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UNITED STATES
 
SECURITIES
 
AND EXCHANGE
 
COMMISSION
WASHINGTON, D.C. 20549
FORM
20-F
REGISTRATION STATEMENT PURSUANT
 
TO SECTION 12(b)
 
OR (g) OF
 
THE SECURITIES
 
EXCHANGE ACT
 
OF 1934
OR
ANNUAL REPORT
 
PURSUANT TO
 
SECTION 13
 
OR 15(d) OF
 
THE SECURITIES
 
EXCHANGE ACT
 
OF 1934 For
 
the fiscal
 
year
ended
June 30, 2021
OR
TRANSITION
 
REPORT PURSUANT
 
TO SECTION 13
 
OR 15(d) OF
 
THE SECURITIES
 
EXCHANGE ACT
 
OF 1934
OR
SHELL COMPANY REPORT
 
PURSUANT TO
 
SECTION 13 OR
 
15(d) OF THE
 
SECURITIES EXCHANGE
 
ACT 1934
Commission
 
file number
0-28800
DRDGOLD LIMITED
(Exact name
 
of Registrant
 
as specified
 
in its charter
 
and translation
 
of Registrant's
 
name into English)
REPUBLIC OF SOUTH AFRICA
(Jurisdiction
 
of incorporation
 
or organization)
Constantia Office Park Cnr 14th Avenue and Hendrik Potgieter Road Cycad House, Building 17, Ground Floor
Weltevreden Park
1709
,
South Africa
 
(Address
 
of principal
 
executive offices)
Riaan Davel
, Chief Financial
 
Officer, Tel. no. +
27
11
470 2600
, Email
riaan.davel@drdgold.com
Mpho Mashatola,
 
Group Financial
 
Controller,
 
Tel. no. +27 11 470 2600,
 
Email mpho
.
mashatola@drdgold.com
(Name, Telephone,
 
Email and/or
 
Facsimile
 
number and Address
 
of Company Contact
 
Person)
Securities
 
registered or
 
to be registered
 
pursuant to Section
 
12(b) of the
 
Act
Title of each
 
class:
Trading symbol
Name of each
 
exchange on
 
which registered:
Ordinary shares (traded in the form of American Depositary
Shares, each American Depositary Share representing ten
underlying ordinary shares.)
DRD
The
New York Stock Exchange
, Inc.
Securities
 
registered or
 
to be registered
 
pursuant to Section
 
12(g) of the
 
Act
None
Securities
 
for which there
 
is a reporting
 
obligation pursuant
 
to Section 15(d)
 
of the Act
None
Indicate the number of outstanding
 
shares of each of the issuer's
 
classes of capital or common stock
 
as of the close of the period
covered by the
 
annual report.
 
864,588,711
 
ordinary shares
 
of no par value
 
outstanding
 
as of June 30,
 
2021.
 
Indicate
 
by
 
check
 
mark
 
if
 
the
 
registrant
 
is
 
a
 
well-known
 
seasoned
 
issuer,
 
as
 
defined
 
in
 
Rule
 
405
 
of
 
the
 
Securities
 
Act.
Yes
No
If this report
 
is an annual
 
report or transition
 
report, indicate
 
by check mark if
 
the registrant
 
is not required
 
to file reports
 
pursuant
to Section 13
 
or 15(d) of the
 
Securities
 
Exchange Act
 
of 1934
 
Yes
 
No
Indicate by check
 
mark whether the
 
registrant
 
(1) has filed all
 
reports required
 
to be filed by Section
 
13 or 15(d) of the
 
Securities
Exchange Act
 
of 1934 during
 
the preceding
 
12 months (or
 
for such shorter
 
period that the
 
registrant was
 
required to file
 
such reports),
 
and
(2) has been
 
subject to
 
such filing requirements
 
for the past
 
90 days.
 
Yes
 
No
Indicate by check mark whether the registrant has submitted electronically every Interactive Date File required to be submitted
pursuant to Rule 405
 
of Regulation S-T (§
 
232.405 of this chapter) during
 
the preceding 12 months (or
 
for such shorter period that
 
the
registrant was required to submit such files).
Yes
 
No
Indicate
 
by check
 
mark whether
 
the registrant
 
is a
 
large accelerated
 
filer, an
 
accelerated
 
filer, a
 
non-accelerated
 
filer, or
 
an emerging
growth company.
 
See definition of
 
“large accelerated filer,” “accelerated filer,”
 
and “emerging growth
 
company” in Rule
 
12b-2 of
 
the
Exchange Act.
Large accelerated
 
filer
 
Accelerated filer
 
Non-accelerated
 
filer
Emerging growth
 
company
If any emerging
 
growth company
 
that prepares
 
its financial
 
statements in
 
accordance with
 
U.S. GAAP, indicate by check
 
mark if
the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting
 
standards
provided pursuant
 
to Section 13(a)
 
of the Exchange
 
Act
 
 
The term
 
“new or
 
revised
 
financial
 
accounting
 
standard”
 
refers to
 
any update
 
issued by
 
the Financial
 
Accounting
 
Standards
 
Board
to its Accounting
 
Standards Codification
 
after April
 
5, 2012.
Indicate by
 
check
 
mark
 
whether
 
the
 
registrant has
 
filed
 
a
 
report
 
on
 
and
 
attestation to
 
its
 
management’s
 
assessment of
 
the
effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by
 
the
registered
 
public accounting
 
firm that prepared
 
or issued its
 
audit report.
Indicate
 
by check
 
mark which
 
basis of
 
accounting
 
the registrant
 
has used
 
to prepare
 
the financial
 
statements
 
included
 
in this filing
.
U.S. GAAP
 
International
 
Financial Reporting
 
Standards as
 
issued by the
International Accounting Standards Board
 
Other
If “Other”
 
has been
 
checked in
 
response to
 
the previous question,
 
indicate by check
 
mark which
 
financial statement item
 
the
registrant
 
has elected to
 
follow.
 
Item 17
 
Item 18
If this
 
is an
 
annual report, indicate by
 
check mark
 
whether the
 
registrant is a
 
shell company (as
 
defined in
 
Rule 12b-2
 
of the
Exchange Act).
 
Yes
 
No
Indicate by check
 
mark whether the
 
registrant
 
has filed all
 
documents and reports
 
required to be
 
filed by Sections
 
12, 13 or 15(d)
of the Securities
 
Exchange Act of
 
1934 subsequent
 
to the distribution
 
of securities
 
under a plan confirmed
 
by a court.
 
Yes
 
No
 
TABLE OF CONTENTS
Page
PART I
ITEM 1.
IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
 
6
ITEM 2.
OFFER STATISTICS
 
AND EXPECTED TIMETABLE
 
6
ITEM 3.
KEY INFORMATION
 
6
3A.
Selected Financial Data
 
6
3B.
Capitalization And Indebtedness
 
8
3C.
Reasons For The Offer And Use Of Proceeds
 
8
3D.
Risk Factors
 
8
ITEM 4.
INFORMATION ON THE COMPANY
 
22
4A.
History And Development Of The Company
 
22
4B.
Business Overview
 
25
4C.
Organizational Structure
 
33
4D.
Property, Plant And Equipment
 
34
ITEM 4A.
UNRESOLVED STAFF
 
COMMENTS
 
41
ITEM 5.
OPERATING AND FINANCIAL REVIEW AND PROSPECTS
 
42
5A.
Operating Results
 
42
5B.
Liquidity And Capital Resources
 
52
5C.
Research And Development, Patents And Licenses, Etc
 
53
5D.
Trend Information
 
53
5E.
Off-Balance Sheet Arrangements
 
57
5F.
Tabular Disclosure Of Contractual Obligations
 
57
5G.
Safe Harbor
 
57
ITEM 6.
DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
 
57
6A.
Directors And Senior Management
 
57
6B.
Compensation
 
60
6C.
Board Practices
 
63
6E.
Share Ownership
 
67
ITEM 7.
MAJOR SHAREHOLDERS AND RELATED PARTY
 
TRANSACTIONS
 
70
7A.
Major Shareholders
 
70
7B.
Related Party Transactions
 
71
7C.
Interests Of Experts And Counsel
 
71
ITEM 8.
FINANCIAL INFORMATION
 
71
8A.
Consolidated statements And Other Financial Information
 
71
8B.
Significant Changes
 
71
ITEM 9.
THE OFFER AND LISTING
 
72
9A.
Offer And Listing Details
 
72
9B.
Plan Of Distribution
 
72
9C.
Markets
 
72
9D.
Selling Shareholders
 
72
9E.
Dilution
 
72
9F.
Expenses Of The Issue
 
72
ITEM 10.
ADDITIONAL INFORMATION
 
72
10A.
Share Capital
 
72
10B.
Memorandum of Incorporation
 
72
10C.
Material Contracts
 
75
10D.
Exchange Controls
 
76
10E.
Taxation
 
78
10F.
Dividends And Paying Agents
 
81
10G.
Statement By Experts
 
81
10H.
Documents On Display
 
81
10I.
Subsidiary Information
 
81
ITEM 11.
QUANTITATIVE
 
AND QUALITATIVE
 
DISCLOSURES ABOUT MARKET RISK
 
81
TABLE OF CONTENTS
Page
PART II
ITEM 12.
DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
 
82
12A.
Debt Securities
 
82
12B.
Warrants and Rights
 
82
12C.
Other Securities
 
82
12D
American Depositary Shares
 
83
ITEM 13.
DEFAULTS,
 
DIVIDEND ARREARAGES AND DELINQUENCIES
 
84
ITEM 14.
MATERIAL
 
MODIFICATIONS TO
 
THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
 
84
ITEM 15.
CONTROLS AND PROCEDURES
 
84
ITEM 16A.
AUDIT COMMITTEE FINANCIAL EXPERT
 
85
ITEM 16B.
CODE OF ETHICS
 
85
ITEM 16C.
PRINCIPAL ACCOUNTANT
 
FEES AND SERVICES
 
85
ITEM 16D.
EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
 
86
ITEM 16F
CHANGE IN REGISTRANT'S CERTIFYING ACCOUNTANT
 
86
ITEM 16G.
CORPORATE
 
GOVERNANCE
 
86
ITEM 16H.
MINE SAFETY DISCLOSURES
 
86
PART III
ITEM 17.
FINANCIAL STATEMENTS
 
88
ITEM 18.
FINANCIAL STATEMENTS
 
88
ITEM 19.
EXHIBITS
 
85
SIGNATURES
88
1
Preparation
 
of Financial
 
Information
 
 
We are a South African
 
company and
 
currently
 
all our operations
 
are located
 
in South Africa.
 
Accordingly, our books
 
of account
 
are
maintained
 
in South African
 
Rand. Our financial statements included in our corporate filings are prepared in accordance with International
Financial Reporting Standards (IFRS), as issued by the International Accounting Standards Board (IASB).
 
 
Our consolidated financial statements included in this Annual Report are prepared in accordance with IFRS as issued by the IASB.
All financial information, except as otherwise noted is prepared in accordance with IFRS as issued by the IASB.
 
 
We present our financial information in rand, which is our presentation and reporting currency.
 
All references
 
to “dollars”
 
or “$”
herein are
 
to United States
 
Dollars and
 
references
 
to “rand” or
 
“R” are to
 
South African
 
rands. Solely for your convenience, this Annual Report
contains translations of certain rand amounts into dollars at specified rates. These rand amounts do not represent actual dollar amounts, nor
could they necessarily have been converted into dollars at the rates indicated. Unless otherwise indicated, rand amounts have been translated
into dollars at the rate of R14.27 per $1.00, the year end exchange rate on June 30, 2021.
 
In this Annual Report, we present certain non-IFRS financial measures such as the financial items “cash operating costs per
kilogram”, “all-in sustaining costs per kilogram” and “all-in costs per kilogram” which have been determined using industry guidelines
promulgated by the World Gold Council, which we use to determine costs associated with producing gold, cash generating capacities of the
mines and to monitor performance of our mining operations. An investor should not consider these items in isolation or as alternatives to,
operating costs, profit/(loss) for the year or any other measure of financial performance presented in accordance with IFRS or as an indicator
of our performance. While the World Gold Council has provided definitions for the calculation of cash operating costs, the calculation of
cash operating costs per kilogram, all-in sustaining costs per kilogram and all-in costs per kilogram may vary significantly among gold
mining companies, and these definitions by themselves do not necessarily provide a basis for comparison with other gold mining companies.
See Glossary of Terms and Explanations and Item 5A. Operating Results – “Cash operating costs, all-in sustaining costs and all-in costs” and
“Reconciliation of cash operating costs per kilogram, all-in sustaining costs per kilogram, all-in costs per kilogram”.
 
DRDGOLD Limited
 
When used in
 
this Annual
 
Report, the
 
term the “Company”
 
refers to DRDGOLD
 
Limited and
 
the terms “we,”
 
“our,” “us” or
 
“the
Group” refer
 
to the Company
 
and its subsidiaries
 
as appropriate
 
in the context.
 
Acquisition
 
of gold assets
 
from Sibanye-Stillwater
 
and subsequent
 
exercise of
 
option to purchase
 
shares
 
On July 31, 2018, we completed the acquisition of the gold assets associated with Sibanye Gold Limited, trading as Sibanye-
Stillwater’s (“
Sibanye-Stillwater
”) West Rand Tailings
 
Retreatment Project (“
WRTRP
”), subsequently renamed Far West Gold Recoveries
Proprietary Limited (“
FWGR
”).
 
This acquisition significantly increased our assets and revenues and added 2.72 million ounces to our Ore
Reserves.
 
In connection with the acquisition, we issued to Sibanye-Stillwater new shares in the Company equal to 38.05% of outstanding
shares, and granted Sibanye-Stillwater an option to acquire up to a total of 50.1% of our shares within a period of 2 years from the effective
date of the acquisition at a 10% discount to the prevailing market value (the “
Option
”). On January 8, 2020, Sibanye-Stillwater exercised the
Option. On January 22, 2020 Sibanye-Stillwater subscribed for 168,158,944 DRDGOLD shares at an aggregate subscription price of R1,086
million. These shares were issued at a price of R6.46 per share, being a 10% discount to the 30-day volume weighted average traded price.
Special Note
 
Regarding Forward-Looking
 
Statements
 
This Annual
 
Report contains
 
certain “forward-looking”
 
statements
 
within the meaning
 
of Section
 
21E of the
 
U.S. Securities
 
Exchange
Act of 1934,
 
regarding expected
 
future events,
 
circumstances,
 
trends and expected
 
future financial
 
performance
 
and information
 
relating to
 
us
that are
 
based on the
 
beliefs of
 
our management,
 
as well as
 
assumptions
 
made by and
 
information
 
currently available
 
to our management.
 
Some
of these forward-looking
 
statements
 
include phrases
 
such as “anticipates,”
 
“believes,”
 
“could,” “estimates,”
 
“expects,”
 
“intends,”
 
“may,”
“should,” or
 
“will continue,”
 
or similar
 
expressions
 
or the negatives
 
thereof or
 
other variations
 
on these expressions,
 
or similar
 
terminology, or
discussions
 
of strategy, plans
 
or intentions,
 
including statements in connection with, or relating
 
to, among other things:
 
our reserve calculations and underlying assumptions;
the trend information discussed in Item 5D.- Trend Information, including target gold production and cash operating costs;
life of mine and potential increase in life of mine;
estimated future throughput capacity and production;
expected trends in our gold production as well as the demand for and the price of gold;
 
our anticipated labor, electricity, water,
 
crude oil and steel costs;
our expectation that existing cash will be sufficient to fund our operations in the next 12 months including our anticipated
commitments;
estimated production costs, cash operating costs per ounce, all-in sustaining costs per ounce and all-in costs per ounce;
expectations on future gold price, supply and pricing trends, including long term trends, expected impact of the global environment
on gold prices;
expected gold production and cash operating costs expected in fiscal year 2022;
 
statements with respect to agreements with unions;
our prospects in litigation and disputes;
2
statements with respect to the legal review for increasing the deposition capacity of the Brakpan/Withok Tailings Storage Facility
(“
TSF
”), and expected potential increase in capacity and life of mine and statements with respect to our flotation fine-grind
 
(“
FFG
”) program;
 
expected deposition capacity from improvements in our dams and new dam construction; and
expected effective gold mining tax rate.
 
 
Such statements
 
reflect our
 
current views
 
with respect
 
to future events
 
and are subject
 
to risks, uncertainties
 
and assumptions.
 
Many
factors could
 
cause our
 
actual results,
 
performance
 
or achievements
 
to be materially
 
different from
 
any future
 
results, performance
 
or
achievements
 
that may be
 
expressed or
 
implied by
 
such forward-looking
 
statements,
 
including, among
 
others:
 
the global
 
impact of
 
the COVID-19
 
pandemic and
 
potential announcement
 
of further
 
national lockdowns,
 
including in
 
South Africa;
 
adverse changes
 
or uncertainties
 
in general
 
economic conditions
 
in South Africa;
 
regulatory
 
developments
 
adverse to
 
us or difficulties
 
in maintaining
 
necessary
 
licenses or
 
other governmental
 
approvals;
future performance
 
relating to
 
the FWGR
 
Phase 2 assets;
challenges
 
in replenishing
 
mineral ore
 
reserves;
changes in
 
our competitive
 
position;
changes in,
 
or that affect
 
our business
 
strategy;
our ability
 
to achieve
 
anticipated
 
efficiencies
 
and other cost
 
savings in
 
connection
 
with past
 
and future
 
acquisitions;
the success
 
of our business
 
strategy, development
 
activities
 
and other initiatives,
adverse changes
 
in our gold
 
production
 
as well as
 
the demand
 
for and the
 
price of gold;
 
changes in
 
technical
 
and economic
 
assumptions
 
underlying DRDGOLD’
 
mineral reserve
 
estimates;
any major
 
disruption in
 
production
 
at our key
 
facilities;
 
adverse changes
 
in foreign
 
exchange rates;
adverse environmental
 
or environmental
 
regulatory changes;
adverse changes
 
in ore grades
 
and recoveries,
 
and to the
 
quality or quantity
 
of reserves;
unforeseen
 
technical
 
production issues,
 
industrial
 
accidents
 
and theft;
anticipated
 
or unanticipated
 
capital expenditure
 
on property, plant
 
and equipment;
 
the impact
 
of HIV/AIDS,
 
tuberculosis
 
and
 
the spread
 
of other contagious
 
diseases,
 
such as coronavirus
 
(COVID-19);
 
and
various other
 
factors,
 
including those
 
set forth in
 
Item 3D.
 
Risk Factors.
 
 
For a discussion
 
of such risks,
 
see Item
 
3D. Risk Factors.
 
The risk factors
 
described above
 
and in Item
 
3D. could affect
 
our future
results, causing
 
these results
 
to differ materially
 
from those
 
expressed in
 
any forward-looking
 
statements.
 
These factors
 
are not necessarily
 
all of
the important
 
factors that
 
could cause
 
our results
 
to differ materially
 
from those
 
expressed
 
in any forward-looking
 
statements.
 
Other unknown
 
or
unpredictable
 
factors could
 
also have
 
material
 
adverse effects
 
on future results.
 
Investors
 
are cautioned
 
not to place
 
undue reliance
 
on these forward-looking
 
statements,
 
which speak
 
only as of the
 
date thereof.
 
We
do not undertake
 
any obligation
 
to update
 
publicly or
 
release
 
any revisions
 
to these forward-looking
 
statements
 
to reflect events
 
or circumstances
after the
 
date of this
 
Annual Report
 
or to reflect
 
the occurrence
 
of unanticipated
 
events.
Special Note
 
Regarding Links
 
to External,
 
or Third-party
 
Websites
Links to external,
 
or third-party
 
websites,
 
are provided
 
solely for
 
convenience.
 
We take no responsibility
 
whatsoever
 
for any third-
party information
 
contained in
 
such third-party
 
websites,
 
and we specifically
 
disclaim adoption
 
or incorporation
 
by reference
 
of such information
into this report.
 
 
 
 
 
3
Imperial units
 
of measure
 
and metric
 
equivalents
 
The table
 
below sets
 
forth units
 
stated in this
 
document, which
 
are measured
 
in Imperial
 
and Metric.
 
Metric
Imperial
Imperial
Metric
1 metric tonne
1.10229 short tons
1 short ton
0.9072 metric tonnes
1 kilogram
2.20458 pounds
1 pound
0.4536 kilograms
1 gram
0.03215 troy ounces
1 troy ounce
31.10353 grams
1 kilometer
0.62150 miles
1 mile
1.609 kilometers
1 meter
3.28084 feet
1 foot
0.3048 meters
1 liter
0.26420 gallons
1 gallon
3.785 liters
1 hectare
2.47097 acres
1 acre
0.4047 hectares
1 centimeter
0.39370 inches
1 inch
2.54 centimeters
1 gram/tonne
0.0292 ounces/ton
1 ounce/ton
34.28 grams/tonnes
0 degree Celsius
32 degrees Fahrenheit
0 degrees Fahrenheit
- 18 degrees Celsius
4
Glossary of Terms and Explanations
The table below sets forth a glossary of terms used in this Annual Report:
Adjusted EBITDA
Adjusted
 
EBITDA
 
means
 
earnings
 
before
 
interest,
 
tax,
 
depreciation,
 
amortisation,
 
share-based
 
payment
(benefit)/expense, change in estimate of environmental rehabilitation recognised in profit
 
or loss, gain/(loss) on
disposal
 
of
 
property,
 
plant
 
and
 
equipment,
 
gain/(loss)
 
on
 
financial
 
instruments,
 
IFRS
 
16
 
lease
 
payments,
transaction costs and retrenchment costs. This is a non-IFRS
 
financial measure and should not be considered a
substitute measure of net income reported by us in accordance with IFRS.
Administration expenses and
other costs excluding non-
recurring items
Administration
 
expenses
 
and
 
other
 
costs
 
excluding
 
loss
 
on
 
disposal
 
of
 
property,
 
plant
 
and
 
equipment
 
and
transaction costs.
All-in sustaining costs per
kilogram
 
All-in sustaining
 
costs is
 
a measure
 
on which
 
guidance is
 
provided by
 
the World
 
Gold Council
 
and includes
cash operating costs of production, plus movement in gold in process on a sales basis, corporate administration
expenses and other (costs)/income,
 
the accretion of rehabilitation
 
costs and sustaining
 
capital expenditure. Costs
other than those listed above are excluded. All-in sustaining costs per kilogram are calculated by dividing total
all-in sustaining costs by kilograms of
 
gold produced. This is a non‑IFRS
 
financial measure and should not be
considered a substitute measure of costs and expenses reported by us in accordance with IFRS.
All-in costs per kilogram
 
All-in costs is
 
a measure
 
on which
 
guidance is
 
provided by
 
the World Gold Council
 
and includes
 
all-in sustaining
costs,
 
retrenchment
 
costs,
 
care
 
and
 
maintenance
 
costs,
 
ongoing
 
rehabilitation
 
expenditure,
 
growth
 
capital
expenditure and capital recoupments.
 
Costs other than
 
those listed above
 
are excluded. All-in costs
 
per kilogram
are calculated by dividing
 
total all-in costs by
 
kilograms of gold
 
produced. This is
 
a non‑IFRS financial measure
and should not
 
be considered a
 
substitute measure of
 
costs and expenses
 
reported by us
 
in accordance with
 
IFRS.
Assaying
 
The chemical testing process of rock samples to determine mineral content.
$/oz
 
US dollar per ounce.
Called gold content
 
The theoretical gold content of material processed.
Care and maintenance
 
Costs to ensure that the Ore Reserves are open, serviceable
 
and legally compliant after active mining activity at
a shaft has ceased.
Cash operating costs of
production
 
Cash
 
operating
 
costs
 
of
 
production
 
are
 
operating
 
costs
 
less
 
ongoing
 
rehabilitation
 
expenses,
 
care
 
and
maintenance costs and net other operating costs/(income). This is a
 
non‑IFRS financial measure and should not
be considered a substitute measure of costs and expenses reported by us in accordance with IFRS.
Cash operating costs per kilogram
 
Cash operating
 
costs are
 
operating costs
 
incurred directly
 
in the
 
production of
 
gold and
 
include labor
 
costs,
contractor and other
 
related costs, inventory
 
costs and electricity
 
costs. Cash operating
 
costs per kilogram
 
are
calculated by dividing
 
cash operating costs
 
by kilograms of
 
gold produced.
 
This is a
 
non‑IFRS financial measure
and should not
 
be considered a
 
substitute measure of
 
costs and expenses
 
reported by us
 
in accordance with
 
IFRS.
Cut‑off grade
 
The minimum
 
in-situ grade
 
of ore
 
blocks for
 
which the
 
cash operating
 
costs per
 
ounce, excluding
 
overhead
costs, is equal to a projected gold price per ounce.
CIL Circuit
Carbon-in-leach circuit.
Depletion
 
The decrease in the quantity of ore in a deposit or property resulting from extraction or production.
Deposition
 
Deposition is the geological process
 
by which material is added
 
to a landform or land mass.
 
Fluids such as wind
and water, as
 
well as sediment flowing via gravity,
 
transport previously eroded sediment, which, at
 
the loss of
enough kinetic
 
energy in
 
the fluid,
 
is deposited,
 
building up
 
layers of
 
sediment. Deposition
 
occurs when
 
the
forces responsible for sediment transportation are no longer sufficient to
 
overcome the forces of particle weight
and friction, creating a resistance to motion.
 
Doré
 
Unrefined gold and silver
 
bullion bars consisting of
 
approximately 90% precious metals
 
which will be further
refined to almost pure metal.
Grade
 
The amount
 
of gold
 
contained within auriferous
 
material generally
 
expressed in
 
ounces per
 
ton or
 
grams per
tonne of ore.
Growth capital expenditure
 
Capital additions that
 
are not sustaining capital
 
expenditure. This is a
 
non‑IFRS financial measure and
 
should
not be considered a substitute measure of costs and expenses reported by us in accordance with IFRS.
g/t
 
Grams per tonne.
Metallurgical plant
 
A processing plant (mill) erected to treat ore and extract the contained gold.
Mine call factor
 
The gold content recovered expressed as a percentage of the called gold content.
Mt
 
Million tons.
Ore
 
A mixture of valuable
 
and worthless materials from
 
which the extraction of
 
at least one mineral
 
is technically
and economically viable.
Other operating costs / (income)
Expenses incurred, and
 
income generated in
 
the course of
 
operating activities, which
 
are not directly
 
attributable
to production activities.
Pay-limit
 
The minimum in-situ grade of
 
ore blocks or sites for
 
which cash operating costs, including
 
all overhead costs,
are equal to a projected gold price per ounce.
Operating costs
 
Operating costs are cost of sales less depreciation, change in
 
estimate of rehabilitation provision, movement in
gold in process and finished inventory – gold bullion, and retrenchment costs.
5
Ore Reserves
 
That part of a mineral deposit which could be economically and legally extracted
 
or produced at the time of the
reserve determination.
Proven Ore Reserves
 
Reserves for which
 
(a) the quantity
 
is computed from
 
dimensions revealed in
 
outcrops, trenches, workings
 
or
drill
 
holes;
 
grade
 
and/or
 
quality
 
are
 
computed
 
from
 
the
 
results
 
of
 
detailed
 
sampling
 
and
 
(b)
 
the
 
sites
 
for
inspection, sampling and measurement are spaced
 
so closely and the geologic character
 
is so well defined that
size, shape, depth, and mineral content of Ore Reserves are well established.
Probable Ore Reserves
 
Ore reserves for which quantity
 
and grade and/or quality are
 
computed from information similar to
 
that used for
Proven Ore Reserves, but the sites for inspection, sampling, and
 
measurement are farther apart or are otherwise
less adequately
 
spaced. The
 
degree of
 
assurance, although
 
lower than
 
that for
 
Proven Ore
 
Reserves, is
 
high
enough to assume continuity between points of observation.
oz/t
 
Ounces per ton.
Refining
 
The final purification process of a metal or mineral.
Rehabilitation
 
The process of restoring mined land to a condition approximating its original state.
Reserves
 
That part of a mineral deposit which could be economically and legally
 
extracted or produced at the time of the
reserve determination.
Sediment
The deposition of solid fragmental material that originated from weathering of rocks and was transported from
a source to a site of deposition.
Slimes
 
The tailings discharged from a processing plant after the valuable minerals have been recovered.
Sustaining capital expenditure
 
Sustaining capital expenditure are
 
those capital additions that
 
are necessary to maintain
 
current gold production.
This is a non‑IFRS financial measure and should
 
not be considered a substitute measure of
 
costs and expenses
reported by us in accordance with IFRS.
t’000
 
Tonnes in thousands.
Tailings
 
Finely ground rock from which valuable minerals have been extracted by milling, or any
 
waste rock, slimes or
residue derived from any mining operation or processing of any minerals.
Tailings dam
 
A dam created from
 
waste material of processed
 
ore after the economically
 
recoverable gold has been
 
extracted.
Tonnage/Tonne
 
Quantities
 
where the
 
metric tonne
 
is
 
an appropriate
 
unit of
 
measure. Typically
 
used to
 
measure reserves
 
of
gold‑bearing material in‑situ or quantities of ore and waste material mined, transported or milled.
Tpm
 
Tonne per month.
Yield
 
The amount of recovered gold from production generally expressed in ounces or grams per ton or tonne of
 
ore.
6
PART I
ITEM 1. IDENTITY
 
OF DIRECTORS, SENIOR
 
MANAGEMENT AND
 
ADVISERS
Not applicable.
ITEM 2. OFFER
 
STATISTICS AND EXPECTED TIMETABLE
Not applicable.
 
ITEM 3. KEY
 
INFORMATION
3A. SELECTED
 
FINANCIAL
 
DATA
 
The following
 
selected
 
consolidated
 
financial
 
data as at June
 
30, 2021 and 2020
 
and for the
 
years ended June
 
30, 2021, 2020
 
and 2019
is derived from our consolidated financial statements set forth elsewhere in this Annual Report, which have been prepared in accordance with
IFRS, as issued by the IASB. These
 
consolidated
 
financial
 
statements
 
have been
 
audited by KPMG
 
Inc.
 
The selected
 
consolidated
 
financial data
as at June
 
30, 2019, 2018
 
and 2017,
 
and for the
 
years ended
 
June 30, 2018
 
and 2017 is
 
derived from
 
audited consolidated
 
financial
 
statements
 
not
appearing in this
 
Annual Report which
 
have been prepared
 
in accordance with
 
IFRS, as issued by the IASB. The
 
selected consolidated
 
financial
data set
 
forth below
 
should be read
 
in conjunction
 
with Item
 
5. Operating
 
and Financial
 
Review and
 
Prospects
 
and with the
 
consolidated
 
financial
statements
 
and the notes
 
thereto and
 
the other financial
 
information
 
appearing elsewhere
 
in this Annual
 
Report.
 
 
 
 
7
Selected Consolidated Financial Data
(in millions, except share, per share and ounce data)
Year ended
 
June 30,
2021
1
2021
2020
2019
2018
2017
$’m
R'm
R'm
R'm
R'm
R'm
Profit or loss Data
Revenue
 
369.2
5,269.0
4,185.0
2,762.1
2,490.4
2,339.9
Results from operating activities
 
127.3
1,816.9
937.9
125.2
52.0
(24.6)
Profit/(loss) for the year attributable to
equity owners of the parent
 
100.9
1,439.9
635.0
78.5
6.5
13.7
Adjusted EBITDA
2
141.3
2,015.9
2
1,411.6
2
254.1
2
-
2
-
2
Per Share Data
Basic earnings/(loss) per share (cents)
 
11.8
168.4
82.5
11.8
1.5
3.2
Diluted earnings/(loss) per share (cents)
 
11.7
167.2
81.0
11.5
1.5
3.2
Dividends proposed per share for the
year (ZAR cents)
 
80.0
85.0
20.0
5.0
5.0
Dividends proposed per American
Depositary Shares for the year
 
(USD cents)
 
56.1
49.1
14.2
3.6
3.4
Exchange rate (USD1:ZAR)
1
14.27
17.32
14.07
13.72
14.68
Intraday high (USD1:ZAR)
 
17.78
19.34
15.69
14.57
14.75
Intraday low (USD1:ZAR)
 
13.39
13.80
13.07
11.50
12.42
Number of shares issued as at June 30
 
864,588,711
864,588,711
864,588,711
696,429,767
431,429,767
431,429,767
Statement of financial position data
Total assets
 
444.8
6,348.0
5,675.2
4,059.9
2,360.5
2,287.4
Equity (Net assets)
 
337.8
4,820.4
4,040.2
2,688.5
1,267.2
1,302.4
Stated share capital
3
431.5
6,157.4
6,157.4
5,072.3
4,177.2
4,177.2
2021
2021
2021
2021
2021
2021
September
August
July
June
May
April
Exchange Rate Data
Intraday high (USD1:ZAR)
 
15.25
15.39
14.99
14.40
14.54
14.84
Intraday low (USD1:ZAR)
 
14.06
14.22
14.15
13.39
13.67
14.14
1
Translations into
 
Dollars in this
 
table are for
 
the purpose of
 
convenience only and
 
are computed at
 
the closing exchange
 
rate at June
 
30,
2021 of R14.27 per $1.00. You should not view such translations as a representation that such amounts represent actual Dollar amounts. All
other translations in this Annual Report are based on exchange rates quoted by local financial institutions.
2
Adjusted
 
EBITDA
 
is
 
a
 
non-IFRS
 
financial
 
measure.
 
For
 
a
 
definition
 
of
 
Adjusted
 
EBITDA
 
see
 
Glossary
 
of
 
Terms
 
and
 
Explanations.
Adjusted EBITDA
 
(which is
 
based on
 
the definition
 
of that
 
term used
 
in our
 
Revolving Credit
 
Facility ("RCF")
 
agreement) may
 
not be
comparable to similarly titled measures of other companies.
 
Adjusted EBITDA is not a measure of performance under
 
IFRS and should be
considered in addition to, and not as a substitute for, other measures of financial performance and liquidity.
The Group also considers Adjusted EBITDA for the purpose of
 
evaluating compliance with the covenants imposed by the Company’s RCF.
The Group considers
 
the presentation
 
of Adjusted
 
EBITDA provides
 
useful information
 
to investors.
 
We began presenting Adjusted
 
EBITDA
following the entry into our
 
RCF in fiscal 2019. Adjusted
 
EBITDA was not presented
 
or considered by the Company
 
before fiscal 2019.
 
For
a reconciliation
 
of Adjusted
 
EBITDA from
 
profit
 
for the
 
year,
 
see Item
 
5.A. Operating
 
and Financial
 
Review and
 
Prospects—Adjusted
earnings before interest, interest, depreciation and amortization
3
Ordinary share capital as
 
of June 30,
 
2021 is stated after
 
the deduction of
 
R51 million (2020:
 
R51 million, 2019:
 
R50.7 million) share
 
capital
relating to treasury shares held by the Group.
8
3B. CAPITALIZATION AND INDEBTEDNESS
Not applicable.
3C. REASONS
 
FOR THE OFFER
 
AND USE OF PROCEEDS
Not applicable.
3D. RISK FACTORS
 
In conducting
 
our business, we
 
face many
 
risks that
 
may interfere
 
with our
 
business objectives. Some of
 
these risks
 
relate to
 
our
operational processes,
 
while others relate
 
to our business environment.
 
It is important to understand
 
the nature of these
 
risks and the impact
 
they
may have on our
 
business, financial
 
condition and
 
operating results.
 
Some of these
 
risks are summarized
 
below and have
 
been organized
 
into the
following categories:
Risks related
 
to our business
 
and operations;
Risks related
 
to the gold
 
mining industry;
Risks related
 
to doing business
 
in South Africa;
 
Risks related to ownership in our ordinary shares or American Depositary Shares (ADSs); and
Risks related to climate change
Risks related
 
to our business
 
and operations
Changes in the market price for gold and exchange rate fluctuations,
 
both of which have fluctuated widely in the past, affect the
profitability
 
of our operations
 
and the cash
 
flows generated
 
by those operations.
Our results
 
are significantly
 
impacted
 
by the price
 
of gold and
 
the USD-Rand
 
exchange rate.
 
Any sustained decline in the market price
of gold from the current elevated levels would adversely affect us, and any sustained decline in the price of gold below the cost of production
could
 
result
 
in
 
the
 
closure
 
of
 
some
 
or
 
all
 
of
 
our
 
operations
 
which
 
would
 
result
 
in
 
significant
 
costs
 
and
 
expenditure,
 
such
 
as,
 
incurring
retrenchment costs earlier than expected
 
which could lead to a decline
 
in profits, or losses, as well
 
as impairment losses. In addition, as
 
most
of our production costs are in rands, while
 
gold is sold in dollars and then converted
 
to rands, our results of operation and financial
 
condition
have been and could be in the future materially affected by
 
an appreciation in the value of the rand. Accordingly,
 
any sustained decline in the
dollar price of gold and/or
 
the strengthening of the South African
 
rand against the dollar would negatively
 
and adversely affect our business,
operating results and financial condition.
In the wake
 
of the COVID-19 pandemic
 
and measures
 
taken to address
 
the outbreak,
 
there has been
 
a global trend
 
of investors
 
turning
to gold
 
and gold
 
stocks as
 
a safe
 
haven asset,
 
as has
 
been the
 
case in
 
previous
 
times of
 
global economic
 
crisis.
 
This has
 
led to
 
a surge
 
in the
 
average
gold price
 
during fiscal
 
2020 and
 
fiscal
 
2021.
 
Changes
 
in these
 
conditions
 
in the
 
future (e.g.
 
global recovery
 
from the
 
COVID-19 pandemic)
 
could
lead to
 
a decrease
 
of the gold
 
price to
 
pre-pandemic
 
levels or
 
lower.
 
In addition,
 
we were
 
impacted by
 
movements
 
in the exchange
 
rate of the
 
rand
against the
 
dollar during
 
the COVID-19
 
pandemic as
 
described below.
 
Exchange rates are influenced by global economic trends. The closing exchange rate of
 
the rand against the dollar
 
at June 30,
 
2021
strengthened
 
by 18% compared
 
to June 30,
 
2020.
 
The closing
 
price of the
 
rand against
 
the dollar
 
at June 30,
 
2020 weakened
 
by 23% compared
 
to
June 30, 2019.
 
At September
 
30, 2021, the
 
rand traded
 
at R14.51 =
 
$1.00 (based
 
on closing rates),
 
a 2% weakening
 
of the rand
 
against the
 
Dollar
from June
 
30, 2021.
 
The rand/dollar
 
exchange
 
rate remained
 
volatile
 
throughout
 
the fiscal
 
year 2021
 
mainly as
 
a result
 
of global,
 
emerging
 
market
and South Africa economic uncertainty
 
including uncertainties
 
resulting from the COVID-19 pandemic,
 
global economic slowdown sentiment,
tensions
 
between
 
the USA
 
and China,
 
perceived
 
political
 
instability
 
and fiscal
 
strength
 
and structurally
 
weak economic
 
growth of
 
the South
 
African
economy including
 
a seemingly
 
terminally
 
distressed
 
power utility, Eskom
 
Holdings SOC
 
Limited (“
Eskom
”).
 
A decrease in the dollar gold price
 
and/or a strengthening
 
of the rand against the dollar
 
results
 
in a decrease in our profitability. If the
rand was to appreciate against
 
the dollar or the gold price were to decrease
 
for a continued time, our operations
 
could experience a reduction
 
in
cash flow
 
and profitability,
 
and this would adversely affect our business, operating results and financial condition.
 
 
We typically do not enter into forward
 
contracts to reduce
 
our exposure to market
 
fluctuations
 
in the dollar gold price
 
or the exchange
rate movements
 
of the
 
rand. We sell
 
gold at
 
spot prices
 
based on
 
the afternoon
 
London Bullion
 
Market
 
fixing price
 
on the
 
day when
 
Rand Refinery,
acting as an agent for the
 
sale of all gold produced by the
 
Group, delivers
 
the Gold to the buyer. Our foreign currency
 
is usually sold at the spot
price in
 
the market
 
on the
 
date of
 
trade.
 
If the
 
dollar gold
 
price should
 
fall and/or
 
the rand
 
should strengthen
 
against
 
the dollar,
 
this would
 
adversely
affect us, and we may experience losses, and if these changes result in revenue below our cost of production and remain at such levels for any
sustained
 
period, we
 
may be forced
 
to curtail
 
or suspend
 
some or all
 
our operations.
 
A failure to acquire
 
new Ore Reserves
 
could negatively affect our future
 
cash flows, results of
 
operations and financial condition.
9
New or
 
ongoing exploration
 
programs may be
 
delayed or
 
may not result
 
in new mineral
 
producing operations
 
that will
 
sustain or
increase our Ore Reserves. A failure to acquire new Ore Reserves in sufficient quantities and quality to maintain or grow the current level
 
and
quality of our reserves will negatively affect our future cash flow,
 
results of operations and financial condition. In addition,
 
if we are
 
unable to
identify Ore
 
Reserves
 
that have
 
reasonable
 
prospects
 
for economic
 
extraction
 
while maintaining
 
sufficient controls
 
on production
 
and other
 
costs,
this will
 
have a material
 
effect on the
 
future viability
 
of our operations.
 
If we are not
 
successful in increasing reserves
 
in future years, our
 
reserves could decrease, and
 
such reduction would adversely
 
affect
our business, operating results and financial condition.
 
We may be unable to
 
make desirable
 
acquisitions
 
or to integrate
 
successfully
 
any businesses
 
we acquire,
 
including the
 
development
of Phase 2
 
of the FWGR
 
assets acquired
 
from Sibanye-Stillwater
.
 
Our future
 
success may
 
depend in
 
part on the
 
acquisition
 
of businesses
 
or technologies
 
intended to
 
complement,
 
enhance or
 
expand our
current business
 
or products or that
 
might otherwise
 
offer us growth opportunities.
 
The ability to complete
 
such transactions
 
may be hindered
 
by
a number of
 
factors, including identifying acquisition targets, obtaining
 
necessary financing and potential difficulties in obtaining government
approvals. Any acquisitions we make,
 
could fail to
 
achieve our financial or
 
strategic objectives or disrupt
 
our ongoing business which
 
could
adversely
 
impact our
 
results of
 
operations.
 
Any acquisition that we do make would pose risks related
 
to the integration of the new business or technology
 
with our business and
organization.
 
We cannot be certain
 
that we will
 
be able to
 
achieve the
 
benefits we
 
expect from
 
a particular
 
acquisition
 
or investment.
 
Acquisitions
may also strain
 
our managerial
 
and operational
 
resources,
 
as the challenge
 
of managing
 
new operations
 
may divert
 
our management
 
from day-to-
day operations of
 
our existing
 
business. Furthermore, we may
 
have difficulty integrating
 
employees, business systems, and
 
technology. The
controls, processes
 
and procedures
 
of acquired
 
businesses
 
may also not adequately
 
ensure compliance
 
with laws and
 
regulations
 
and we may fail
to identify compliance
 
issues or liabilities.
 
Our business,
 
financial condition
 
and results
 
of operations
 
may be materially
 
and adversely
 
affected if
we fail
 
to coordinate
 
our resources
 
effectively
 
to manage
 
both our existing
 
operations
 
and any businesses
 
we acquire.
 
Acquisitions
 
can also result
in unforeseen
 
liabilities.
 
Moreover, our
 
resources
 
are limited
 
and our
 
decision
 
to pursue
 
a transaction
 
has opportunity
 
costs;
 
accordingly, if
 
we pursue
 
a particular
transaction,
 
we may need
 
to forgo the
 
prospect of
 
entering into
 
other transactions
 
that could
 
help us achieve
 
our financial
 
or strategic
 
objectives.
Limited deposition
 
capacity
Our operations
 
are based on ultra-volume
 
and almost nano-gold
 
extraction.
 
The volume of reclaimed
 
material delivered
 
has one of the
most profound impacts on the gold
 
output of our metallurgical plants.
 
The large volumes of
 
material that are processed at our operations are
deposited on tailings facilities
 
which have a finite capacity. Alternative facilities
 
will be required to ensure adequate deposition
 
capacity for the
future.
 
Key projects
 
include
 
the development
 
of the
 
regional
 
tailings
 
storage
 
facility
 
as part
 
of Phase
 
2 FWGR
 
project
 
as well
 
as obtaining
 
regulatory
approvals for
 
alternative
 
depositioning
 
at Ergo
.
 
 
Our large projects, most notably
 
the development of FWGR, are
 
subject to schedule delays and
 
cost overruns, and we
 
may face
constraints
 
in financing our existing
 
projects or new
 
business opportunities,
 
which could render
 
our projects unviable
 
or less profitable
 
than
planned.
 
The development of our projects are capital intensive
 
processes carried out over long durations
 
and requires us to commit significant
capital expenditure
 
and allocate
 
considerable
 
management
 
resources in
 
utilising our
 
existing experience
 
and know-how.
 
Projects like
 
the development
 
of Phase 2 of the
 
FWGR assets acquired
 
from Sibanye-Stillwater
 
is subject to
 
the risk of delays
 
and cost
overruns which
 
are inherent
 
in any large
 
construction
 
project including,
inter alia
:
 
shortages
 
or unforeseen
 
increases
 
in the cost
 
of equipment,
 
labor and
 
raw
 
materials;
 
unforeseen
 
design and
 
engineering
 
problems;
 
changes in
 
construction
 
plans that
 
may require
 
new or amended
 
planning permissions;
 
 
unforeseen
 
construction
 
problems;
 
unforeseen
 
delays
 
commissioning
 
sections
 
of the project;
 
inadequate
 
phasing of activities;
 
labor disputes;
 
inadequate
 
workforce
 
planning or
 
productivity
 
of workforce;
 
inadequate
 
management
 
practices;
 
natural disasters
 
and adverse
 
weather conditions;
 
national work
 
stoppages
 
as a result
 
of infectious
 
deceases and
 
pandemics
 
such as COVID-19;
 
failure or
 
delay of third-party
 
service providers;
 
and
 
changes to
 
regulations,
 
such as environmental
 
regulations.
 
The Phase 2 definitive
 
feasibility
 
study was completed
 
in the 3
rd
 
quarter of fiscal
 
year 2021, however
 
regulatory approval
 
still needs
 
to
be obtained
 
on the regulatory
 
approvals
 
for the submitted
 
amended design.
 
It is therefore
 
anticipated
 
that the construction
 
of the Regional
 
Storage
Facility, related
 
to Phase 2,
 
will be delayed
 
from fiscal
 
year 2022 to fiscal
 
year 2024.
 
10
 
In addition,
 
if the
 
assumptions
 
we make
 
in assessing
 
the viability
 
of our
 
projects,
 
including
 
those relating
 
to commodity
 
prices,
 
exchange
rates, interest rates, inflation
 
rates and
 
discount rates,
 
prove to
 
be incorrect or
 
need to
 
be significantly revised, this
 
may adversely affect
 
the
profitability or even
 
the viability of our projects.
 
The uncertainty and volatility
 
in the gold market makes it more difficult
 
to accurately evaluate
the project
 
economics
 
and increases
 
the risk that
 
the assumptions
 
underlying
 
our assessment
 
of the viability
 
of the project
 
may prove incorrect.
 
As the
 
development of FWGR is
 
particularly material to DRDGOLD, significant cost overruns
 
or adverse changes
 
in assumptions
affecting the
 
viability of
 
the project
 
could have
 
a material
 
adverse effect
 
on our business,
 
cash flows,
 
financial condition
 
and prospects.
 
 
Our operating cash flow and available banking facilities may be insufficient to meet our capital expenditure plans and requirements,
depending on the timing and cost of development of our existing projects and any further projects we may pursue. As a result, new sources of
capital may
 
be needed to meet
 
the funding requirements
 
of these projects
 
and to fund ongoing
 
business activities.
 
Our ability to
 
raise and service
significant
 
new sources
 
of capital
 
will be a
 
function of,
inter alia
, macroeconomic
 
conditions,
 
our credit
 
rating, our
 
gearing and
 
other risk
 
metrics,
the condition
 
of the financial
 
markets, future
 
gold prices,
 
the prospects
 
for our industry, our
 
operational
 
performance
 
and operating
 
cash flow and
debt position.
 
In the event of operating or financial
 
challenges, any dislocation
 
in financial markets
 
or new funding limitations,
 
our ability to pursue
new business
 
opportunities,
 
invest in
 
existing and
 
new projects,
 
fund our ongoing
 
business activities
 
and pay dividends,
 
could be
 
constrained,
 
any
of which could
 
have a material
 
adverse effect
 
on our business,
 
operating results
 
cash flows
 
and financial
 
condition.
 
We may not be able
 
to meet our
 
cash requirements
 
because of
 
a number of
 
factors, many
 
of which are
 
beyond our
 
control.
 
Management’s estimates on future cash flows are subject to risks and uncertainties,
 
such as the rand gold price, production volumes,
recovered grades and costs. If we are unable to meet our cash requirements
 
out of cash flows generated from our operations,
 
we would need to
fund our cash requirements
 
from financing sources
 
and any such financing
 
may not be permitted
 
under the terms
 
of our financing arrangements,
or may not
 
be available
 
on acceptable
 
terms, or at
 
all. If we
 
do not generate
 
sufficient cash
 
flows or have
 
access to adequate
 
financing,
 
our ability
to respond to
 
changing business and economic conditions, make
 
future acquisitions, react to
 
adverse operating results, meet our
 
debt service
obligations
 
and fund required
 
capital expenditures
 
or meet our
 
working capital
 
requirements
 
may be adversely
 
affected.
 
 
Any interruption
 
in gold production at any of our two mining
 
operations generating
 
cash flows, will have an adverse
 
effect on the
Company.
 
We have two mining
 
operations
 
generating
 
cash flows,
 
namely Ergo and
 
FWGR.
 
Ergo’s
 
reclamation
 
sites,
 
processing
 
plants,
 
pump
stations and
 
the Brakpan/Withok
 
TSF are linked
 
through pipeline
 
infrastructure.
 
The Ergo plant
 
is currently
 
our major
 
processing
 
plant. FWGR’s
reclamation
 
site, DP2 processing
 
plant, pump
 
stations and
 
the Driefontein
 
4 Tailings Storage
 
Facility are
 
linked through
 
pipeline infrastructure.
 
 
Our reclamation sites, plants,
 
pipelines
 
infrastructure and the
 
deposition/storage facilities are exposed to
 
numerous risks, including
operational
 
down time due
 
to planned or
 
unplanned maintenance,
 
destruction of
 
infrastructure,
 
spillages, higher
 
than expected
 
operating costs,
 
or
lower than
 
expected production as
 
a
 
result of
 
decreases in
 
extraction efficiencies due
 
to
 
imbalances in
 
the metallurgical process
 
as
 
well as
inconsistent
 
volume throughput
 
or other factors.
 
 
We
 
have suffered interruptions in gold production. For example: the Group temporarily halted its operations at Ergo and FWGR on
March 26, 2020 pursuant to the
 
announcement of the national lockdown in South African (“
Lockdown
”). Operations gradually recommenced
through April
 
and May 2020 (Refer
 
to Item 4D. ‘‘Property, plant
 
and production
 
– Ergo Production
 
and FWGR production”),
 
and have not been
impacted by subsequent
 
lockdowns during
 
fiscal 2021,
 
but we remain
 
subject to the
 
risk of further
 
lockdowns and
 
other restrictions
 
as a result of
the continuing
 
COVID-19 pandemic.
 
 
Our FWGR operations
 
are reliant on the use to and
 
access of Sibanye-Stillwater’s
 
mining infrastructure,
 
related services
 
including the
smelting and recovery of gold
 
from gold loaded carbon produced at
 
FWGR as well
 
as the
 
use of various
 
rights, permits and licenses held by
Sibanye Gold
 
pursuant to
 
which FWGR
 
operates,
 
pending the
 
transfer
 
to FWGR of
 
those that
 
are transferable.
 
Any disruption
 
in the supply
 
of, or
our ability to
 
use and access
 
the Sibanye-Stillwater
 
mining infrastructure,
 
related services
 
and rights, permits
 
and licenses,
 
could have an
 
adverse
impact on
 
our operations.
 
Each of these conditions or other weather
 
conditions or other interruptions
 
could adversely impact
 
our operations which could have
 
a
material
 
adverse effect
 
on our business,
 
operating results
 
and financial
 
condition.
 
Flooding at
 
our discontinued
 
underground
 
operations
 
may cause
 
us to incur
 
liabilities
 
for environmental
 
damage.
 
If the rate of rise of water is not controlled,
 
water from our abandoned
 
underground mining
 
areas could potentially
 
rise and come into
contact
 
with naturally
 
occurring
 
underground
 
water or
 
decant into
 
surrounding
 
underground
 
mining areas
 
and could
 
ultimately
 
also rise
 
to surface.
Progressive flooding
 
of
 
these abandoned
 
underground mining
 
areas and
 
surrounding underground mining
 
areas could
 
eventually cause
 
the
discharge of
 
polluted water
 
to the surface
 
and to local
 
water sources.
 
 
 
 
 
 
 
 
 
 
 
11
 
Should underground water levels
 
not reach a natural subterranean
 
equilibrium, and if underground
 
water rises to the surface, we may
face claims
 
relating
 
to environmental
 
damage.
 
Any such
 
claims
 
may have
 
a material
 
adverse
 
effect on
 
our business,
 
operating
 
results
 
and financial
condition.
 
An increase
 
in production
 
costs could
 
have an adverse
 
effect on our results
 
of operations.
 
 
An increase
 
in our production
 
costs will
 
impact our
 
results of
 
operations.
 
Production
 
costs are
 
affected by,
inter alia
:
 
 
labor stability,
 
productivity
 
and increases
 
in labor costs;
 
increases
 
in electricity
 
and water prices;
 
increases
 
in crude oil
 
and steel
 
prices;
 
changes in
 
regulation;
 
unforeseen
 
changes in
 
ore grades
 
and recoveries;
 
unexpected
 
changes in
 
the quality
 
or quantity
 
of reserves;
 
technical
 
production issues;
 
availability
 
and cost of
 
smelting and
 
refining arrangements;
 
environmental
 
and industrial
 
accidents;
 
gold theft;
 
environmental
 
factors; and
 
pollution.
 
Our production costs consist mainly of materials including reagents and steel, labor, electricity, specialized service providers,
 
water,
fuels, lubricants
 
and other oil
 
and petroleum-based
 
products. Production
 
costs have
 
in the past, and
 
could in the future,
 
increase at
 
rates in excess
of our annual
 
inflation rate
 
and impact
 
our results
 
of operation
 
and can result
 
in the restructuring
 
of these operations
 
at substantial
 
cost.
 
 
 
On February 28, 2021,
 
ERGO signed a one
 
year wage extension
 
agreement,
 
with organized labour,
 
for the period July
 
1, 2021 to June
30, 2022 with a 5.9% average increase
 
per annum across the ERGO workforce
 
with individual increases
 
ranging from 5.5%
 
to 7% per annum.
The transitional
 
arrangements
 
regarding wage
 
increases
 
with the workforce
 
at FWGR when
 
these employees
 
were incorporated
 
into DRDGOLD
have now come
 
to an end. As
 
a consequence,
 
negotiations
 
are currently
 
underway with
 
organized labour
 
at FWGR with
 
the intention
 
of trying to
reach a 3 year
 
wage agreement.
 
Increases in production
 
costs, if material,
 
will adversely
 
impact our results
 
of operations.
 
In addition, any initiatives
 
that we pursue to
reduce costs,
 
such as reducing
 
our labor force, a reduction
 
of the corporate
 
overhead, negotiating
 
lower price increases
 
for consumables
 
and cost
controls
 
may not
 
be successful
 
or sufficient
 
to offset
 
the increases
 
affecting
 
our operations
 
and could
 
adversely
 
affect our
 
business,
 
operating
 
results
and financial
 
condition.
 
 
Uncertainties
 
regarding the
 
impact of the
 
COVID-19 pandemic
 
on current
 
and future
 
operations
 
 
We face risks relating
 
to the COVID-19
 
pandemic and
 
measures taken
 
to address
 
the outbreak.
 
The Group temporarily halted
 
its operations at Ergo and FWGR on March 26, 2020 pursuant to the announcement
 
of the Lockdown.
Operations
 
gradually
 
recommenced
 
through
 
April
 
and May
 
2020 (Refer
 
to Item
 
4D. ‘‘Property,
 
plant
 
and production
 
– Ergo
 
Production
 
and FWGR
production”) and have not been impacted by subsequent lockdowns
 
during fiscal 2021.
 
We remain subject to the
 
risk of further lock-downs or
other restrictions
 
to our operations
 
and we also
 
face the risk
 
of disruptions
 
to our suppliers'
 
operations.
 
The table
 
below outlines
 
the number
 
of COVID-19
 
tests conducted,
 
the number
 
of COVID-19
 
positive
 
cases and
 
the COVID-19
 
related
fatalities
 
suffered by our
 
workforce:
 
COVID statistics
 
Ergo
FWGR
Corporate office
Consolidated
Number of tests conducted
 
576
176
3
755
Number positive cases
142
34
3
179
Fatalities
2
1
0
3
 
The risk related
 
to the impact of the COVID-19
 
pandemic is not isolated
 
to health and safety
 
for our employees
 
and disruptions to
 
our
operations, but has manifested as a risk in terms of
 
social stability as well as economic activity and growth both in South
 
Africa and globally.
While
 
we have
 
implemented
 
programs
 
to address
 
the risk
 
of COVID-19
 
infections
 
at our
 
operations,
 
the COVID-19
 
pandemic
 
may have
 
numerous
other consequences,
 
including adverse
 
impacts on our supply
 
chain and availability
 
of materials
 
used in our operations.
 
The risks associated
 
with
an anticipated “new
 
wave” of infection remain
 
highly uncertain
 
and could lead to increased
 
employee infection
 
risk decreasing productivity
 
and
could result
 
in further
 
restrictive
 
national lockdowns,
 
which could
 
lead to disruptions
 
in our business
 
operations.
 
We have benefitted
 
from the increase
 
in dollar gold
 
prices and
 
weakening of the
 
rand/dollar
 
exchange rate
 
driven at least
 
in part by the
impact of
 
the COVID-19
 
pandemic.
 
Dollar gold
 
prices may
 
decrease and
 
the rand/dollar
 
exchange rate
 
may strengthen
 
as the global
 
impact of
 
the
COVID-19 pandemic
 
is alleviated.
 
Our operations
 
are subject
 
to extensive
 
environmental
 
regulations
 
which could
 
impose significant
 
costs and liabilities.
12
 
Our operations are subject to increasingly extensive laws and regulations governing the protection
 
of the environment under various
state, provincial
 
and
 
local
 
laws,
 
which
 
regulate air
 
and
 
water
 
quality,
 
hazardous waste
 
management and
 
environmental rehabilitation and
reclamation.
 
Our mining and related activities have
 
the potential to impact the environment, including land,
 
habitat, streams and environment
near the mining sites. Failure to comply with environmental
 
laws or delays in obtaining,
 
or failures to obtain
 
government permits
 
and approvals
may adversely impact
 
our operations.
 
In addition, the regulatory
 
environment
 
in which we operate
 
could change in ways
 
that could substantially
increase
 
costs of compliance,
 
resulting in
 
a material
 
adverse effect
 
on our profitability.
 
We have incurred, and expect to incur in the future, expenditures to comply with these
 
environmental laws and regulations.
 
We have
estimated our aggregate
 
group Provision for
 
Environmental Rehabilitation at a
 
net present
 
value of
 
R570.8 million which is
 
included in
 
our
statement of
 
financial position
 
as
 
at
 
June
 
30,
 
2021
 
(Refer
 
to
 
Item
 
18.
 
‘‘Financial
 
Statements -
 
Note
 
11
 
 
Provision
 
for
 
environmental
rehabilitation”).
 
However, the ultimate amount of rehabilitation costs may in the future exceed the current estimates due to factors beyond our
control, such
 
as changing
 
legislation, higher than
 
expected cost
 
increases, or
 
unidentified rehabilitation costs. We
 
fund these
 
environmental
rehabilitation
 
costs
 
by making
 
contributions
 
over the
 
life
 
of the
 
mine to
 
environmental
 
trust funds
 
or funds
 
held in
 
insurance
 
instruments
 
established
for our
 
operations. If any
 
of our
 
operations are prematurely closed, the
 
rehabilitation funds may be
 
insufficient to meet
 
all the
 
rehabilitation
obligations
 
of those
 
operations.
 
The closure
 
of mining
 
operations,
 
without sufficient
 
financial
 
provision for
 
the funding
 
of rehabilitation
 
liabilities,
or unacceptable damage
 
to the environment, including pollution
 
or environmental degradation,
 
may expose us and our directors to prosecution,
litigation
 
and potentially
 
significant
 
liabilities.
 
 
Damage to
 
tailings dams
 
and excessive
 
maintenance
 
and rehabilitation
 
costs could
 
result in
 
lower production
 
and health,
 
safety and
environmental
 
liabilities.
Our tailings
 
facilities
 
are exposed to
 
numerous risks
 
and events,
 
the occurrence
 
of which may
 
result in the
 
failure, breach
 
or damage of
such a facility. These may include sabotage, failure by our employees
 
to adhere to the codes of practice and natural disasters such as excessive
rainfall and seismic events, any of which could
 
force us to stop
 
or limit operations. In addition, the dams could
 
overflow or a side wall
 
could
collapse and the health
 
and safety of our employees and
 
communities living
 
around these dams could
 
be jeopardized. In the event
 
of damage to
our tailings facilities, our operations will be adversely affected and this in turn could have a material adverse effect on our
 
business, operating
results and
 
financial
 
condition.
 
Due to the
 
nature of our
 
business, our
 
operations
 
face extensive
 
health and safety
 
risks and regulation
 
of those risks.
Gold mining
 
is exposed
 
to
 
numerous risks
 
and events,
 
the occurrence
 
of
 
which may
 
result in
 
the death
 
of, or
 
personal injury,
 
to
employees.
 
According to
 
section 54
 
of the Mine,
 
Health and
 
Safety Act
 
of 1996, if
 
an inspector
 
believes
 
that any
 
occurrence,
 
practice or
 
condition
at a mine
 
endangers
 
or may endanger
 
the health
 
or safety
 
of any person
 
at the mine,
 
the inspector
 
may give
 
any instruction
 
necessary
 
to protect
 
the
health or safety
 
of persons at
 
the mine. These
 
instructions
 
could include
 
the suspension
 
of operations
 
at the whole
 
or part of the
 
mine. Health
 
and
safety incidents
 
could lead to mine operations
 
being halted and that will
 
increase our unit production
 
costs, which could
 
have a material adverse
effect on our
 
business,
 
operating results
 
and financial
 
condition.
 
Events may
 
occur for which
 
we are not
 
insured which
 
could affect
 
our cash flows
 
and profitability.
 
Because of
 
the nature of
 
our business,
 
we may become
 
subject to liability
 
for pollution
 
or other hazards
 
against which
 
we are unable
 
to
insure or are
 
not insured, including those in
 
respect of past mining activities. Our existing property,
 
business interruption and other insurance
contains certain
 
exclusions and
 
limitations on coverage.
 
The insured value for property
 
and loss of profits
 
due to business interruption
 
is R11.35
billion, with a total
 
loss limit of R650 million
 
for the 2022 fiscal
 
year. Business interruption
 
is only covered from
 
the time the loss occurs
 
and is
subject to time
 
and amount deductibles
 
that vary between
 
categories.
 
To cover legal liability
 
to third parties
 
for damage, injury, illness
 
or death a
total of R1.5
 
billion insurance
 
cover is in
 
place for
 
the 2020 fiscal
 
year,
 
subject to
 
certain exclusions
 
and limitations
 
on coverage.
 
 
Insurance coverage
 
may not cover the extent of claims brought against us, including
 
claims for environmental,
 
industrial or pollution
related accidents,
 
for which coverage is not available. If we are required
 
to meet the costs of claims, which exceed our insurance
 
coverage, this
could have
 
a material
 
adverse effect
 
on our business,
 
operating results
 
and financial
 
condition.
If we are
 
unable to attract
 
and retain
 
key personnel
 
our business
 
may be harmed.
 
The success
 
of our
 
business
 
will depend,
 
in large
 
part, upon
 
the skills
 
and efforts
 
of a
 
small
 
group of
 
management
 
and technical
 
personnel
including the positions
 
of Chief Executive Officer
 
and Chief Financial Officer. In addition, we compete with mining and other companies on a
global basis to
 
attract and retain key
 
human resources at
 
all levels with
 
appropriate technical skills and operating
 
and managerial experience
necessary to operate the
 
business. Factors critical to retaining our present staff and attracting additional highly qualified
 
personnel include our
ability to
 
provide these individuals with
 
competitive compensation arrangements, and other benefits. If
 
we are
 
not successful in
 
retaining or
attracting highly
 
qualified individuals
 
in key management positions,
 
our business may be harmed.
 
We do not maintain “key man” life insurance
policies on
 
any members
 
of our executive
 
team. The loss
 
of any of our
 
key personnel
 
could delay
 
the execution
 
of our business
 
plans, which
 
may
result in
 
decreased
 
production,
 
increased
 
costs and decreased
 
profitability.
 
We are subject to
 
operational
 
risks
 
associated
 
with our flotation
 
and fine-grind
 
(FFG) project.
 
Our flotation
 
and fine-grind
 
project, implemented
 
in fiscal
 
year 2014, is
 
designed to
 
improve extraction
 
efficiencies.
 
13
 
Certain
 
components
 
of the FFG
 
were temporarily
 
halted in
 
the first
 
quarter
 
of fiscal
 
year 2020
 
to perform
 
an evaluation
 
and compare
 
the
additional revenues earned from additional gold extracted
 
from the most recently integrated reclamation sites compared to the cost incurred to
operate the FFG circuit.
 
The remaining components
 
of the FFG continue to operate.
 
Testing on the newly integrated material
 
has suggested that
some of these
 
halted components
 
will only operate
 
in subsequent
 
years once the
 
related reclamation
 
sites have
 
been brought
 
online in accordance
with the current life of mine plan for ERGO. These halted components
 
are classified as idle assets until
 
they are brought back into operation
 
as
described.
 
The
 
success of
 
the
 
FFG is
 
directly dependent
 
on
 
the
 
material type
 
and
 
material mix
 
processed through
 
it.
 
Therefore, the
 
halted
components will
 
remain idle
 
pending the continuation
 
and conclusion
 
of various test
 
work regarding
 
the material
 
type and material
 
mix of future
reclamation
 
sites.
 
Firm decisions
 
have also
 
not yet
 
been made
 
by the executive
 
committee
 
and the
 
Board of
 
Directors
 
on the
 
future of
 
the FFG.
 
We
remain subject
 
to operations
 
risks relating
 
to the FFG
 
project.
A disruption
 
in our information
 
technology
 
systems, including
 
incidents
 
related to
 
cyber security,
 
could adversely
 
affect our
business
 
operations.
 
We
 
rely
 
on
 
the
 
accuracy,
 
availability and
 
security
 
of
 
our
 
information technology
 
systems. Despite
 
the
 
measures
 
that
 
we
 
have
implemented,
 
including
 
those
 
related
 
to cyber
 
security, our
 
systems
 
could be
 
breached
 
or damaged
 
by computer
 
viruses
 
and systems
 
attacks,
 
natural
or man-made
 
incidents,
 
disasters
 
or unauthorized
 
physical or
 
electronic
 
access.
 
 
Any system
 
failure, accident or
 
security breach could
 
result in
 
business disruption, theft
 
of our
 
intellectual property, trade
 
secrets
(including
 
our proprietary
 
technology),
 
unauthorized
 
access to,
 
or disclosure
 
of, personnel
 
or supplier
 
information,
 
corruption
 
of our data
 
or of our
systems,
 
reputational
 
damage
 
or litigation.
 
We may also
 
be required
 
to incur
 
significant
 
cost to
 
protect
 
against
 
or repair
 
the damage
 
caused
 
by these
disruptions or
 
security breaches in
 
the future,
 
including, for
 
example, rebuilding internal
 
systems, implementing additional threat
 
protection
measures, defending
 
against litigation,
 
responding to regulatory
 
inquiries or
 
actions, paying
 
damages, or taking
 
other remedial
 
steps with respect
to third parties.
 
 
These threats
 
are constantly
 
evolving,
 
thereby
 
increasing
 
the difficulty
 
of successfully
 
defending
 
against
 
them or
 
implementing
 
adequate
preventative
 
measures and
 
we remain
 
subject to
 
additional
 
known or unknown
 
threats.
 
In some instances,
 
we may be
 
unaware of
 
an incident
 
or its
magnitude and effects. We
 
may be
 
susceptible to new and emerging
 
risks,
 
including cyber-attacks and phishing, in the evolving landscape of
cybersecurity
 
threats. Given
 
the increasing
 
sophistication
 
and evolving
 
nature of
 
these threats,
 
DRDGOLD cannot
 
rule out the
 
possibility
 
of them
occurring in the future. An extended
 
failure of critical system
 
components, caused by accidental,
 
or malicious actions, including
 
those resulting
from a cyber
 
security attack,
 
could result
 
in a significant
 
environmental
 
incident, commercial
 
loss or interruption
 
to operations.
 
In addition,
 
from
 
time
 
to time,
 
we implement
 
updates
 
to our
 
information
 
technology
 
systems
 
and software,
 
which
 
can disrupt
 
or shutdown
our information
 
technology
 
systems.
 
Information
 
technology
 
system disruptions,
 
if not
 
appropriately
 
addressed
 
or mitigated,
 
could have
 
a material
adverse effect
 
on our operations.
Risks related
 
to the gold
 
mining industry
 
 
A change in
 
the dollar
 
price of gold,
 
which in the
 
past has fluctuated
 
widely, is beyond
 
our control.
Historically,
 
the gold
 
price has
 
fluctuated
 
widely and
 
is affected
 
by numerous
 
industry factors
 
over which
 
we have
 
no control
 
including:
 
a significant
 
amount of above-ground
 
gold in the
 
world that
 
is used for
 
trading by investors;
 
the physical supply of gold from world-wide production and scrap sales, and the purchase, sale or divestment by central banks of their gold
holdings;
 
the demand
 
for gold for
 
investment
 
purposes, industrial
 
and commercial
 
use, and in
 
the manufacturing
 
of jewelry;
 
speculative
 
trading activities
 
in gold;
 
 
the overall
 
level of forward
 
sales by other
 
gold producers;
 
 
the overall
 
level and cost
 
of production
 
of other gold
 
producers;
 
 
international
 
or regional
 
political
 
and economic
 
events or
 
trends;
 
 
the strength
 
of the dollar
 
(the currency
 
in which gold
 
prices generally
 
are quoted)
 
and of other
 
currencies;
 
 
financial
 
market expectations
 
regarding the
 
rate of inflation;
 
 
interest rates;
 
 
gold hedging and de-hedging by gold producers; and
 
actual or expected gold sales by central banks and the International Monetary Fund.
During fiscal year 2021 the
 
gold price reached a
 
high of
 
U$2,072 per ounce and
 
a low
 
of U$1,676.
 
We
 
benefited from a sustained
upswing in
 
gold price
 
in the
 
first quarter,
 
and in
 
the fourth
 
quarter, following
 
the global
 
response
 
to the
 
COVID-19
 
pandemic,
 
the gold
 
price surged
further to
 
all-time highs.
 
 
Investors globally, as they have in so many previous times
 
of crisis, turned to gold and gold stocks as a safe haven asset,
 
leading to a
surge in the
 
average gold
 
price during
 
fiscal 2020
 
and fiscal
 
2021. The rand/dollar
 
exchange rate
 
remained volatile
 
throughout fiscal
 
2021 mainly
as a result of economic
 
uncertainty and perceived
 
political instability,
 
global market
 
slowdown sentiment,
 
tensions between
 
the USA and China,
low economic growth,
 
and a seemingly terminally
 
distressed Eskom.
 
Further volatility
 
in the Rand was fueled by Moody’s downgrade
 
of South
Africa’s sovereign credit
 
rating to
 
sub-investment grade as
 
a result
 
of “continuing deterioration in
 
fiscal strength and
 
structurally very weak
economic growth.”
 
14
 
COVID-19 (or
 
an alleviation
 
of the pandemic)
 
or other factors
 
mentioned above
 
could put negative
 
pressure on
 
the price of
 
gold or the
USD –
 
rand exchange
 
rate in
 
the future.
 
Our profitability
 
may be
 
negatively
 
impacted
 
by a
 
decline
 
in the
 
gold price
 
as we
 
incur losses
 
when revenue
from gold sales
 
drops below
 
the cost of
 
production for
 
an extended
 
period.
 
The
 
exploration
 
of
 
mineral
 
properties
 
is
 
highly
 
speculative
 
in
 
nature,
 
involves
 
substantial
 
expenditures,
 
and
 
is
 
frequently
unproductive.
 
Exploration is highly speculative
 
in nature and requires
 
substantial expenditure for drilling,
 
sampling and analysis of
 
ore bodies to
quantify the extent of the gold reserve. Many gold
 
exploration
 
programs,
 
including some
 
of ours, do
 
not result
 
in the discovery
 
of mineralization
and any mineralization
 
discovered may not be of sufficient
 
quantity or quality to be mined profitably. If we discover
 
a viable deposit, it usually
takes several years from the initial phases of exploration
 
until production is possible.
 
During this
 
time, the economic
 
feasibility of
 
production
may change.
 
 
Moreover, we rely on
 
the evaluations of professional geologists, geophysicists, and
 
engineers for estimates in determining whether
to commence or continue mining. These estimates
 
generally rely on scientific and economic assumptions, which
 
in some instances may not be
correct, and
 
could result
 
in the
 
expenditure of
 
substantial amounts
 
of money
 
on a
 
deposit before
 
it can
 
be determined
 
with any
 
degree of
accuracy whether
 
the deposit
 
contains economically
 
recoverable mineralization.
 
Uncertainties as
 
to the
 
metallurgical recovery
 
of any
 
gold
discovered may not warrant mining based on available technology.
 
Our future
 
growth and profitability
 
will depend,
 
in part, on
 
our ability
 
to identify
 
and acquire
 
additional
 
mineral rights,
 
and on the costs
and results
 
of our continued
 
exploration
 
and development
 
programs. Our business focuses
 
mainly on the extraction of gold from tailings, which
is a
 
volume driven
 
exercise. Only
 
significant deposits
 
within proximity
 
of services
 
and infrastructure
 
that contain
 
adequate gold
 
content to
justify the significant capital investment associated with plant,
 
reclamation and deposition infrastructure are suitable for exploitation
 
in terms
of our model. There is a limited supply of these deposits which may inhibit exploration and developments,
 
especially in a declining gold price
environment.
 
 
Because of these uncertainties, we may not successfully acquire additional mineral rights, or identify new Proven and Probable Ore
Reserves in sufficient quantities to justify commercial operations in any of our operations. The costs incurred on exploration activities that do
not identify commercially exploitable reserves of gold are not likely to be recovered and therefore are likely to be impaired.
 
There is inherent uncertainty in Ore Reserve estimates.
 
Our Ore Reserve figures described in this document
 
are the best estimates of our current management as
 
of the dates stated and are
reported
 
in
 
accordance
 
with
 
the
 
requirements
 
of
 
Industry
 
Guide
 
7
 
of
 
the
 
SEC.
 
These
 
estimates
 
may
 
not
 
reflect
 
actual
 
reserves
 
or
 
future
production.
 
 
Should we encounter mineralization
 
or formations different from those
 
predicted by past drilling,
 
sampling and similar examinations,
reserve estimates
 
may have to be adjusted
 
and mining plans
 
may have to be altered
 
in a way that might ultimately
 
cause our reserve
 
estimates to
decline. Moreover,
 
if the rand price
 
of gold declines,
 
or stabilizes
 
at a price
 
that is lower
 
than recent
 
levels,
 
or those assumed
 
in our mining
 
plans,
or if our
 
labor, water, steel,
 
electricity
 
and other
 
production
 
costs increase
 
or recovery
 
rates decrease,
 
it may become
 
uneconomical
 
to recover
 
Ore
Reserves,
 
particularly
 
those containing
 
relatively
 
lower grades
 
of mineralization.
 
Under these
 
circumstances,
 
we would be
 
required to
 
re-evaluate
our Ore Reserves. Short-term
 
operating factors
 
relating to the ability
 
to reclaim our Ore Reserves,
 
at the required rate,
 
such as an interruption
 
or
reduction in
 
the supply of
 
electricity
 
or a shortage
 
of water may
 
have the effect
 
that we are unable
 
to achieve critical
 
mass, which may
 
render the
recovery of
 
Ore Reserve,
 
or parts of the
 
Ore Reserve
 
no longer feasible,
 
which could
 
negatively
 
affect production
 
rate and costs
 
and decrease
 
our
profitability during any given period. Estimates
 
of reserves are based on drilling results and because unforeseen conditions may occur in these
mine
 
dumps that
 
may not
 
have been
 
identified
 
by the drilling
 
results,
 
the actual
 
results may
 
vary from
 
the initial
 
estimates.
 
These factors have and
could result in reductions in our Ore Reserve estimates and as a result, our production, which could in turn adversely impact the total value of
our mining asset base and our business, operating results and financial condition.
 
Gold mining is susceptible to numerous events that could have an adverse impact on a gold mining business.
 
The business of gold
 
mining is exposed to numerous
 
risks and events, the
 
occurrence of which
 
may result in the
 
death of or personal
injury to
 
employees, the
 
loss of mining
 
and reclamation
 
equipment, damage
 
to or
 
destruction of
 
mineral properties
 
or production
 
facilities,
monetary losses,
 
delays in
 
production, environmental
 
damage, loss
 
of the
 
license to
 
mine and
 
potential legal
 
claims. The
 
risks and
 
events
associated with the business of gold mining include:
 
environmental
 
hazards and pollution,
 
including dust generation,
 
toxic chemicals,
 
discharge of metals, pollutants,
 
radioactive materials
and other hazardous
 
material
 
into the air
 
and water;
flooding, landslides,
 
sinkhole formation,
 
ground subsidence,
 
ground and
 
surface water
 
pollution and
 
waterway
 
contamination;
a decrease
 
in labor productivity
 
due to labor
 
disruptions,
 
work stoppages,
 
disease, slowdowns
 
or labor strikes;
unexpected
 
decline of
 
ore grade;
metallurgical
 
conditions or
 
lower than
 
expected gold
 
recovery;
failure of
 
unproven or evolving
 
technologies;
mechanical
 
failure or breakdowns
 
and ageing
 
infrastructure;
energy and electrical
 
power supply
 
interruptions;
availability
 
of water;
injuries to
 
employees
 
or fatalities
 
due to falls
 
from heights
 
and accidents
 
relating to
 
mobile machinery
 
or electrocution
 
or other causes;
15
activities
 
of illegal
 
or artisanal
 
miners;
material
 
and equipment
 
availability;
legal and
 
regulatory
 
restrictions
 
and changes
 
to such restrictions;
social or
 
community disputes
 
or interventions;
accidents
 
caused from
 
the collapse
 
of tailings
 
dams;
pipeline failures
 
and spillages;
safety-related
 
stoppages;
 
and
corruption, fraud and theft including
 
gold bullion
 
theft.
The occurrence of any of these
 
hazards could delay production,
 
result in losses, or increase
 
production costs or decrease
 
earnings and
may result
 
in significant
 
legal claims
 
and adversely
 
impact our
 
business results
 
of operations
 
and financial
 
condition.
Risks related
 
to doing business
 
in South Africa
 
 
Political or
 
economic
 
instability
 
in South Africa
 
may reduce
 
our production
 
and profitability.
 
We are incorporated
 
in South
 
Africa
 
and all
 
our operations
 
are currently
 
in South
 
Africa.
 
As a
 
result,
 
political
 
and economic
 
risks relating
to South Africa could have a significant
 
effect on our production and profitability. Large
 
parts of the South African population
 
are unemployed
and do not
 
have access
 
to adequate
 
education,
 
health care,
 
housing and
 
other services,
 
including water
 
and electricity.
 
Government
 
policies aimed
at alleviating and
 
redressing the disadvantages suffered by
 
most citizens under previous
 
governments may increase our
 
costs and
 
reduce our
profitability. In
 
recent years,
 
South Africa
 
has experienced
 
high levels of
 
crime. These
 
problems may
 
impede fixed
 
inward investment
 
into South
Africa and
 
increase emigration
 
of skilled
 
workers and
 
as a result,
 
we may have
 
difficulties
 
retaining qualified
 
employees.
 
 
The COVID-19
 
pandemic has
 
increased the
 
risk of
 
social unrest
 
in
 
our surrounding communities already
 
created from
 
a growing
frustration of society
 
at large on slow reformative
 
action being taken
 
by all spheres of the
 
South African
 
government,
 
in particular, in combating
high unemployment
 
particularly
 
in the youth
 
of the country. Unemployment
 
rates in South
 
Africa reached
 
an all-time
 
high of 34.4%
 
in June 2021
due in part, to South Africa’s COVID-19 related economic downturn.
 
This frustration was a contributing
 
factor that led to social unrest, people
committing crimes, vandalising property,
 
and damaging
 
infrastructure around our
 
operations during July
 
2021. There
 
is no
 
assurance that
 
a
prolonged economic
 
downturn will
 
not result in
 
an extended
 
period of high
 
unemployment,
 
further exacerbating
 
anti-mining sentiments
 
in South
Africa. Furthermore,
 
the rise of
 
ESG factors
 
in investment
 
decisions may
 
result in divestment
 
in the mining
 
sector.
Inflation can
 
adversely
 
affect us.
 
The inflation rate in South Africa is relatively high compared to developed,
 
industrialized
 
countries. As of June 30, 2021, the annual
Consumer Price Inflation Index (“
CPI
”),
 
stood at 4.9%
 
compared to 2.2%
 
in June 2020
 
and 4.5%
 
in June 2019.
 
Annual CPI was 5.0%
 
as at
September 30, 2021.
 
Inflation in South
 
Africa generally
 
results
 
in an increase in our rand
 
operational
 
costs, unless
 
such inflation is
 
accompanied
by a concurrent devaluation of the rand against
 
the dollar or an increase in the dollar price of gold. Higher and sustained
 
inflation in the future,
with a consequent increase
 
in operational costs could have
 
a material adverse effect
 
on our results of operations
 
and our financial condition
 
and
could result
 
in operations
 
being discontinued
 
or reduced
 
or rationalized,
 
which could
 
reduce our
 
profitability.
 
The treatment of
 
occupational health diseases and
 
the potential liabilities related
 
to occupational health
 
diseases may have
 
an
adverse effect
 
on the results
 
of our operations
 
and our financial
 
condition.
We may be subject
 
to claims
 
relating to occupational
 
health diseases
 
and we are
 
currently
 
subject to
 
legal action
 
described below.
In January 2013, DRDGOLD, East Rand Proprietary Mines Limited (“
DRDGOLD Respondents
”) and 23
 
other mining companies
(“
Other Respondents
”) (collectively
 
referred
 
to as "
Respondents
") were
 
served with
 
a court
 
application
 
issued in
 
the High
 
Court of
 
South Africa
for
 
a
 
class certification
 
on
 
behalf of
 
former mineworkers
 
and
 
dependents of
 
deceased mineworkers
 
(“
Applicants
”).
 
In
 
the
 
application the
Applicants allege
 
that
 
the
 
Respondents conducted
 
underground mining
 
operations in
 
a
 
negligent and
 
complicit manner
 
causing the
 
former
mineworkers to contract
 
occupational lung diseases.
 
The Applicants have as yet not quantified
 
the amounts which they are demanding
 
from the
Respondents
 
in damages.
On May
 
3, 2018, former mineworkers and dependents of
 
deceased mineworkers (“
Applicants
”) and
 
Anglo American South Africa
Limited,
 
AngloGold
 
Ashanti
 
Limited,
 
Sibanye
 
Gold Limited
 
trading as
 
Sibanye-Stillwater,
 
Harmony Gold
 
Mining Company
 
Limited,
 
Gold Fields
Limited, African Rainbow Minerals Limited and certain of their affiliates (“
Settling Companies
”) settled the class certification application in
which the Applicants
 
in each sought to certify
 
class actions against
 
gold mining houses
 
cited therein on behalf
 
of mineworkers who
 
had worked
for any of
 
the particular
 
respondents
 
and who suffer
 
from any occupational
 
lung disease,
 
including silicosis
 
or tuberculosis.
The DRDGOLD
 
Respondents,
 
are not a
 
party to the
 
settlement
 
between the
 
Applicants
 
and Settling
 
Companies.
 
The dispute,
 
insofar as
the class certification
 
application
 
and appeal
 
thereof is concerned,
 
still stands
 
and has not
 
terminated
 
in light of the
 
settlement
 
agreement (refer to
Item 18. “Financial
 
Statements
 
- Note 26 – Contingencies”).
An adverse judgment in the claim described above or any other claim could have an adverse impact on us.
 
 
We have experienced
 
an increase
 
in organised
 
crime activities
 
which have
 
started to
 
target gold
 
plants.
16
 
In October
 
2019, a number
 
of companies,
 
including our
 
Knights and
 
Ergo plants,
 
were subject
 
to armed attacks
 
targeting the
 
gold in the
plants or high-grade
 
gold bearing material.
 
These incidents were
 
very well organised and
 
in all the incidents the
 
thieves were armed.
 
In some of
the incidents
 
employees
 
of companies
 
were also held
 
hostage until
 
the targeted
 
material was
 
obtained. In
 
the 2019 incident,
 
a security
 
officer was
fatally injured.
 
 
Any such incidents have
 
and may
 
still result in losses
 
of gold
 
or other damage which
 
could have a
 
material adverse impact on our
business,
 
financial
 
results or
 
condition.
 
 
Theft at our
 
sites, particularly
 
of copper, may result
 
in greater
 
risks to employees
 
or interruptions
 
in production.
 
Crime statistics
 
in South Africa
 
indicate an
 
increase
 
in theft.
 
This together
 
with price
 
increases
 
for copper
 
has resulted
 
in theft
 
of copper
cable. Our operations
 
experience high incidents
 
of copper cable theft
 
despite the implementation
 
of security measures.
 
In addition to the general
risk to
 
employees’
 
lives in
 
an area
 
where theft
 
occurs, we
 
may suffer
 
production
 
losses and
 
incur additional
 
costs as
 
a result
 
of power
 
interruptions
caused by
 
cable theft
 
and theft
 
of bolts used
 
for the pipeline.
Power stoppages
 
or shortages
 
or increases
 
in the cost
 
of power could
 
negatively
 
affect our results
 
and financial
 
condition.
Our mining operations
 
are dependent on electrical
 
power supplied by Eskom,
 
South Africa’s state-owned
 
utility company. As a result
of insufficient generating
 
capacity, owing to poor maintenance and lagging capital
 
infrastructure
 
investment, South Africa has faced significant
disruptions
 
in electricity
 
supply in
 
the past
 
and Eskom
 
has warned
 
that the
 
country could
 
continue to
 
face disruptions
 
in electrical
 
power supply
 
in
the foreseeable
 
future.
The security
 
of future
 
power supply
 
as well
 
as the
 
cost thereof
 
remains a
 
risk and
 
may have
 
major implications
 
for our
 
operations,
 
which
may result in
 
significant production losses.
 
The country’s
 
current reserve capacity may be
 
insufficient and the
 
risk of
 
electricity stoppages is
expected to continue for the foreseeable
 
future. Supply interruptions
 
because of this as well as an aging and poorly maintained distribution
 
grid
may pose a
 
significant
 
risk to the
 
operations.
 
The group has a load-curtailment agreement in place with Eskom in terms of which we
 
reduce power consumption by between 10%
and 20% when the grid is under pressure, but Eskom maintains uninterrupted power supply to the operations.
 
The National
 
Energy Regulator
 
of South
 
Africa
 
(“
NERSA
”) initially
 
approved
 
an average
 
tariff increase
 
of 5.2%
 
average
 
effective
 
April
1, 2021.
 
In July 2020,
 
the High
 
Court of
 
South Africa
 
ordered that
 
the average
 
tariff for
 
April 1,
 
2021 be increased
 
by a further
 
9.8%. NERSA
 
has
applied for leave to appeal
 
this ruling. These increases
 
have had an adverse effect on our production
 
costs and similar or higher
 
future increases
could have
 
a material
 
adverse effect
 
on our operating
 
results and
 
financial condition.
 
Subsequently, several
 
notable developments
 
have occurred:
The South African government provided Eskom with an additional R69 billion bailout over a three-year period, from 2019 to
 
2021.
Eskom subsequently
 
challenged the
 
multi-year price
 
determination (MYPD), Regulatory
 
Clearing Account
 
(RCA) and
 
NERSA’s
treatment of
 
the bailout as a
 
tariff subsidy in
 
South African
 
court. On July
 
28, 2020, the
 
South African
 
court ruled in
 
favour of Eskom,
allowing the
 
company to
 
recover the
 
additional
 
R69 billion
 
in a phased
 
manner through
 
future tariff
 
increases.
 
The revenue
 
recovery of
R10 billion
 
(of the
 
R69 billion)
 
would occur
 
for the
 
2021 to
 
2022 year.
 
The remaining
 
R59 billion
 
revenue
 
recovery
 
would occur
 
outside
the MYPD
 
period,
 
likely
 
in the
 
2022 to
 
2023 year
 
and 2023
 
to 2024
 
year. Having
 
accepted
 
the decision
 
on the
 
merits
 
of the
 
case, NERSA
appealed the
 
remedy.
NERSA has additionally allowed
 
the revenue recovery of R6.6 billion
 
in the 2021 to 2022 year (half of NERSA’s determination of a
R13.3 billion RCA amount for the period from
 
2018 to 2019), instead of the
 
R27.3 billion amount that Eskom had applied for.
 
The
remaining half
 
will be recovered
 
in the 2022 to
 
2023 year.
Additionally, in June
 
2020, Eskom
 
succeeded in
 
obtaining a judgment
 
to recover a
 
portion of the
 
additional shortfall
 
of R35 billion
 
for
the periods from 2014 to
 
2015, 2015 to 2016
 
and 2016 to 2017,
 
where NERSA had initially determined the RCA amount for
 
those
periods to be
 
R32 billion when
 
Eskom had applied
 
for an amount of
 
R67 billion. Approximately
 
R4.7 billion of
 
the determination
 
will
be liquidated
 
in the 2021
 
to 2022 year.
 
Combined, these
 
outcomes will
 
impact the
 
tariff increase
 
implemented on
 
1 April 2021,
 
which resulted
 
in an increase
 
of approximately
15%, instead of the initially
 
previously approved
 
5.2% increase. As a result
 
of the judgments rendered
 
in favour of Eskom, and the potential
 
for
further RCA
 
applications,
 
it is likely
 
that Eskom’s electricity
 
tariffs will
 
increase above-inflation
 
in the future.
 
 
In February
 
2019, the
 
President of
 
South Africa
 
announced the
 
vertical unbundling of
 
Eskom. While
 
full state
 
ownership will
 
be
maintained, the unbundling is expected to result in the
 
separation of Eskom’s generation, transmission and distribution functions into separate
entities,
 
which may require
 
legislative
 
and/or policy
 
reform. The
 
unbundling
 
is currently
 
underway
 
and is expected
 
to be completed
 
by December
2021 for the
 
legal separation
 
of the transmission
 
function, and
 
December 2022
 
for the generation
 
and distribution
 
functions.
 
Poor reliability
 
of the
supply of electricity and instability
 
in prices through the unbundling process
 
is expected to continue. Eskom’s coal fired power plants have not
performed
 
well for
 
a number
 
of years,
 
with national
 
rotational
 
power cuts
 
(load shedding)
 
having been
 
implemented
 
intermittently
 
through the
 
last
number of
 
fiscal
 
years.
 
Should we
 
experience
 
further
 
power tariff
 
increases,
 
its business
 
operating
 
results and
 
financial
 
condition
 
may be
 
adversely
impacted.
17
Ergo
 
is
 
currently
 
disputing
 
the
 
electricity
 
tariff
 
charged
 
by
 
Ekurhuleni
 
Metropolitan
 
Municipality
 
(refer
 
to
 
Item 18.
 
“Financial
Statements
 
- Note 24 –
 
Payments made
 
under protest”).
Risks related
 
to climate
 
change
Extreme weather
 
Our
 
operations are
 
also
 
exposed to
 
severe weather
 
events that
 
could
 
interrupt production. Major
 
property,
 
infrastructure and/or
environmental damage
 
as well as loss of human life could be caused by extreme weather events.
 
Extreme weather conditions
 
such as droughts,
extreme
 
rainfall
 
and high
 
wind volumes
 
are on
 
the increase.
 
Specifically,
 
the increase
 
in intensity
 
of events,
 
such as
 
thunderstorms
 
on the
 
Highveld,
where our operations are situated.
 
It is believed that the long-term upward
 
trend in global temperature
 
is directly correlated
 
with the increase in
global severe
 
weather events
 
both in terms
 
of magnitude
 
and frequency.
 
 
For example,
 
dry weather
 
conditions
 
have prompted
 
level 2
 
water restrictions
 
on residential
 
water users
 
in the Johannesburg
 
area. These
water restrictions remain in place as at September 30, 2021.
 
Severe thunderstorms
 
and high winds,
 
especially during the summer rainy season,
may also cause damage to
 
operation infrastructure that may in turn cause an
 
interruption in the production of gold.
 
Such incidents and other
weather
 
events
 
may damage
 
the facility
 
and
 
may result
 
in water
 
shortages
 
which can
 
impact our
 
operations
 
and cause
 
the interruption
 
of deposition
and gold production
 
until the
 
facility is
 
repaired
 
or alternative
 
deposition is
 
brought online.
Scarcity
 
of water may
 
negatively
 
affect our
 
operations.
South Africa faces water shortages, which may lead to the
 
revision of water usage strategies by several sectors in the South African
economy, including electricity generation and municipalities.
 
This may result in rationing or increased water costs in the
 
future. Such changes
would adversely
 
impact our
 
surface retreatment
 
operations,
 
which use
 
water to
 
transport
 
the slimes
 
or sand from
 
reclaimed
 
areas to the
 
processing
plant and to the tailings facilities.
 
In addition, as our gold plants and piping
 
infrastructure
 
were designed to carry certain
 
minimum throughputs,
any reductions
 
in the volumes
 
of available
 
water may require
 
us to adjust
 
production
 
at these
 
operations.
 
DRDGOLD invested R22 million in the construction
 
of a filtration plant at the Rondebult Waste Water
 
Works (operated by the East
Rand Water Care Company) to
 
treat sewage water to reduce the use of
 
potable water. This water is used
 
both to reclaim and carry production
materials and
 
also,
 
ultimately,
 
to
 
irrigate rehabilitation
 
vegetation at
 
a
 
significantly lower
 
cost
 
than
 
that
 
of
 
potable
 
water.
 
The
 
plant
 
was
commissioned in early fiscal
 
year 2016 and has design capacity to provide Ergo with 10 Mega Litres (“
Ml
”) a day from the Rondebult sewage
treatment facility.
 
However, due to the deterioration
 
of the local government
 
authorities’ infrastructure,
 
the expected quantity
 
of sewerage is not
reaching the
 
treatment
 
facility and
 
as a result
 
Ergo is still
 
not able to
 
extract
 
the full design
 
capacity
 
of 10 Ml of
 
water a
 
day.
 
It is not
 
certain if
 
and
when the flow
 
of sewerage
 
will reach
 
expected levels.
These measures may not be sufficient to alleviate the water scarcity issues we face.
Government
 
Regulation
 
Government
 
policies in
 
South Africa
 
may adversely
 
impact our operations
 
and profits.
 
The mining
 
industry in
 
South Africa
 
is extensively
 
regulated through legislation
 
and regulations issued
 
through the
 
government’s
administrative
 
bodies. These
 
involve directives
 
in respect
 
of health
 
and safety, the
 
mining and
 
exploration
 
of minerals
 
and managing
 
the impact
 
of
mining operations on
 
the environment. A
 
variety of
 
permits and
 
authorities are
 
required to
 
mine lawfully,
 
and the
 
government enforces its
regulations
 
through the various
 
government
 
departments.
 
The formulation or implementation of government policies may
 
be discretionary and
unpredictable on
 
certain issues, including
 
changes in conditions
 
for the issuance
 
of licenses insofar
 
as social and
 
labor plans are
 
concerned,
transformation of
 
the workplace, laws
 
relating to
 
mineral rights, ownership
 
of mining
 
assets and the
 
rights to prospect
 
and mine,
 
additional
taxes on the mining industry
 
and in extreme cases, nationalization. A
 
change in regulatory or government
 
policies could adversely affect our
business.
 
 
 
Mining royalties
 
and other
 
tax reform
 
could have
 
an adverse
 
effect on the
 
business,
 
operating results
 
and financial
 
condition
 
of our
operations.
 
The
 
Mineral
 
and
 
Petroleum
 
Resources
 
Royalty
 
Act,
 
No.28
 
of
 
2008
 
and
 
the
 
Mineral
 
and
 
Petroleum
 
Resources
 
Royalty
 
Act
(Administration),
 
No.29 of 2008
 
govern royalty
 
rates for
 
gold mining
 
in South Africa.
 
These acts
 
provide for
 
the payment
 
of a royalty, calculated
through a
 
royalty rate
 
formula (using
 
rates of
 
between 0.5%
 
and 5.0%)
 
applied against
 
gross revenue
 
per year, payable
 
half yearly
 
with a third
 
and
final payment
 
thereafter.
 
The royalty
 
is tax
 
deductible
 
and the
 
cost after
 
tax amounts
 
to a
 
rate of
 
between
 
0.33% and
 
3.3% at
 
the prevailing
 
marginal
tax rates
 
applicable
 
to the taxed
 
entity. The royalty
 
is payable
 
on old
 
unconverted
 
mining rights
 
and new
 
converted
 
mining rights.
 
Based on
 
a legal
opinion
 
the
 
Company
 
obtained,
 
mine
 
dumps
 
created
 
before
 
the
 
enactment
 
of
 
the
 
Mineral
 
and
 
Petroleum
 
Resources
 
Development
 
Act
(“
MPRDA
”) fall outside the ambit of
 
this royalty and consequently the Company does not pay any royalty on any
 
dumps created prior to the
MPRDA. Introduction
 
of further
 
revenue
 
based royalties
 
or any adverse
 
future tax
 
reforms
 
could have
 
an adverse
 
effect on
 
our business,
 
operating
results and
 
financial
 
condition.
18
Failure to comply with the requirements
 
of the Broad Based Socio-Economic Empowerment
 
Charter 2018 could have an adverse
effect on our
 
business,
 
operating results
 
and financial
 
condition of
 
our operations.
 
In April
 
2018, judgment
 
was handed
 
down by the
 
North Gauteng
 
High Court
 
in Pretoria
 
against a
 
provision in
 
the 2010 Mining
 
Charter
regarding
 
the “once
 
empowered
 
always
 
empowered”
 
principle.”
 
This principle
 
refers
 
to whether
 
a mining
 
company, after
 
the exit
 
of a
 
Black
 
partner
that held a
 
stake in the
 
company consequent
 
to a result
 
of a Black
 
Economic Empowerment
 
(“
BEE
”) transaction,
 
continues to
 
be BEE compliant.
 
The judgment
 
was appealed
 
by the DMRE.
 
The DMRE
 
in August
 
2020, withdrew
 
their notice
 
to appeal
 
to the
 
Supreme
 
Court of
 
Appeal in
 
respect
of the judgment
 
issued in
 
April 2018
 
by the Pretoria
 
High Court.
 
 
On September
 
27, 2018
 
the Broad-Based
 
Socio-Economic
 
Empowerment
 
Charter
 
for the
 
Mining and
 
Minerals
 
Industry, 2018
 
(“
Mining
Charter 2018
”) was
 
published in
 
Government Gazette No.
 
41934 of
 
Government Notice No.
 
639 on
 
September 27,
 
2018 superseding and
replacing all previous
 
charters, including
 
the Reviewed Broad-Based
 
Black Economic Empowerment
 
Charter for the South African
 
Mining and
Minerals
 
Industry, 2016 (“
Mining Charter
 
III
”).
 
Mining Charter
 
2018 requires,
inter alia
, an enduring
 
30% BEE
 
interest
 
in respect
 
of new mining
 
rights.
 
It also
 
has extensive
 
provisions
in
 
respect
 
of
 
Historically Disadvantaged
 
Persons
 
(“
HDP
”)
 
representation at
 
board
 
and
 
management, as
 
well
 
provisions
 
relating
 
to
 
local
procurement
 
of goods and
 
services.
 
The procurement
 
target of the
 
total spend
 
on services
 
from South
 
African companies
 
has been pegged
 
at 80%
(up from 70%
 
in Mining
 
Charter III)
 
and 60% of
 
the aggregate
 
spend thereof
 
must be apportioned
 
to BEE entrepreneurs.
 
 
In March 2019,
 
the Mineral
 
Council of
 
South Africa
 
brought an application
 
in the High
 
Court, Pretoria
 
for a judicial
 
review and
setting aside
 
of certain
 
provisions in
 
Mining Charter
 
2018.
 
In June
 
2020, the
 
High Court
 
ordered
 
the Minerals
 
Council
 
to join
 
parties
 
representing
 
communities,
 
trade unions
 
and BEE
 
entrepreneurs
as a prerequisite
 
to the continuation
 
of the lawsuit,
 
as they have
 
a direct and
 
substantial
 
interest in
 
the outcome
 
of the litigation.
 
 
On September
 
21, 2021,
 
the High
 
Court of
 
South Africa
 
ruled that
 
the Mining
 
Charter
 
2018 is
 
not binding
 
subordinate
 
legislation
 
but an
instrument of policy. This ruling affirmed that the Minister
 
of Mineral Resources and Energy (“
MRE Minister
”) was not entitled to make law
through the
 
Mining Charter
 
2018 to require
 
30% HDP ownership
 
for the renewal
 
of existing
 
mining rights.
 
DRDGOLD cannot guarantee
 
that it will meet all the targets set out by the Mining Charter 2018. For example,
 
if the Mining Charter
2018 were
 
to remain
 
in its current
 
form, there
 
is no assurance
 
that the goods,
 
services
 
and supplies
 
in South Africa
 
would be sufficient
 
to allow us
to
 
meet the
 
targets.
 
More specifically,
 
DRDGOLD may
 
not
 
be
 
able to
 
meet the
 
requirement that 80%.
 
of total
 
mining goods
 
and services
procurement spend be on South African-manufactured
 
goods due to an insufficient number of suppliers in South Africa
 
with heavy equipment.
DRDGOLD may be required to increase participation by HDP in senior positions and allocate additional resources
 
for the development of the
mine community, human resources,
 
sustainability, procurement
 
and enterprise. DRDGOLD
 
may also be required to make further adjustment
 
to
the ownership
 
structure of
 
its South African
 
mining assets,
 
including increasing
 
the ownership
 
of HDP, in order to meet
 
the Mining Charter
 
2018
requirements.
 
Any such additional
 
measures could
 
have a material
 
adverse effect
 
on our business,
 
operating results
 
and/or financial
 
condition.
 
In addition,
 
if we are
 
unable to
 
obtain sufficient
 
representation
 
of HDP at
 
the board
 
level and
 
in management
 
positions
 
or if there
 
are not
sufficient succession
 
plans in place, this could have a material adverse
 
effect on our business (including resulting
 
in the imposition of fines and
having
 
a
 
negative effect
 
on
 
production levels),
 
operating results
 
and
 
financial position.
 
In
 
relation
 
to
 
this,
 
the
 
mining
 
industry,
 
including
DRDGOLD, continues
 
to experience a global shortage of qualified senior
 
management and technically
 
skilled employees.
 
DRDGOLD may be
unable to hire
 
or retain appropriate
 
senior management,
 
technically
 
skilled employees
 
or other management
 
personnel, or
 
may have to
 
pay higher
levels of
 
remuneration
 
than it currently
 
intends in
 
order to do
 
so.
 
Also, there is no
 
guarantee that
 
any steps DRDGOLD has
 
already taken or
 
might take in
 
the future will
 
ensure the retention
 
of its
existing mining rights, the successful renewal of its existing mining rights, the granting of applications for
 
new mining rights or that the terms
of renewals of its mining
 
rights would not be significantly less favourable
 
than the terms of its current
 
mining rights. Any further adjustment
to
 
the
 
ownership
 
structure of
 
DRDGOLD’s South
 
African mining
 
assets in
 
order
 
to
 
meet the
 
abovementioned
 
requirements
 
could have
 
a
material adverse effect on the value of DRDGOLD’s securities
 
Refer to
 
Item 4B.
 
Business
 
Overview –
 
Governmental
 
regulations
 
and their
 
effect on
 
our business
 
 
The Broad
 
Based Socio-Economic
Empowerment
 
Charter.
 
Government
 
policies in
 
South Africa
 
may adversely
 
impact our operations
 
and profits
 
related to
 
financial
 
provisioning
 
for
rehabilitation.
 
 
An amendment to the MPRDA was first proposed in 2013. The amendment bill, if implemented, would have had a material adverse
impact
 
on the Group's
 
estimated
 
financial
 
provisions
 
for environmental
 
remediation
 
and management
 
due to
 
the proposed
 
inclusion
 
of historic
 
and
old mine dumps
 
in the definition
 
of “residue
 
stockpiles”
 
as well as the
 
extension of
 
the liability
 
for rehabilitation
 
beyond the
 
issuance
 
of a closure
certificate and the requirement to maintain financial provision for
 
closed sites within a
 
period of 20
 
years after a
 
site is
 
closed. The MPRDA
Amendment Bill
 
was withdrawn
 
in August 2018
 
by the MRE Minister,
 
citing, amongst
 
other things,
 
the adequacy
 
of the current
 
MPRDA to deal
with all regulatory
 
matter pertaining
 
to the mining
 
and petroleum
 
industries.
19
 
Revised
 
Financial Provisioning
 
Regulations (“
FPR
”)
 
were
 
published on
 
November 20,
 
2015
 
under
 
the
 
National
 
Environmental
Management Act, 107 of 1998 (“
NEMA
”) and became effective from the date of publication thereof. Proposed
 
amendments to the FPRs were
published
 
for public
 
comment
 
GNR 1228
 
GG 41236
 
of November
 
10, 2017
 
(“
Draft
 
Regulations
”), which
 
seek
 
to address
 
some challenges
 
relating
to the implementation
 
thereof. Under
 
these FRPs to
 
be implemented
 
by the DMRE,
 
existing environmental
 
rehabilitation
 
trust funds
 
may only be
used for post
 
closure activities
 
and may no
 
longer be utilised
 
for their
 
intended purpose
 
of concurrent
 
and final rehabilitation
 
and closure.
 
 
Several further proposed amendments to
 
the FPRs,
 
(“
Proposed Amendments
”) were
 
published subsequently. The
 
latest Proposed
Amendments
 
were published
 
in August
 
2021 which,
inter alia
, extends
 
the compliance
 
with these
 
regulations
 
to three
 
months following
 
the fiscal
year end June
 
30, 2022.
 
 
The Proposed Amendments,
 
in their current form and which are still subject
 
to the approval of the DMRE and Treasury, allow under
certain circumstances for the withdrawal against financial
 
provision (which is currently not contemplated in the FPR). It is
 
therefore uncertain
whether these
 
provisions relating
 
to withdrawal
 
will remain
 
in their current
 
form, or at
 
all.
 
 
See discussion
 
in
 
4.B. Business
 
Overview –
 
Governmental regulations and their
 
effect on
 
our business
 
 
Financial Provision for
Rehabilitation.
The implementation
 
of Carbon Tax effective
 
from June
 
1, 2019 may
 
have a direct
 
or indirect
 
material adverse
 
effect on our
business,
 
operating results
 
and financial
 
condition.
 
The Carbon Tax Act No
 
15 of 2019, or the
 
CTA, came into effect from
 
June 1, 2019. The
 
CTA is based on the polluter-pays-principle
and will be implemented across
 
phases. The first phase will run from June 1, 2019 to December
 
31, 2022 and is applicable to scope 1 emitters.
The First phase did not have a
 
material financial impact. The second phase will be implemented from January 1, 2023 to December 31, 2030.
During the
 
first
 
phase,
 
tax-free
 
emission
 
allowances
 
ranging
 
from 60
 
per cent
 
to 95
 
per cent
 
are available
 
to emitters
 
in this
 
first
 
phase.
 
This includes
a basic
 
tax-free
 
allowance
 
of 60
 
per cent
 
for all
 
activities,
 
a 10
 
per cent
 
process
 
and fugitive
 
emissions
 
allowance,
 
a maximum
 
10 per
 
cent allowance
for companies that use
 
carbon offsets to reduce their
 
tax liability, a
 
performance allowance of up to
 
5 per
 
cent for companies that reduce
 
the
emissions
 
intensity of
 
their activities,
 
a 5 per cent
 
carbon budget
 
allowance
 
for complying
 
with the reporting
 
requirements
 
and a maximum
 
10 per
cent allowance
 
for trade
 
exposed sectors.
 
The South African
 
government
 
indicated
 
that a review
 
of the impact
 
of the carbon
 
tax will
 
be conducted
before the second phase of the South African
 
Carbon Tax Act is implemented. The carbon tax has not had an impact on the price of electricity.
However, should
 
Eskom be
 
required
 
to pass
 
on the cost
 
of the tax
 
from its
 
emissions
 
to its customers,
 
electricity
 
tariffs may
 
rise significantly.
 
This
may also
 
affect the
 
electricity
 
prices charged
 
to our
 
suppliers
 
who may
 
pass on
 
the tax
 
to us increasing
 
the price
 
of goods
 
and services
 
we consume
in our operation.
 
 
Regulations detailing
 
the tax-free emission allowances
 
during the second phase have not been published
 
to date. The second phase of
implementation of the
 
Carbon Tax
 
may have
 
a material
 
direct and/or indirect
 
adverse effect on
 
our business, operating
 
results and
 
financial
condition if the tax-free emission allowances
 
are significantly reduced or the scope of implementation
 
of the CTA
 
is significantly increased.
 
In
addition, the
 
potential increases
 
in costs resulting
 
from suppliers
 
passing through
 
their Carbon
 
Tax exposure to
 
the Company
 
may have a
 
direct or
indirect
 
material adverse
 
effect on our
 
business,
 
operating results
 
and financial
 
condition.
 
Ring-fencing
 
of unredeemed
 
capital
 
expenditure
 
for South
 
African
 
mining
 
tax purposes
 
could
 
have
 
an adverse
 
effect on
 
the business,
operating results
 
and financial
 
condition of
 
our operations.
 
The Income Tax Act No 58 of 1962,
 
or the ITA, contains certain
 
ring-fencing
 
provisions in
 
section 36 specifically
 
relating to different
mines
 
regarding
 
the deduction
 
of certain
 
capital
 
expenditure
 
and the
 
carry
 
over to
 
subsequent
 
years.
 
After the
 
restructuring
 
of the
 
surface
 
operations,
effective July 1, 2012,
 
Ergo is treated as
 
one taxpaying operation
 
pursuant to the
 
relevant ring-fencing
 
legislation.
 
It is expected that
 
FWGR will
also be
 
treated as
 
one taxpaying
 
operation
 
pursuant to
 
the relevant
 
ring-fencing
 
legislation.
 
In the event
 
that we
 
are unsuccessful
 
in confirming
 
our
position or should
 
the South African
 
Revenue Service
 
have a different interpretation
 
of section 36 of the ITA, it could have
 
an adverse effect on
our business,
 
operating results
 
and financial
 
condition.
 
Draft amendments
 
to the
 
ITA regarding
 
claiming
 
accelerated
 
capital expenditure
 
allowances
 
for South
 
African
 
mining tax
 
purposes
could have
 
an adverse
 
effect on the
 
business,
 
operating results
 
and financial
 
condition
 
of our operations.
 
The National Treasury
 
has proposed a prospective
 
amendment to the
 
preamble of section
 
15 of the ITA to limit the accelerated
 
capital
expenditure
 
allowances
 
applicable
 
to taxpayers
 
conducting
 
mining
 
operations
 
to only
 
those
 
taxpayers
 
that hold
 
a mining
 
right
 
as defined
 
in section
1 of the Mineral
 
and Petroleum
 
Resources Development
 
Act in respect of
 
the mine where
 
those mining
 
operations
 
are carried
 
on
”. In addition,
 
in
relation
 
to section
 
36 of
 
the ITA, the
 
National
 
Treasury has
 
proposed
 
an amendment
 
to the
 
heading
 
in order
 
to limit
 
the application
 
of the
 
provisions
in respect
 
of the calculation
 
of the redemption
 
allowance
 
and balance
 
of unredeemed
 
capital
 
expenditure,
 
to certain
 
mining operations.
 
 
DRDGOLD, as a surface miner, conducts mining
 
operations for its own benefit (i.e.
 
it is not a contract miner) but DRDGOLD is not
required to hold
 
a mining right
 
in terms of the
 
MPRDA.
 
The proposed requirement
 
by the ITA to require a miner
 
to hold a mining
 
right in terms
of the MPRDA
 
will preclude
 
DRDGOLD from
 
claiming accelerated
 
capital expenditure
 
allowances
 
in terms
 
of sections
 
15 and 36 of
 
the ITA.
 
 
If these proposed amendments are adopted, it will accelerate
 
cash outflows resulting from current
 
tax expenditure.
 
This could have a
material adverse
 
effect on our
 
cash flows,
 
operations,
 
capital investment
 
decisions
 
and financial
 
condition.
 
 
Assessment
 
of unredeemed
 
capital expenditure
 
by the South
 
African Revenue
 
Service could
 
have an adverse
 
effect on the business,
operating results
 
and financial
 
condition of
 
our operations.
20
 
The South African
 
Revenue Service
 
(“
SARS
”) assessed capital
 
expenditure when
 
it is redeemed
 
against taxable
 
mining income rather
than when
 
it is
 
incurred.
 
A different
 
interpretation
 
by SARS
 
could have
 
an adverse
 
effect on
 
our business,
 
operating
 
results
 
and financial
 
condition.
 
 
Since our
 
South African
 
labor force
 
has substantial
 
trade union
 
participation,
 
we face
 
the risk
 
of disruption
 
from labor
 
disputes
 
and
new South African
 
labor laws.
 
Labor costs
 
are significant
 
for Ergo, constituting
 
19% of Ergo’s
 
production
 
costs for
 
fiscal year
 
2021 (2020:
 
22%). As
 
of June
 
30, 2021,
our Ergo operations
 
provided full-time
 
employment
 
for 771 employees
 
while our main
 
service providers
 
deployed an
 
additional
 
1,495 employees
to our operations,
 
of whom approximately
 
82% are members
 
of trade unions
 
or employee
 
associations.
 
 
Labor costs
 
are significant
 
for FWGR, constituting
 
20% of FWGR’s production
 
costs for fiscal
 
year 2021 (2020:
 
22%). As of June
 
30,
2021, our FWGR
 
operations provided full-time employment for 154 employees while our
 
main service providers deployed an additional 343
employees to our operations,
 
of whom approximately
 
93% are members of
 
trade unions or employee
 
associations.
 
We have entered into various
agreements regulating
 
wages and working
 
conditions at
 
our mines. Unreasonable
 
wage demands could
 
increase production
 
costs to levels
 
where
our operations are no longer profitable.
 
This could lead to accelerated
 
mine closures and labor disruptions.
 
We are also susceptible to strikes by
workers from
 
time to time,
 
which result
 
in disruptions
 
to our mining
 
operations.
 
In recent
 
years, labor
 
laws in South
 
Africa have
 
changed in
 
ways that
 
significantly
 
affect our
 
operations.
 
In particular,
 
laws that
 
provide
for mandatory
 
compensation
 
in the event
 
of termination
 
of employment
 
for operational
 
reasons and
 
that impose
 
large monetary
 
penalties for
 
non-
compliance with the administrative
 
and reporting requirements of affirmative action
 
policies could result in significant costs to us. In addition,
future South
 
African
 
legislation
 
and regulations
 
relating
 
to labor
 
may further
 
increase
 
our costs
 
or alter
 
our relationship
 
with our
 
employees.
 
Labor
cost increases
 
could have
 
an adverse
 
effect on our
 
business,
 
operating results
 
and financial
 
condition.
 
 
Labor unrest
 
could affect
 
production.
 
During December 2018 to April 2019 there was strike action by staff
 
at the Sibanye-Stillwater gold mines adjacent to FWGR.
 
Such
events at
 
our operations
 
or at our reclamation
 
sites could
 
have an adverse
 
effect on our
 
business,
 
operating results
 
and financial
 
condition.
 
We use a
 
third
 
party service
 
provider
 
for the
 
management
 
of our
 
reclamation
 
sites
 
as well
 
as on
 
our Brakpan/Withok
 
TSF and
 
Driefontein
4 TSF.
 
Any labor
 
unrest or other
 
significant
 
issue at
 
this third
 
party service
 
provider may
 
impact the
 
operation of
 
this facility.
 
 
Strike action and
 
intimidation at mining
 
operations adjacent to our
 
FWGR mining operations
 
could have
 
an adverse
 
effect on
 
our
business,
 
operating results
 
and financial
 
condition.
 
Our financial flexibility could be materially constrained by South African currency restrictions.
South African law provides for exchange control regulations, which restrict the export of capital from South Africa, the Republic of
Namibia, and the
 
Kingdoms of Lesotho
 
and Eswatini, known
 
collectively as the
 
Common Monetary Area
 
(the “
CMA
”). The Exchange
 
Control
Department of the South African Reserve Bank, or SARB, is responsible for the administration of exchange control regulations. In particular,
South African companies:
are generally not permitted to export capital from South Africa or to hold foreign currency without the approval of the SARB;
are generally required to repatriate, to South Africa, profits of foreign operations; and
are limited in their ability to utilize profits of one foreign business to finance operations of a different foreign business.
 
While the
 
South African
 
Government has
 
relaxed exchange
 
controls in
 
recent years,
 
South African
 
companies remain
 
subject to
restrictions on their ability to deploy capital outside of the CMA and it is difficult to predict whether such relaxation of controls will
 
continue
in
 
the
 
future.
 
As
 
a
 
result,
 
DRDGOLD’s
 
ability
 
to
 
raise
 
and deploy
 
capital
 
outside
 
the
 
CMA
 
is
 
restricted.
 
These
 
restrictions
 
could
 
hinder
DRDGOLD’s
 
financial
 
and
 
strategic
 
flexibility,
 
particularly
 
its
 
ability
 
to
 
fund
 
acquisitions,
 
capital
 
expenditures
 
and
 
exploration
 
projects
outside South Africa. For further information see Item 10D. Exchange Controls.
We
 
could be adversely affected
 
by violations of
 
the U.S. Foreign Corrupt
 
Practices Act and
 
similar anti-bribery laws outside
 
of
the United States.
 
21
 
The U.S. Foreign
 
Corrupt Practices
 
Act, or the FCPA, and similar
 
anti-bribery laws
 
in other jurisdictions
 
generally prohibit
 
companies
and their
 
intermediaries
 
from
 
making improper
 
payments
 
to government
 
officials
 
or other
 
persons
 
for the
 
purpose
 
of obtaining
 
or retaining
 
business.
This includes
 
aggressive
 
investigations
 
and enforcement
 
proceedings
 
by both the
 
U.S. Department
 
of Justice
 
and the SEC,
 
increased
 
enforcement
activity by
 
non-
 
U.S. regulators,
 
and increases
 
in criminal
 
and civil proceedings
 
brought against
 
companies
 
and individuals.
 
Our policies
 
mandate
compliance
 
with the FCPA and other applicable
 
anti-bribery laws.
 
Our internal control
 
policies and procedures
 
may not protect us from
 
reckless
or criminal
 
acts committed
 
by our employees,
 
the employees
 
of any of
 
our businesses,
 
or third
 
party intermediaries.
 
In the event
 
that we
 
believe or
have reason to believe that our employees or agents have
 
or may have violated applicable anti-corruption
 
laws, including the FCPA, we would
investigate or have outside
 
counsel investigate the relevant facts and
 
circumstances, which can be expensive and
 
require significant time and
attention
 
from senior
 
management.
 
Violations of
 
these laws
 
may result
 
in criminal
 
or civil
 
sanctions,
 
inability
 
to do
 
business
 
with existing
 
or future
business partners
 
(either as a result of express prohibitions
 
or to avoid the appearance of impropriety),
 
injunctions against
 
future conduct, profit
disgorgements,
 
disqualifications
 
from directly
 
or indirectly
 
engaging in
 
certain
 
types of
 
businesses,
 
the loss of
 
business
 
permits,
 
reputational
 
harm
or other restrictions
 
which could
 
disrupt our
 
business and
 
have a material
 
adverse effect
 
on our business,
 
financial
 
condition, results
 
of operations
or liquidity.
 
 
We face risks with respect to compliance with
 
the FCPA and similar anti-bribery laws through
 
our acquisition of new companies
 
and
the due diligence
 
we perform in connection
 
with an acquisition
 
may not be sufficient
 
to enable us fully to assess
 
an acquired company’s historic
compliance
 
with applicable
 
regulations.
 
Furthermore,
 
as we make acquisitions
 
such as the acquisition
 
of FWGR, our post-acquisition
 
integration
efforts may
 
not be
 
adequate
 
to ensure
 
our system
 
of internal
 
controls
 
and procedures
 
are fully
 
adopted and
 
adhered
 
to by
 
acquired
 
entities,
 
resulting
in increased
 
risks of non-compliance
 
with applicable
 
anti-bribery
 
laws.
 
Risks related to ownership of our ordinary shares or ADSs
 
 
It may
 
not be
 
possible for
 
you to
 
effect service
 
of legal
 
process, enforce
 
judgments of
 
courts outside
 
of South
 
Africa or
 
bring
actions based on securities laws of jurisdictions other than South Africa against us or against members of our board.
Our Company,
 
certain members
 
of our
 
board of
 
directors and
 
executive officers
 
are residents
 
of South
 
Africa. All
 
our assets
 
are
located outside the United States and a major portion with
 
respect to the assets of members of our board
 
of directors and executive officers are
either wholly or
 
substantially located outside
 
the United States.
 
As a result,
 
it may not
 
be possible for
 
you to effect
 
service of legal
 
process,
within the United States or elsewhere including in South Africa, upon most of
 
our directors or officers, including matters arising under United
States federal securities laws or applicable United States state securities laws.
 
Moreover,
 
it may
 
not be
 
possible for
 
you to
 
enforce against
 
us or
 
the members
 
of our
 
board of
 
directors and
 
executive officers’
judgments obtained in courts outside South Africa, including the United States, based on the civil liability provisions of the securities laws of
those countries, including
 
those of the
 
United States. A foreign judgment is not directly enforceable
 
in South Africa, but constitutes
 
a cause of
action which
 
will be enforced
 
by South African
 
courts provided
 
that:
 
the court which
 
pronounced the
 
judgment had
 
jurisdiction
 
to entertain
 
the case according
 
to the principles
 
recognized by
 
South African
law with reference
 
to the jurisdiction
 
of foreign
 
courts;
 
the judgment
 
is final and
 
conclusive
 
(that is,
 
it cannot be
 
altered by
 
the court which
 
pronounced
 
it);
 
the judgment
 
has not lapsed;
 
the recognition
 
and enforcement
 
of the judgment
 
by South African
 
courts would
 
not be contrary
 
to public
 
policy, including
 
observance
of the rules
 
of natural
 
justice which
 
require that
 
no award
 
is enforceable
 
unless the
 
defendant
 
was duly
 
served with
 
documents initiating
proceedings,
 
that he
 
was given
 
a fair
 
opportunity
 
to be heard
 
and that
 
he enjoyed
 
the right
 
to be legally
 
represented
 
in a free
 
and fair
 
trial
before an
 
impartial
 
tribunal;
 
the judgment
 
was not obtained
 
by fraudulent
 
means;
 
the judgment
 
does not involve
 
the enforcement
 
of a penal
 
or revenue
 
law; and
the enforcement
 
of the judgment
 
is not otherwise
 
precluded by
 
the provisions
 
of the Protection
 
of Business
 
Act, 1978 (as
 
amended), of
South Africa.
 
It is
 
the policy
 
of South
 
African
 
courts to
 
award compensation
 
for the
 
loss or
 
damage sustained
 
by the
 
person to
 
whom the
 
compensation
is awarded.
 
Although the
 
award of punitive
 
damages is
 
generally unknown
 
to the South
 
African legal
 
system that
 
does not mean
 
that such
 
awards
are necessarily
 
contrary to
 
public policy.
 
Whether a
 
judgment was
 
contrary to
 
public policy
 
depends on
 
the facts
 
of
 
each case.
 
Exorbitant,
unconscionable, or excessive
 
awards will generally be contrary to public policy. South African courts cannot enter into the merits of
 
a foreign
judgment and cannot
 
act as a court of appeal
 
or review over the
 
foreign court.
 
South African
 
courts will usually
 
implement their
 
own procedural
laws and,
 
where an
 
action based
 
on an international
 
contract
 
is brought
 
before a
 
South African
 
court, the
 
capacity
 
of the parties
 
to the contract
 
will
usually be
 
determined
 
in accordance
 
with South African
 
law.
 
 
It is doubtful whether
 
an original action
 
based on United States
 
federal securities
 
laws may be brought before
 
South African courts.
 
A
plaintiff who is not
 
resident in South Africa may be
 
required to provide security for costs in the
 
event of proceedings being initiated in South
Africa. Furthermore,
 
the Rules of
 
the High Court
 
of South Africa
 
require that
 
documents
 
executed outside
 
South Africa
 
must be authenticated
 
for
use in South African courts.
 
It may not be
 
possible therefore for an
 
investor to seek
 
to impose liability on
 
us in a South
 
African court arising
from a violation of United States federal securities laws.
Dividend withholding tax will reduce the amount of dividends received by beneficial owners.
22
On April 1, 2012, the South African Government replaced
 
Secondary Tax on Companies (then 10%) with a 15% withholding tax on
dividends and other distributions
 
payable to shareholders.
 
The dividend withholding
 
tax rate was increased to 20%, effective
 
from February 22,
2017.
 
The withholding
 
tax reduces
 
the amount of
 
dividends or
 
other distributions
 
received
 
by our shareholders.
 
Any further
 
increases
 
in such tax
will further
 
reduce net
 
dividends received
 
by our shareholders.
 
Your rights as a shareholder
 
are governed by
 
South African law,
 
which differs in
 
material respects
 
from the rights
 
of shareholders
under the laws of other jurisdictions.
Our Company is a
 
public limited liability
 
company incorporated under
 
the laws of
 
the Republic of South
 
Africa. The rights
 
of holders
of our ordinary shares, and therefore many of the rights of our ADS holders, are
 
governed by our memorandum of incorporation and by South
African law. These rights differ in material
 
respects from the rights of
 
shareholders in companies incorporated elsewhere,
 
such as in the
 
United
States.
 
In
 
particular,
 
South African
 
law significantly
 
limits
 
the circumstances
 
under
 
which
 
shareholders of
 
South
 
African companies
 
may
institute litigation on behalf of a company.
 
Control by principal shareholders could adversely affect our other shareholders.
Sibanye-Stillwater beneficially owns 50.1% of our
 
outstanding ordinary shares and voting power
 
and has the ability to control, our
board of
 
directors. Sibanye-Stillwater
 
will continue
 
to have
 
control over
 
our affairs
 
for the
 
foreseeable future,
 
including with
 
respect to
 
the
election of directors, the consummation of significant
 
corporate transactions, such as an
 
amendment of our constitution, a
 
merger or other sale
of
 
our company
 
or our
 
assets, and
 
all matters
 
requiring
 
shareholder approval.
 
In certain
 
circumstances, Sibanye-Stillwater’s
 
interests as
 
a
principal shareholder
 
may conflict
 
with the
 
interests of
 
our other
 
shareholders and
 
Sibanye-Stillwater’s ability
 
to exercise
 
control, or
 
exert
significant influence, over us may have the effect
 
of causing, delaying, or preventing changes or transactions that our
 
other shareholders may
or may not deem
 
to be in their
 
best interests. In addition,
 
any sale or expectation
 
of sale of some or
 
all the shares held
 
by Sibanye-Stillwater
could have an adverse impact on our stock price.
 
Sales of large
 
volumes of our
 
ordinary shares or
 
ADSs or the
 
perception that these
 
sales may occur,
 
could adversely affect
 
the
prevailing market price of such securities.
The
 
market price
 
of
 
our ordinary
 
shares or
 
ADSs
 
could
 
fall if
 
substantial
 
amounts of
 
ordinary
 
shares or
 
ADSs are
 
sold by
 
our
stockholders, or there
 
is the perception
 
in the marketplace
 
that such sales
 
could occur.
 
Current holders of
 
our ordinary shares
 
or ADSs may
decide to sell them at
 
any time. Sales of
 
our ordinary shares or
 
ADSs, if substantial, or
 
the perception that any
 
such substantial sales may
 
occur,
could exert downward
 
pressure on the prevailing
 
market prices for
 
our ordinary shares
 
or ADSs, causing their
 
market prices to
 
decline. Trading
activity of hedge funds and the
 
ability to borrow script in the marketplace will
 
increase trading volumes and may place our
 
share price under
pressure.
ITEM 4. INFORMATION ON
 
THE COMPANY
4A. HISTORY AND DEVELOPMENT
 
OF THE COMPANY
Introduction
 
DRDGOLD
 
Limited, or
 
DRDGOLD, is
 
a
 
South
 
African domiciled
 
company
 
that
 
holds
 
assets engaged
 
in
 
surface gold
 
tailings
retreatment
 
in South Africa
 
including exploration,
 
extraction,
 
processing
 
and smelting.
 
 
 
We are a public limited liability company, incorporated
 
in South Africa on February
 
16, 1895, as Durban Roodepoort Deep,
 
Limited.
On December 3, 2004,
 
the company changed
 
its name from Durban
 
Roodepoort Deep
 
Limited to DRDGOLD
 
Limited. Our operations
 
focus on
South Africa's
 
Witwatersrand Basin,
 
which has
 
been a gold
 
producing
 
region for
 
over 120 years.
 
 
Our shares
 
and/or related
 
instruments
 
trade on the
 
Johannesburg
 
Stock Exchange
 
(“
JSE
”),
 
and the New
 
York Stock Exchange.
 
Our registered office and
 
business address is Constantia Office
 
Park,
 
Cnr 14th
 
Avenue and
 
Hendrik Potgieter Road,
 
Cycad House,
Building 17, Ground Floor,
 
Weltevreden Park,
 
1709,
 
South Africa. The postal address is
 
P.O. Box
 
390, Maraisburg, 1700, South Africa. Our
telephone number is (+27
 
11) 470-2600 and our facsimile number
 
is (+27 86) 524-3061. We are registered under the South African
 
Companies
Act 71, 2008 under registration number
 
1895/000926/06. For our ADSs,
 
the Bank of New York
 
Mellon, at 101 Barclay Street,
 
New York,
 
NY
10286, United
 
States, has
 
been appointed
 
as agent.
The SEC maintains
 
an internet
 
site that contains
 
reports, proxy
 
and information
 
statements
 
and other information
 
regarding issuers
 
that
file electronically with the SEC, which can be found
 
at http://www.sec.gov. Our internet address is http://www.drdgold.com.
 
The information
contained on
 
our website
 
is not incorporated
 
by reference
 
and does not
 
form part
 
of this annual
 
report.
 
All of our
 
operations
 
are conducted
 
in South Africa.
 
Our
 
operations primarily
 
consist
 
of
 
Ergo
 
and
 
FWGR.
 
Our
 
Ergo
 
operations include
 
the
 
historic
 
Crown
 
operations (which
 
were
restructured
 
into Ergo during fiscal
 
year 2012 and have substantially
 
been rehabilitated
 
as at the end of fiscal year
 
2018).
 
East Rand Proprietary
Mines
 
Limited's
 
(“
ERPM
”)
 
underground
 
mining
 
infrastructure was
 
under
 
care
 
and
 
maintenance up
 
to
 
reporting
 
date
 
at
 
which
 
date
 
the
23
decommissioning
 
and rehabilitation
 
of the last
 
remining underground
 
mining infrastructure
 
was completed.
Ergo
 
Ergo was formed
 
in June 2007. Ergo is the surface tailings retreatment operation which consists
 
of what was historically the Crown
Gold Recoveries
 
Proprietary
 
Limited (“
Crown
”), ERPM
 
Cason Dump
 
operation
 
and
 
the ErgoGold
 
business units.
 
On July
 
1, 2012,
 
Ergo
acquired the mining assets and certain liabilities of Crown and all the surface assets and liabilities of ERPM as part of the
 
restructuring of our
surface operations.
 
Capital expenditure for the
 
Ergo projects is
 
mainly financed through
 
operational cash flows while
 
financing for significant growth
projects may
 
be obtained
 
through specific
 
financing arrangements
 
if required.
 
Brakpan/Withok TSF expansion
 
 
To extend the life of our Ergo operation, it is necessary to increase residue tailings deposition capacity at our Brakpan/Withok TSF.
 
A legal review of the existing authorizations was undertaken
 
for increasing the deposition capacity
 
of the Brakpan/Withok TSF. The
results indicated
 
that most of the current
 
authorizations
 
are sufficient. An updated
 
application was
 
submitted to the Department
 
of Water Affairs
and Sanitation (“
DWAS
”) for which we are awaiting approval.
 
Recommissioning
 
and design studies are ongoing in anticipation of the DWAS
approval. We expect this could increase the potential deposition capacity by approximately
 
800Mt, and thus, our life of mine from 12
 
years to
more than
 
20 years.
 
For further information
 
on other capital
 
investments, divestures, capital
 
expenditure and capital
 
commitments, see Item
 
4D. Property,
Plant and Equipment, and Item 5B. Liquidity and Capital Resources.
FWGR
 
On July 31, 2018, we acquired certain gold surface processing assets and tailing storage facilities that included Driefontein 3 and 5,
Kloof 1,
 
Venterspost
 
North and
 
South, Libanon,
 
Driefontein 4,
 
Driefontein 2
 
plant, Driefontein
 
3 plant,
 
WRTRP
 
pilot plant,
 
and the
 
land
owned by Sibanye-Stillwater that was earmarked for the
 
future development of a central processing plant,
 
regional tailings storage facility and
return
 
water
 
dam
 
(together,
 
the
 
WRTRP
 
Assets
”)
 
associated
 
with
 
Sibanye-Stillwater’s
 
WRTRP,
 
subsequently
 
renamed
 
FWGR.
 
This
acquisition represented a significant
 
increase in our assets, which
 
impacted our results in
 
fiscal 2019, 2020 and
 
2021. In connection with
 
the
acquisition, we
 
issued to
 
Sibanye-Stillwater new
 
shares equal
 
to 38.05%
 
of outstanding
 
shares and
 
granted Sibanye-Stillwater
 
an option
 
to
acquire up to a total
 
of 50.1% of our shares
 
within a
 
period of
 
2 years
 
from the
 
effective
 
date of
 
the acquisition
 
at a
 
10% discount
 
to the
 
prevailing
market value.
 
On January 8,
 
2020, Sibanye-Stillwater exercised the
 
option and on
 
January 22, 2020 subscribed
 
for 168,158,944 DRDGOLD
shares at an aggregate subscription price of R1,086 million, (R6.46 per DRDGOLD share).
The assets acquired are to be developed in two phases – Phase 1 and Phase 2.
 
FWGR Phase 1
Phase 1
 
envisions the
 
reclamation of
 
the Driefontein
 
5 dump
 
through a
 
reconfigured Driefontein
 
2 plant
 
and deposition
 
onto the
Driefontein 4 tailings storage facility. The Driefontein
 
4 tailings
 
storage facility
 
was an upstream
 
day-wall dam
 
with a capacity
 
of approximately
200,000 tonnes per
 
month. In
 
order to
 
increase the deposition
 
capacity to
 
500 000 tonnes per
 
month, the
 
conversion of this
 
dam to
 
cyclone
deposition
 
commenced
 
in fiscal
 
2019. The
 
conversion
 
has been
 
completed
 
and this
 
allows a
 
deposition
 
capacity
 
of 500,000
 
tonnes per
 
month until
at least the
 
end of calendar
 
year 2024.
Although the Phase 1 upgrade of the Driefontein 2 Plant was essentially complete by the end of fiscal 2019, a decision was made to
bypass the
 
mill so that
 
further improvements
 
to the mill
 
liner configuration
 
could be made.
 
These modifications
 
were successfully
 
completed,
 
and
the mill
 
was recommissioned
 
in September
 
2019. A further
 
upgrade to
 
convert the
 
mill to
 
closed circuit
 
from the
 
open circuit
 
to improve
 
the grind
of the
 
material
 
and yield
 
more gold
 
was completed
 
in fiscal
 
2021.
 
A new
 
thickener
 
is under
 
construction
 
to optimise
 
the slurry
 
density
 
for treatment
in the carbon
 
in leach plant
 
and is expected
 
to be commissioned
 
in November
 
2021.
 
The conversion
 
is expected
 
to yield a better
 
grind of material
with a concomitant improvement
 
in leaching conditions
 
and gold recovery,
 
lower maintenance
 
costs and increased
 
water storage capacity
 
in the
current thickeners.
The material being reclaimed
 
by FWGR contains
 
high
 
levels of copper which incurs
 
penalty refining charges
 
of between 1% and 5%
during final refining by
 
Rand Refinery depending on
 
the copper content of
 
the bullion delivered. FWGR
 
has been
 
allocated 98% of
 
its gold
production
 
with 2%
 
lost to
 
these penalty
 
refining charges
 
due to the
 
high levels
 
of copper
 
in the
 
bullion delivered.
 
To reduce these
 
penalty refining
charges, FWGR constructed and commissioned a copper elution plant at a
 
cost of approximately R12 million during fiscal 2021.
 
The plant is
expected to
 
result in an
 
additional
 
1.2kg to 1.8kg
 
of gold per month
 
which would
 
otherwise
 
have been lost
 
due to penalty
 
refining charges
 
for the
copper in its
 
bullion.
 
FWGR Phase 2 expansion
24
The Phase 2 project is a key project for us intended to extend potential resources in the West Rand.
 
Phase 2 includes
 
the construction of
 
a new Central Processing
 
Plant (“
CPP
”) with a
 
capacity of between 1.2
 
to 2.4 million
 
tonnes
per month and the equipping of the required reclamation sites and pipeline infrastructure to supply the relevant resources to the CPP.
Phase 2 also includes the construction of a new Regional
 
Tailings Storage
 
Facility (“
RTSF
”),
 
that we believe is necessary in order to
develop our FWGR as envisaged by our management, the new RTSF is expected to be capable of processing 3 million tonnes per month with
a maximum capacity of approximately 800 million tonnes
The Definitive Feasibility Study (“
DFS
”) for Phase 2 was completed
 
in the 3rd quarter of the fiscal
 
year and that the project was found
 
to be
economically viable in a number of scenarios.
We engaged an external consultant, Sound Mining (consultants to the mining industry specializing in surface and underground operations) to
perform an independent review of the available information and studies that have been performed regarding the Phase 2 expansion project.
These included:
 
DFS performed by DRA
 
Global (“
DRA
”) (An engineering consulting
 
company) regarding the construction of
 
the CPP and related
pumping and pipeline infrastructure;
 
Detail design
 
of a
 
new Reginal
 
Storage Facility
 
(“
RTSF
”) performed
 
by Beric
 
Robinson (engineer
 
of record)
 
and related
 
capital
costing performed by DRA;
Reviews of
 
the explorations data
 
base, Mineral
 
Resource and Reserve
 
estimates of FWGR
 
assets and
 
other future potential
 
assets
such as battery metals, uranium and other gold West Rand metal resources;
 
Legal tenure, permitting, environmental and compliance status; and
Economic analysis of the projects.
Sound Mining concluded that the Phase 2 Project is a low risk, based on the following:
 
The mineral assets are well defined
There are tried and tested technologies and processes
Established experienced management team with a solid track record
Significant expansion potential in the far West Rand region
Project economics indicate healthy operating margins
Legal aspects are being addressed
 
Based on currently
 
available information, the Company
 
believes that there are
 
no material technical
 
or geo-metallurgical risks
 
that
could significantly impact the production forecasts.
 
Risks associated
 
with the
 
Phase 2
 
project include
 
obtaining regulatory
 
approval of
 
the amended
 
design of
 
the RTSF,
 
which was
submitted to
 
the DWA
 
S. Delays in
 
obtaining such
 
regulatory approval may
 
have an adverse
 
impact on
 
the project timeline
 
and capital cost
estimate. We engaged the services of an
 
external expert to assist
 
us with engaging with
 
the DWAS and these discussions are currently
 
ongoing.
Presentations were conducted to provide the regulator with the technical and scientific reasons for the changes to the design of the RTSF. It is
anticipated that construction of the RTSF
 
will commence in first half fiscal year 2024. The plant construction is anticipated to commence 6-9
months later.
 
Financing for significant growth projects may be
 
obtained through specific financing arrangements if required.
 
Capital expenditure
for FWGR
 
Phase 1
 
was financed
 
through our
 
RCF (Refer
 
to Item
 
18. “Financial
 
Statements -
 
Note 20
 
– Capital
 
Management). Significant
financing is
 
required for the
 
Phase 2 expansion
 
which is expected
 
to be
 
financed through a
 
combination of cash
 
resources, operational cash
flows and facilities as
 
may be determined.
 
Capital expenditure for other
 
projects is mainly financed through
 
operational cash flows and
 
cash
resources.
 
We
 
have commenced the next
 
step in our
 
Phase 2 project which
 
entails the Front End
 
Engineering Design of the
 
CPP.
 
FWGR has
appointed DRA Global to perform the relevant function.
For further information
 
on other capital
 
investments, divestures, capital
 
expenditure and capital
 
commitments, see Item
 
4D. Property,
Plant and Equipment, and Item 5B. Liquidity and Capital Resources.
ERPM
 
ERPM was
 
acquired
 
in October,
 
2002 and
 
consists
 
of an
 
underground
 
mine which
 
has been
 
under care
 
and maintenance
 
since fiscal
 
year
2009. Underground mining
 
at ERPM was halted in October
 
2008. On July 1, 2012, ERPM sold its
 
surface mining
 
assets and its 65% interest
 
in
ErgoGold to Ergo
 
in exchange
 
for shares
 
in Ergo as part
 
of the restructuring
 
of our surface
 
operations.
 
 
In December
 
2018,
 
ERPM concluded
 
revised agreements
 
to dispose certain
 
of its underground
 
assets to OroTree
 
Limited (“
Orotree
”).
The disposal of the
 
underground mining and prospecting rights were concluded in
 
the second half of
 
the financial year ended June
 
30, 2019.
Orotree did
 
not exercise
 
an option to
 
purchase the
 
underground mining
 
infrastructure.
 
25
 
In fiscal
 
2021, ERPM
 
completed
 
the decommissioning
 
and rehabilitation
 
of the
 
last remaining
 
underground
 
mining infrastructure,
 
being
the Far East
 
Vertical Shaft.
Crown
 
 
Crown was
 
acquired
 
on September
 
14, 1998.
 
Due to the
 
depletion
 
of ore
 
reserves
 
in the western
 
Witwatersrand,
 
the Crown
 
plant ceased
operation in
 
March 2017.
4B. BUSINESS
 
OVERVIEW
We
 
are
 
a
 
South
 
African
 
company
 
that holds
 
assets engaged in
 
surface gold
 
tailings retreatment including exploration, extraction,
processing
 
and smelting.
 
Our surface tailings retreatment operations, including the requisite infrastructure and metallurgical processing plants,
are located in South
 
Africa. Our operating footprint is
 
unique in that it involves
 
some of the largest concentration
 
of gold tailings deposits in
the world, situated within the city boundaries of Johannesburg and its suburbs and the far west rand of the province of Gauteng.
DRDGOLD’s
 
long-term goal
 
to extract
 
as much
 
gold from
 
its assets
 
as possible,
 
sustainable and
 
economically viable.
 
To
 
a large
extent this
 
depends on
 
how effectively
 
it continues
 
to manage
 
its capitals.
 
DRDGOLD uses
 
sustainable development
 
to direct
 
its strategic
thinking. We
 
seek sustainable benefits in
 
respect to financial, manufactured, natural,
 
social and human capitals,
 
each of which is
 
essential to
our operations.
 
We also aim to align and overlap the interests of each of these capitals in such a manner that an investment
 
in any one translates into
value-added increases
 
in as many of the others as possible. We therefore seek to achieve
 
an enduring and harmonious
 
alignment between
 
them,
and we pursue
 
these criteria
 
in the feasibility
 
analysis
 
of each investment.
 
We intend to explore
 
opportunities
 
made possible
 
by technology, which
could entail
 
further investment
 
in research
 
and development
 
(“
R&D
”) to improve
 
gold recoveries
 
even further
 
over the long
 
term.
 
On July 31,
 
2018, we acquired
 
the gold assets
 
associated with Sibanye-Stillwater’s
 
WRTRP,
 
subsequently renamed FWGR.
 
This
acquisition represented a significant increase in our assets.
 
During the
 
fiscal years
 
presented in
 
this Annual
 
Report, all
 
of our
 
operations took
 
place in
 
one geographic
 
region, namely
 
South
Africa.
Description
 
of Our Mining
 
Business
Surface tailings retreatment
 
Surface tailings
 
retreatment
 
involves the
 
extraction
 
of gold from
 
old mine dumps
 
and slimes
 
dams,
 
comprising
 
the waste material
 
from
earlier
 
underground
 
gold mining
 
activities.
 
This is
 
done by
 
reprocessing
 
sand dumps
 
and slimes
 
dams.
 
Sand dumps
 
are the
 
result
 
of the
 
less efficient
stamp-milling
 
process employed
 
in earlier
 
times. They
 
consist of coarse-grained
 
particles which
 
generally contain
 
higher quantities
 
of gold. Sand
dumps are reclaimed
 
mechanically
 
using front
 
end loaders
 
that load sand
 
onto conveyor
 
belts. The
 
sand is fed
 
onto a screen
 
where water
 
is added
to wash the sand into a sump, from where it is pumped to the plant. Most sand dumps have already been retreated using more efficient milling
methods.
 
Lower
 
grade slimes
 
dams were
 
the product
 
of the
 
“tube
 
and ball
 
mill”
 
recovery
 
process.
 
The economic
 
viability
 
of processing
 
this material
has improved due to improved treatment
 
methods such as the treatment
 
of large volumes of this material.
 
The material from the slimes dams is
broken down using
 
monitor guns
 
that spray jets
 
of high pressure
 
water at the target
 
area. The resulting
 
slurry is then
 
pumped to a treatment
 
plant
for processing.
Exploration
 
Exploration activities
 
are focused on the extension
 
of existing ore reserves
 
and identification
 
of new ore reserves both
 
at existing sites
and at undeveloped
 
sites. Once a potential
 
site has been identified,
 
exploration is extended
 
and intensified
 
in order to enable clearer
 
definition of
the site
 
and the
 
portions with
 
the
 
potential to
 
be
 
mined. Geological techniques
 
are
 
constantly refined to
 
improve the
 
economic viability
 
of
exploration
 
and exploitation.
 
Our Metallurgical
 
Plants and
 
Processes
 
A detailed
 
review of the
 
metallurgical
 
plants and
 
processes is
 
provided under
 
Item 4D.
 
Property, Plant and
 
Equipment.
Gold Market
 
The gold market
 
is relatively
 
liquid compared
 
to other commodity
 
markets, and
 
the price of
 
gold is quoted
 
in dollars. Physical
 
demand
for gold is primarily
 
for manufacturing
 
purposes,
 
and gold is traded
 
on a world-wide
 
basis. Refined
 
gold has a variety
 
of uses, including
 
jewelry,
electronics,
 
dentistry, decorations,
 
medals and official
 
coins. In addition,
 
central banks,
 
financial
 
institutions
 
and private individuals
 
buy, sell and
hold gold bullion
 
as an investment
 
and as a store
 
of value.
The use
 
of gold
 
as a store
 
of value
 
and the
 
large quantities
 
of gold
 
held for
 
this purpose
 
in relation
 
to annual
 
mine production
 
have meant
that historically the potential total supply of gold has been far greater than demand. Thus, while current supply and
 
demand play some part in
26
determining
 
the price of gold,
 
this does not occur
 
to the same extent
 
as in the case
 
of other commodities.
 
Instead, the
 
gold price has from
 
time to
time been significantly affected by macro-economic factors such as expectations of inflation, interest rates, exchange
 
rates, changes in reserve
policy by
 
central
 
banks and
 
global or
 
regional
 
political
 
and economic
 
crises.
 
In times
 
of inflation
 
and currency
 
devaluation
 
or economic
 
uncertainty
gold is often
 
seen as a
 
safe haven,
 
leading to
 
increased
 
purchases of
 
gold and support
 
for its price.
Investors globally, as they have in so many previous
 
times of crisis,
 
turned to gold and gold stocks as a safe haven asset,
 
leading to a
surge in the average gold price during
 
fiscal 2020 and 2021 as described
 
below. The rand/dollar exchange
 
rate remained volatile
 
throughout the
fiscal year 2021 mainly
 
as a result of global, emerging
 
market and South Africa
 
economic uncertainty
 
including uncertainties
 
resulting from the
COVID-19 pandemic,
 
global economic slowdown
 
sentiment, tensions between the
 
USA and
 
China, perceived political
 
instability and
 
fiscal
strength and
 
structurally
 
weak economic
 
growth of the
 
South African
 
economy including
 
a seemingly
 
terminally
 
distressed
 
power utility, Eskom.
The average
 
gold spot price
 
increase by
 
18% from $1,562
 
per ounce
 
to $1,850 per
 
ounce during
 
fiscal year
 
2021 after
 
having increased
by 24% from $1,263 per ounce to $1,562 per ounce during
 
the fiscal year 2020 and having decreased by 3% from
 
$1,297 per ounce to $1,263
per
 
ounce during
 
the fiscal
 
year 2019.
 
As a
 
result, the average gold
 
price received by us
 
in Rands for
 
fiscal year 2021
 
increased by 19%
 
to
R917,996 per kg compared
 
to the previous year at R768,675
 
per kg and for fiscal year 2020 increased
 
by 33% to R768,675 per kg compared
 
to
the previous
 
year at R577,483
 
per kg.
We generally take full
 
exposure to the
 
US dollar spot
 
price of gold
 
and rand/dollar
 
exchange rate.
 
The higher the gold
 
price, the higher
our profit margin and
vice versa,
subject to exchange rate fluctuations.
 
We benefited from a sustained upswing in gold price in fiscal 2020 and
fiscal 2021,
 
following
 
the global
 
response to
 
the COVID-19
 
pandemic,
 
when the gold
 
price surged
 
to all-time
 
highs. The increase
 
in the spot
 
gold
price is reflected
 
in the increase
 
in our gold price
 
received and
 
contributed
 
to the increase
 
in our total revenue for fiscal year 2021 amounting to
R5,269.0 million (2020: R4,185.0 million and 2019: R2,762.1 million). All our revenue is generated from our operations in South Africa.
 
Looking ahead we believe that the global economic environment
 
(particularly during
 
the COVID-19 pandemic), including
 
escalating
sovereign
 
and personal
 
levels
 
of debt,
 
economic
 
volatility
 
and the
 
oversupply
 
of foreign
 
currency, will
 
continue
 
to make
 
gold attractive
 
to investors.
The supply
 
of gold
 
has shrunk
 
in recent
 
years and
 
is likely
 
to shrink
 
even more
 
due to
 
the significantly
 
reduced
 
capital
 
expenditure
 
and development
occurring in the sector.
 
We believe that this, coupled with
 
global economic
 
uncertainty, is likely to provide
 
support to the gold
 
price in the long
term.
 
 
All gold
 
we produce
 
is sold
 
on our
 
behalf
 
by Rand
 
Refinery
 
Proprietary
 
Limited
 
(Rand
 
Refinery)
 
in accordance
 
with a
 
refining
 
agreement
entered into
 
in October
 
2001 and updated
 
in July
 
2018.
 
The gold bars
 
which we produce
 
consist of approximately
 
85% gold, 7-8%
 
silver and the
remaining balance
 
comprises copper
 
and other common elements.
 
The gold bars are sent
 
to Rand Refinery for
 
assaying and final
 
refining where
the gold is purified to 99.9% and
 
cast into troy ounce bars of varying
 
weights. The Group recognizes
 
revenue from the sale
 
of gold at a point in
time when
 
Rand Refinery, acting
 
as an agent
 
for the sale
 
of all gold
 
produced by
 
the Group,
 
delivers the
 
gold to the
 
buyer.
 
The sales
 
price is fixed
at the London afternoon fixed dollar price on the day the gold is delivered to the buyer.
 
Before November 2020, the dollar proceeds
 
sold were
remitted to
 
us within two
 
days at which
 
date the dollars
 
were sold.
 
Since November
 
2020 the dollars
 
are also sold
 
on the day the
 
gold is delivered
to the buyer. In
 
exchange for this service,
 
we pay Rand Refinery a variable refining fee plus fixed marketing and administration
 
fees. We own
11.3% (fiscal
 
year 2020 and 2019:
 
11.3%) of Rand
 
Refinery.
 
Ore Reserves
 
Ore
 
Reserve
 
estimates
 
in
 
this
 
Annual
 
Report
 
are
 
reported
 
in
 
accordance
 
with
 
the
 
requirements
 
of
 
the
 
SEC’s
 
Industry
 
Guide
 
7.
Accordingly, as of
 
the date of reporting, all ore reserves are planned
 
to be mined under the life of mine plan
 
within the period of our existing
rights to
 
mine, or
 
within the
 
time period
 
of assured
 
renewal periods
 
of our
 
rights to
 
mine. In
 
addition, as
 
of the
 
date of
 
this report,
 
all ore
reserves are covered
 
by required
 
permits and
 
governmental approvals. See
 
Item 4D.
 
Property,
 
Plant and
 
Equipment for
 
a description
 
of the
rights in relation to each mine.
 
In South Africa, we
 
are legally required
 
to publicly report
 
Ore Reserves and
 
Mineral Resources in compliance
 
with the South African
Code for
 
the Reporting
 
of Exploration
 
Results, Mineral
 
Resources and
 
Mineral Reserves,
 
or SAMREC
 
Code. The
 
SEC’s
 
Industry Guide
 
7
does not currently recognize
 
Mineral Resources. Accordingly,
 
we do not include
 
estimates of Mineral Resources in
 
this Annual Report. The
SEC has
 
adopted rules that
 
will rescind Guide
 
7 from our
 
next annual
 
report on Form
 
20-F and,
inter alia
, require the
 
inclusion of Mineral
Resources in additional to Mineral Reserves.
Ore Reserve calculations are
 
subject to a review
 
conducted in accordance with
 
SEC Industry Guide 7.
 
Ore Reserve tons,
 
grade and
content are quoted
 
as delivered to the gold
 
plant. There are
 
two types of methods available
 
to select ore for mining. The
 
first is pay-limit, which
includes cash operating costs, including overhead costs, to
 
calculate the pay-limit grade. The
 
second is the
 
cut-off grade which includes cash
operating costs,
 
excluding fixed
 
overhead
 
costs, to calculate
 
the cut-off grade,
 
resulting in
 
a lower figure
 
than the full
 
pay-limit grade.
 
The cut-off
grade is based
 
upon direct
 
costs from the
 
mining plan,
 
taking into
 
consideration
 
production levels,
 
production efficiencies
 
and the expected
 
costs.
We use the pay-limit
 
to determine
 
which areas
 
to mine as
 
an overhead
 
inclusive
 
amount that
 
is indicative
 
of the break-even
 
position.
 
 
The pay-limit approach
 
is based on the minimum in-situ
 
grade of reclamation
 
sites, for which the
 
production costs,
 
which includes all
overhead costs,
 
including head
 
office charges,
 
are equal to a
 
three-year historical
 
average gold
 
price per ounce
 
for that year. This
 
calculation
 
also
considers
 
the previous
 
three years’
 
mining and
 
milling efficiencies,
 
which includes
 
metallurgical
 
and other
 
mining factors
 
and
 
the production
 
plan
for the next twelve
 
months. Only
 
areas above the
 
pay-limit grade
 
are considered
 
for mining. The
 
pay-limit grade
 
is higher than
 
the cut-off grade,
because this
 
includes overhead
 
costs, which
 
indicates
 
the break-even
 
position of
 
the operation.
 
 
When delineating
 
the economic
 
limits to the
 
ore bodies,
 
we adhere
 
to the following
 
guidelines:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
27
The potential
 
ore to be mined
 
is well defined
 
by an externally
 
verified and
 
approved geological
 
model;
 
The potential
 
ore, which
 
is legally
 
allowed to
 
be mined, is
 
also confined
 
by the mine's
 
lease boundaries;
 
and
A business
 
plan is prepared
 
to mine the
 
potential ore.
 
 
Our Ore Reserves figures are estimates,
 
which may not reflect actual ore reserves or future production.
 
These figures are prepared in
accordance with industry practice, converting mineral deposits to an Ore
 
Reserve through the preparation of a
 
mining plan. The Ore
 
Reserve
estimates contained
 
herein inherently include
 
a degree of uncertainty and depend to some extent on statistical
 
inferences. Ore
 
reserve estimates
require revisions based on actual production experience or new information. Should we encounter mineralization or formations different from
those predicted
 
by past drilling,
 
sampling and
 
similar examinations,
 
ore reserve
 
estimates may
 
have to be adjusted
 
and mining plans
 
may have to
be altered in a way
 
that might adversely affect our operations and actual gold recoveries may differ from those indicated in our Ore Reserves.
Moreover, if the
 
price of gold
 
declines,
 
or stabilizes
 
at a price that
 
is lower than
 
recent levels,
 
or if our production
 
costs increase
 
or recovery
 
rates
decrease,
 
it may become
 
uneconomical
 
to recover
 
Ore Reserves
 
containing relatively
 
lower grades
 
of mineralization.
 
 
Our Ore
 
Reserves are prepared
 
using three-year average
 
rand gold prices.
 
We
 
prepare business plans
 
using the
 
forecast rand gold
price at the time of the ore reserve determination.
 
Gold prices and exchange rates used for Ore Reserves and for our business plan are outlined in the following table.
June, 30
June, 30
June, 30
2021
2020
2019
Three-year
average gold
price
Prevailing gold
price
Three-year
average gold
price
Prevailing gold
price
Three-year
average gold
price
Prevailing gold
price
Reserve gold price –$/oz
1,559
1,796
1,375
1,666
1,272
1,369
Reserve gold price –R/kg
756,355
851,239
629,263
905,774
552,585
629,404
Exchange rate –R/$
15.09
14.74
14.24
16.91
13.53
14.30
Our Ore Reserves
 
(imperial)
 
changed in
 
the past three
 
fiscal years
 
as follows:
Our Ore Reserves (imperial) decreased from 5.73 million ounces at June 30,
 
2020, to 5.35 million ounces at June
 
30, 2021,
 
mainly
because of depletion through ongoing mining activities. At FWGR there was a non-material increase in reserves due to adjustments
of bulk density assumptions to further test work performed.
Our Ore Reserves (imperial) decreased from 5.77 million ounces at June
 
30, 2019, to
 
5.73 million ounces at June 30,
 
2020, mainly
because of depletion through
 
ongoing mining activities as
 
well as the Grootvlei dump
 
6/L/16 of 0.3Moz no
 
longer being classified
as an Ore Reserve. The decrease was offset by inclusion of Marievale dumps at Ergo of 0.5Moz.
The life-of-mine for Ergo based on proven and probable ore reserves under Industry Guide 7 of the SEC as
 
at June 30, 2021,
 
was 13
years (June 30, 2020:
 
13 years, June 30, 2019:
 
11 years).
The life of mine for FWGR
 
based on proven and
 
probable
 
ore reserves
 
under Industry Guide
 
7 of the SEC as at June 30,
 
2021 was 18
years (June
 
30, 2020:
 
20 years;
 
June 30, 2019:
 
15 years).
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
28
DRDGOLD's Ore Reserves as of June 30, 2021 and 2020 are set forth in the tables below.
The Ore Reserves listed in the table below are estimates of what can be legally and economically recovered from operations, and, as stated, are estimates of tons delivered to the plant.
 
Ore Reserves: Imperial
At June 30, 2021
At June 30, 2020
Proven Ore Reserves
Probable Ore Reserves
Proven Ore Reserves
Probable Ore Reserves
 
Tons
 
 
Grade
 
 
Gold
Content
 
 
Tons
 
 
Grade
 
 
Gold
Content
 
 
Tons
 
 
Grade
 
 
Gold
Content
 
 
Tons
 
 
Grade
 
 
Gold
Content
 
 
(mill)
 
(oz/ton)
 
 
('m ozs)
 
(mill)
 
(oz/ton)
 
 
('000 ozs)
 
 
(mill)
 
(oz/ton)
 
 
('m ozs)
 
 
(mill)
 
 
(oz/ton)
 
 
('000 ozs)
 
Surface
 
Ergo
32.36
0.01
0.28
279.54
0.01
2.53
50.01
0.01
0.44
291.99
0.01
2.69
FWGR
245.01
0.01
2.40
14.19
0.01
0.14
248.33
0.01
2.46
13.99
0.01
0.13
Total
277.37
0.01
2.68
293.73
0.01
2.67
298.34
0.01
2.90
305.99
0.01
2.82
Ore reserves: Metric
At June 30, 2021
At June 30, 2020
Proven Ore Reserves
Probable Ore Reserves
Proven Ore Reserves
Probable Ore Reserves
Tonnes
Grade
Gold
Content
Tonnes
Grade
Gold
Content
Tonnes
Grade
Gold
Content
Tonnes
Grade
Gold
Content
(mill)
(g/tonne)
(tonnes)
(mill)
(g/tonne)
(tonnes)
(mill)
(g/tonne)
(tonnes)
(mill)
(g/tonne)
(tonnes)
Surface
 
Ergo
29.36
0.300
8.81
253.59
0.310
78.61
45.37
0.300
13.61
264.89
0.316
83.61
FWGR
222.27
0.337
74.79
12.88
0.330
4.24
225.29
0.340
76.55
12.70
0.330
4.19
Total
251.63
0.333
83.60
266.47
0.311
82.85
270.66
0.333
90.16
277.59
0.316
87.80
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
29
The measurement
 
and classification
 
of our Proven
 
and Probable
 
Ore Reserves
 
are sensitive
 
to an extent
 
to the fluctuation
 
of the rand
gold price.
 
If we had
 
used the different
 
rand gold prices
 
or as set
 
forth below
 
instead of
 
the three-year
 
average prices
 
at the time
 
of ore reserve
determination,
 
as of June
 
30, 2021 and
 
2020 respectively,
 
we would not
 
have had significantly
 
different ore
 
reserves as
 
of those dates.
 
Using the
same methodology
 
and assumptions
 
as were used
 
to estimate
 
Ore Reserves
 
but with different
 
rand gold prices
 
as detailed
 
below, our Ore
Reserves
 
as of June
 
30, 2021 and
 
2020 would be
 
as follows:
Year ended
 
June 30, 2021
Three-year average
gold price
Prevailing price
10% Below
prevailing price
10% Above
prevailing price
Rand gold price per kilogram
 
756,355
851,239
766,115
936,363
Dollar gold price per ounce
 
1,559
1,796
1,616
1,976
Ore Reserves (million ounces)
5.35
5.35
5.35
5.35
Year ended
 
June 30, 2020
Three-year average
gold price
Prevailing price
10% Below
prevailing price
10% Above
prevailing price
Rand gold price per kilogram
 
629,263
905,774
815,197
996,351
Dollar gold price per ounce
 
1,375
1,666
1,499
1,833
Ore Reserves (million ounces)
5.73
5.73
5.73
5.73
The approximate mining recovery factors for the 2021 ore reserves shown in the above table are as follows:
Mine Call Factor
Metallurgical recovery factor
(%)
(%)
Ergo
 
100
49
FWGR
100
53
The approximate mining recovery factors for the 2020 ore reserves shown in the above table are as follows:
Mine Call Factor
Metallurgical recovery factor
(%)
(%)
Ergo
 
100
46
FWGR
100
53
The following table shows the average drill/sample spacing (rounded to the nearest foot) as at June 30, 2021 and 2020, for
 
each category of Ore Reserves at our mines calculated based on a three year average dollar price of gold.
Proven
Probable
Reserves
Reserves
Ergo and FWGR
328 ft. by 328 ft.
328 ft. by 328 ft.
The pay-limit grades based on the three year average rand price for gold amounting to R756,355/kg and costs used to
reserves as of June 30, 2021, are as follows:
Costs used to determine pay-
Pay-limit grade (g/t)
limit grade (R/t)
Ergo
 
0.200
84.10
FWGR
0.170
69.94
The pay-limit grades based on the three year average rand price for gold amounting to R629,263/kg and costs used to
reserves as of June 30, 2020, are as follows:
Costs used to determine pay-
Pay-limit grade (g/t)
limit grade (R/t)
Ergo
1
0.220
82.15
FWGR
0.220
61.12
1
 
 
Ergo's disclosed Costs used to determine pay-limit grade (R/t), for 30 June 2020, has been updated to reflect the correct amount.
 
We apply the pay-limit approach to the mineralized material database of our business in order to determine the tonnage and
 
grade available for mining.
 
30
Governmental
 
regulations
 
and their
 
effects on
 
our business
Common Law
 
Mineral Rights
 
and Statutory
 
Mining Rights
 
Prior to the introduction
 
of the Minerals
 
and Petroleum Resources
 
Development Act,
 
or MPRDA in 2002,
 
ownership in mineral
 
rights
in South Africa
 
could be acquired
 
through the common
 
law or by statute.
 
With effect from May
 
1, 2004, all minerals
 
have been placed
 
under the
custodianship
 
of the
 
South African
 
government
 
under the
 
provisions
 
of the
 
MPRDA and
 
old order
 
proprietary
 
rights were
 
required
 
to be
 
converted
to new order rights
 
of use within certain
 
prescribed periods,
 
as dealt with in more
 
detail below. Mine dumps
 
created
 
before the MPRDA
 
became
law fall outside the
 
MPRDA and do
 
not require a
 
mining license to be
 
processed nor do
 
they require the extensive rehabilitation and closure
guarantees that are
 
a feature
 
of the
 
MPRDA. Many
 
of the
 
activities to re-process a
 
mine dump
 
do fall
 
under the
 
provisions of the
 
National
Environmental
 
Management
 
Act though,
 
which requires
 
at it most
 
basic the
 
compilation
 
and submission
 
of an Environmental
 
Impact Assessment.
Conversion
 
and renewal of
 
Rights under
 
the Mineral
 
and Petroleum
 
Resources Development
 
Act, 2002
 
Existing old
 
order rights
 
were required
 
to be converted
 
into new
 
order rights
 
in order
 
to ensure
 
exclusive
 
access to
 
the mineral
 
for which
rights existed
 
at the time
 
of the enactment
 
of the MPRDA.
 
In respect
 
of used old
 
order mining
 
rights, the
 
DMRE
 
is obliged
 
to convert
 
the rights
 
if
the applicant complies
 
with certain
 
statutory criteria. These include
 
the submission of
 
a mining
 
works program, demonstrable technical and
financial capability
 
to give effect to the
 
program, provision
 
for environmental
 
management and
 
rehabilitation,
 
and compliance
 
with certain black
economic
 
empowerment
 
criteria
 
and a social
 
and labor
 
plan. These
 
applications
 
had to be
 
submitted
 
within five
 
years after
 
the promulgation
 
of the
MPRDA
 
on May
 
1, 2004.
 
Similar
 
procedures
 
apply
 
where
 
we hold
 
prospecting
 
rights
 
and a
 
prospecting
 
permit
 
and conduct
 
prospecting
 
operations.
Under the
 
MPRDA mining
 
rights are
 
not perpetual,
 
but endure
 
for a fixed
 
period, namely
 
a maximum
 
period of
 
thirty years,
 
after which
 
they may
be renewed for
 
a further period of
 
thirty years. Prospecting rights are limited to
 
five years, with one
 
further period of renewal of
 
three years.
Applications for conversion of our
 
old order
 
rights were submitted to
 
the DMRE
 
within the requisite time
 
periods. As at
 
June 30,
 
2021 and
September
 
30, 2021 respectively,
 
all of our
 
Ergo operation’s
 
old order
 
mining rights
 
have been
 
converted
 
into new order
 
rights under
 
the terms
 
of
the MPRDA
 
and applications
 
to renew the
 
converted
 
the new order
 
mining rights
 
have been
 
lodged timeously.
The Broad Based
 
Socio-Economic
 
Empowerment
 
Charter
 
In order to promote broad based participation in mining revenue, the MPRDA provides
 
for a Mining Charter to be developed by the
MRE Minister
 
within six
 
months
 
of commencement
 
of the
 
MPRDA beginning
 
May 1,
 
2004. The
 
Mining
 
Charter
 
was initially
 
published
 
in August
2004 and was
 
subsequently
 
amended in
 
September
 
2010. Its objectives
 
include:
 
increased
 
direct and
 
indirect ownership
 
of mining entities
 
by qualifying
 
parties as
 
defined in
 
the Mining
 
Charter;
expansion of
 
opportunities
 
for persons
 
disadvantaged
 
by unfair
 
discrimination
 
under the previous
 
political
 
dispensation;
 
expansion of the skills base of
 
such persons, the promotion of employment and advancement of the social and
 
economic welfare of
mining communities;
 
and
 
promotion of
 
beneficiation.
 
The Mining Charter
 
sets certain
 
goals on equity
 
participation
 
(amount of
 
equity participation
 
and time frames)
 
by historically
 
disadvantaged
South Africans
 
of South African
 
mining assets.
 
It recommends
 
that these
 
are achieved
 
by, among other
 
methods, disposal
 
of assets
 
by mining
companies
 
to historically
 
disadvantaged
 
persons on
 
a willing seller,
 
willing buyer
 
basis at
 
fair market
 
value. The goals
 
set by the
 
Mining Charter
require each
 
mining company
 
to achieve
 
15 percent
 
ownership by
 
historically
 
disadvantaged
 
South Africans
 
of its South
 
African mining
 
assets
within five
 
years and
 
26 percent
 
ownership by
 
May 1, 2014.
 
It also sets
 
out guidelines
 
and goals in
 
respect of
 
employment
 
equity at management
level with
 
a view to
 
achieving 40
 
percent participation
 
by historically
 
disadvantaged
 
persons in
 
management
 
and ten percent
 
participation
 
by
women in the
 
mining industry, each
 
within five
 
years from
 
May 1, 2004.
 
Compliance
 
with these
 
objectives
 
is measured
 
on the weighted
 
average
“scorecard”
 
approach in
 
accordance
 
with a scorecard
 
which was
 
first published
 
around August
 
2010. In April
 
2018, judgment
 
was handed
 
down
by the North
 
Gauteng High
 
Court in Pretoria
 
against a
 
provision in
 
the 2010 Mining
 
Charter regarding
 
the “once
 
empowered
 
always
empowered”
 
principle.”
 
This principle
 
refers to
 
whether a
 
mining company, after
 
the exit of
 
a Black partner
 
that held a
 
stake in the
 
company
consequent
 
to a result
 
of a BEE transaction,
 
continues to
 
be BEE compliant.
 
The judgment
 
was appealed
 
by the DMRE.
 
The DMRE in
 
August
2020, withdrew
 
their notice
 
to appeal
 
to the Supreme
 
Court of Appeal
 
in respect
 
of the judgment
 
issued in April
 
2018 by the
 
Pretoria High
 
Court.
 
 
The Mining Charter and the related
 
scorecard are not legally
 
binding and, instead,
 
simply state a public policy. However, the DMRE
places significant
 
emphasis on the
 
compliance
 
therewith. The
 
Mining Charter
 
and scorecard
 
have a decisive
 
effect on administrative
 
action taken
under the MPRDA.
 
 
In recognition of the Mining
 
Charter’s objectives of
 
transforming the mining
 
industry by increasing the
 
number of black people
 
in
the industry
 
to reflect
 
the country’s
 
population demographics,
 
to empower
 
and enable
 
them to
 
meaningfully participate
 
in and
 
sustain the
growth of the
 
economy, thereby advancing equal
 
opportunity and equitable
 
income distribution, we
 
have
 
achieved
 
our commitment
 
to ownership
compliance
 
with the MPRDA
 
through our historic
 
black economic
 
empowerment
 
structures
 
which have
 
subsequently
 
unwound.
 
The mining
 
industry in
 
South Africa
 
is extensively
 
regulated
 
through legislation
 
and regulations
 
issued by government’s
 
administrative
bodies. These involve
 
directives with respect
 
to health
 
and safety,
 
mining and
 
exploration of
 
minerals, and
 
managing the
 
impact of
 
mining
operations
 
on the environment.
 
A change
 
in regulatory
 
or government
 
policies could
 
adversely
 
affect our business.
 
On June
 
15, 2017, the
 
Reviewed Broad-Based Black Economic Empowerment Charter for the South
 
African Mining and Minerals
31
Industry, 2017
 
(“
2017 Mining
 
Charter
”) was published
 
in the
 
Government
 
Gazette
 
No. 40923
 
of Government
 
Notice.581.
 
The publication
 
of the
charter was met with widespread criticism
 
and on June 26, 2017 the Minerals Council of South Africa (previously
 
Chamber of Mines of South
Africa), and
 
applied to
 
the High Court
 
of South Africa,
 
Gauteng division
 
for an urgent
 
interdict
 
to prevent
 
the charter
 
from implementation.
 
Key provisions
 
included:
 
50% Black ownership
 
for new prospecting
 
rights;
30% Black ownership
 
for mining
 
rights (up
 
to 11% offset
 
for local
 
beneficiation)
 
 
For new
 
mining
 
rights
 
to be
 
issued,
 
the provision
 
for 1%
 
of Earnings
 
Before
 
Interest,
 
Taxes, Depreciation
 
and Amortisation
 
(“
EBITDA
”)
is paid to
 
communities
 
and employees
 
as a trickle
 
dividend from
 
the sixth year
 
of a mining
 
right until
 
dividends
 
are declared
 
or at any point
 
in a
12-month period
 
where dividends
 
are not declared
 
On February
 
2016, The President
 
of South Africa
 
announced that
 
a new mining charter
 
would be developed,
 
and will follow
 
a process
which includes
 
all stakeholders.
 
The Minerals
 
Council of
 
South Africa
 
subsequently
 
postponed
 
its application
 
in the
 
High Court
 
in respect
 
of the
2017 Mining
 
Charter.
 
 
On September
 
27, 2018
 
the Broad-Based
 
Socio-Economic
 
Empowerment
 
Charter
 
for the
 
Mining and
 
Minerals
 
Industry, 2018
 
(“
Mining
Charter 2018
”) was
 
published in
 
Government Gazette No.
 
41934 of
 
Government Notice No.
 
639 on
 
September 27,
 
2018 superseding and
replacing
 
all previous
 
charters,
 
including Mining
 
Charter III.
 
 
Mining Charter
 
2018 requires
 
an enduring
 
30% BEE interest
 
in respect
 
of new mining
 
rights. It
 
also has extensive
 
provisions in
 
respect
of HDP representation
 
at board and management,
 
as well provisions
 
relating to
 
local procurement
 
of goods and services.
 
The procurement
 
target
of the total
 
spend on services
 
from South African
 
companies has
 
been set at 80% (up
 
from 70% in Mining
 
Charter III)
 
and 60% of the aggregate
spend thereof
 
must be apportioned
 
to BEE entrepreneurs.
 
 
Key provisions
 
of Mining Charter
 
2018 are:
 
The conditional acceptance
 
of the continued consequences
 
of previous compliance
 
of the BEE ownership threshold
 
of 26% in respect
of existing
 
mining rights;
 
Of the 30%
 
HDP ownership
 
component, qualifying
 
employees
 
and communities
 
are each to
 
hold a 5% carried
 
interest (as
 
opposed to a
free carry interest
 
as per Mining Charter III)
 
the cost of which may be recovered
 
by the mining right holder from
 
the development of
the asset.
 
The community
 
interest
 
in turn may
 
be offset by
 
way of an
 
equity equivalent;
 
Removal of
 
the so-called
 
1% of EBITDA
 
trickle dividend
 
provided for
 
in the 2017
 
Mining Charter;
 
and
 
The removal
 
of provisions
 
requiring
 
community
 
and employee
 
representation
 
at board level.
 
that the continuing
 
consequences
 
of HDP ownership
 
are not recognized
 
for transfers
 
of mining rights;
 
and
 
 
that a top
 
up of HDP ownership
 
back to 30%
 
is required
 
for the renewal
 
of existing
 
rights.
 
 
Subsequently, several
 
notable developments
 
have occurred:
 
In March
 
2019, the
 
Mineral Council
 
of South Africa
 
brought an
 
application
 
in the High
 
Court, Pretoria
 
for a judicial
 
review and
 
setting
aside of certain
 
provisions in
 
Mining Charter
 
2018.
 
 
In June 2020, the
 
High Court ordered
 
the Minerals Council
 
of South Africa to join parties
 
representing
 
communities,
 
trade unions and
BEE entrepreneurs
 
as a prerequisite
 
to the continuation
 
of the lawsuit,
 
as they
 
have a
 
direct and
 
substantial
 
interest
 
in the outcome
 
of the litigation.
 
 
On September
 
21, 2021,
 
the High
 
Court of
 
South Africa
 
ruled that
 
the Mining
 
Charter
 
2018 is
 
not binding
 
subordinate
 
legislation
 
but an
instrument of policy. This ruling
 
affirmed that the MRE Minister
 
was not entitled to make
 
law through the Mining Charter
 
2018 to require 30%
HDP ownership
 
for the renewal
 
of existing
 
mining rights.
 
Mine Health
 
and Safety
 
Regulation
 
The South
 
African
 
Mine Health
 
and Safety
 
Act, 1996
 
(as amended),
 
or the
 
Mine Health
 
and Safety
 
Act, came
 
into effect
 
in January
 
1997.
The principal object
 
of the Mine Health and Safety
 
Act is to improve health
 
and safety at South African
 
mines and, to this end, imposes
 
various
duties on
 
us at our
 
mines and
 
grants the
 
authorities
 
broad powers
 
to, among
 
other things,
 
close unsafe
 
mines and
 
order corrective
 
action relating
 
to
health and safety matters.
 
In the event of any future accidents at any of our mines, regulatory authorities
 
could take steps which could increase
our costs and/or
 
reduce our production
 
capacity. The Act was
 
amended in 2009
 
and the
 
amendments to the
 
Act dealt with
inter alia
 
the stoppage
of production and
 
increase punitive measures
 
including increased financial
 
fines and legal
 
liability of mine
 
management. Some
 
of the more
important provisions in
 
the 2009 amendment bill
 
are the insertion of
 
section 50(7A) that obliges
 
an inspector to impose
 
a prohibition on
 
the
further functioning of a site where a person’s death, serious injury or
 
illness to a person or a health threatening
 
occurrence has occurred; a new
section 86A(1) creating a
 
new offence for any
 
person who contravenes or
 
fails to comply with
 
the provisions of the
 
Mine Health and Safety
Act thereby causing a
 
person’s death or
 
serious injury or illness to
 
a person. Subsection (3)
 
further provides that (a)
 
the “fact that the person
issued instructions prohibiting
 
the performance or
 
an omission is not
 
in itself sufficient
 
proof that all
 
reasonable steps were
 
taken to prevent
the performance or omission”; and that
 
(b) “the defense of ignorance or mistake by
 
any person accused cannot be permitted”; or that
 
(c) “the
defense that the death of a person, injury, illness or endangerment was caused by the performance or an omission of any individual within the
employ
 
of
 
the
 
employer
 
may
 
not
 
be
 
admitted”;
 
section
 
86A(2)
 
creating
 
an
 
offence
 
of
 
vicarious
 
liability
 
for
 
the
 
employer
 
where
 
a
 
Chief
32
Executive Officer,
 
manager, agent
 
or employee of
 
the employer committed
 
an offence and
 
the employer either
 
connived at or
 
permitted the
performance or
 
an omission
 
by the
 
Chief Executive
 
Officer,
 
manager, agent
 
or employee
 
concerned; or
 
did not
 
take all
 
reasonable steps
 
to
prevent the performance or an omission. The maximum fines were also increased. Any owner convicted in
 
terms of section 86 or 86A may be
sentenced to “withdrawal
 
or suspension of
 
the permit” or
 
to a fine
 
of R3 million
 
or a period
 
of imprisonment not
 
exceeding five years
 
or to
both such
 
fine and
 
imprisonment, while
 
the maximum
 
fine for
 
other offences
 
and for
 
administrative fines
 
have all
 
been increased,
 
with the
highest being R1 million.
 
Under the South African Compensation
 
for Occupational Injuries
 
and Diseases Act, 1993 (as amended),
 
or COID Act, employers are
required to contribute
 
to a fund specifically
 
created for the
 
purpose of compensating
 
employees
 
or their dependents
 
for disability
 
or death arising
in the
 
course
 
of their
 
work.
 
Employees
 
who are
 
incapacitated
 
in the
 
course
 
of their
 
work have
 
no claim
 
for compensation
 
directly
 
from the
 
employer
and must
 
claim compensation
 
from the
 
COID Act
 
fund. Employees
 
are entitled
 
to compensation
 
without having
 
to prove
 
that the
 
injury or
 
disease
was caused by negligence
 
on the part of the employer, although
 
if negligence is involved,
 
increased compensation
 
may be payable by this fund.
The COID Act relieves employers of the prospect of costly damages, but does not relieve employers
 
from liability for negligent acts caused to
third parties outside
 
the scope of employment.
 
In fiscal year 2021, we contributed
 
approximately
 
R4.3 million under the COID
 
Act (2020: R3.7
million and
 
2019: R3.6
 
million) to
 
a multi-employer
 
industry fund
 
administered
 
by Rand Mutual
 
Assurance
 
Limited.
 
Under the Occupational
 
Diseases in Mines and
 
Works Act, 1973 (as amended), or the Occupational
 
Diseases Act, the multi-employer
fund pays compensation
 
to employees of mines
 
performing “risk
 
work,” usually in circumstances
 
where the employee
 
is exposed to dust, gases,
vapors, chemical
 
substances or other working
 
conditions which are
 
potentially harmful,
 
or if the employee contracts
 
a “compensatable
 
disease,”
which
 
includes
 
pneumoconiosis,
 
tuberculosis,
 
or a
 
permanent
 
obstruction
 
of the
 
airways.
 
No employee
 
is entitled
 
to benefits
 
under the
 
Occupational
Diseases
 
Act for
 
any disease
 
for which
 
compensation
 
has been
 
received or
 
is still
 
to be
 
received
 
under the
 
COID Act.
 
These payment
 
requirements
are based
 
on a combination
 
of the employee
 
costs and claims
 
made during the
 
fiscal year.
 
Uranium and radon are often
 
encountered during the
 
ordinary course of gold mining
 
operations in South Africa,
 
and present potential
risks for radiation exposure
 
of workers at those operations
 
and the public to radiation
 
in the nearby vicinity. We monitor our uranium and radon
emissions for compliance with
 
all local
 
laws and
 
regulations pertaining to
 
uranium and radon
 
management and under
 
the current
 
legislative
exposure limits prescribed for workers and
 
the public, under
 
the Nuclear Energy
 
Act, 1999
 
(as amended) and
 
Regulations from the National
Nuclear Regulator.
 
Environmental
 
Regulation
Managing the
 
impact of mining
 
on the environment
 
is extensively
 
regulated by
 
statute in
 
South Africa.
 
Recent statutory
 
enactments
 
set
compliance
 
standards both
 
generally, in the
 
case of the
 
National Environmental
 
Management
 
Act, and in
 
respect of
 
specific areas
 
of environment
impact, as
 
in the case
 
of the Air Quality
 
Act 2004, the
 
National Water Act
 
(managing effluent),
 
and the Nuclear
 
Regulator
 
Act 1999. Liability
 
for
environmental damage is also extended to
 
impose personal liability on
 
managers and directors of
 
mining corporations that are found
 
to have
violated applicable
 
laws.
The impact
 
on the environment
 
by mining operations
 
is extensively
 
regulated
 
by the MPRDA.
 
The MPRDA
 
has onerous
 
provisions
 
for
personal liability
 
of directors
 
of companies
 
whose mining
 
operations
 
have an unacceptable
 
impact on the
 
environment.
Mining
 
companies are
 
also
 
required to
 
demonstrate both
 
the
 
technical and
 
financial ability
 
to
 
sustain an
 
ongoing environmental
management program,
 
or EMP,
 
and achieve ultimate rehabilitation,
 
the particulars of which are to be incorporated in an EMP. This program is
required to
 
be submitted
 
and approved
 
by the DMRE
 
as a prerequisite
 
for the issue
 
of a new order
 
mining right.
 
Various funding mechanisms
 
are
in place,
 
including trust
 
funds, guarantees
 
and concurrent
 
rehabilitation
 
budgets, to
 
fund the rehabilitation
 
liability.
The MPRDA
 
imposes specific,
 
ongoing environmental
 
monitoring and
 
financial
 
reporting obligations
 
on the holders
 
of mining rights.
 
We
 
believe that
 
our
 
environmental risks
 
have
 
been
 
addressed in
 
EMPs
 
which
 
have
 
been
 
submitted to
 
the
 
DMRE
 
for
 
approval.
Additionally, key environmental issues
 
have been prioritized and are being addressed through active management
 
input and support as well as
progress measured
 
in terms of
 
activity schedules
 
and timescales
 
determined for
 
each activity.
 
 
Our existing
 
reporting and
 
controls
 
framework
 
is consistent
 
with the additional
 
reporting and
 
assessment
 
requirements
 
of the MPRDA.
 
 
Financial Provision
 
for Rehabilitation
 
We are required to make
 
financial provision
 
for the cost
 
of mine closure
 
and post-closure
 
rehabilitation,
 
including monitoring
 
once the
mining operations
 
cease. We fund these
 
environmental
 
rehabilitation
 
costs by irrevocable
 
contributions
 
to environmental
 
trust funds
 
that function
under the authority
 
of trustees
 
that have
 
been appointed
 
by, and who owe
 
a statutory
 
duty of trust
 
to the
 
Master of
 
the High Court
 
of South
 
Africa.
The funds
 
held in these
 
trusts are
 
invested primarily
 
in interest
 
bearing call
 
deposits.
 
As of June
 
30, 2021,
 
we held
 
a total
 
of R564.7 million
 
(2020:
R542.2 million) in trust, the
 
balance held in
 
each fund being
 
R127.2 million (2020: R122.1 million) for
 
Ergo, R425.1 million (2020:
 
R408.1
million)
 
for FWGR
 
and R12.4
 
million
 
(2020:
 
R12.0 million)
 
for ERPM.
 
Trustee meetings
 
are held
 
as required
 
and quarterly
 
reports
 
on the
 
financial
status of
 
the funds,
 
are submitted to
 
our board
 
of directors. If
 
any of
 
the operations are
 
prematurely closed, the
 
rehabilitation funds may be
insufficient
 
to meet all
 
the rehabilitation
 
obligations
 
of those operations.
 
 
Whereas the old Minerals
 
Act allowed for the
 
establishment
 
of a fully funded rehabilitation
 
fund over the operational
 
life of mine, the
MPRDA assumes
 
a fully compliant fund
 
at any given time.
 
Insurance instruments
 
may also be utilized
 
to make up the shortfall
 
in available
 
cash
drd20210630p36i1.gif drd20210630p36i0.gif
33
funds subject
 
to the DMRE’s consent.
 
The Company
 
has subsequently
 
made use of
 
approved insurance
 
products for
 
a portion of
 
its rehabilitation
liabilities.
 
As of June
 
30, 2021, we
 
held a total
 
of R87.5 million
 
(2020: R83.8
 
million) in
 
funds held
 
in insurance
 
instruments.
 
As at June
 
30, 2021
guarantees
 
amounting to
 
R430.1 million
 
(2020: R427.3
 
million) were
 
issued to
 
the DMRE.
 
The provision
 
for environmental
 
rehabilitation
 
for the group was
 
R570.8 million
 
at June 30, 2021,
 
compared to
 
R568.9 million
 
at June
30, 2020.
 
New
 
Financial Provisioning
 
Regulations (“
FPR
”)
 
were
 
promulgated on
 
November 20,
 
2015
 
under
 
the
 
National
 
Environmental
Management Act, 107
 
of 1998
 
(“
NEMA
”) by
 
the Department of
 
Forestry, Fisheries and
 
the Environment (“
DFFE
”).
 
Under the
 
FPRs to
 
be
implemented
 
by the
 
DMRE, existing
 
environmental
 
rehabilitation
 
trust funds,
 
of which
 
DRDGOLD
 
has R564.7
 
million,
 
may be
 
used only
 
for post
closure activities and may
 
no longer be
 
utilized for their
 
intended purpose of
 
concurrent and final rehabilitation on
 
closure. As a
 
result, new
provisions will
 
have to be
 
made for
 
these activities.
 
Several further proposed amendments to
 
the FPRs,
 
(“
Proposed Amendments
”) were
 
published subsequently.
 
The latest
 
Proposed
Amendments
 
were published
 
in August
 
2021 which,
inter alia
, extends
 
the compliance
 
with these
 
regulations
 
to three
 
months following
 
the fiscal
year end June
 
30, 2022.
 
 
The Proposed Amendments,
 
in their current form and which are still subject
 
to the approval of the DMRE and Treasury, allow under
certain circumstances for the withdrawal against financial
 
provision (which is currently not contemplated in the FPR). It is
 
therefore uncertain
whether these
 
provisions relating
 
to withdrawal
 
will remain
 
in their current
 
form, or at
 
all.
 
 
Regulation 5(4) of the Proposed Amendments
 
states that the determination of financial provision
 
must be undertaken by a specialist,
which according to the definitions
 
listed in the Proposed Amendments
 
is an “independent person”.
 
Regulation 10 of the Proposed Amendments
further requires
 
the annual review and re-assessment
 
of financial provision
 
by an independent specialist,
 
which in terms of Regulation
 
11 of the
Proposed Amendments
 
must also be
 
audited by an
 
independent
 
auditor. The Proposed
 
Amendments
 
do not require
 
that the annual
 
review and re-
assessment
 
of financial
 
provision be
 
audited by a
 
financial
 
auditor.
4C. ORGANIZATIONAL
 
STRUCTURE
The
 
following chart
 
shows our
 
principal subsidiaries as
 
of
 
June 30,
 
2021
 
and
 
as
 
of
 
September 30,
 
2021 respectively.
 
All
 
of
 
our
subsidiaries are incorporated in South Africa. Our voting interest in each of our subsidiaries are equal to our
 
ownership interests. We hold the
majority of
 
our subsidiaries
 
directly or
 
indirectly
 
as indicated
 
below. Refer to
 
Exhibit 8.1 for
 
a list of
 
our significant
 
subsidiaries.
 
 
34
4D. PROPERTY, PLANT AND EQUIPMENT
Description
 
of Significant
 
Subsidiaries'
 
Properties and
 
Mining Operations
Ergo
Overview
 
We
 
own 100%
 
of Ergo.
 
Ergo is
 
a surface tailings
 
retreatment operation operating
 
across central and east Johannesburg.
 
In order to
improve synergies,
 
effect cost savings and establish
 
a simpler group structure,
 
DRDGOLD restructured
 
the Group’s surface operations
 
(Crown,
ERPM’s
 
Cason
 
Dump
 
surface
 
operation
 
and
 
ErgoGold) into
 
Ergo
 
with effect
 
from
 
July 1,
 
2012. ERPM’s
 
Cason
 
Dump
 
surface
 
tailings
retreatment operation was depleted in the
 
first half of fiscal year 2015.
 
At June 30, 2021,
 
Ergo employed
 
771 full-time
 
employees.
 
In addition,
specialist
 
service providers
 
deployed a
 
further 1,495
 
employees
 
to our
 
operations
 
bringing the
 
total number
 
of in-house
 
and outsourced
 
employees
to 2,266 at
 
June 30, 2021
 
(at June 30,
 
2020: 2,155
;
at June 30,
 
2019: 2,214
)
.
 
Properties
 
The Ergo plant is
 
located approximately
 
43 miles (70
 
kilometers)
 
east of the Johannesburg’s
 
central business
 
district in the
 
province of
Gauteng on
 
land owned
 
by Ergo. Access
 
to the Ergo plant
 
is via the
 
Ergo Road on the
 
N17 Johannesburg-Springs
 
motorway.
 
 
Following the
 
restructuring
 
of the
 
Crown operations,
 
which consisted
 
of three
 
separate
 
locations,
 
City Deep,
 
Crown Mines
 
and Knights,
into a single
 
surface retreatment
 
operation in
 
Ergo,
 
these mining
 
rights were
 
transferred
 
to Ergo in March
 
2014.
 
Our ore
 
reserves
 
in the
 
western
 
Witwatersrand
 
had become
 
depleted.
 
We therefore
 
took a
 
decision
 
to close
 
the Crown
 
Mines plant
 
which
operated as
 
a pump/milling
 
station feeding
 
the metallurgical
 
plants until
 
March 2017.
 
The Crown sites
 
have been
 
cleared and
 
the rehabilitation
 
of
the Crown plant
 
site has
 
been completed.
 
The City Deep operation is located on the West Wits line within the Central Goldfields of the Witwatersrand
 
Basin, approximately
 
3
miles (5 kilometers)
 
south-east
 
of the Johannesburg
 
central business
 
district in
 
the province
 
of Gauteng.
 
Access is
 
via the Heidelberg
 
Road on the
M2 Johannesburg-Germiston
 
motorway. The City
 
Deep plant
 
continues to
 
operate as
 
a pump/milling
 
station feeding
 
the metallurgical
 
plants.
 
 
The Knights operation
 
is located at
 
Stanley and Knights
 
Road Germiston
 
off the R29 Main
 
Reef Road. The
 
Knights plant
 
continues to
operate as
 
a metallurgical
 
plant.
As of June
 
30, 2021 and
 
September 30, 2021, no material
 
encumbrances
 
exist on Ergo's
 
property.
 
Mining and Processing
 
Ergo undertakes the retreatment of surface tailings.
Material processed
 
by Ergo
 
is sourced
 
from primary
 
surface sources namely,
 
sand and
 
slime. The
 
surface sources
 
have generally
undergone a
 
complex depositional
 
history resulting
 
in grade
 
variations associated
 
with improvements
 
in plant
 
recovery over
 
the
 
period the
material was deposited.
 
 
Our two gold producing metallurgical plants,
 
Ergo and Knights have an installed capacity
 
to treat approximately 25 million tons of
material per year based on 92% availability
 
and are fully operational. All
 
of the
 
plants have
 
undergone
 
various modifications
 
during recent
 
years
resulting in
 
significant changes
 
to
 
the
 
processing circuits. The
 
City
 
Deep plant
 
continues to
 
operate as
 
a
 
pump/milling station
 
feeding the
metallurgical
 
plants.
 
Ergo’s assets include: access
 
to tailings deposited
 
across the western,
 
central and eastern
 
Witwatersrand; a 50km
 
pipeline; and tailings
deposition facilities
 
including the
 
significant
 
Brakpan/Withok
 
TSF.
 
The feedstock is made up of
 
sand and slime which are reclaimed separately.
 
Sand is reclaimed using mechanical front-end loaders,
re-pulped
 
with
 
water
 
and
 
pumped
 
to
 
the
 
plant.
 
Slime
 
is
 
reclaimed
 
using
 
high
 
pressure
 
water
 
monitoring
 
guns
 
also
 
known
 
as
 
hydraulic
reclamation. The re-pulped slime is pumped
 
to the plant and the reclaimed material is
 
treated using screens, cyclones, ball
 
mills and Carbon-
in-Leach, or CIL, technology to extract the gold.
 
Set forth below is a description of each of our plants in operation:
Ergo Plant:
 
Commissioned
 
by Anglo American Corporation
 
in 1977, became part
 
of AngloGold Ashanti
 
in 1998 from which it was
acquired
 
for a
 
consideration
 
of R42.8
 
million
 
in 2007.
 
The remaining
 
five CIL
 
tanks were
 
refurbished
 
during fiscal
 
year 2015
 
to increase
capacity to
 
treat up to
 
25.2Mt per
 
year.
 
 
Knights Plant:
 
Commissioned in 1988, this surface/underground plant comprises a circuit including screening, primary cycloning,
milling in closed circuit with hydrocyclones,
 
thickening, oxygen preconditioning,
 
CIL, elution, electro-winning
 
and smelting to doré.
The
 
Knights
 
plant,
 
although
 
historically
 
part
 
of
 
the
 
Crown
 
operation,
 
is
 
located
 
further
 
east
 
and
 
considerably
 
closer
 
to
 
the
35
Brakpan/Withok
 
TSF. Due to the
 
location
 
of the Knights
 
plant it
 
deposits waster
 
on the Brakpan/Withok
 
TSF. The Knights
 
plant has
 
an
installed
 
capacity to
 
treat an estimated
 
3.6Mt per year.
 
 
City Deep Plant:
 
Commissioned
 
in 1987, this surface/underground
 
plant comprises
 
a circuit including
 
screening, primary,
 
secondary
and tertiary cycloning in closed circuit milling, thickening, oxygen preconditioning, CIL, elution and zinc precipitation followed by
calcining and smelting to doré. Retreatment
 
continued at the City Deep Plant until the plant was decommissioned in August 2013 to
operate as
 
a milling
 
and pump station
 
and is currently
 
pumping material
 
to the Ergo Plant
 
for the final
 
extraction
 
of gold.
As of June
 
30, 2021,
 
the net book
 
value of Ergo’s mining
 
assets was
 
R1,427.8 million
 
(2020: R 1,283.9
 
million).
Capital Expenditure
 
 
For a
 
discussion of capital
 
expenditures in fiscal
 
years 2019,
 
2020 and
 
2021, see
 
"Item 5.A.
 
Operating and Financial
 
Review and
Prospects—Capital
 
expenditure".
 
 
Advance planning is underway
 
for the expansion of the Brakpan/Withok
 
TSF to accommodate higher
 
grade resources in the Far East
area of
 
the Gauteng province and
 
further extend the
 
life of mine
 
of ERGO. A
 
legal review of
 
the existing authorizations was undertaken for
increasing the deposition capacity of the Brakpan/Withok TSF.
 
The results indicated that most of
 
the current authorizations are sufficient. An
updated application was
 
submitted to
 
the DWAS
 
for which
 
we are
 
awaiting approval. Recommissioning and
 
design studies
 
are ongoing
 
in
anticipation
 
of the DWAS approval.
 
We expect this could
 
increase
 
the potential
 
deposition
 
capacity
 
by approximately
 
800Mt, and
 
thus, our
 
life of
mine from
 
13 years to
 
more than 20
 
years.
 
Capital expenditure
 
related to
 
material growth
 
projects are
 
financed on
 
a project-by-project
 
basis which
 
may include
 
bank facilities
 
and
existing
 
cash resources.
 
Sustaining
 
capital
 
expenditure
 
is financed
 
from cash
 
generated
 
from operations
 
and existing
 
cash resources.
 
For a
 
summary
of capital
 
expenditure,
 
see Item 5A.
 
Operating
 
Results.
 
 
The majority
 
of the Company’s carbon
 
emissions
 
are the scope
 
2 carbon emissions
 
for electricity
 
consumption purchased
 
from Eskom,
who produces electricity, predominately
 
from coal powered fire stations. In the current year
 
the Company generated 404
 
609 tonnes of scope 2
carbon emissions
 
(2020: 364
 
950 tonnes).
 
A large percentage
 
of the capital
 
expenditure
 
in the current
 
year is
 
expected
 
to go towards
 
our own
 
solar
photovoltaic
 
power generation
 
plant and
 
battery
 
storage facility
 
at Ergo. The
 
successful
 
completion
 
of this
 
project
 
is expected
 
to reduce
 
our carbon
emissions
 
footprint. The
 
project is
 
subject to
 
regulatory
 
approval.
 
Exploration
 
and Development
 
Exploration and development
 
activity at Ergo involve the drilling of surface dumps and evaluating the potential
 
gold bearing surface
material.
Environmental
 
and Closure
 
Aspects
 
Municipal infrastructure
 
as well as commercial and residential
 
developments have
 
encroached towards
 
the Ergo operation. The major
environmental risks are associated
 
with dust from various reclamation sites, and effective management
 
of relocated process material on certain
tailings dams. The impact of windblown dust on the surrounding
 
environment and community
 
is addressed through a scientific
 
monitoring and
evaluation
 
process,
 
with active
 
input from
 
Professor
 
H. Annagran
 
from the
 
Cape Peninsula University of Technology and
 
appropriate
 
community
involvement.
 
Environmental management
 
programs,
 
addressing
 
a
 
wide
 
range
 
of
 
environmental issues,
 
have
 
been
 
prepared
 
by
 
specialist
environmental consultants,
 
which are audited annually. Water pollution
 
is controlled by means
 
of a comprehensive
 
system of return water dams
which allow
 
for used
 
water to
 
be recycled
 
for use
 
in Ergo’s metallurgical
 
plants. Overflows
 
of return
 
water dams
 
may, depending
 
on their
 
location,
pollute surrounding
 
streams
 
and wetlands.
 
Ergo has an
 
ongoing monitoring
 
program
 
to ensure
 
that its
 
water balances
 
(in its
 
reticulation
 
system,
 
on
its tailings
 
and its return
 
water dams)
 
are maintained
 
at levels
 
that are sensitive
 
to the capacity
 
of return water
 
dams.
 
Dust pollution is
 
controlled through an
 
active environmental management program for the
 
residue disposal sites and
 
chemical and
organic dust suppression
 
on recovery sites. Short-term
 
dust control is accomplished
 
through ridge ploughing the top surface
 
of dormant tailings
dams. Additionally,
 
environmentally friendly dust suppressants are
 
applied. Dust fall-out
 
is monitored
 
through an
 
extensive dust monitoring
network monthly, and is utilized as a management
 
measure to ensure the effectiveness
 
of mitigation measures employed.
 
In the long-term, dust
suppression and water pollution is managed through
 
a program of progressive vegetation of the tailings followed
 
by the application of lime, to
reduce the
 
natural acidic
 
conditions,
 
and fertilizer
 
to assist
 
in the growth
 
of vegetation
 
planted on the
 
tailings dam.
 
A program of
 
environmental
 
restoration
 
that provides
 
for the rehabilitation
 
of areas affected
 
by mining operations
 
during the life
 
of the
mine is in
 
place. The
 
surface reclamation
 
process at
 
Ergo has several
 
environmental
 
merits as
 
it removes potential
 
pollution sources
 
and opens up
land for development.
 
 
Environmental management
 
and compliance is further assisted
 
by the in–house developed electronic
 
monitoring system (Compliance
Management Tool) that incorporates
 
all existing Environmental
 
Impact Assessments
 
(“
EIA
s”), EMPs, Mining Right Conversions,
 
Performance
Assessments
 
and Social
 
and Labor
 
Plans (“
SLP
s”) associated
 
with each
 
mining right.
 
The existing
 
and most
 
recent studies
 
are used
 
to supplement
the management components with regards to the mining right boundaries and its required compliance parameters.
 
The individual management
items
 
are integrated
 
to provide
 
a holistic
 
overview
 
of the
 
state
 
of each
 
of the
 
mining
 
right
 
areas.
 
Spatial
 
data
 
pertaining
 
to the
 
mining
 
right
 
boundaries
is stored onto a central
 
database and is utilized
 
to create a live map
 
which illustrates
 
the mining right area
 
and various environmental
 
monitoring
systems. This
 
map depicts
 
the mining right
 
boundaries,
 
roads, rails,
 
mine dumps,
 
plants, rivers,
 
pipeline routes,
 
servitudes,
 
way leaves,
 
municipal
 
 
36
services and
 
other spatial
 
data relevant
 
to our mining
 
operations.
While the ultimate amount
 
of rehabilitation costs
 
to be incurred is uncertain,
 
we have estimated that the total cost
 
for Ergo, in current
monetary
 
terms as
 
at June
 
30, 2021 is
 
approximately
 
R445.8 million.
 
As at June
 
30, 2021, a
 
total of
 
R127.2 million
 
(2020: R122.1
 
million)
 
is held
in the Ergo Rehabilitation
 
Trust Fund, previously
 
called the Crown
 
Rehabilitation
 
Trust Fund, which
 
is an irrevocable
 
trust, managed
 
by specific
responsible
 
people who we nominated
 
and who are appointed
 
as trustees by the Master
 
of the High Court of South Africa.
 
In addition, a total of
R62.7 million
 
(2020: R59.9
 
million)
 
is held in
 
insurance
 
instruments.
Ore Reserves
 
 
As at June 30, 2021, our Proven and Probable
 
Ore Reserves of Ergo was 2.81 million
 
ounces, a decrease from
 
3.13 million ounces at
June 30, 2020
 
due to depletion
 
resulting from
 
ongoing mining.
 
A Mineral
 
Reserves and
 
Mineral Resources
 
competent
 
person is
 
appointed at
 
each
operation to
 
review our
 
Ore Reserve
 
calculations
 
for accuracy. For
 
Ergo, Professor
 
Steven Rupprecht
 
is the designated
 
competent
 
person in terms
of the SAMREC
 
Code responsible
 
for the compilation
 
and reporting
 
of ore reserves.
Production
 
 
For fiscal
 
year 2021,
 
production
 
increased
 
to 137,059
 
ounces
 
from
 
128,249 ounces
 
in fiscal
 
year 2020
 
mainly due the
 
volume
 
throughput
that increased
 
from 20.2Mt
 
to 23.0Mt,
 
a consequence
 
of more
 
stable production
 
during fiscal
 
2021 compared
 
to fiscal
 
2020 which
 
was affected
 
by
the COVID-19
 
Lockdown, a
 
cautious
 
subsequent
 
ramp-up and
 
interruptions
 
in power
 
supply from
 
Eskom and
 
the City of
 
Ekurhuleni.
 
The impact
of this increase
 
was offset
 
by the decrease
 
in the average yield from 0.197g/t in fiscal 2020 to 0.186g/t in fiscal 2021.
 
 
Ergo temporarily halted
 
its operations on March
 
26, 2020 pursuant to the announcement
 
of the Lockdown.
 
The Disaster Management
Act regulations
 
subsequently
 
issued by the Department
 
of Co-operative
 
governance
 
and traditional
 
affairs affirmed
 
that gold mining
 
and refining
are “essential
 
services” and
 
was therefore
 
exempt from
 
restrictions
 
imposed by the
 
Lockdown. ERGO
 
recommenced
 
operations on
 
April 9, 2020
with limited sites and ramped up to almost full production in June 2020. ERGO’s Knights plant recommenced operations on May 7, 2020 and
ramped up to
 
almost full
 
production
 
in June 2020.
 
Subsequent
 
lockdowns
 
in fiscal
 
2021 did not
 
result in any
 
similar stoppages
 
in production.
 
Cash operating
 
costs increased
 
by $143 per
 
ounce,
 
or 13%, from
 
$1,129 per
 
ounce in fiscal
 
year 2020 to
 
$1,272 per
 
ounce in fiscal
 
year
2021 mainly
 
due to the
 
6% decrease
 
in yield and
 
a 15% tariff
 
increase
 
by power utility, Eskom,
 
which came
 
into effect
 
in April 2021.
 
The following table details certain production and financial results of Ergo for the past two fiscal years.
2021
2020
Production (imperial)
Ore milled ('000 tons)
 
22,952
20,228
Recovered grade (oz/ton)
 
0.006
0.006
Gold produced (ounces)
 
137,059
128,249
Results of Operations
 
Revenue (R million)
3,943.0
3,064.3
 
Cost of sales (R million)
2,871.0
2,453.5
 
Cash operating costs (R million)
2,666.5
2,274.0
 
Cash operating costs (R/kilogram)
1
629,585
568,476
 
All-in sustaining costs (R/kilogram)
 
1
704,503
614,861
 
All-in cost (R/kilogram)
 
1
717,755
621,316
1 Cash operating cost, cash operating costs per kilogram, all-in sustaining costs per kilogram and all-in costs per kilogram are financial measures of performance that we use to determine cash generating capacities
 
of the
mines and to monitor
 
performance of our mining operations.
 
These are all non-IFRS
 
measures. For a reconciliation of
 
these measures to the nearest
 
IFRS measure see Item
 
5A.: “Operating Results - Reconciliation
 
of
cash cost per kilogram, all-in sustaining costs per kilogram and all-in costs per kilogram.”
37
FWGR
Overview
 
On July 31, 2018,
 
we acquired WRTRP Assets, which
 
are surface gold processing
 
assets and tailing storage
 
facilities in Carletonville
in the West
 
Rand Goldfield of
 
Gauteng, 30km from
 
Johannesburg, that
 
include Driefontein 3
 
and 5, Kloof
 
1, Venterspost
 
North and South,
Libanon, Driefontein
 
4, Driefontein
 
2 plant,
 
Driefontein 3
 
plant, WRTRP
 
pilot plant,
 
and land
 
for the
 
development of
 
a central
 
processing
plant, regional tailings storage
 
facility and return water
 
dam associated with
 
Sibanye-Stillwater’s WRTRP,
 
subsequently renamed FWGR.
 
This
acquisition represents a significant increase in our assets, which had a material impact on our results for fiscal years ended June 30, 2019.
 
 
In connection with the
 
acquisition, we issued to Sibanye-Stillwater
 
new shares equal to 38.05%
 
of our then outstanding shares
 
and
granted Sibanye-Stillwater
 
an option
 
to acquire
 
up to
 
a total
 
of 50.1%
 
of our
 
shares within a period of 2
 
years from the effective date of the
acquisition
 
at a 10% discount
 
to the prevailing
 
market value.
 
On January 8, 2020, Sibanye-Stillwater exercised the option. On January 22, 2020
Sibanye-Stillwater subscribed
 
for 168,158,944
 
DRDGOLD shares
 
at an
 
aggregate subscription
 
price of
 
R1,086 million.
 
These shares
 
were
allotted and issued at a price of R6.46 per share, being a 10% discount to the 30-day volume weighted average traded price
 
The WRTRP Assets consisted of the following:
Asset (incl properties)
Description
Additional tailings dams
Surface tailings
 
dams which
 
form part
 
of the
 
gold assets
 
of the
 
WRTRP
 
Assets and
 
which include
 
Driefontein
Dumps 3 and 5, Kloof 1, Venterspost
 
North and South and Libanon Dump.
DP2 Plant
The Driefontein 2 Plant which is located on Portion 6 of Farm Blyvooruitzicht No 116 Registration Division I.Q.
and Remainder of Portion 1 of the Farm Driefontein No 113, Registration Division I.Q., Gauteng Province.
 
The
 
DP2
 
Plant
 
processed
 
surface
 
rock
 
dumps
 
(“
SRD
”)
 
material,
 
which
 
was
 
delivered
 
by
 
rail
 
and
 
truck.
Throughput is achieved through two
 
Semi-Autogenous Grinding (“
SAG
”) mills and a ball
 
milling circuit, cyanide
leaching and a Carbon-in-Pulp (“
CIP
”) plant. A Carbon-in-leach circuit was commissioned in 2014 at DP2 Plant
to improve recoveries by replacing the aging CIP circuit.
DP3 Plant
The Driefontein 3 Plant which
 
is located on Portion 6
 
of Farm Blyvooruitzicht No 116, Registration
 
Division I.Q.,
Gauteng Province. The DP3 Plant was originally designed as
 
a uranium plant, but was converted to process low-
grade surface
 
rock in
 
1998. Similar to
 
DP2 Plant,
 
SRD ore
 
was delivered
 
by rail
 
and truck.
 
This plant has
 
four
SAG mills followed by cyanide leaching and a CIP circuit.
Driefontein 4
The current active tailings deposition facility which forms part of the gold assets of the WRTRP Assets.
Pilot Plant
The
 
moveable
 
LogiProc
 
pilot
 
plant
 
established
 
to
 
test
 
the
 
processes, techniques
 
and
 
assumptions
 
made
 
in
 
the
definitive
 
level
 
design
 
of
 
the
 
full
 
scale
 
retreatment
 
of
 
dumps
 
as
 
part
 
of
 
the
 
WRTRP
 
Assets
 
and
 
located
 
at
Driefontein 1 Plant.
Plan and Materials
Any and all drawings, plans, studies
 
(including feasibility studies of a geological or
 
geotechnical nature), surveys,
reports (including
 
sampling and
 
assaying reports),
 
maps (including
 
geophysical, geological
 
and/or drill
 
maps),
statements, schedules and other data in whatever form of a financial, technical, labour, marketing, administrative,
accounting or other matters pertaining to the WRTRP Assets.
Transferring Land
The land upon which:
·
 
the CPP will be located after the subdivision of the Farm Rietfontein No 347 Registration Division I.Q.
 
Portion
35 and 73, Gauteng Province; and
·
 
the Regional Tailing Storage Facility and Return Water
 
Dam will be located.
Active Tailings Dams
The Driefontein 1 and 2, Kloof 2 and Leeudoorn currently active tailings dams are also required to be transferred
under
 
the
 
acquisition
 
agreement,
 
for
 
no
 
additional
 
consideration,
 
once
 
they
 
have
 
been
 
decommissioned
 
by
Sibanye-Stillwater.
Licences to Operate
All
 
the
 
licences,
 
permits,
 
permissions,
 
management
 
plans
 
and
 
reports,
 
as
 
well
 
as
 
amendments,
 
variations
 
or
modifications thereof from time to time necessary for Sibanye-Stillwater to operate the WRTRP Assets lawfully.
Access Rights
The grant of access to DRDGOLD of the:
·
 
Driefontein 10 shaft;
·
 
Kloof 10
 
shaft located
 
in the
 
Kloof mining
 
area that
 
is subject
 
to the
 
Kloof Mining
 
Right, for
 
the purpose
 
of
pumping and
 
supplying, at the cost
 
of WRTRP,
 
the required quantities of
 
water, as licenced,
 
for the WRTRP
Assets;
·
 
rights, servitudes
 
and agreements
 
for installation,
 
supply and
 
distribution and
 
maintenance of
 
power supply;
existing and proposed pipeline routes; servitudes; wayleaves and surface right permits; and
·
 
Driefontein 1 Gold Plant for the purpose of accessing the Pilot Plant.
As of June
 
30, 2021 and
 
September 30, 2021, no material
 
encumbrances
 
exist on FWGR's
 
property.
38
 
 
At June 30, 2021,
 
the net book value of FWGR’s mining assets was R1,341.3 million (2020: R1,303.5 million).
 
At June
 
30, 2021,
 
FWGR employed
 
154 full-time
 
employees.
 
In addition,
 
specialist
 
service providers
 
deployed a
 
further
 
343 employees
to our operations
 
bringing the
 
total number
 
of in-house
 
and outsourced
 
employees
 
to 497.
 
Mining and Processing
 
FWGR undertakes the retreatment of surface tailings.
 
Slime is reclaimed using high pressure water
 
monitoring guns also known as
hydraulic reclamation. The re-pulped slime is
 
pumped to the DP2 plant and the
 
reclaimed material is treated using screens,
 
cyclones, ball mills
and Carbon-in-Leach, or CIL, technology to extract the gold.
 
During Phase 1, the DP2 metallurgical plant
 
was reconfigured to have an installed capacity to treat
 
approximately 6 million tons of
material per year
 
based on 92%
 
availability. Material
 
is sourced from
Driefontein Dump 5
. The surface sources
 
have generally undergone
 
a
complex depositional
 
history resulting
 
in grade
 
variations associated
 
with improvements
 
in plant
 
recovery over
 
the period
 
the material
 
was
deposited.
 
The FWGR makes use of and require access to
 
Sibanye-Stillwater’s mining infrastructure and related services.
 
FWGR entered into
a smelting agreement
 
with Sibanye-Stillwater to smelt
 
and recover gold from
 
gold loaded carbon produced
 
at the DP2 plant,
 
and deliver the
gold to
 
Rand Refinery.
 
In exchange for
 
this service, Sibanye-Stillwater
 
receives a fee
 
based on
 
the smelting costs
 
plus 10% of
 
the smelting
costs. Rand Refinery performs the
 
final refinement of all gold
 
produced. FWGR also engaged its
 
fellow subsidiary, Ergo
 
Mining Proprietary
Limited, to act as its agent and representative and to enter into a refining services arrangement with
 
Rand Refinery for the sale, marketing and
export of the refined
 
gold of the Company. This agreement
 
is expected to be
 
in place until FWGR
 
obtains its own precious
 
metals beneficiation
license.
The Mineral Resources
 
and Mineral Reserves
 
held by FWGR
 
were acquired from
 
Sibanye Gold Limited
 
(Sibanye Gold), a
 
subsidiary
of Sibanye-Stillwater Limited, in a transaction in which common law ownership was established over
 
the various tailings dams containing the
said
 
Mineral
 
Resources
 
and
 
Mineral
 
Reserves,
 
and
 
control
 
was
 
established
 
by
 
Sibanye-Stillwater
 
over
 
DRDGOLD.
 
FWGR
 
conducts
 
its
activities inter
 
alia in
 
accordance with
 
Environmental Approvals
 
and the
 
provisions of
 
the Mine
 
Health and
 
Safety regulations.
 
A Use
 
and
Access Agreement with
 
Sibanye Gold articulates
 
the various rights,
 
permits and licenses
 
held by Sibanye
 
Gold in terms
 
which FWGR operates,
pending the transfer to FWGR of those that are transferable.
Capital Expenditure
 
 
For a discussion of capital expenditures in fiscal year 2021,
 
see "Item 5.A. Operating and Financial Review and Prospects—Capital
expenditure".
 
 
Financing for significant growth projects may
 
be obtained through specific financing
 
arrangements if required. In
 
fiscal year 2019,
capital expenditure
 
incurred on the development
 
of Phase 1 of FWGR of approximately
 
R330.7 million were
 
financed through
 
a combination
 
of
borrowings (refer
 
to the Revolving Credit Facility
 
described in Item 10C.
 
Material Contracts) and cash resources and operational
 
cash flows of
the Group.
 
FWGR appointed an engineering consulting company to undertake the
 
definitive feasibility study and detailed design for the Phase
2
 
project.
 
The
 
available
 
information
 
was
 
independently
 
reviewed
 
by
 
an
 
external
 
consultant,
 
Sound
 
Mining.
 
The
 
project
 
includes
 
the
construction of a new CPP with a capacity of between 1.2 Mtpm to 2.4Mtpm and the equipping of the required reclamation sites and pipeline
infrastructure to supply the relevant resources to the CPP.
 
Phase 2 also includes the construction of a new RTSF capable of accepting 3Mtpm
to a capacity of approximately 800Mt. The definitive feasibility study was concluded in the current year and is subject to obtaining regulatory
approvals on the amended design of the RTSF.
 
 
 
Capital expenditure related to material growth projects are financed
 
on a project-by-project basis which may include bank facilities
and existing cash resources. Sustaining capital expenditure is financed from cash generated from operations and existing cash resources. For
 
a
summary of
 
capital expenditure,
 
see Item
 
5A. Operating
 
Results.
Exploration
 
and Development
 
Exploration
 
and development
 
activity
 
at FWGR
 
involves the
 
drilling of
 
surface
 
dumps and
 
evaluating
 
the potential
 
gold bearing
 
surface
material,
 
as well as
 
exploratory
 
and development
 
activities
 
around Phase
 
2 of the project.
Environmental
 
and Closure
 
Aspects
 
The major environmental
 
risks are associated
 
with dust from various
 
reclamation
 
sites, and effective
 
management of relocated
 
process
material on certain tailings dams. The impact of
 
nuisance dust fallout on the
 
surrounding environment and community is addressed through a
comprehensive monitoring network, with active input
 
from Professor H.
 
Annagran from the
 
Cape
 
Peninsula
 
University
 
of
 
Technology
 
and
appropriate
 
community
 
involvement.
 
Environmental
 
management
 
programs,
 
addressing
 
a wide
 
range of
 
environmental
 
issues,
 
have been
 
prepared
by independent specialist
 
environmental
 
consultants, which
 
are audited annually. Water pollution where appropriate
 
is controlled by means of a
comprehensive
 
system
 
of return
 
water
 
dams which
 
allow
 
for used
 
process
 
water to
 
be returned
 
for use
 
in FWGR’s
 
metallurgical
 
plant and
 
hydraulic
reclamation.
 
FWGR has an ongoing monitoring
 
program to ensure
 
that its water balances
 
(in its reticulation
 
system, on its tailings
 
and its return
39
water dams)
 
are maintained
 
at levels
 
that are sensitive
 
to the capacity
 
of return water
 
dams.
 
Nuisance dust fallout is controlled through active mitigation measures described in
 
the environmental management program for the
management of our
 
activities.
 
These mitigation
 
measures include
 
environmentally
 
friendly dust suppressants
 
applied to high impact
 
areas, active
wetting of access
 
roads by water
 
bowsers,
 
a network of
 
high velocity
 
sprayers on
 
our active
 
TSF. Dust fall-out is
 
monitored through
 
an extensive
dust monitoring network
 
monthly and is utilized as a management
 
measure to ensure the effectiveness
 
of mitigation measures
 
employed. In the
long-term,
 
dust suppression
 
and water
 
pollution will
 
be managed
 
through concurrent
 
rehabilitation
 
of the
 
tailings
 
dam, thus
 
reducing
 
water ingress
and dust from
 
exposed areas.
 
FWGR
 
will
 
undertake concurrent
 
rehabilitation of
 
areas affected
 
by
 
mining
 
operations during
 
the
 
life
 
of
 
the
 
mine.
 
The
 
surface
reclamation
 
process at
 
FWGR has several
 
environmental
 
merits as
 
it removes
 
pollution sources
 
and opens up
 
land for development.
 
 
 
Environmental
 
management
 
and compliance
 
is further assisted
 
by the in–house
 
developed electronic
 
monitoring system
 
that details
 
the
commitments made
 
within the EMPs and Water Use Licenses
 
to aid in keeping the operation
 
compliant to its
 
statutory obligations.
 
The existing
and most recent
 
specialist
 
studies are
 
used to supplement
 
the management
 
components
 
with regards
 
to the compliance
 
parameters.
 
The individual
management
 
items are integrated
 
to provide a
 
holistic overview
 
of the state
 
of the operation.
 
Spatial data
 
pertaining
 
to the operation
 
is stored on
 
a
Geographical Information
 
System (GIS) which provides a spatial overview
 
of the operation which includes environmental
 
monitoring systems,
right boundaries, roads,
 
rails, mine dumps, plants, rivers, wetlands,
 
pipeline routes, servitudes,
 
way leaves, municipal services
 
and other spatial
data relevant
 
to our mining
 
operations.
While the
 
ultimate
 
amount of rehabilitation
 
costs to be
 
incurred is
 
uncertain,
 
we have estimated
 
that the total
 
cost for FWGR,
 
in current
monetary
 
terms as
 
at June
 
30, 2021
 
is approximately
 
R116.4 million
 
(June 30,
 
2020: R103.3
 
million).
 
As at
 
June 30,
 
2021, a
 
total of
 
R425.1
 
million
is held in
 
the Ergo Rehabilitation
 
Trust Fund for
 
the benefit
 
of FWGR’s rehabilitation.
 
The Ergo Rehabilitation
 
Trust Fund is
 
an irrevocable
 
trust,
managed by
 
specific responsible
 
people who we
 
nominated
 
and who are
 
appointed as
 
trustees by
 
the Master
 
of the High
 
Court of South
 
Africa.
Ore Reserves
 
 
As at June 30, 2021,
 
our Proven and
 
Probable Ore
 
Reserves of FWGR
 
was 2.54 million ounces,
 
an decrease from
 
2.60 million ounces
at June
 
30, 2020.
 
The small
 
increase
 
in
 
reserves
 
despite
 
depletion
 
through
 
ongoing
 
mining
 
activities
 
is
 
due
 
to
 
the
 
application
 
of
 
revised
modifying factors
 
i.e. being
 
the dilution
 
from footwall
 
soil and
 
mining loss.
 
A Mineral Reserves and Mineral Resources
 
competent person is
appointed to
 
review our
 
Ore Reserve
 
calculations
 
for accuracy. For
 
FWGR, Mr. Vaughn Duke is the
 
designated
 
competent person
 
in terms of
 
the
SAMREC
 
Code responsible
 
for the compilation
 
and reporting
 
of ore reserves.
 
Production
 
 
For fiscal
 
year 2021,
 
production
 
increased
 
to 46,940 ounces
 
from 46,136
 
ounces produced
 
in fiscal
 
year 2020.
 
This was
 
mainly due the
volume throughput
 
that increased
 
from 6.1Mt in
 
fiscal 2020
 
to 6.2Mt
 
in fiscal
 
2021.
 
The average yield remained stable at 0.237g/t.
 
FWGR temporarily
 
halted its
 
operations
 
on March
 
26, 2020
 
pursuant
 
to the announcement
 
of the Lockdown.
 
The Disaster
 
Management
Act regulations
 
subsequently
 
issued by the Department
 
of Co-operative
 
governance
 
and traditional
 
affairs affirmed
 
that gold mining
 
and refining
are “essential services” and was therefore exempt from restrictions imposed
 
by the Lockdown. FWGR was able to
 
recommence operations on
April 3, 2020 and was able to ramp up production to almost full capacity in May and June 2020, respectively.
 
Subsequent lockdowns
 
in fiscal
2021 did not
 
result in
 
any similar
 
stoppages in
 
production.
 
Construction of Phase
 
1 commenced during
 
August 2018 with
 
R330.7 million spent
 
on,
inter alia
, the reconfiguration
 
of the DP2
plant
 
and relevant
 
infrastructure to
 
process tailings
 
from the
 
Driefontein 5
 
slimes dam
 
and deposit
 
residues on
 
the Driefontein
 
4 Tailings
Storage
 
Facility.
 
During
 
this
 
construction
 
phase,
 
some
 
gold
 
was
 
produced
 
at
 
the
 
adjacent
 
Driefontein
 
3
 
plant
 
(“
DP3
”).
 
Early-stage
commissioning of the
 
DP2 plant commenced on
 
December 6, 2018
 
with the pumping of
 
reclaimed tailings into
 
the carbon in
 
leach (“
CIL
”)
circuit. Testing of the reconfigured plant and ramp-up of production continued during the third quarter of the fiscal year ended June 30, 2019.
Management considered,
inter alia
, the design capacity of the plant, recoveries and the ability to sustain production in determining the
 
date of
commercial production. The
 
date of commercial
 
production for Phase
 
1 (excluding the
 
milling section) was
 
determined to be
 
April 1, 2019.
The mills
 
were subsequently
 
commissioned
 
in September
 
2019.
 
Cash operating
 
costs increased
 
by $74 per
 
ounce, or
 
15%, from
 
$484 per
 
ounce in
 
fiscal year
 
2020 to $558
 
per ounce
 
in fiscal
 
year 2021
mainly due
 
to FY2021 being
 
FWGR’s first full
 
year of milling.
 
 
 
40
The following table details certain production and financial results of FWGR for the past two fiscal years.
2021
2020
Production (imperial)
Ore milled ('000 tons)
 
6,159
6,052
Recovered grade (oz/ton)
 
0.008
0.008
Gold produced (ounces)
 
46,940
46,136
Results of Operations
 
Revenue (R million)
1,326.0
1,120.7
 
Cost of sales (R million)
517.1
473.3
 
Cash operating costs (R million)
406.2
352.0
 
Cash operating costs (R/kilogram)
1
276,174
243,542
 
All-in sustaining costs (R/kilogram)
 
1
377,210
299,792
 
All-in cost (R/kilogram)
 
1
400,829
311,597
1 Cash operating cost, cash operating costs per kilogram, all-in sustaining costs per kilogram and all-in costs per kilogram are financial measures of performance that we use to determine cash generating capacities
 
of the
mines and to monitor
 
performance of our mining operations.
 
These are all non IFRS
 
measures. For a reconciliation of
 
these measures to the
 
nearest IFRS measure see Item
 
5A.: “Operating Results - Reconciliation
 
of
cash cost per kilogram, all-in sustaining costs per kilogram and all-in costs per kilogram.”
See Item 5A.
 
Operating Results
 
– Capital
 
expenditure
 
for a discussion
 
on capital
 
expenditure.
ERPM
Overview
 
 
In December
 
2018,
 
ERPM concluded
 
revised agreements
 
to dispose
 
certain of
 
its underground
 
assets
 
to OroTree Limited
 
(“
OroTree
”).
The revised agreements
 
consisted of a
 
disposal of
 
ERPM's underground mining
 
and prospecting rights and
 
an option
 
agreement, at the
 
sole
discretion
 
of OroTree,
 
to purchase
 
the underground
 
mining infrastructure
 
exercisable
 
on or before
 
June 30, 2019.
 
The disposal
 
of the underground
mining and prospecting rights were concluded in the second
 
half of the financial year
 
ended June 30, 2019.
 
OroTree’s option to
 
purchase the
underground mining
 
infrastructure
 
lapsed on June 30, 2019
 
when it did not exercise
 
said option.
 
The underground mining
 
infrastructure
 
remains
under care
 
and maintenance.
 
Certain infrastructure
 
was demolished
 
during fiscal
 
2021.
 
 
At June
 
30, 2021,
 
ERPM had
 
no employees. The
 
financial results and
 
remaining assets and
 
liabilities of these halted
 
underground
operations
 
are included
 
in ‘Corporate
 
office and other
 
reconciling
 
items’ in the
 
financial
 
statements
 
for segmental
 
reporting purposes
 
for all three
years presented.
Property
 
ERPM is situated on
 
the Central Rand Goldfield
 
located within and near
 
the northern margin of the
 
Witwatersrand Basin in the town
of Boksburg,
 
20 miles
 
(32 kilometers)
 
east of
 
Johannesburg on
 
land owned
 
by ERPM.
 
Access is
 
via Jet
 
Park Road
 
on the
 
N12 Boksburg-
Benoni highway. Historically underground
 
mining and recovery operations comprised relatively shallow remnant pillar mining in the central
area and conventional
 
longwall mining in
 
the south-eastern area. Until
 
underground mining was
 
halted in October 2008,
 
the mine exploited
the conglomeratic South Reef, Main Reef Leader and Main Reef in the central area and the Composite Reef in the south-eastern area. ERPM
concluded the
 
disposal of
 
its underground
 
mining and
 
prospecting
 
rights in
 
the second
 
half of the
 
financial
 
year ended
 
2019.
Surface reclamation
 
operations including
 
the treatment
 
of sand
 
from ERPM’s
 
Cason Dump,
 
was conducted
 
through the
 
Knights
metallurgical plant, tailings deposition facilities and associated facilities until
 
ERPM’s surface mining assets were transferred
 
to Ergo as part
of the restructuring which took place on July 1, 2012.
 
As of June 30, 2021, and
 
September 30, 2021, no encumbrances
 
exist on ERPM's
 
property.
 
At June 30,
 
2021, the net
 
book value
 
of ERPM’s mining
 
assets was
 
zero (2020: zero).
 
Mining and Processing
 
 
ERPM’s underground gold mining infrastructure
 
is under care and maintenance. Surface reclamation operations and
 
surface mining
assets were transferred to Ergo as part of the restructuring which took place on July 1, 2012.
 
Exploration
 
and Development
 
ERPM disposed
 
prospecting
 
right ERPM
 
Extension
 
1 covering
 
an area
 
of 1,252ha
 
(3,094 acres)
 
of the adjacent
 
Sallies mine
 
and ERPM
Extension 2,
 
for an additional
 
area of 5,500ha
 
(13,590 acres)
 
to OroTree Limited
 
during the second
 
half of the
 
fiscal year
 
ended June
 
30, 2019.
 
 
41
Environmental
 
and Closure
 
Aspects
 
There is a regular ingress of
 
water into the underground workings of ERPM, which was contained by continuous pumping from the
underground section.
 
Studies on
 
the estimates
 
of the probable
 
rate of
 
rise of water
 
have been
 
inconsistent,
 
with certain
 
theories suggesting
 
that the
underground water
 
might reach
 
a natural subterranean
 
equilibrium,
 
whilst other
 
theories maintain
 
that the water
 
could decant
 
or surface.
 
 
The government has
 
appointed Trans-Caledon
 
Tunnel Authority (“
TCTA
”) to construct a partial
 
treatment plant
 
(neutralisation
 
plant)
to prevent
 
the ground
 
water
 
being
 
contaminated.
 
TCTA completed
 
the construction
 
of the
 
neutralisation
 
plant
 
for the
 
Central
 
Basin and
 
commenced
treatment
 
during July
 
2014. As
 
part of
 
the heads
 
of agreement
 
signed
 
in December
 
2012 between
 
EMO, Ergo,
 
ERPM and
 
TCTA, sludge
 
emanating
from this plant is co-disposed
 
onto the Brakpan/Withok
 
TSF together with
 
processed material
 
from the Ergo plant. Partially
 
treated water
 
is then
discharged
 
by TCTA into
 
the Elsburg
 
Spruit. This
 
agreement
 
includes
 
the granting
 
of access
 
to the
 
underground
 
water basin
 
through one
 
of ERPM
shafts and the rental of a site onto which it constructed its neutralisation
 
plant. In exchange, Ergo and its associate companies
 
including ERPM
have a set-off
 
against any future
 
directives
 
to make any contribution
 
toward costs
 
or capital of
 
up to R250 million.
 
Through this
 
agreement,
 
Ergo
also secured the right to purchase
 
up to 30 ML of partially treated Acid
 
Mine Drainage (“
AMD
”), a day, from TCTA at cost, in order to reduce
Ergo’s reliance on
 
potable water
 
for mining and
 
processing
 
purposes.
 
 
 
While the
 
ultimate
 
amount of
 
rehabilitation
 
costs to
 
be incurred
 
in the future
 
is uncertain,
 
we have
 
estimated
 
that as at
 
June 30,
 
2021 the
present
 
discounted
 
value of
 
the total
 
cost of
 
rehabilitation
 
for ERPM
 
is approximately
 
R8.6 million
 
(2020: R17.9
 
million).
 
A total
 
of R12.4
 
million
(2020: R12.0 million)
 
is held in the Ergo Rehabilitation
 
Trust Fund for the benefit of ERPM and R24.8 million
 
(2020: R23.8 million)
 
is held in
insurance instruments
 
and is available for
 
the settlement of these
 
rehabilitation
 
costs. The Ergo Rehabilitation
 
Trust Fund is an irrevocable
 
trust,
managed by
 
specific responsible
 
people who we
 
nominated
 
and who are
 
appointed as
 
trustees by
 
the Master
 
of the High
 
Court of South
 
Africa.
 
Ongoing Legal
 
Proceedings
Ekurhuleni
 
Metropolitan
 
Municipality
 
(“Municipality”)
 
Electricity
 
Tariff Dispute
Refer to Item 18.
 
‘‘Financial Statements
 
- Note 24 –
 
Payments made
 
under Protest”.
Silicosis
 
Litigation
Refer to Item 18.
 
‘‘Financial Statements
 
- Note 26.1
 
– Contingencies”.
ITEM 4A. UNRESOLVED STAFF COMMENTS
None.
 
 
 
ITEM 5. OPERATING AND FINANCIAL
 
REVIEW AND PROSPECTS
This
 
section
 
should
 
be
 
read
 
in
 
conjunction
 
with,
 
our
 
audited
 
financial
 
statements
 
and
 
the
 
other
 
financial
 
information
 
contained
elsewhere in this Annual Report. Our financial statements have been prepared in accordance with International Financial Reporting Standards
(“
IFRS
”) as issued
 
by the International
 
Accounting Standards Board
 
(“
IASB
”). Our discussion
 
contains forward looking
 
information based
on current
 
expectations that
 
involve risks and
 
uncertainties, such
 
as our
 
plans, objectives
 
and intentions.
 
Our actual
 
results may
 
differ from
those indicated in such forward looking statements.
Comparison of financial performance for the fiscal year ended June 30, 2020 with fiscal year ended June 30, 2019
This comparison analysis can be found in Item 5A of the Company’s
 
annual report on Form 20-F for the fiscal year ended
 
June 30,
2020.
 
42
5A. OPERATING RESULTS
Business overview
We
 
are
 
a
 
South
 
African
 
gold
 
mining
 
company
 
engaged
 
in
 
surface gold
 
tailings retreatment,
 
including
 
exploration,
 
extraction,
processing and
 
smelting. All
 
our surface
 
tailings retreatment
 
operations, including
 
the requisite
 
infrastructure and
 
metallurgical processing
plants, are located in South Africa.
The success of DRDGOLD’s long-term goal to extract as much gold from its assets as possible and is economically viable depends,
to a large extent, on how effectively it continues to manage its resources.
DRDGOLD’s
 
strategic thinking
 
is informed
 
by principles
 
of sustainable
 
development. Our
 
goal is
 
to optimally
 
exploit our
 
entire
resource over the long term,
 
thereby seeking sustainable benefits
 
in respect to the
 
following capitals, each of which
 
is essential to our operation
– financial, manufactured, natural, human and social capital.
We also aim to align and overlap the interests of each of these capitals
 
in such a manner that an investment in any
 
one translates into
value-add in
 
as many of
 
the others as
 
possible. We
 
therefore seek to
 
achieve an enduring
 
and harmonious alignment
 
between them, and
 
we
pursue these criteria in the feasibility analysis of each investment.
 
Our profit
 
for fiscal
 
year 2021 increased
 
compared to
 
fiscal 2020,
 
mainly due to,
 
inter alia
, the following:
gold production
 
increased
 
by 6%
 
to 5,723kg
 
together
 
with an
 
increase
 
in gold
 
sold
 
by 5%
 
to 5,734kg.
 
The increase
 
in production
 
reflected
an 11% increase
 
in throughput
 
to 29,111t,
 
offsetting the
 
4% decrease
 
in average
 
yield to 0.197g/t;
 
and
the average
 
rand gold price
 
received increased
 
by 19%.
 
Key drivers of our operating results and principal factors affecting our operating results
 
The principal uncertainties and variables facing our business and, therefore, the key drivers of our operating results are:
the price of gold, which fluctuates both in terms of dollars and rands;
our production tonnages and gold content thereof, impacting on the amount of gold we produce at our operations;
our cost of producing gold, including the effects of mining efficiencies; and
general economic factors, such as exchange rate fluctuations and inflation, and factors affecting mining operations in South Africa.
Gold price
 
Our revenues
 
are derived
 
primarily from
 
the sale
 
of gold
 
produced at
 
our surface
 
tailings retreatment
 
operations. As
 
a result,
 
our
operating results are directly
 
related to the price of gold,
 
which can fluctuate widely and
 
is affected by numerous factors
 
beyond our control,
including industrial and jewelry
 
demand, expectations with respect
 
to the rate of
 
inflation, the strength of
 
the U.S. dollar (the
 
currency in which
the price of
 
gold is generally
 
quoted) and of
 
other currencies, interest
 
rates, actual or
 
expected gold sales by
 
central banks, forward
 
sales by
producers, global
 
or regional
 
political or
 
economic events,
 
and production
 
and cost
 
levels in
 
major gold-producing
 
regions such
 
as South
Africa. In addition, the price of gold is often subject to rapid short-term changes because
 
of speculative activities. In response
 
to the COVID19
pandemic and measures
 
taken to deal with the outbreak, investors
 
globally, as they have in so many previous times of crisis,
 
turned to gold and
gold stocks
 
as a safe
 
haven asset,
 
leading to a
 
surge in the
 
average gold
 
price during
 
fiscal 2020
 
and 2021.
 
The demand
 
for and supply
 
of gold affects
 
gold prices, but
 
not necessarily in
 
the same manner
 
that supply and
 
demand affect
 
the
prices of other commodities. The supply of
 
gold consists of a combination of new
 
production from mining and existing stocks of
 
bullion and
fabricated gold held by governments, public and private financial institutions, industrial organizations and private individuals.
 
The following table indicates data relating to the dollar gold spot prices for the 2021 and 2020 fiscal years:
2021 fiscal year
2020 fiscal year
Change
$ per ounce
$ per ounce
%
Closing gold spot price on June 30,
1,770
1,781
(1)
Lowest gold spot price during the fiscal year
 
1,676
1,382
21
Highest gold spot price during the fiscal year
 
2,072
1,785
16
Average gold spot price for the fiscal year
 
1,850
1,562
18
All our
 
operations and
 
gold production
 
are based
 
in South
 
Africa, and
 
as a
 
result, the
 
impact of
 
movements in
 
relevant exchange
rates is significant to our operating results.
 
The average gold price in rand (based
 
on average spot prices for the year) increased
 
by 37% from
R17,914 per ounce in 2019 to R24,466 per ounce in 2020, and increased by 16% to R28,490 per ounce in 2021.
An increase/(decrease) of 20% in the US dollar gold price throughout
 
fiscal year 2021 would have increased/(decreased) revenue by
approximately R1,053.8 million (2020: R837.0 million).
 
An increase/(decrease) of 20% in
 
the Rand to US dollar exchange
 
rate throughout fiscal year 2021
 
would have increased/(decreased)
revenue by approximately R1,053.8 million (2020: R837.0 million).
43
Gold production
 
 
In fiscal year 2021,
 
gold production increased to
 
183,999 ounces (produced from 29.1
 
million tonnes milled at an
 
average yield of
0.197g/t) from 174,385 ounces in fiscal
 
year 2020 (produced from 26.3 million tonnes
 
milled at an average yield of
 
0.206g/t). This was mainly
due to Ergo’s gold production which increased to 137,059 ounces in fiscal year 2021 (produced from 23.0 million tonnes milled at an average
yield of
 
0.186g/t) from
 
128,249 ounces
 
in fiscal year
 
2020 (produced
 
from 20.2
 
million tonnes milled
 
at an
 
average yield
 
of 0.197g/t). The
increase was a
 
consequence of stable production during fiscal 2021 compared to fiscal 2020 when production suffered from the impact of the
Lockdown, subsequent
 
cautious ramp-up
 
and interruptions
 
in power supply
 
from Eskom
 
and the City
 
of Ekurhuleni.
In fiscal year 2020,
 
gold production increased to
 
174,385 ounces (produced from 26.3
 
million tonnes milled at an
 
average yield of
0.206g/t) from 155,159 ounces in fiscal
 
year 2019 (produced from 24.4 million tonnes
 
milled at an average yield of 0.197g/t).
 
This was mainly
due to the first full year of gold production
 
of FWGR resulting in production
 
of 46,136 ounces (produced from 6.1
 
million tonnes milled
 
at an
average yield of 0.237g/t), mitigating the impact of
 
Ergo’s gold production which
 
decreased to 128,249 ounces in fiscal year 2020
 
(produced
from 20.2 million tonnes milled at an average yield
 
of 0.197g/t) from 144,453 ounces in fiscal year 2019
 
(produced from 23.2 million tonnes
milled at an average
 
yield of 0.194g/t).
 
This was
 
a consequence
 
of the
 
Lockdown,
 
subsequent
 
cautious
 
ramp-up
 
and interruptions
 
in power
 
supply
from Eskom
 
and the City
 
of Ekurhuleni.
Cash operating costs
 
Cash operating costs is a non-IFRS financial measure of performance that
 
is reported to the group’s chief
 
operating decision maker
(CODM) and is used
 
to monitor performance –
 
refer to Item 18. ‘‘Financial Statements
 
- Note 23 – Operating Segments”.
 
For a reconciliation
of this measure see Item 5A.: “Reconciliation of cash cost per kilogram, all-in sustaining costs per kilogram and all-in costs per kilogram”.
 
 
Cash operating
 
costs include
 
consumables, labor,
 
specialized service
 
providers, electricity
 
and other
 
related costs
 
incurred in
 
the
production of gold. Consumables, water and electricity, labor, specialized service providers and other costs are the largest components of cash
operating costs. A breakdown of cash operating costs into
 
these costs is described in Item 5A.: “Comparison of financial performance for
 
the
fiscal year ended June 30, 2021 with fiscal year ended June 30, 2020”.
General economic factors
We are
 
exposed to a number
 
of factors, which could
 
affect our profitability,
 
such as exchange rate
 
fluctuations, inflation and other
risks relating to South
 
Africa. In conducting mining operations,
 
we are subject to the
 
inherent risks and uncertainties of
 
the industry, and
 
the
wasting nature of the assets.
Effect of exchange rate fluctuations
For the fiscal years 2021
 
and 2020, all of
 
our revenues were generated from
 
South African operations, all of
 
our operating costs were
denominated in
 
rand and
 
we derived
 
all of
 
our revenues
 
in dollars
 
before being
 
translated to
 
rands. As
 
the price
 
of gold
 
is denominated
 
in
dollars which is then translated into
 
rands, the appreciation of the dollar
 
against the rand increases our profitability,
 
whereas the depreciation
of the dollar against the rand reduces our profitability.
 
In fiscal year 2021
 
the Rand gold
 
price received increased by
 
19% compared to fiscal
 
year 2020, outperforming the
 
combined impact
of the average Dollar gold price which increased
 
by 18% and the average exchange rate of
 
the rand against the dollar that strengthened
 
by 2%.
In line with our long-term strategy of being an unhedged gold producer,
 
we generally do not enter into forward gold sales contracts
to reduce our exposure
 
to market fluctuations in the
 
Dollar gold price or the
 
exchange rate movements. If revenue
 
from gold sales falls
 
for a
substantial period
 
below our
 
cost of
 
production at
 
our operations,
 
we could
 
determine that
 
it is
 
not economically
 
feasible to
 
continue commercial
production at any or
 
all of our plants
 
or to continue the
 
development of some or
 
all of our projects.
 
However, during periods
 
when medium-
term debt is incurred
 
to fund growth projects and
 
hence introduce liquidity risk
 
to the Group, we
 
may mitigate this liquidity
 
risk by entering
into hedging instruments to
 
achieve price protection (refer
 
Item 11.
 
Quantitative and Qualitative Disclosures
 
About Market Risk –
 
General).
For example in fiscal year
 
2019 we entered into a hedging
 
instrument in the form of a
 
collar in respect of 50,000 ounces
 
of gold that expired
at the end of May 2019.
Effect of inflation and exchange rates
In the past, our operations have been materially adversely affected by inflation. If there is a significant increase in inflation in South
Africa, our costs will
 
increase and if such
 
a cost increase is not
 
offset by an
 
increase in the rand
 
price of gold, this
 
will negatively affect our
operating results.
The movements in
 
the rand/dollar exchange
 
rate, based
 
upon average rates
 
during the periods
 
presented, and the
 
local annual inflation
rate for the periods presented, as measured by the South African Consumer Price Index, or CPI, are set out in the table below:
 
 
44
Fiscal year ended
Year
 
ended June 30,
2021
2020
2019
(%)
(%)
(%)
The average rand/dollar exchange rate (strengthened)/weakened by:
(2)
10
10
CPI (inflation rate)
 
4.9
2.2
4.5
Production
 
stoppages
 
due to the
 
impact of the
 
COVID-19 pandemic
 
on current
 
operations
 
 
The Group
 
temporarily halted its operations at
 
Ergo and
 
FWGR on
 
March 26,
 
2020 pursuant to
 
the announcement of
 
the national
lockdown in South African (“
Lockdown
”). Operations gradually recommenced through April and May 2020. Subsequent lockdowns in fiscal
2021 did not resulting
 
in any similar
 
stoppages in production.
 
(Refer to Item
 
4D. ‘‘Property, plant and production
 
– Ergo Production
 
and FWGR
production”).
Key financial and operating indicators
The table
 
below presents
 
the key
 
performance measurement
 
data for
 
the past
 
two fiscal
 
years: The
 
financial results
 
for the
 
fiscal
years below are stated in accordance with IFRS as issued by the IASB. The table includes the key performance measures for our business and
its profitability, which are revenue, gold production, gold prices, operating costs, cash operating costs per kilogram, all-in sustaining costs per
kilogram and all-in costs per kilogram, capital expenditure (additions to property, plant and equipment) and Ore Reserves.
 
Operating data
Year ended
 
June 30,
2021
2020
Revenue (R'm)
5,269.0
4,185.0
Gold production (ounces)
 
183,999
174,385
Gold production (kilograms)
 
5,723
5,424
Gold sold (ounces)
 
184,352
174,804
Gold sold (kilograms)
 
5,734
5,437
Average spot gold price (R/kilogram)
 
915,972
786,601
Average gold price received (R/kilogram)
 
917,996
768,675
Cost of sales (R'm)
3,388.2
2,937.9
Operating costs (R'm)
3,122.5
2,692.1
Cash operating costs (R'm)
 
(1)
3,072.7
2,626.0
Cash operating costs (R/kilogram)
 
(1)
 
540,338
482,417
All-in sustaining costs (R/kilogram)
 
(1)
 
626,247
541,475
All-in costs (R/kilogram)
 
(1)
 
643,338
551,646
Additions to property, plant and equipment (R'm)
395.7
182.7
Ore Reserves (million ounces)
 
5.35
5.73
(1) Cash
 
operating costs,
 
cash operating
 
costs per kilogram,
 
all-in sustaining
 
costs, all-in
 
sustaining costs per
 
kilogram and
 
all-in costs
and all-in
 
costs per kilogram
 
are non-IFRS financial
 
measures of performance
 
that we use
 
to monitor performance.
 
A reconciliation of
these measures to the nearest IFRS measure is included in Item 5A.: “Operating Results - Reconciliation of cash cost per
 
kilogram, all-in
sustaining costs per kilogram and all-in costs per kilogram.”
Revenue
Revenue increased by 26% to R5,269.0
 
million in fiscal year 2021 from R4,185.0
 
million in fiscal year 2020 mainly due
 
to the 5%
increase
 
in gold sold
 
from 5,437
 
kilograms
 
in fiscal
 
2020 to 5,734
 
kilograms
 
in fiscal
 
2021 and the
 
average
 
rand gold
 
price received
 
that increased
by 19% to R917,996
 
per kilogram.
 
Refer to Item 5A:. “Operating results: Key drivers of our operating results
 
and principal factors affecting our operating results”
 
for a
discussion
 
regarding the
 
gold price
 
received and
 
sales volumes.
 
Ore Reserves
 
As at June 30, 2021, our Ore Reserves (imperial) were estimated at 5.35 million ounces, as compared to 5.73 million ounces at
June 30, 2020. The decrease was mainly because of depletion through ongoing mining activities. The decrease was offset by a non-material
increase in FWGR’s ore reserves despite depletion through ongoing mining activities due to the application of revised modifying factors i.e.
being the dilution from footwall soil and mining loss. The table
 
below sets
 
forth our Ore
 
Reserves as
 
of the date
 
indicated:
 
 
 
 
 
 
 
 
 
 
 
 
45
Year ended
 
June 30,
2021
2020
Ore Reserves
Ounces
Tonnes
Ounces
Tonnes
‘m ozs
‘m ozs
Ergo
 
2.81
87.42
3.13
97.22
FWGR
2.54
79.03
2.60
80.74
Total Ore
 
Reserves
5.35
166.45
5.73
177.96
Capital expenditure
 
During fiscal year 2021 capital expenditure increased by R214.6 million to R395.7 million from R181.1 million in fiscal year 2020.
 
Ergo’s capital expenditure during fiscal year 2021 increased by R136.5 million to R250.9 million from R114.4 million in fiscal year
2020. This was mainly
 
due to infrastructure development
 
for reclamation of the
 
4L3 and 4L4 dumps
 
amounting to R47.5 million,
 
upgrading
of
 
the
 
Brakpan
 
plant’s
 
carbon
 
in
 
leach
 
circuit
 
to
 
provide
 
more
 
capacity
 
and
 
achieve
 
better
 
efficiencies
 
amounting
 
to
 
R10.8
 
million,
 
the
installation of a
 
third regeneration kiln
 
amounting to R13.2
 
million, both for
 
additional carbon regeneration
 
capacity to manage
 
the planned
higher plant throughput and
 
as back-up for the two
 
existing kilns and improved tailings
 
deposition and recommissioning studies
 
and designs
for the Brakpan/Withok TSF expansion amounting to R10.2 million.
FWGR’s capital expenditure during fiscal year 2021 increased by R83.2 million to R143.3 million from R60.1 million in fiscal year
2020. This was mainly due
 
to the construction of an
 
additional thickener amounting to R40.3
 
million at reporting date (total
 
cost is expected
to be approximately
 
R88 million),
 
feasibility studies and
 
designs for Phase
 
2 amounting to
 
R32.5 million and
 
the installation of
 
a copper elusion
circuit amounting to R12 million.
During fiscal year
 
2020, capital expenditure
 
was R181.1 million
 
primarily consisting of
 
expenditure incurred on
 
sustaining capital
expenditure on the Brakpan/Withok TSF,
 
upgrade of CIL tanks and site establishment costs and authorisations for reclamation sites.
 
Critical accounting policies
 
The
 
preparation
 
of
 
the
 
consolidated financial
 
statements
 
requires
 
management
 
to
 
make
 
accounting
 
assumptions, estimates
 
and
judgements
 
that affect the application
 
of the Group's
 
accounting policies
 
and reported amounts
 
of assets and liabilities,
 
income and expenses.
 
By
their nature, judgements
 
are subject to an inherent
 
degree of uncertainty. Accounting
 
assumptions,
 
estimates and
 
judgements are
 
reviewed on an
ongoing basis.
 
Revisions
 
to reported
 
amounts are
 
recognized
 
in the period
 
in which
 
the revision
 
is made and
 
in any future
 
periods affected.
 
Actual
results may
 
differ from
 
these estimates.
Management
 
has discussed
 
the development
 
and selection
 
of each of these
 
critical accounting
 
policies with
 
the Board of
 
Directors and
the Audit Committee,
 
both of which have approved
 
and reviewed
 
the disclosure
 
of these policies.
 
This discussion
 
and analysis should
 
be read in
conjunction
 
with the
 
consolidated
 
financial
 
statements
 
and related
 
notes included
 
in Item 18.
 
“Financial
 
Statements”.
Critical accounting policies that require significant judgment
 
Management
 
believes
 
the following
 
critical
 
accounting
 
policies
 
require more
 
significant
 
judgements
 
to be used
 
in the preparation
 
of our
consolidated
 
financial
 
statements
 
and could potentially
 
impact our
 
financial
 
results and
 
future financial
 
performance:
Payments
 
made under
 
protest: Judgement
 
regarding the
 
outcome of
 
the matter, and
Contingencies:
 
Judgement
 
regarding the
 
outcome of
 
the respective
 
matters
Payments made
 
under protest
 
The assessment
 
to develop and apply the relevant
 
accounting policy
 
for payments made
 
under protest that
 
arise from the Municipality
Electricity Tariff Dispute (refer
 
Item 18. ‘‘Financial
 
Statements - Note 24
 
Payments made under protest”) requires the
 
exercise of significant
judgement.
 
 
The judicial
 
proceedings
 
that impact
 
the Payments
 
made under
 
protest
 
are inherently
 
complex
 
legal
 
issues
 
that are
 
subject
 
to uncertainties
and complexities
 
and are subject
 
to interpretation.
 
Contingencies
 
The assessment
 
of the impact of contingent
 
liabilities
 
require the exercise
 
of significant judgement
 
regarding the outcome
 
of uncertain
future events.
 
Litigation
 
and other
 
judicial
 
proceedings
 
inherently
 
entail complex
 
legal issues
 
that are
 
subject to
 
uncertainties
 
and complexities
 
and
are subject
 
to interpretation.
Critical accounting policies that require significant assumptions and estimates
46
 
Management
 
believes the
 
following are
 
critical accounting
 
policies which
 
involve the
 
more significant
 
assumptions
 
and estimates
 
used
in the preparation
 
of our consolidated
 
financial statements,
 
and are therefore
 
considered DRDGOLD’s critical
 
accounting estimates
 
which could
potentially
 
impact our
 
financial
 
results and
 
future financial
 
performance:
Depreciation:
 
Estimation
 
of the life-of-mine
Provision for
 
environmental
 
rehabilitation:
 
Estimation
 
of future environmental
 
rehabilitation
 
costs
 
Income tax:
 
Estimation
 
of the deferred
 
tax rate
Payments
 
made under
 
protest: Estimation
 
of the carrying
 
value and recoverability
Other investments:
 
Estimation
 
of the fair
 
value of financial
 
assets
Depreciation:
 
Estimation
 
of life-of-mine
 
Depreciation
 
of
 
mine plant
 
facilities and
 
equipment, as
 
well as
 
mining
 
property and
 
development (including
 
mineral rights)
 
are
calculated using the units of production method which is based on the life-of-mine of each site. The life-of-mine is primarily based on proved
and probable
 
mineral reserves. It
 
reflects the estimated
 
quantities of
 
economically recoverable
 
gold that
 
can be
 
recovered from
 
reclamation
sites based on
 
the estimated
 
gold price.
 
Changes in the
 
life-of-mine will impact
 
depreciation on a
 
prospective basis. The
 
life-of-mine is prepared
using a methodology that takes account of current information
 
to assess the economically recoverable gold from specific
 
reclamation sites and
includes the consideration of historical experience.
 
Provision
 
for environmental
 
rehabilitation:
 
Estimation
 
of future environmental
 
rehabilitation
 
costs
 
Provisions for environmental
 
rehabilitation
 
are provided at the present
 
value of the costs expected
 
to be incurred in the future to settle
the obligation based on
 
current prices. The unwinding of
 
the obligation is
 
included in profit
 
or loss.
 
Estimated future costs of
 
environmental
rehabilitation
 
are reviewed
 
regularly
 
and adjusted
 
as appropriate.
 
Changes
 
in estimates
 
are capitalized
 
or reversed
 
against
 
the related
 
asset
 
but taken
to profit or loss if there
 
is no related asset left.
 
Gains or losses from the
 
expected disposal
 
of assets are not taken into account
 
when determining
the provision.
 
Estimates
 
of future environmental
 
rehabilitation
 
costs are
 
based on the
 
Group’s environmental
 
management
 
plans which
 
are developed
in accordance
 
with regulatory requirements,
 
the life-of-mine
 
plan and the planned method
 
of rehabilitation
 
which is influenced
 
by developments
in trends and
 
technology.
Income tax:
 
Estimation
 
of the deferred
 
tax rate
 
Deferred tax
 
is recognized
 
in
 
respect of
 
temporary differences between the
 
carrying amounts of
 
assets and
 
liabilities for financial
reporting purposes
 
and the amounts
 
used for tax
 
purposes.
 
The deferred
 
tax liability
 
is calculated
 
by applying a
 
forecast
 
weighted average
 
tax rate
that is based
 
on a prescribed
 
formula. The
 
calculation
 
of the forecast
 
weighted average
 
tax rate requires
 
the use of assumptions
 
and estimates
 
and
are inherently uncertain and could change materially over time. These assumptions and estimates include the expected future profitability and
timing
 
of the
 
reversal
 
of the
 
temporary
 
differences.
 
Due to
 
the forecast
 
weighted
 
average
 
tax rate
 
being based
 
on a
 
prescribed
 
formula
 
that increases
the effective
 
tax rate with
 
an increase
 
in forecast
 
future profitability,
 
and vice versa,
 
the tax rate
 
can vary significantly
 
year on year
 
and can move
contrary to
 
current period
 
financial performance.
Payments made
 
under protest:
 
Estimation of
 
the carrying
 
value and recoverability
 
The discounted
 
amount of
 
the Payments
 
made under
 
protest is
 
determined using
 
assumptions about the
 
future that
 
are inherently
uncertain
 
and can change
 
materially over
 
time and includes
 
the discount
 
rate and discount
 
period.
 
 
These assumptions about the future include estimating
 
the timing of concluding on the main application, i.e. the discount period, the
ultimate settlement terms (refer Item
 
18. ‘‘Financial
 
Statements -
 
Note 24
 
Payments made under
 
protest”), the discount
 
rate applied and
 
the
assessment
 
of recoverability.
 
Recognition
 
and measurement
 
The asset that arises from the Ekhurhuleni electricity dispute (refer Item 18. ‘‘Financial Statements - Note 24
 
Payments made under
protest”) and that are payments made under protest is
 
initially measured at a discounted amount and any
 
difference between the face value of
payments made
 
under protest
 
and the discounted
 
amount on initial
 
recognition is
 
recognised
 
in profit or loss
 
as a finance expense.
 
Subsequent to
initial recognition, the Payments made under
 
protest is measured using
 
the effective interest method to
 
unwind the discounted amount to
 
the
original face value
 
less any write downs for recovery. Unwinding
 
of the carrying value and
 
changes in the discount
 
period are recognised
 
in the
statement
 
of profit or
 
loss.
 
Assessment
 
of recoverability
 
The discounted amount of the payments under protest is assessed at
 
each reporting date to determine whether there is any
 
objective
evidence that the full amount
 
is no longer expected to be recovered.
 
The Group considers the reasonable
 
and supportable information
 
related to
the
 
creditworthiness of Ekurhuleni
 
Metropolitan Municipality and
 
events surrounding
 
the outcome
 
of
 
the
 
Main Application
 
(refer Item
 
18.
‘‘Financial Statements
 
- Note 24 Payments
 
made under
 
protest”).
 
Any write
 
down is recognised
 
in the statement
 
of profit or
 
loss.
 
 
 
 
 
 
 
 
 
 
47
 
Other investments:
 
Estimation
 
of the fair
 
value of financial
 
assets
 
The fair value of
 
other investments are determined using assumptions about the future that
 
are inherently uncertain and can change
materially over time.
 
It includes several
 
assumptions that are based
 
on both
 
observable and unobservable inputs. Assumptions applied in
 
the
estimation
 
of the fair
 
value of the
 
investment
 
in Rand Refinery
 
include the
 
following:
Amounts in R million
Observable/unobservable
Unit
2021
2020
Rand Refinery operations
Average gold price
 
Observable input
R/kg
 
847,317
 
852,098
Average silver price
 
Observable input
R/kg
 
11,751
 
9,453
Average South African CPI
Observable input
%
4.4
4.8
South African long-term government bond rate
Observable input
%
9.5
9.5
Terminal growth rate
Unobservable input
%
4.4
5.0
Weighted average cost of capital
Unobservable input
%
15.1
15.1
Investment in Prestige Bullion
Discount period
Unobservable input
Year
12
13
Cost of equity
Unobservable input
%
16.5
13.2
 
Marketability and minority discounts (both
 
unobservable inputs) were also applied
 
of 16.5%
 
and 17.0%
 
(2020: 16.5% and
 
17.0%)
respectively. The latest budgeted cash flow
 
forecasts provided by Rand Refinery as
 
at June
 
30, 2021 was
 
used, and therefore classified as an
unobservable
 
input into
 
the models.
 
New standards, amendments to standards and interpretations
 
Refer to Item 18. ‘‘Financial Statements - Note 3 – New standards, amendments to standards and interpretations”
 
for a discussion of
relevant standards,
 
amendments to standards
 
and interpretations
 
that may be applicable
 
to the business of the Group
 
and may have an impact
 
on
future consolidated
 
financial
 
statements.
Comparison of financial performance for the fiscal year ended June 30, 2021 with fiscal year ended June 30, 2020
Gold revenue
The following table illustrates the year-on-year change in gold revenue for fiscal year 2021 in comparison to fiscal year 2020:
R million
Total
Impact of change in amount
of gold sold
Impact of
change in
gold price
Net change
Total
gold revenue
gold revenue
2020
2021
Ergo
 
3,060.5
221.3
658.0
879.3
3,939.9
FWGR
1,118.7
6.2
199.0
205.2
1,323.9
Consolidated
4,179.2
227.5
857.0
1,084.5
5,263.8
Gold revenue increased by
 
R1,084.5 million,
 
or 26%, to R5,263.8 million
 
during fiscal year 2021.
 
This was
 
mainly due
 
to the
 
average
rand gold price
 
received
 
which increased
 
by 19% to R917,996
 
per kilogram
 
as well as
 
gold sold having
 
increased by
 
5%. The increase is mainly
due to Ergo’s gold production
 
which increased
 
by 7%, a consequence
 
of more stable
 
production
 
during fiscal
 
2021 compared
 
to fiscal
 
2020 when
production suffered
 
from the impact
 
of the Lockdown,
 
subsequent cautious
 
ramp-up and interruptions
 
in power supply
 
from Eskom and
 
the City
of Ekurhuleni.
Cost of sales
 
Cost of sales
 
amounted to R3,388.2
 
million in fiscal
 
year 2021, consisting
 
mainly of operating
 
costs of R3,122.5
 
million, depreciation
of
 
R252.5
 
million,
 
movement
 
in
 
gold
 
in
 
process
 
of
 
R25.6
 
million
 
and
 
a
 
positive
 
movement
 
in
 
the
 
change
 
in
 
estimate
 
of
 
environmental
rehabilitation of R12.4 million. These are discussed as follows:
 
Operating costs
 
Operating costs increased by 16.0% to R3,122.5 million for fiscal year
 
2021 compared to R2,692.1 million for fiscal year 2020. The
increase is mainly due
 
to a 13% increase in
 
Ergo’s throughput
 
to 23.0Mt compared to 20.2Mt
 
in fiscal year 2020
 
and a 15% electricity tariff
increase by power utility Eskom which came into effect in April 2021.
48
Depreciation
Depreciation charges were
 
R252.5 million for
 
fiscal year
 
2021 compared to
 
R270.8 million for
 
fiscal year
 
2020. Depreciation charges
decreased as a result of an increase in the life of mine for both Ergo and FWGR.
 
Change in estimate of environmental rehabilitation
As of June 30,
 
2021, we estimate our total
 
environmental rehabilitation provision, being the
 
discounted estimate of future
 
costs, to
be R570.8 million as compared
 
to R568.9 million at June
 
30, 2020.
 
A change in estimate of environmental rehabilitation of R12.4
 
million was
recognized due
 
to changes
 
in the
 
estimated timing
 
of the
 
vegetation of
 
reclamation sites,
 
as well
 
as an
 
increase in
 
contractor rates
 
for the
establishment of vegetation based on ongoing test work performed.
A total
 
of R564.7 million
 
was invested in
 
our various
 
environmental trust
 
funds as
 
at the
 
end of
 
fiscal year
 
2021, as
 
compared to
R542.2 million at
 
the end
 
of fiscal
 
year 2020.
 
The increase
 
is attributable
 
primarily due
 
to R
 
22.5 million
 
interest received
 
on these
 
funds
during fiscal
 
year 2021.
 
A total
 
of R87.5 million
 
(2020: R83.8 million)
 
is invested
 
in funds held in insurance instruments to secure financial
guarantees provided to the DMR
 
through an insurance cell captive
 
company, the
 
Guardrisk Cell Captive. The increase
 
is attributable to R3.7
million interest received on
 
these funds during fiscal
 
year 2021. As at June 30, 2021, guarantees
 
amounting to R430.1
 
million were in issue
 
to
the
 
DMR
 
(2020:
 
R427.3 million).
 
The
 
shortfall
 
between
 
the
 
invested
 
funds
 
and
 
the
 
estimated
 
provisions
 
is
 
expected
 
to
 
be
 
financed
 
by
contributions to the
 
Guardrisk Cell Captive
 
from time to
 
time as required
 
over the remaining
 
production life of
 
the respective mining
 
operations
and, at the time of mine closure, the proceeds on the disposal of remaining assets and gold from plant clean-up.
Movements in gold in process
Movement in gold in
 
process in fiscal
 
year 2021 amounted to
 
R25.6 million mainly
 
due to a decrease
 
in the lock up
 
of gold in
 
process
at the plants and finished inventories - Gold Bullion.
Administration expenses and general costs
Administration expenses and general costs decreased by R245.9 million from R309.9 million in fiscal
 
year 2020 to R64.0 million in
fiscal year
 
2021. Administration
 
expenses and
 
general costs
 
in fiscal
 
year 2021
 
included a
 
share-based payments
 
benefit of
 
R44.3 million
(2021: share-based payments expense of R218.1 million). The share-based payment
 
benefit in 2021 is mainly due to the remeasurement
 
of the
cash-settled share-based
 
payment liability
 
at a seven-day
 
volume weighted
 
average price (VWAP)
 
of the
 
DRDGOLD share from
 
R25.14 at
June 30, 2020 to R18.62 at November 5, 2020. This liability was fully settled on November 5, 2020.
Finance income
Finance income increased
 
from R109.8 million in
 
fiscal year 2020 to
 
R216.2 million in fiscal year
 
2021, mainly due
 
to a dividend
received from Rand Refinery of R72.3
 
million (2020: nil) and an increase
 
in interest income earned of R46.7 million
 
mainly due to higher
 
cash
and cash equivalents
 
balances during
 
the year.
Finance expense
Finance expenses increased
 
from R68.8 million
 
in fiscal year
 
2020 to R69.5 million
 
in fiscal year
 
2021, mainly attributable
 
to the
unrealized
 
foreign
 
exchange
 
loss
 
of
 
R8.4
 
million
 
in
 
fiscal
 
2021
 
compared
 
to
 
nil
 
in
 
fiscal
 
2020.
 
The
 
unwinding
 
of
 
the
 
provision
 
for
environmental rehabilitation decreased by R7.3 million as a result of a lower provision estimated as at June 30, 2020.
Income tax
Income tax amounted to a charge of R523.8 million for fiscal year 2021 (2020: charge of R343.9 million) and consisted of a current
tax charge of R423.7 million (2020: charge of R263.2 million)
 
and deferred tax charge of R100.0 million (2020: deferred tax charge of R80.7
million).
The current tax increased
 
to R423.7 million in
 
fiscal 2021 from R263.2
 
million in fiscal 2020
 
mostly due to an
 
increase in the taxable
mining income
 
of both
 
Ergo and
 
FWGR resulting
 
mainly from
 
the increase
 
in the
 
Rand gold
 
price received.
 
The current
 
tax expense
 
was
mitigated by the full redemption of
 
capital expenditure incurred during the fiscal year 2021
 
and resulted in the deferred tax charge
 
of R100.0
million.
The forecast
 
weighted average
 
deferred tax
 
rate for
 
both Ergo
 
and FWGR
 
remained unchanged
 
in fiscal
 
year 2021
 
at 25.0%
 
and
30.0% respectively.
 
 
 
 
 
 
49
Non-IFRS Measures
Set forth below is a discussion of non
 
-IFRS measures presented in this report, including a
 
reconciliation of such measures from the
nearest measure under IFRS, as well as an explanation as to why we believe that presentation of such
 
information provides useful information
to investors and additional purposes, if any, for which we use such measures.
Adjusted earnings before interest, tax, depreciation and amortization (“Adjusted EBITDA”)
Set forth below
 
is a
 
presentation of our
 
Adjusted EBITDA, which
 
is a
 
non-IFRS measure, including
 
the items
 
included in this
 
measure
and a reconciliation from profit for
 
the year.
 
Our calculation of Adjusted EBITDA
 
is based on the calculation of
 
this measure as included in
our
 
RCF
 
agreement
 
and
 
may not
 
be
 
comparable
 
to
 
similarly
 
titled measures
 
of
 
other
 
companies.
 
Adjusted
 
EBITDA
 
is
 
not
 
a
 
measure
 
of
performance under
 
IFRS and
 
should be
 
considered in
 
addition to,
 
and not
 
as a
 
substitute for,
 
other measures
 
of financial
 
performance and
liquidity. We
 
consider Adjusted EBITDA for the purpose of evaluating compliance with the covenants imposed by the Company’s borrowing
agreements entered into
 
during fiscal
 
2019. The Group
 
considers the
 
presentation of
 
Adjusted EBITDA provides
 
useful information to
 
investors
to enable investors to assess compliance with our covenants in the RCF agreement.
Year ended,
 
June 30
Reconciliation of adjusted EBITDA
2021
2020
Profit for the year
1,439.9
635.0
Income tax
523.7
343.9
Profit before tax
1,963.6
978.9
Finance expense
69.5
68.8
Finance income
(216.2)
(109.8)
Results from operating activities
1,816.9
937.9
Depreciation
 
252.5
270.8
Share based payment (benefit)/expense
(28.3)
224.1
Change in estimate of environmental rehabilitation recognised in profit or loss
(12.4)
(21.9)
Gain on disposal of property, plant and equipment
(0.1)
(0.7)
IFRS 16 Lease payments
1
(15.8)
-
Transaction costs
3.1
1.4
Adjusted earnings before interest, tax depreciation and amortisation ("Adjusted EBITDA")
 
2
2,015.9
1,411.6
1
The amended RCF includes IFRS 16 lease payments in the calculation of the adjusted EBITDA.
2
See Glossary of Terms for definitions.
50
Cash operating costs, cash operating costs per kilogram, all-in sustaining costs and all-in costs per kilogram
Cash operating costs per
 
kilogram, all-in sustaining costs
 
per kilogram and all-in
 
costs per kilogram are
 
non-IFRS financial measures
that should not
 
be considered by
 
investors in isolation
 
or as alternatives
 
to cost of
 
sales, net profit/(loss)
 
attributable to equity
 
owners of the
parent, profit/(loss)
 
before tax
 
and other
 
items or
 
any other
 
measure of
 
financial performance
 
presented in
 
accordance with
 
IFRS or
 
as an
indicator of our performance. While the World Gold Council has provided guidance for the calculation of cash operating costs, cash
 
operating
costs
 
per
 
kilogram,
 
all-in
 
sustaining
 
costs
 
and
 
all-in
 
costs
 
per
 
kilogram,
 
such
 
measurements
 
may
 
vary
 
significantly
 
among
 
gold
 
mining
companies, and these
 
definitions by themselves do
 
not necessarily provide
 
a basis for
 
comparison with other
 
gold mining companies.
 
However,
we
 
believe
 
that
 
these
 
measures
 
are
 
useful
 
indicators
 
to
 
investors
 
and
 
our
 
management
 
of
 
an
 
individual
 
mine's
 
performance
 
and
 
of
 
the
performance of our operations as a whole as they provide:
 
an indication of a mine’s profitability and efficiency;
 
the trend in costs;
a measure of margin per kilogram, by comparison of the cash operating costs per kilogram to the price of gold; and
a benchmark of performance to allow for comparison against other mines and mining companies.
 
 
 
 
 
 
 
 
 
51
For fiscal
 
year 2021,
 
consolidated cash
 
operating costs
 
per kilogram
 
increased by
 
12% to
 
R540,338 per
 
kilogram from
 
R482,417 per
kilogram in fiscal year 2020. Consolidated all-in sustaining costs
 
per kilogram increased by 16% to R626,247 per
 
kilogram in fiscal year 2021
from R541,475 per kilogram
 
in fiscal year 2020.
 
Consolidated all-in costs per
 
kilogram increased by 17%
 
to R643,338 per kilogram
 
of gold
in fiscal 2021 from R551,646 per kilogram of gold in fiscal year 2020.
 
The increase in consolidated cash operating costs
 
per kilogram,
 
all-in sustaining costs
 
per kilogram and all-in costs per kilogram
 
was
mainly due to an
 
increased in cash
 
operating costs, which is
 
due to a
 
13% increase in Ergo’s throughput to
 
23.0Mt in fiscal
 
year 2021 compared
to 20.2Mt in
 
fiscal year 2020
 
and a 15%
 
tariff increase by
 
power utility Eskom
 
which came into
 
effect in April
 
2021. At FWGR,
 
there was
increased electricity usage due to fiscal 2021 being the first full year of milling.
 
The
 
increase
 
in
 
sustaining
 
capital
 
expenditure
 
during
 
fiscal
 
year
 
2021
 
contributed
 
to
 
the
 
increase
 
in
 
all-in
 
sustaining
 
costs
 
per
kilogram. The increase in
 
growth capital expenditure
 
incurred during fiscal year
 
2021 similarly contributed to
 
the increase in all-in
 
costs per
kilogram.
Reconciliation of cash operating costs, cash operating costs per kilogram, all-in sustaining costs, all-in
sustaining costs per kilogram, all-in costs and all-in costs per kilogram
R millions
2021
2020
Cost of sales
3,388.2
2,937.9
Depreciation
 
(252.5)
(270.8)
Change in estimate of environmental rehabilitation
 
12.4
21.9
Movement in gold in process
 
(25.6)
3.1
Operating costs
 
3,122.5
2,692.1
Ongoing rehabilitation expenditure
 
(48.3)
(24.3)
Care and maintenance costs
 
(3.9)
(11.1)
Other operating income/(costs)
1
2.4
(30.7)
Cash operating costs
 
2
3,072.7
2,626.0
Movement in gold in process
 
25.6
(3.1)
Administration expenses and other costs excluding non-recurring items
 
2
109.7
96.1
Other operating income/(costs)
(2.4)
30.7
Change in estimate of environmental rehabilitation
 
(12.4)
(21.9)
Unwinding of rehabilitation provision
 
44.7
52.0
Sustaining capital expenditure
 
2
353.0
164.2
All-in sustaining costs
2
3,590.9
2,944.0
Care and maintenance costs
 
3.9
11.1
Ongoing rehabilitation expenditure
 
48.3
24.3
Transaction costs
3.1
1.4
Growth capital expenditure
 
2
42.7
18.5
All-in costs
 
2
3,688.9
2,999.3
Gold produced (kilograms)
 
5,723
5,424
Cash operating costs per kilogram (R per kilogram)
 
540,338
482,417
All-in sustaining costs per kilogram (R per kilogram)
 
626,247
541,475
All-in costs per kilogram (R per kilogram)
 
643,338
551,646
Reconciliation of sustaining capital expenditure and growth capital expenditure
 
Additions - property, plant and equipment owned
395.7
182.7
Less
Growth capital expenditure
 
2
42.7
18.5
Sustaining capital expenditure
 
2
353.0
164.2
1
Decrease from 2020 to 2021 of other operating costs as a result of reduction in costs at the Company's
training centre as a result of a change in structure of the centre
2
See Glossary of Terms for definitions.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
52
Cash operating costs
 
Cash operating costs are linked directly to the level of throughput of a specific fiscal year.
 
 
The following table
 
illustrates the year-on-year
 
change in
 
cash operating costs
 
for fiscal year
 
2021 in comparison
 
with fiscal year
2020
.
R million
Cash operating
costs
Impact of change in
throughput
Impact of change in
costs
Net change
Cash operating
costs
2020
2021
Ergo
 
2,274.0
306.2
86.3
392.5
2,666.5
FWGR
352.0
6.2
48.0
54.2
406.2
Total
2,626.0
312.4
134.3
446.7
3,072.7
Cash operating costs
 
in fiscal year
 
2021 increase by
 
R446.7 million to
 
R3,072.7 million compared
 
to cash operating
 
costs of R2,626.0
million in fiscal
 
year 2020.The increase
 
is mainly due to
 
a 13% increase
 
in Ergo’s throughput to 23.0Mt
 
in fiscal year
 
2021 compared to
 
20.2Mt
in fiscal year 2020 and a 15% tariff increase by power utility Eskom which came into effect in April 2021 and an increase in electricity usage
at FWGR due to fiscal 2021 being the first full year of milling.
 
 
The following
 
table lists
 
the major
 
components of
 
cash operating
 
costs for
 
the Group
 
for each
 
operation and
 
fiscal year
 
set forth
below respectively:
Ergo
FWGR
Years ended
 
Year ended
 
Costs
2021
2020
Costs
2021
2020
Consumables
 
28%
30%
Consumables
 
33%
31%
Labor
 
19%
22%
Labor
 
20%
22%
Electricity and water
 
18%
18%
Specialized service providers
 
9%
9%
Specialized service providers
 
16%
17%
Electricity and water
 
19%
12%
Machine hire
4%
4%
Machine hire
2%
2%
Security expenses
4%
3%
Security expenses
5%
4%
Other costs
 
11%
6%
Other costs
 
12%
20%
5B. LIQUIDITY AND CAPITAL
 
RESOURCES
Cash flows
 
from operating
 
activities
 
Cash generated
 
from operating
 
activities
 
amounted to
 
R1,573.4 million
 
for fiscal
 
year 2021 (fiscal
 
year 2020:
 
R1,128.9 million).
 
 
Cash generated
 
from operating
 
activities
 
increased
 
during fiscal
 
year 2021 mostly
 
due to a 5% increase
 
in gold sold and a
 
19% increase
in the average rand gold price
 
received to R917,996 per
 
kilogram. In addition,
 
interest received increased by
 
R42.2 million to
 
R105.9 million,
mainly due
 
to higher cash and cash equivalents balances
 
during the year and the Group received dividends from Rand
 
Refinery amounting to
R72.3 million (2020: nil).
 
The increase in cash
 
inflows was partially mitigated by a
 
R212.0 million increase in current tax paid
 
to R452.1 million and
 
the net
movement
 
in working capital
 
that amounted
 
to a cash
 
outflow of R194.9
 
million in
 
fiscal year
 
2021.
 
Cash flows
 
from investing
 
activities
Net cash
 
utilized by
 
investing
 
activities
 
amounted to
 
R446.6 million
 
in fiscal
 
year 2021
 
compared
 
to R202.5 million
 
in fiscal
 
year 2020.
In fiscal
 
year 2021,
 
net cash
 
utilized by
 
investing activities consisted mainly of
 
R395.7 million in
 
additions to
 
property, plant
 
and
equipment and R51.0 million spent
 
on environmental rehabilitation payments. These outflows were reduced by R0.1
 
million proceeds on the
disposal of
 
property, plant and
 
equipment.
 
In fiscal
 
year 2020,
 
net cash
 
utilized by
 
investing activities consisted mainly of
 
R181.1 million in
 
additions to
 
property, plant
 
and
equipment and R22.1 million spent
 
on environmental rehabilitation payments. These outflows were reduced by R0.7
 
million proceeds on the
disposal of
 
property, plant and
 
equipment.
Cash flows
 
from financing
 
activities
53
Net cash outflow from financing activities
 
was R653.5 million in fiscal year 2021 compared
 
to net cash inflows of R509.2 million in
fiscal year
 
2020.
 
During fiscal
 
year 2021,
 
the net cash
 
outflow consisted
 
mostly of dividends
 
paid on ordinary
 
shares amounting
 
to R640.9 million.
During fiscal
 
year 2020,
 
the
 
net cash inflow
 
consisted
 
mostly of proceeds
 
received on
 
the issue
 
of ordinary
 
shares to Sibanye-Stillwater
amounting to
 
R1,085.6 million
 
offset by dividends
 
paid on ordinary
 
shares amounting
 
to R564.5 million.
Cash and cash
 
equivalents
 
Cash and cash equivalents as at June 30, 2021
 
amounted to R2,180.0 million compared to R1,715.1 million at the end of fiscal year
2020.
 
Substantially
 
all of our cash
 
and cash equivalent
 
balances were
 
denominated
 
in South African
 
rand. Cash and
 
cash equivalent
 
denominated
in foreign
 
currency amounted
 
to USD 3.4
 
million at
 
June 30, 2021
 
compared
 
to nil at the
 
end of fiscal
 
year 2020.
 
 
Cash and
 
cash equivalents
 
as at June
 
30, 2021 includes
 
restricted
 
cash related
 
to guarantees
 
of R10.4 million
 
compared
 
to R19.3 million
at the end
 
of fiscal
 
year 2020.
 
At September
 
30, 2021,
 
our cash and cash equivalents were R1,898.9 million.
Borrowings
 
and funding
At
 
June
 
30,
 
2021
 
and
 
September
 
30,
 
2021,
 
our
 
external sources
 
of
 
capital included
 
our
 
RCF
 
described in
 
Item
 
10C.
 
Material
Contracts’’.
In September 2020 the RCF was amended as described in Item
 
10C. “Material Contracts”.
 
The amendments include
 
a reduction in
the size of the
 
facility from R300million to
 
R200 million as well as
 
removing any commitment towards
 
the performance guarantee issued
 
to
Ekurhuleni Metropolitan Municipality. No amounts were drawn under this facility as of June 30, 2021 or September 30, 2021.
Anticipated funding requirements and sources
 
Our cash
 
and cash
 
equivalents are set
 
out above
 
under “Cash
 
and cash
 
equivalents”. Our management believes
 
that existing
 
cash
resources, net
 
cash generated
 
from
 
operations and
 
the
 
availability of
 
negotiated funding
 
facilities will
 
be
 
sufficient to
 
meet
 
the
 
anticipated
commitments of our existing operations
 
for fiscal year 2022. As a result of the significant increase
 
in the gold price, at September 30, 2021 the
Group has
 
a cash
 
and cash
 
equivalents balance of R1,898.9
 
million. In addition,
 
the Group has
 
an undrawn
 
R200 million RCF
 
available as
additional
 
backstop liquidity.
 
Liquidity
 
has been enhanced
 
by the continued
 
high rand gold
 
price levels.
 
5C. RESEARCH
 
AND DEVELOPMENT, PATENTS AND LICENSES, ETC.
DRDGOLD
 
has a
 
dedicated
 
team that
 
looks at
 
ways and
 
means
 
of improving
 
recoveries.
 
While the
 
team remains
 
active with
 
an ongoing
focus on improving
 
extraction efficiencies,
 
the projects undertaken
 
during the year
 
ended June 30, 2021
 
were focused
 
on optimizing the
 
existing
facilities
 
rather than
 
implementing
 
new technologies
 
to improve
 
extraction
 
efficiencies.
 
We have no registered
 
patents or
 
licenses.
 
5D. TREND INFORMATION
In response
 
to the
 
COVID-19
 
pandemic
 
and measures
 
taken to
 
address
 
the outbreak,
 
investors
 
globally, as
 
they have
 
in so
 
many previous
times of crisis,
 
turned to gold and
 
gold stocks as
 
a safe haven asset,
 
leading to a surge
 
in the average
 
gold price during
 
fiscal 2020 and
 
2021. The
rand/dollar exchange rate remained volatile throughout the year mainly as
 
a result of
 
economic uncertainty and perceived political instability,
global market
 
slowdown sentiment,
 
tensions between
 
the USA and
 
China, low
 
economic growth,
 
and a seemingly
 
terminally
 
distressed
 
Eskom.
Any sustained
 
decline in
 
the market
 
price of
 
gold from
 
the current
 
elevated gold
 
price levels
 
would adversely
 
affect us,
 
and any
decline in
 
the price
 
of gold
 
below the
 
cost of
 
production could
 
result in
 
the closure
 
of some
 
or all
 
of our
 
operations which
 
would result
 
in
significant costs and expenditure, such as,
 
incurring retrenchment costs earlier than expected
 
which could lead to a decline
 
in profits, or losses.
In addition, as most of our production costs are in rands, while gold is sold in dollars and then converted to rands, our results of operation and
financial condition
 
have been
 
and could
 
be in
 
the future
 
materially affected
 
by an
 
appreciation in
 
the value
 
of the
 
rand. Accordingly,
 
any
sustained decline in
 
the dollar price
 
of gold and/or
 
the strengthening
 
of the South
 
African rand
 
against the dollar
 
would negatively and
 
adversely
affect our business, operating results and financial condition.
 
 
For the fiscal year 2022,
 
we are planning Group gold production
 
of 160,000 (4 977kg) to 180,000
 
(5 599kg) ounces
 
at cash operating
unit cost of
 
approximately
 
R600,000 per
 
kilogram and
 
expect a capital
 
investment
 
of approximately
 
R600 million.
 
 
54
Reconciliation of budgeted cost of sales to budgeted cash operating costs (R’million)
Cost of sales
3,502.9
Reconciling items
1
(327.5)
Cash operating costs
 
2
3,175.4
1
Includes expected depreciation
 
of R270.6 million, ongoing environmental expenses
 
of R49.7 million, care and maintenance expenses of R6.7 million and other
operating
 
expenses
 
of R0.5 million
2
See glossary
 
of terms
 
for definition
 
Rounding of
 
figures may
 
result in computational
 
discrepancies
 
Our ability to meet the full year’s production target could be impacted by COVID-19 in a number of ways, including potential
 
further national
lockdowns,
 
stoppages
 
in production
 
due to
 
outbreaks
 
of infections
 
in our
 
workforce
 
and interruptions
 
to our
 
supply chain.
 
It could
 
also be
 
impacted
by lower
 
grades,
 
failure
 
to achieve
 
the throughput
 
targets
 
set at
 
Ergo and
 
FWGR,
 
power interruptions
 
and other
 
risks (refer
 
Item 3D.
 
Risk Factors—
Risks related to our business and operations and “–Forward Looking Statements”).
 
We
 
are also subject to cost pressures in the event of
 
above
inflation increases
 
in labor, electricity
 
and water; crude
 
oil and steel costs.
 
Unforeseen changes
 
in ore grades and
 
recoveries,
 
unexpected changes
in the quality or quantity
 
of reserves and
 
resource, technical
 
production issues,
 
environmental
 
and industrial accidents,
 
gold
 
theft, environmental
factors and pollution could adversely
 
impact the production, sales
 
and cash operating costs for fiscal year
 
2022 and cause us to fail to meet our
targets for
 
the year.
 
Refer to Item 5A.: “Key drivers of our operating
 
results and principal factors affecting
 
our operating results” for a discussion of the
trends
 
in the US Dollar
 
gold price
 
as well as
 
exchange rates
 
impacting our
 
business.
 
Set forth below
 
is our summary
 
results for
 
the first
 
quarter of
 
fiscal 2022.
 
This information
 
has not been
 
audited.
Operating results
 
for the quarter
 
ended September
 
30, 2021
 
 
 
 
 
 
 
 
 
 
 
 
55
Quarter ended
Quarter ended
Sep 30, 2021
Jun 30, 2021
% change
Production
Gold produced
kg
1,449
1,357
7%
oz
46,587
43,629
7%
Gold sold
kg
1,428
1,365
5%
oz
45,912
43,886
5%
Ore milled
Metric (000't)
 
7,421
7,506
-1%
Yield
Metric (g/t)
0.195
0.181
8%
Reconciliation of adjusted EBITDA
Profit for the period
217.3
240.7
Income tax
87.8
67.6
Profit before tax
305.1
308.3
Finance expense
12.6
24.7
Finance income
(35.0)
(78.8)
Results from operating activities
282.7
254.2
Depreciation
 
68.8
62.9
Share based payment (benefit)/expense
4.2
4.7
Change in estimate of environmental
-
(12.4)
Gain on disposal of property, plant and
-
-
IFRS 16 Lease payments
1
(5.2)
(7.9)
Transaction costs
0.3
1.6
Adjusted EBITDA
1,2*
350.8
303.1
1
The amended RCF includes IFRS 16 lease
2
See Glossary of Terms for definitions.
* The adjusted EBITDA may not be comparable to similarly titled measures of other companies. Adjusted EBITDA is not a measure of performance under IFRS and should be
considered in addition to, and not as substitute for other measures of financial performance and liquidity
Reconciliation of cash operating costs, cash operating costs per kilogram, all-in sustaining costs, all-in sustaining
costs per kilogram, all-in costs and all-in costs per kilogram
(R'millions)
Cost of sales
892.6
851.7
Depreciation
 
(68.8)
(62.9)
Change in estimate of environmental
-
12.4
Movement in gold in process
 
37.9
(0.5)
Operating costs
 
861.7
800.7
Ongoing rehabilitation expenditure
 
(9.6)
(7.5)
Care and maintenance costs
 
(2.2)
1.6
Other operating income/(costs)
 
(3.3)
18.3
Cash operating costs
 
1
846.6
813.1
Movement in gold in process
 
(37.9)
0.5
Administration expenses and other costs
excluding non-recurring items
 
1
27.5
16.3
Other operating costs
 
3.3
(18.3)
Change in estimate of environmental
-
(12.4)
Unwinding of rehabilitation provision
 
12.2
8.6
Sustaining capital expenditure
 
1
74.8
106.7
All-in sustaining costs
1
926.5
914.5
Care and maintenance costs
 
2.2
(1.6)
Ongoing rehabilitation expenditure
 
9.6
7.5
Transaction costs
0.3
1.6
Growth capital expenditure
 
1
13.9
9.1
All-in costs
 
1
952.5
931.3
 
 
56
Quarter ended
Quarter ended
September 30,
June 30, 2021
% change
Price and costs
Average gold price received
R per kg
839,983
821,647
2%
US$ per oz
1,786
1,810
-1%
Cash operating costs
R/t
114
108
6%
US$/t
8
8
-
Cash operating costs
R per kg
566,317
595,824
-5%
US$ per oz
1,204
1,312
-8%
All-in sustaining costs **
R per kg
648,880
669,744
-3%
US$ per oz
1,380
1,475
-6%
All-in cost **
R per kg
667,157
681,905
-2%
US$ per oz
1,419
1,550
-8%
Capital expenditure
Sustaining
Rm
74.8
106.7
-30%
US$m
5.1
7.6
-33%
Non-sustaining/growth
Rm
13.9
9.1
53%
US$m
1
0.6
67%
Average R/US$ exchange rate
14.63
14.12
4%
Reconciliation of sustaining capital
Additions - property, plant and equipment
88.7
115.8
Less
 
Growth capital expenditure
 
1
74.8
106.7
Sustaining capital expenditure
 
1
13.9
9.1
1
See Glossary of Terms for definitions.
Rounding of figures may result in computational discrepancies
**
All-in cost definitions based on the guidance note on non-GAAP Metrics issued by the World Gold Council on 27 June 2013
.
 
Gold production
 
increased
 
by 7% from
 
the previous
 
quarter to
 
1,449kg primarily
 
due to a 8%
 
increase
 
in yield. Gold
 
sold increased
 
by
5% to 1,428kg.
 
 
Although increases
 
in electricity
 
and labour costs
 
with effect
 
from July 2021
 
resulted in
 
higher cash
 
operating costs,
 
the increase
 
in the
number of gold
 
units produced
 
and sold resulted
 
in a 5% decrease
 
in cash operating
 
costs per
 
kilogram to R566,317/kg.
 
The cash
 
operating cost
per ton of material
 
processed increased
 
by 6% to R114/t.
 
All-in sustaining
 
costs per
 
kilogram and
 
all-in costs
 
per kilogram
 
were R648,810/kg
 
and R667,017/kg,
 
respectively, decreasing
 
quarter
on quarter
 
mainly due
 
to a decrease
 
in sustaining
 
capital expenditure.
 
Adjusted EBITDA
 
increased by
 
16%
 
from the previous
 
quarter to
 
R350.8 million
 
primarily
 
due to a 5%
 
increase
 
in gold sold
 
and a
2% increase
 
in the average
 
Rand gold price
 
received of
 
R839,983/kg.
 
Payment of
 
the final
 
dividend declared
 
for the fiscal
 
year ended
 
June 30, 2021
 
of R345.2 million
 
and negative
 
working capital
 
changes
of R173.5 million
 
at September
 
30, 2021 reduced
 
cash and cash
 
equivalents
 
by R276.8 million
 
to R1,903.2
 
million at
 
September
 
30, 2021 (June
30, 2021: R2,
 
180 million).
 
External
 
borrowings
 
remained
 
at Rnil as
 
at September
 
30, 2021 (June
 
30, 2021: Rnil).
 
The cash
 
generated during
 
the current
 
quarter will,
inter alia
, be applied
 
towards the
 
Company’s extended
 
capital expenditure
programme
 
for the fiscal
 
year ending June
 
30, 2022. Despite
 
the capital
 
expenditure
 
planned for
 
the fiscal
 
year, the Company
 
remains in
 
a
favourable
 
position to,
 
in the absence
 
of unforeseen
 
events, consider
 
declaring
 
an interim
 
cash dividend
 
in February
 
2022.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
57
5E. OFF-BALANCE SHEET ARRANGEMENTS
The Company does
 
not engage in
 
off-balance sheet financing
 
activities, and does
 
not have any
 
off-balance sheet debt
 
obligations,
unconsolidated special purposes entities or unconsolidated affiliates.
5F.
 
TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS
Estimated and actual payments due by period
Total
Less than
Between
Between
More than
5 years
1 year
1-3 years
3-5 years
R m
R m
R m
R m
R m
Provision for environmental rehabilitation
2
570.8
53.0
134.9
91.7
291.2
Lease liabilities
54.8
16.9
26.9
10.0
1.0
Trade and other payables
 
509.8
509.8
-
-
-
Purchase obligations – contracted capital expenditure
1
65.5
65.5
-
-
-
Other contractual obligations
 
1.4
1.4
-
-
-
Total contractual and cash obligations
1,202.3
646.6
161.8
101.7
292.2
1
 
Represents planned capital expenditure for which contractual obligations exist.
2
 
Gold
 
mining
 
companies
 
are
 
subject
 
to
 
extensive
 
environmental
 
regulations
 
in
 
the
 
various
 
jurisdictions
 
in
 
which
 
they
 
operate.
 
These
regulations establish certain conditions on
 
the conduct of our
 
operations. Pursuant to environmental regulations,
 
we are also obliged to
 
close
our operations and
 
reclaim and rehabilitate
 
the lands upon
 
which we
 
have conducted our
 
mining and gold
 
recovery operations. The
 
estimated
closure
 
costs
 
at
 
existing
 
operating
 
mines
 
and
 
mines
 
in
 
various
 
stages
 
of
 
closure
 
are
 
reflected
 
in
 
this
 
table.
 
For
 
more
 
information
 
on
environmental
 
rehabilitation
 
obligations,
 
see
 
Item
 
4D.
 
“Property,
 
Plant
 
and
 
Equipment”
 
and
 
Note
 
11
 
-
 
“Provision
 
for
 
environmental
rehabilitation” under Item 18. “Financial Statements".
5G.
 
SAFE HARBOR
See ‘Special
 
Note Regarding
 
Forward-Looking
 
Statements”.
ITEM 6. DIRECTORS,
 
SENIOR MANAGEMENT
 
AND EMPLOYEES
 
6A. DIRECTORS
 
AND SENIOR MANAGEMENT
 
Directors and
 
Executive Officers
 
Our board of
 
directors
 
may consist
 
of not less
 
than four
 
and not more
 
than twenty
 
directors.
 
As at June
 
30, 2021, our
 
board consisted
 
of
ten directors.
 
 
In accordance
 
with JSE listing
 
requirements
 
and our Memorandum
 
of Incorporation,
 
or MOI, one third
 
of the directors
 
comprising the
board of
 
directors,
 
on a rotating
 
basis,
 
are subject
 
to re-election
 
at each
 
annual general
 
shareholders’
 
meeting. Additionally,
 
all directors
 
are subject
to election
 
at the first
 
annual general
 
meeting following
 
their appointment.
 
Retiring directors
 
normally make
 
themselves
 
available
 
for re-election.
 
 
Mr Geoffrey Campbell’s tenure as a director and chairman of the board of directors of the Company will come to an end with effect
from December 1, 2021. Mr Timothy Cumming,
 
a non-executive director
 
of the Company, will replace Mr Campbell as chairman
 
of the Board
and the nominations
 
committee with
 
effect from December
 
1, 2021 subject
 
to shareholder
 
approval at
 
the Annual General
 
Meeting to be held
 
on
November 29,
 
2021.
 
In order to ensure
 
good corporate
 
governance
 
in accordance
 
with the recommendations
 
of the King IV
 
Report on Corporate
Governance
 
for South Africa
 
2016, Mr Edmund
 
Jeneker will
 
remain as
 
the lead independent
 
director of
 
the Company.
 
Mrs Toko
 
Mnyango, an
 
independent non-executive director of the
 
Company, has
 
been appointed as
 
a member
 
of the
 
nominations
committee
 
with effect from
 
August 19, 2021
 
The address
 
of each of
 
our Executive
 
Directors
 
and non-executive
 
directors
 
is the address
 
of our principal
 
executive
 
offices.
Executive
 
Directors
Daniël (Niel)
 
Johannes Pretorius
 
(54)
 
Chief Executive
 
Officer. Niël Pretorius
 
has two
 
decades of
 
experience
 
in the mining
 
industry. He
was appointed Chief Executive Officer designate
 
of DRDGOLD on August 21, 2008 and Chief Executive Officer on January 1, 2009. Having
joined the company on May 1,
 
2003 as legal advisor, he
 
was promoted to Group Legal Counsel on September 1, 2004
 
and General Manager:
Corporate Services on
 
April 1,
 
2005. Niël
 
was appointed Chief
 
Executive Officer of
 
Ergo Mining
 
Operations Proprietary Limited (formerly
DRDGOLD SA)
 
on July 1, 2006
 
and became
 
Managing Director
 
thereof on April
 
1, 2008.
58
 
Adriaan
 
(Riaan)
 
Jacobus
 
Davel
 
(45)
 
Chief
 
Financial Officer.
 
Riaan
 
Davel
 
joined
 
DRDGOLD
 
in
 
January
 
2015.
 
Before
 
joining
DRDGOLD, he gained
 
17 years’ experience
 
in the professional
 
services industry, the
 
majority obtained
 
in the mining
 
industry in Africa.
 
As part
of gaining
 
that experience,
 
Riaan provided
 
assurance
 
and advisory
 
services,
 
including support
 
and training
 
on IFRS
 
to clients
 
and teams
 
across the
African continent.
 
He has
 
spent seven
 
years at
 
KPMG as
 
an audit
 
partner, performing,
inter alia
, audits
 
of listed
 
companies
 
in the mining
 
industry,
including SEC
 
registrants.
 
Riaan has
 
also gained
 
experience
 
as an IFRS
 
technical
 
partner and
 
represented
 
the South African
 
Institute of
 
Chartered
Accountants
 
on the
 
International
 
Accounting
 
Standards
 
Board’s project
 
on extractive
 
activities
 
from 2003
 
to 2010.
 
Riaan
 
has served
 
on committees
that compile/update the South African codes for reporting and valuation
 
of mineral reserves and resources.
 
Riaan is a member of
 
the Social &
Ethics Committee
 
of DRDGOLD.
Non-Executive
 
Directors
 
Geoffrey Charles
 
Campbell (60).
 
Geoffrey Campbell was
 
appointed a
 
Non-executive Director in
 
2002, a
 
senior independent non-
executive
 
director
 
in December
 
2003 and Non-executive
 
Chairman
 
in October
 
2005. A qualified
 
geologist,
 
he has worked
 
on gold mines
 
in Wales
and Canada. He spent 15 years as a stockbroker
 
before becoming a fund manager, managing
 
the Merrill Lynch Investment Managers
 
Gold and
General Fund, one of the
 
largest gold mining
 
investment
 
funds. He was also research
 
director for Merrill
 
Lynch Investment Managers.
 
Geoffrey
is a director
 
of Oxford Abstracts
 
Limited. Geoffrey
 
chairs the
 
Nominations
 
Committee
 
of DRDGOLD.
Edmund Abel
 
Jeneker (59)
. Edmund Jeneker was appointed Non-executive Director in November 2007 and Lead Independent
 
Non-
executive
 
Director
 
in
 
August
 
2017.
 
He
 
has
 
more
 
than
 
30
 
years’
 
experience
 
as
 
an
 
executive
 
in
 
banking,
 
business
 
strategy,
 
advisory
 
and
management at Grant Thornton South
 
Africa Proprietary Limited, Swiss Re
 
Corporate Solutions Advisors South Africa
 
Proprietary Limited,
the World
 
Bank Competitiveness Fund
 
and Deloitte South
 
Africa.
He spent over
 
13 years at
 
Absa Bank and
 
Barclays Africa, where
 
he was
Managing Executive
 
and served
 
as director
 
on the
 
boards of
 
several subsidiary
 
companies in
 
the ABSA
 
Bank Group.
 
Edmund is
 
active in
community social upliftment
 
and served
 
as a member
 
of the Provincial
 
Development Commission of
 
the Western Cape Provincial
 
Government.
He currently serves
 
on the National
 
Social Ethics Forum
 
of the Institute
 
of Directors, Chairman
 
of the BADISA
 
Investment Committee and
serves on
 
the board
 
of the
 
Cape Town
 
Philharmonic Orchestra.
 
He is
 
a Chartered
 
Director (SA)
 
with a
 
focus on
 
Board Development
 
and
Strategy, Climate Change and ESG. Edmund
 
chairs the Social & Ethics Committee and is a member of the Remuneration Committee and the
Nominations Committee of DRDGOLD.
Johan Andries
 
Holtzhausen
 
(75)
. Johan Holtzhausen holds a B.Sc.
 
(Geology and Chemistry) from the University
 
of Stellenbosch and
a B. Compt.
 
(Hons) from the University
 
of South Africa.
 
He has been a
 
Chartered Accountant (South
 
Africa) since 1975. He
 
was appointed
independent Non-executive Director in on April 25, 2014. He has more than 42 years’ experience in the accounting profession, having served
as a senior
 
partner at
 
KPMG Services Proprietary
 
Limited, and
 
held the
 
highest Generally Accepted
 
Accounting Principles
 
(United States),
Generally
 
Accepted Auditing
 
Standards and
 
Sarbanes-Oxley Act
 
accreditation
 
required to
 
service clients
 
listed on
 
stock exchanges
 
in the
United States. His
 
clients included major
 
corporations listed in
 
South Africa, Canada,
 
the United Kingdom,
 
Australia and the
 
United States.
Johan
 
currently
 
serves
 
as
 
a
 
voluntary
 
independent
 
director
 
and
 
chairman
 
of
 
the
 
Audit
 
and
 
Risk
 
Committee
 
of
 
the
 
Tourism
 
Enterprise
Partnership. He
 
also chairs
 
the Audit
 
and Risk
 
Committee of
 
Tshipi
 
é Ntle
 
Manganese Mining
 
Proprietary Limited.
 
He is
 
a Non-executive
Director of Caledonia
 
Mining Corporation Plc, a
 
Canadian corporation listed in
 
the United States and
 
the United Kingdom. Johan
 
chairs the
Audit Committee and is a member of the Remuneration Committee and the Nominations Committee of DRDGOLD.
 
Jean Johannes
 
Nel (49). Jean Nel was appointed as an independent Non-executive Director on November 30, 2018. He qualified as
a CA(SA)
 
in 1998
 
obtained the
 
CFA
 
(AIMR) qualification.
 
Mr.
 
Nel has
 
20 years
 
of mining
 
finance and
 
mining executive
 
and operational
management experience. He was appointed to the Aquarius Platinum Board in April 2012 and became CEO of the Group in November 2012,
a position he
 
held until Aquarius
 
Platinum was acquired
 
by Sibanye- Stillwater
 
in April 2016.
 
From April 2016
 
to January 2017
 
he was the
CEO of the Platinum division of Sibanye Stillwater. He is currently a non-executive director of Mimosa Investments which owns the Mimosa
platinum mine in Zimbabwe
 
and Northam Platinum
. Jean chairs the
 
Remuneration Committee and
 
is a member of
 
the Audit Committee and
the Risk Committee of DRDGOLD.
Toko Victoria Buyiswa Nomalanga Mnyango
 
(56). Toko Mnyango was
 
appointed independent Non-executive Director
 
on December
1, 2016. Toko began
 
her career
 
as a
 
prosecutor for
 
the KaNgwane
 
homeland, before
 
becoming a legal
 
advisor for
 
the Eastern Cape
 
Development
Corporation.
 
She
 
has
 
held
 
directorships
 
on
 
company
 
boards
 
including
 
Gijima, EOH
 
Mthombo
 
Proprietary
 
Limited,
 
AllPay
 
Eastern
 
Cape
Proprietary Limited,
 
a subsidiary
 
of ABSA
 
Limited, and
 
the Ryk
 
Neethling Foundation.
 
She currently
 
holds the
 
position of
 
CEO of
 
Vitom
Technologies Proprietary Limited and Vitom Brands Communication Proprietary Limited.
 
Toko is a member of the
 
Remuneration Committee,
Nominations Committee, and the Social & Ethics Committee of DRDGOLD.
Kuby Prudence Lebina
 
(40). Prudence Lebina was appointed as independent non-executive director on 03 May 2019. She qualified
as a chartered
 
accountant in December 2005
 
after serving her articles
 
at PricewaterhouseCoopers Incorporated. A
 
member of the South
 
African
Institute of Chartered
 
Accountants, with extensive
 
experience in corporate
 
finance, financial management,
 
investor relations and
 
the mining
industry, she is currently Chief Executive Officer of TriAlpha Investment Management and Non-executive director of Growthpoint Properties
Limited
 
and
 
lemas
 
Financial
 
Services
 
Co-operative
 
Limited.
 
Prudence
 
chairs
 
the
 
Risk
 
Committee
 
and
 
is
 
a
 
member
 
of
 
the
 
Nominations
Committee and the Audit Committee of DRDGOLD.
Timothy John Cumming
 
(63) holds a B.Sc (Hons) in Civil Engineering
 
from the University of Cape
 
Town and an MA in Philosophy,
Politics and Economics from Oxford University.
 
His career spans mining,
 
financial services and consulting. He is
 
the founder of
 
Scatterlinks
Proprietary
 
Limited,
 
a South African-based
 
company providing
 
leadership
 
development
 
and advisory
 
services
 
to senior
 
business executives.
 
He is
also
 
an
 
independent non-executive director
 
of
 
Sibanye-Stillwater Limited and
 
Nedgroup Investments
 
Limited and
 
serves
 
as
 
non-executive
Chairman of
 
Riscura Holdings
 
Limited. Timothy
 
started out
 
as an engineer
 
at the Anglo American
 
Corporation
 
of South Africa
 
Limited working
59
on a number of gold and diamond mines including involvement in the geo-technical
 
design of the Ergo tailings dam. Thereafter he held senior
roles in
 
financial
 
services including
 
General Manager
 
at Allan Gray
 
Limited,
 
Head of Investment
 
Research at
 
HSBC Securities
 
(SA), CEO of
 
Old
Mutual Asset Managers and MD of various divisions within the Old Mutual Group. Other involvements
 
include Chairmanship of the Mandela
Rhodes Foundation’s Investment Committee and the
 
Woodside Endowment Trust
 
and membership of
 
the Greenpop advisory board
 
(a social
enterprise committed
 
to
 
restoring ecosystems
 
and
 
sustainable development).
 
Timothy
 
is
 
a
 
member
 
of
 
the
 
Risk
 
Committee, Remuneration
Commmittee,
 
and Nominations
 
Committee
 
of DRDGOLD.
Charmel Diane Flemming (38)
 
holds a B.Acc (Hons) from the
 
University of the Free State and
 
is a qualified Chartered Accountant
(South Africa)
 
with 10 years´ post
 
articles experience
 
primarily within
 
the mining space.
 
She started her
 
career as a trainee
 
accountant at KPMG
South Africa
 
and held
 
various
 
positions
 
within the
 
De Beers
 
Group over
 
a period
 
of 11 years.
 
She also
 
served as
 
a trustee
 
on the boards
 
of both the
De Beers Benefit Society Medical
 
Aid and De Beers Pension Fund from 2014 to 2018. Charmel is the founder and chief
 
executive officer of F
Twelve and is also a non-executive director at Acorn Agri & Food Limited and at ATKV.
 
Charmel is a member of the Risk Committee, Audit
Committee
 
and Social & Ethics Committee of DRDGOLD.
Senior Management
 
and Prescribed
 
Officers
 
Wilhelm Jacobus
 
Schoeman (47)
(Dip Analytical
 
Chemistry, BTech Analytical
 
Chemistry).
 
Jaco Schoeman
 
joined DRDGOLD
 
in 2011
as Executive
 
Officer: Business
 
Development
 
to focus
 
on expanding
 
the Group’s
 
surface retreatment
 
business
 
and extracting
 
maximum value
 
from
existing resources.
 
In July 2014,
 
he was appointed
 
Operations
 
Director: Ergo
 
Mining Operations
 
Proprietary
 
Limited.
 
 
Henry Gouws (52)
 
(National Higher Diploma
 
(Extraction Metallurgy),
 
MDP)
 
Managing Director:
 
Ergo. Henry Gouws has more than
30
 
years’ experience
 
in
 
the
 
mining industry.
 
He
 
graduated from
 
Technikon
 
Witwatersrand and
 
obtained a
 
National Diploma
 
in
 
Extraction
Metallurgy
 
in 1990
 
and a
 
National
 
Higher
 
Diploma
 
in Extraction
 
Metallurgy
 
in 1991.
 
He completed
 
a Management
 
Development
 
Program in
 
2003
through
 
Unisa
 
School of
 
Business
 
Leadership
 
and an
 
Executive
 
Development
 
Programme
 
in 2012
 
through
 
the University
 
of Stellenbosch
 
Business
School. He was appointed Operations Manager
 
of Crown in January 2006 and General Manager in July 2006. He was appointed to his current
position in
 
October 1,
 
2011.
Mark
 
Burrell
 
(59)
 
(BCom
 
Accounting, MDP)
 
Financial Director:
 
Ergo.
 
Mark
 
Burrell holds
 
a
 
B.Comm Accounting
 
degree,
 
has
completed
 
a Management
 
Development
 
Programme (MDP)
 
and has more
 
than 20 years’
 
experience
 
in the mining
 
sector. He joined
 
DRDGOLD
in 2004
 
on a
 
consulting basis and later that
 
year, was
 
appointed as Financial Manager of the
 
Blyvooruitzicht operation. He was appointed as
Financial
 
Director of
 
Ergo in January
 
2012. Mark serves
 
as a director
 
on the Board
 
of Rand Refinery
 
Proprietary
 
Limited.
 
Kevin Kruger
 
(53)
 
(BscEng (Mechanical
 
Engineering),
 
MDP, PMD, Government
 
Certificate
 
of Competency
 
(Mines)). Kevin
 
has more
than 30 years’ experience in the mining industry in Africa. He joined the mining industry in January 1987 as second year engineering student.
Kevin graduated from the University
 
of the Witwatersrand at the end of 1989 obtaining his BSc (Mechanical
 
Engineering) and his government
certificate of Competency
 
(mines) during 1993. Kevin was appointed
 
as junior engineer in December 1989, section
 
engineer - March 1994 and
engineer in September 1994. He was
 
appointed engineering manager 2003, general manager – technical services 2004 and managing director
Chizimgold
 
2010. On 01
 
October 2013
 
he was appointed
 
as technical
 
director at
 
Ergo where he
 
was responsible
 
for the
 
environmental,
 
health and
safety, mineral
 
resources and
 
engineering
 
portfolios.
 
On 1 August
 
2018, Kevin
 
was
 
appointed Managing
 
Director
 
of FWGR.
 
Henriette
 
Hooijer (41)
 
(BCom (Hons),
 
CA(SA)). Henriette
 
Hooijer is
 
the Financial
 
Director
 
of FWGR. She
 
joined DRDGOLD
 
in May
2016 and was
 
appointed as Financial Director of FWGR in
 
August 2018. Before joining DRDGOLD, she spent
 
11 years’ in
 
the professional
services industry
 
at KPMG, performing,
 
inter alia,
 
audits of listed
 
companies
 
in the mining
 
industry, including
 
SEC registrants.
 
Elise Beukes (44)
 
(BProc). Elise
 
Beukes was appointed
 
as Company Secretary
 
of DRDGOLD with effect
 
from October 01, 2019.
 
She
has broad governance experience in all aspects of commercial law, having spent several years in both litigation and commercial practice as an
admitted attorney
 
and four years
 
as corporate
 
legal counsel.
 
She has dealt
 
extensively
 
with broad-based
 
black economic
 
empowerment
 
structures,
employee ownership schemes, enterprise development and share incentive schemes involving complex company restructuring for both
 
multi-
nationals
 
and large local
 
entities. She
 
has extensive
 
knowledge on
 
the new Companies
 
Act and has
 
particular interests
 
in company secretarial
 
and
corporate
 
governance
 
matters.
There are no family relationships between
 
any of our non-executive directors,
 
executive directors or members
 
of the group executive
and senior
 
management.
 
There are no
 
arrangements
 
or understandings
 
between any
 
of our directors
 
or executive
 
officers and
 
any other person
 
by
which any of our
 
directors or executive officers has been so elected or appointed. Furthermore, none of the non-executive directors, executive
directors, group
 
executive and senior
 
management members
 
or other key management
 
personnel are
 
elected or appointed
 
under any undertaking
by, arrangement
 
or understanding
 
with any major
 
shareholder,
 
customer, supplier
 
or otherwise.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
60
6B. COMPENSATION
Our MOI
 
provide that
 
the directors'
 
fees should
 
be determined
 
from time
 
to time in
 
a general
 
meeting or
 
by a quorum
 
of Non-Executive
Directors.
 
The total
 
amount of directors'
 
remuneration
 
paid and or
 
accrued for
 
the year ended
 
June 30, 2021
 
was R62.6 million.
 
 
Non-Executive
 
Directors
 
received the
 
following fees
 
for fiscal
 
year 2021:
Base fee
 
as Non-Executive
 
Chairman of
 
R1,388,518 per
 
annum up to
 
December
 
1, 2020 and R1,457,944
 
thereafter;
Base fee
 
as Lead Independent
 
Non-Executive
 
Director of
 
R640,261 per
 
annum up to
 
December
 
1, 2020 and
 
R672,274 thereafter;
Base fee
 
as Non-Executive
 
Directors of
 
R617,119 per annum
 
up to December
 
1, 2020 and R647,975
 
thereafter;
Annual fee for Audit Committee
 
Chairman of R30,856 (excluding
 
fee received as a committee
 
member) up to December 1, 2020 and
R32,399 thereafter;
Annual fee
 
for Audit Committee
 
member of
 
R30,856 up to
 
December
 
1, 2020 and
 
R32,399 thereafter;
Annual fee
 
for the
 
chairman of
 
Remuneration Committee, Nominations Committee and
 
Social and
 
Ethics Committee of
 
R23,142
(excluding
 
fee received
 
as a committee
 
member) up to
 
December
 
1, 2020 and R24,299
 
thereafter;
Annual fee for members
 
of Remuneration Committee
 
and Social and Ethics
 
Committee of R23,142
 
each up to December
 
1, 2020 and
R24,299 thereafter;
Daily
 
fee of R23,142
 
up to December
 
1, 2020 and
 
R24,299 thereafter;
 
Hourly rate
 
of R3,086 up
 
to December
 
1, 2020 and R3,240
 
thereafter;
Half-day fee
 
for participating
 
by telephone
 
in special
 
board meetings
 
of R11,571 up to
 
December
 
1, 2020 and R12,150
 
thereafter;
 
and
The Chairman
 
of the board,
 
Lead Independent
 
Non-Executive
 
Director and
 
other Non-Executive
 
Directors
 
to receive
 
committee
 
fees.
The following table sets forth the compensation for our directors and prescribed officers for the year ended June 30, 2021.
The disclosure detailed in this table is consistent with the disclosure requirements of the Companies Act, 2008 (Act 71 of 2008)
and the JSE Listings Requirements.
Directors / Prescribed Officer
 
Total
remuneration
recognised
during the year
Short-Term
Incentives
recognised
related to this
cycle
Discretionary
Short-Term
Incentives
recognised
related to this
cycle (1)
Long-term
Incentives paid
during this
cycle
Total
remuneration
related to this
cycle
R'000
R'000
R'000
R'000
R'000
Executive directors
D J Pretorius
7,253
6,927
1,732
21,627
37,539
A J Davel
4,089
3,891
973
12,150
21,103
11,342
10,818
2,705
33,777
58,642
Non-executive directors
G C Campbell
1,545
-
-
-
1,545
E A Jeneker
794
-
-
-
794
J Holtzhausen
712
-
-
-
712
T B V N Mnyango
724
-
-
-
724
J J Nel
756
-
-
-
756
K P Lebina
769
-
-
-
769
T J Cumming
681
-
-
-
681
C D Flemming
674
-
-
-
674
6,655
-
-
-
6,655
Prescribed officers (2)
W J Schoeman
3,877
3,891
973
12,150
20,891
E Beukes
1,357
1,292
-
-
2,649
5,234
5,183
973
12,150
23,540
Total
23,231
16,001
3,678
45,927
88,837
(1)
 
Awarded after 30 June 2021
(2)
 
The Companies
 
Act, 2008
 
(Act 71
 
of 2008),
 
under section
 
30, requires
 
the remuneration
 
of prescribed
 
officers, as
 
defined in
 
regulation 38
 
of Company
Regulations 2008,
 
to be
 
disclosed with
 
that of
 
directors of
 
the company.
 
A person
 
is a
 
prescribed officer
 
if they
 
have general
 
executive authority
 
over the
company, general responsibility for the financial management
 
or management of legal affairs, general
 
managerial authority over the operations
 
of the company
or directly or indirectly exercise or significantly
 
influence the exercise of control over the
 
general management and administration of the whole
 
or a significant
portion of the business and activities of the company.
 
 
 
 
 
 
61
Also see Item 6E. Share Ownership for details of share options held by directors.
Compensation
 
of key management
Refer to Item 18. ‘‘Financial
 
Statements
 
– Note 19.2 –
 
Related party
 
transactions’’ for
 
the total compensation
 
paid to key management
(including executive
 
and non-executive
 
directors
 
as well as
 
prescribed officers).
The Group applies
 
a pool-based Short-Term Incentive
 
scheme, based on
 
modified free cash
 
flow, because it drives
 
a strong teamwork
culture with
 
all participants
 
working primarily
 
towards a
 
single goal,
 
maximising free
 
cash flow
 
which is
 
an easy
 
measure to
 
understand.
Salient features of the short-term incentive scheme are as follows:
• Participants include the executive directors, prescribed officers and senior management.
 
 
The
 
pool
 
is
 
calculated
 
as
 
15%
 
of
 
the
 
Free
 
Cash
 
Flow
 
with
 
90%
 
of
 
the
 
pool
 
accruing
 
to
 
employees
 
achieving
 
a
 
satisfactory
performance rating;
• 10%
 
of
 
the
 
pool is
 
available
 
for allocation
 
at the
 
discretion
 
of the
 
remuneration
 
committee as
 
recommended
 
by
 
the executive
committee which provides the ability to recognise exceptional discretionary effort;
• A production modifier that can modify the pool upwards as well as downwards based on gold produced measured against budget;
• A safety and a
 
fatality modifier, both supporting the Company’s strong commitment to its
 
strategy of a renewed focus
 
on employee
safety, development, values and wellbeing; and
 
• The
 
individual performance
 
moderator model
 
has been
 
expanded to
 
include employee
 
performance ratings
 
between 2
 
and 3
 
to
participants in the STI scheme on a broader sliding scale set out below:
Individual performance rating
 
Individual performance modifier
 
< 2
 
(100%)
2 to 2.24
 
(80%)
2.25 to 2.49
 
(60%)
2.5 to 2.74
 
(40%)
2.75 to 2.99
 
(20%)
>= 3
 
0%
Performance measures
 
The STI
 
is funded
 
out of
 
a pool
 
created from
 
the Adjusted
 
Free Cash
 
Flow (“
Adjusted
FCF
”) generated
 
by DRDGOLD
 
in the
financial year:
• Adjusted FCF is defined for the performance
 
measure as cash generated from operations, less
 
capital expenditure (“
Capex
”), and
tax. In the budgeting
 
process, if the Group believes
 
that any Capex, Investment
 
or other item/s should be
 
excluded or amortised or
 
treated in
any different way for determining Adjusted FCF at the end of the year, they may make representations to the Remuneration Committee on the
treatment of such
 
item/s for the
 
purposes of calculating Adjusted
 
FCF for purposes
 
of the STI
 
pool. Remco has
 
absolute discretion in approving
the treatment of such items;
• The STI Pool is modified as per the Tables below;
Modifiers of the incentive pool
To drive strategic initiatives, the short-term incentive pool is modified by up to
 
20% for isolated non-achievements of targets and up
to 50% for systemic or
 
repetitive non-compliance. The modifiers are
 
approved by the Remuneration Committee.
 
These strategic initiatives and
their measures
 
are assessed
 
at the
 
beginning of
 
each financial
 
year to
 
ensure that
 
current strategies
 
are driven
 
in that
 
year.
 
These strategic
modifiers
 
and
 
their
 
weightings
 
are
 
communicated
 
to
 
participants
 
at
 
the
 
beginning
 
of
 
each
 
financial
 
year
 
to
 
ensure
 
understanding
 
and
compliance.
The Group performance measures set out by the Remuneration Committee and the weightings for FY2021 are as follows:
 
Strategic Initiatives Modifiers
Environmental:
 
4%
Safety:
 
4%
Social development:
 
4%
Labour development:
 
4%
Transformation:
 
4%
Fatality Modifier
• Up to 25% per fatality, depending on the degree of culpability of the company,
 
as assessed by the Remuneration Committee.
• If the fatality/ies is/are as a result of a breakdown in or disregard for a safety culture, the STI Pool can be modified by up to 100%
at the Remuneration Committee’s discretion.
Production Modifier
 
The calculated
 
STI Pool
 
may be
 
modified, upwards
 
or downwards,
 
based upon
 
gold (kg)
 
produced measured
 
against budget,
 
as
follows:
Gold (Kg) Produced:
 
STI
% of Budget
 
Pool Adjustment
 
 
 
62
< 93%
 
-10%
93% to < 97%
 
-5%
97% to < 103%
 
0%
103% to < 107%
 
+5%
≥ 107%
 
+10%
Distribution of the Incentive pool
The STI pool, after any moderation, will be distributed as follows:
• 90% formulaically, pro-rata to each individual’s
 
“% of STI Pool” taking
inter alia
 
the following factors into account:
• All-inclusive package of the individual for the financial year;
• Market-related STI quanta applicable to the Category;
• The level of accountability and responsibility of the role of the individual.
 
10%
 
on
 
a
 
discretionary
 
basis
 
allocated
 
by
 
the
 
Executive
 
Committee
 
after
 
recommendations
 
from
 
line
 
management.
 
The
Remuneration Committee will approve any allocations from the 10% discretionary pool to Executive Committee members.
Distributions are moderated for individual performance as follows:
Individual Performance Rating
Modifier %
< 2
 
-100%
2 to < 2.25
 
-80%
2.25 to < 2.5
 
-60%
2.5 to < 2.75
 
-40%
2.75 to < 3
 
-20%
≥ 3
 
0%
In order
 
to be
 
able to
 
reward exceptional
 
individual performance
 
appropriately,
 
the formulaic
 
plus discretionary
 
allocations may
exceed this amount, but these instances, if any, would be subject to the Executive Committee’s and ultimately the Remuneration Committee’s
approval.
Further considerations for the CEO and CFO
For
 
the
 
CEO and
 
CFO
 
(“executive directors”)
 
the
 
formulaically calculated
 
STI
 
amounts
 
will
 
be
 
reviewed by
 
the
 
Remuneration
Committee, who has absolute discretion to further modify the STI amounts, upwards or downwards:
• If compelling, exceptional and objective circumstances warrant such application of discretion; and
• To ensure that the STI amounts awarded are balanced and equitable.
Executive Directors’
 
STI amounts
 
may be
 
settled in
 
a combination
 
of cash
 
and DRDGOLD
 
shares (deferred
 
bonus shares),
 
with
Remco having discretion to make up to 40% of the award in deferred bonus shares.
Deferred Bonus Shares will vest / be released to the Executive Directors as follows:
• 50% after 9 months;
• 50% after 18 months.
The following provisions apply to the deferred bonus shares:
• The Executive Director needs to be in active service and not under notice of resignation on the vesting dates in
 
order to be eligible
to receive the deferred bonus shares and any dividends accrued thereon; and
• The deferred bonus shares carry voting and dividend rights; however, the dividends will accrue and will only be paid out upon the
vesting / release of the shares to which the dividends relate.
Service Agreements
Service contracts negotiated with
 
each executive and non-executive
 
director incorporate their terms
 
and conditions of employment
and are approved by our Remuneration Committee.
 
The Company’s current executive directors, Mr. D.J. Pretorius and Mr. A.J. Davel, entered into agreements of employment with us,
on January 1,
 
2009 and
 
January 1, 2015,
 
respectively. These
 
agreements regulated
 
the employment relationship
 
with Messrs. D.J.
 
Pretorius
and A.J. Davel during the year ended June 30, 2021.
On July 1, 2019
 
Mr. D.J.
 
Pretorius entered into a
 
new agreement of employment
 
for a period of 3
 
years and thereafter it
 
continues
indefinitely until
 
terminated by
 
either party on
 
not less than
 
three months’
 
written notice. Under
 
the employment agreement
 
effective up
 
to
June 30,
 
2022 Mr.
 
D.J. Pretorius
 
receives from
 
us a
 
guaranteed remuneration
 
package of
 
R6.2 million
 
per annum.
 
Mr. D.J.
 
Pretorius was
eligible under his employment
 
agreement, for an incentive
 
bonus of up to
 
100% of his annual
 
remuneration package in respect
 
of one bonus
cycle per
 
annum
 
over
 
the
 
duration of
 
his
 
appointment,
 
on
 
the condition
 
that DRDGOLD
 
achieves certain
 
key
 
performance indicators.
 
In
addition, he is
 
eligible to participate in
 
the cash-settled long-term
 
incentive scheme (awarded 2,323,009
 
phantom shares in
 
November 2015)
and the equity-settled
 
long-term incentive scheme
 
(awarded 1,069,321 conditional
 
shares in December 2019
 
and 332,497 conditional
 
shares
in October 2020).
 
63
Mr.
 
A.J.
 
Davel entered
 
into
 
a
 
new employment
 
agreement
 
effective
 
from
 
July 1,
 
2019
 
for
 
a
 
period
 
of
 
3
 
years
 
and
 
thereafter
 
it
continues indefinitely until
 
terminated by either
 
party on not
 
less than three
 
months’ prior written
 
notice. Mr.
 
A.J. Davel receives
 
from us a
guaranteed remuneration
 
package of
 
R3.4 million
 
per annum.
 
Mr. A.J.
 
Davel is
 
eligible under
 
his employment
 
agreement, for
 
a short
 
term
incentive of up to 100% of his annual remuneration package in respect of one bonus cycle
 
per annum over the duration of his appointment, on
the condition that
 
DRDGOLD achieves certain
 
key performance indicators.
 
In addition, he
 
is eligible to
 
participate in the
 
cash-settled long-
term incentive scheme
 
(awarded 1,305,033 phantom
 
shares in November
 
2015) and the
 
equity-settled long-term incentive
 
scheme (awarded
517,522 conditional shares in December 2019 and 160,919 conditional shares in October 2020)
 
Messrs. G.C. Campbell and E.A. Jeneker each have service agreements which run for fixed periods until October 31, 2021. Mr.
 
J.A
Holtzhausen has a service agreement
 
which runs for a fixed period until April 25, 2022. Mrs. TVBN
 
Mnyango has a service agreement which
runs until March 31, 2023. Mr. J Nel entered into a service agreement
 
which runs for a fixed period until March 31, 2022, and Ms. K.P Lebina
entered into a service
 
agreement which runs until May
 
02, 2023. Mr.
 
T J
 
Cumming and Ms
 
Charmel Diane Flemming entered into a
 
service
agreement which
 
runs for a fixed
 
period until July
 
31, 2022. After
 
expiration of
 
the initial
 
two-year periods,
 
the agreements
 
continue indefinitely
until terminated
 
by either party
 
on not less
 
than three
 
months’ prior
 
written notice.
The Company
 
does not administer
 
any pension,
 
retirement
 
or other similar
 
scheme in which
 
the directors
 
receive a
 
benefit.
 
Each service
 
agreement with
 
our directors
 
provides for
 
the provision
 
of benefits
 
to the director
 
where the
 
agreement
 
is terminated
 
by us
in the case of our executive
 
officers, except
 
where terminated
 
as a result of certain
 
action on the part
 
of the director, upon the
 
director reaching
 
a
certain age, or by
 
the director upon the occurrence of a
 
change of control. A termination of a
 
director's employment upon the occurrence of a
change of control
 
is referred to
 
as an “eligible
 
termination.”
 
Upon an eligible
 
termination,
 
the director
 
is entitled to
 
receive a payment
 
equal to at
least one
 
year's salary or
 
fees, but
 
not more
 
than three
 
years' salary for
 
Executive Directors or two
 
years’ fees for
 
Non-Executive Directors,
depending on
 
the period
 
of time that
 
the director
 
has been employed.
 
6C. BOARD PRACTICES
Board of Directors
As at June 30, 2021 and as at September
 
30, 2021,
 
the board of directors comprises two Executive Directors (Mr. D.J. Pretorius and
Mr. A.J.
 
Davel),
 
and eight
 
Non-Executive Directors
 
(Messrs. G.C. Campbell,
 
J.J.
 
Nel, E.A. Jeneker,
 
J.A. Holtzhausen,
 
T.J.
 
Cumming and
Mmes. K.P. Lebina, T.V.B.N.
 
Mnyango,
 
C.D. Flemming). The
 
Non-Executive Directors are
 
independent under the
 
New York Stock Exchange,
or NYSE, requirements (as affirmatively determined by
 
the Board of Directors)
 
and the South African King IV
 
Report except Mr. T Cumming
who also serves as an independent non-executive director of Sibanye-Stillwater Limited, DRDGOLD’s controlling shareholder.
In
 
accordance
 
with
 
the
 
King
 
IV
 
Report
 
on
 
corporate
 
governance,
 
as
 
encompassed
 
in
 
the
 
JSE
 
Listings
 
Requirements,
 
and
 
in
accordance with
 
the United Kingdom
 
Combined Code, the
 
responsibilities of Chairman
 
and Chief Executive
 
Officer are
 
separate. Mr.
 
G.C.
Campbell is the Non-Executive Chairman, Mr. D.J. Pretorius is the Chief Executive Officer and Mr.
 
A.J Davel is the Chief Financial Officer.
The board has established a Nominations Committee, and it is our
 
policy for details of a prospective candidate to be
 
distributed to all directors
for formal consideration at a
 
full meeting of the board.
 
A prospective candidate would be
 
invited to attend a meeting
 
and be interviewed before
any decision is taken. In compliance with the NYSE rules a majority of independent directors will select or recommend director nominees.
The board’s main
 
roles are
 
to create
 
value for
 
shareholders, to
 
provide leadership
 
of the
 
Company, to approve
 
the Company’s strategic
objectives and
 
to ensure
 
that the
 
necessary financial
 
and other
 
resources are
 
made available
 
to management
 
to enable
 
them to
 
meet those
objectives. The board retains full and effective control over the Company, meeting on a quarterly basis with additional ad hoc meetings being
arranged when necessary, to review
 
strategy and planning and
 
operational and financial performance.
 
The board further authorizes
 
acquisitions
and disposals,
 
major capital
 
expenditure, stakeholder
 
communication and
 
other material
 
matters reserved
 
for its
 
consideration and
 
decision
under its terms of reference. The board also approves the annual budgets for the various operational units.
The board is responsible for monitoring
 
the activities of executive management within
 
the company and ensuring that decisions on
material matters are referred to the board. The board approves all the terms of reference for
 
the various subcommittees of the board, including
special
 
committees
 
tasked
 
to
 
deal
 
with
 
specific
 
issues.
 
Only the
 
executive
 
directors
 
are
 
involved with
 
the
 
day-to-day
 
management of
 
the
Company.
To assist new directors, an induction program has
 
been established by the Company, which includes
 
background materials, meetings
with senior management, presentations
 
by the Company’s
 
advisors and site visits.
 
The directors are assessed
 
annually, both
 
individually and
as a board, as part of an evaluation process, which is driven by an independent consultant. In
 
addition, the Nominations Committees formally
evaluate the executive directors on an annual basis, based on objective criteria.
All
 
directors,
 
in
 
accordance
 
with
 
the
 
Company’s
 
MOI,
 
are
 
subject to
 
retirement by
 
rotation
 
and re-election
 
by
 
shareholders.
 
In
addition, all directors are subject to election by shareholders at the first
 
annual general meeting following their appointment by directors. The
appointment of new
 
directors is approved by
 
the board as a
 
whole. The names of
 
the directors submitted for
 
re-election are accompanied by
sufficient biographical details in the notice of the forthcoming annual general meeting to enable shareholders to make an informed decision in
respect of their re-election.
All
 
directors
 
have
 
access
 
to
 
the
 
advice
 
and
 
services
 
of
 
the
 
Company
 
Secretary,
 
who
 
is
 
responsible
 
to
 
the
 
board
 
for
 
ensuring
compliance with
 
procedures and regulations
 
of a
 
statutory nature. Directors
 
are entitled
 
to seek independent
 
professional advice
 
concerning
 
 
 
64
the affairs of the Company at the Company’s expense, should they believe that course of action would be in the best interest of the Company.
Board
 
meetings
 
are
 
held
 
quarterly
 
in
 
South
 
Africa
 
and
 
occasionally
 
abroad.
 
The
 
structure
 
and
 
timing
 
of
 
the
 
Company’s
 
board
meetings, which
 
are scheduled over
 
two days,
 
allows adequate time
 
for the
 
Non-Executive Directors to
 
interact without
 
the presence of
 
the
Executive
 
Directors.
 
The
 
board
 
meetings
 
include
 
the
 
meeting
 
of
 
the
 
Audit
 
Committee,
 
Risk
 
Committee,
 
Remuneration
 
Committee
 
&
Nominations Committee as well as the Social & Ethics Committee which act
 
as subcommittees to the board. Each subcommittee is chaired by
one of
 
the Independent
 
Non-Executive Directors,
 
each of
 
whom provides
 
a formal
 
report back
 
to the
 
board. Each
 
subcommittee meets
 
for
approximately half a day. Certain senior personnel of the Company attend the subcommittee meetings as invitees.
The board sets the
 
standards and values of
 
the Company and much of
 
this has been embodied in
 
the Company’s Code
 
of Conduct,
which is available
 
on our website
 
at www.drdgold.com.
 
The Code of
 
Conduct applies to
 
all directors, officers
 
and employees, including
 
the
principal executive, financial and accounting officers,
 
in accordance with Section 406 of
 
the US Sarbanes-Oxley Act of 2002,
 
the related US
securities laws
 
and the
 
NYSE rules.
 
The Code
 
contains provisions
 
for employees
 
to report
 
violations of
 
Company policy
 
or any
 
applicable
law, rule or regulation, including US securities laws.
A description of the significant ways in which our corporate governance practices
 
differ from practices followed by U.S. companies
listed on the NYSE can be found in Item 16G. Corporate Governance.
Directors'
 
Terms of Service
 
The following
 
table shows
 
the date of
 
appointment,
 
expiration
 
of term
 
and number
 
of years
 
of service
 
with us of
 
each of
 
the directors
 
as
at June 30,
 
2021:
 
Director
Title
Year first
appointed
Term of
current office
Unexpired
term of
current office
D.J. Pretorius
Chief Executive Officer
2008
3 years
12 months
A.J. Davel
Chief Financial Officer
2015
3 years
12 months
G.C. Campbell
Non-Executive Director
2002
2 years
4 months
E.A. Jeneker
Non-Executive Director
2007
2 years
4 months
J. Holtzhausen
Non-Executive Director
2014
2 years
9 months
T.V.B.N.
 
Mnyango
Non-Executive Director
2016
2 years
19 months
J.J Nel
Non-Executive Director
 
2018
2 years
19 months
K.P Lebina
Non-Executive Director
2019
2 years
22 months
T.J. Cumming
Non-Executive Director
 
2020
2 years
13 months
C.D. Flemming
Non-Executive Director
2020
2 years
13 months
Executive
 
Committee
 
As at June
 
30, 2021,
 
the Executive
 
Committee
 
consisted of
 
Mr. D J Pretorius
 
(Chairman),
 
Mr. A J Davel, Mr. W.J. Schoeman
 
and Ms.
E. Beukes.
 
The Executive
 
Committee meets
 
on a weekly
 
basis to review
 
current operations,
 
develop strategy
 
and policy
 
proposals for
consideration
 
by the board
 
of directors.
 
Members of
 
the Executive
 
Committee,
 
who are unable
 
to attend the
 
meetings
 
in person,
 
are able to
participate
 
via teleconference
 
facilities,
 
to allow participation
 
in the discussion
 
and conclusions
 
reached. The
 
subsidiary
 
companies’
 
executives
are permanent
 
participants
 
on the Executive
 
Committee.
Board Committees
The board has established a number of standing committees to enable it to properly discharge its duties and responsibilities and to
effectively fulfill its decision-making process. Each committee acts within written terms of reference which have been approved by the board
and under which specific functions of the board are delegated. The terms of reference for all committees can be obtained by application to
the Company Secretary at the Company’s registered office. Each committee has defined purposes, membership requirements, duties and
reporting procedures. Minutes of the meetings of these committees are circulated to the members of the committees and made available to
the board. Remuneration of Non-Executive Directors for their services on the committees concerned is determined by the board. The
committees are subject to annual evaluation by the board with respect to their performance and effectiveness. The following information
reflects the composition and activities of these committees.
Committees
 
of the Board
 
of Directors
Nominations
 
Committee
As at June
 
30, 2021 the
 
Nominations
 
Committee
 
consisted of
 
G C Campbell
 
(Chairman),
 
E A Jeneker,
 
J A Holtzhausen, T V B N
Mnyango, K
 
P Lebina,
 
and T J Cumming.
65
The Nominations Committee meets on an
ad hoc
 
basis. All members of this committee are independent non-executive directors
who are independent according to the definition set out in the NYSE Rules, except for T Cumming. It is chaired by the board chairman who
is an independent non-executive director (“
NED
”).
The primary role of the committee is to execute the following functions:
ensure the
 
establishment
 
of a formal
 
process for
 
the appointment
 
of directors;
ensure that
 
inexperienced
 
directors are
 
developed through
 
a mentorship
 
programme;
ensure that
 
directors receive
 
regular briefings
 
on changes
 
in risks, laws
 
and the appropriate
 
contribution;
drive an annual
 
process to
 
evaluate the
 
board, board
 
committees
 
and
 
individual
 
directors;
 
ensure that
 
succession
 
plans for the
 
board, chief
 
executive officer
 
and senior
 
management
 
appointments
 
are developed
 
and
implemented.
The key nominations responsibilities of the committee include the following:
make recommendations
 
to the board
 
on the appointment
 
of new directors;
make recommendations
 
on the composition
 
of the board
 
and the balance
 
between executive
 
and non-executive directors appointed
to the board;
review board
 
structure,
 
size and composition
 
on a regular
 
basis;
make recommendations
 
on directors
 
eligible to
 
retire by
 
rotation; and
apply the principles
 
of good corporate
 
governance
 
and best practice
 
in respect
 
of nominations
 
matters.
Remuneration
 
Committee
As at June
 
30, 2021 the
 
Remuneration
 
Committee
 
consisted of
 
J J Nel (Chairman),
 
E A Jeneker,
 
J A Holtzhausen, T V B N Mnyango
and T J Cumming.
 
The Remuneration Committee meets on a quarterly basis. All members of this committee are independent non-executive directors
who are independent according to the definition set out in the NYSE Rules, except for T J Cumming. It is chaired by an independent non-
executive director.
The committee has a mandate to offer competitive packages that will attract and retain executives of the highest caliber and
encourage and reward superior performance. Industry surveys are provided for comparative purposes, and to assist the committee in the
formulation of remuneration policies that are market related.
Audit Committee
As at June
 
30, 2021 the
 
Audit Committee consisted
 
of J.A. Holtzhausen (Chairman), J.J. Nel, K P Lebina and C.D. Flemming.
All members of the Audit Committee are independent according to the definition set out in the NYSE Rules. The committee’s
charter deals with all the aspects relating to its functioning.
 
The Audit Committee charter sets out the committee’s terms of reference which include responsibility for:
appointment
 
and oversight
 
of external
 
auditors, audit
 
process and
 
financial reporting;
oversight of
 
internal audit;
overseeing
 
the integrated
 
reporting and
 
assurance
 
model;
overseeing the
 
development
 
and annual review
 
of a policy
 
and plan for
 
risk management;
ensuring that
 
risk management
 
assessments
 
are performed
 
on a continuous
 
basis;
ensuring that
 
reporting on
 
risk management
 
assessment
 
is complete,
 
timely, accurate
 
and accessible;
ensuring that
 
frameworks
 
and methodologies
 
are implemented
 
to increase
 
the possibility
 
of anticipating
 
unpredictable
 
risks;
ensuring that
 
continuous
 
risk monitoring
 
by management
 
takes place.
 
The Audit Committee meets each quarter with the external auditors, the company’s manager: risk and internal audit, and the CFO.
The committee reviews the audit plans of the internal auditors to ascertain the extent to which the scope of the audits can be relied upon to
detect weaknesses in internal controls. It also reviews the annual and interim financial statements prior to their approval by the board.
The committee is responsible for making recommendations to appoint, reappoint or remove the external auditors, and the
designated external audit partner as well as determining their remuneration and terms of engagement. In accordance with its policy, the
committee preapproves all audit and non-audit services provided by the external auditors. KPMG Inc. was reappointed by shareholders at the
last AGM on December 2, 2020 to perform DRDGOLD’s external audit function, such appointment was made by the shareholders in
accordance with the laws of South Africa and upon recommendation of the board following the Audit Committee.
The internal audit function is performed in-house, with the assistance of Pro-Optima Audit Services Proprietary Limited. Internal
audits are performed at all DRDGOLD operating units and are aimed at reviewing, evaluating and improving the effectiveness of risk
management, internal controls and corporate governance processes.
66
Significant deficiencies, material weaknesses, instances of non-compliance and exposure to high risk and development needs are
brought to the attention of operational management for resolution and reported to the Audit Committee.
 
The committee members have access
to all the records of the internal audit team.
DRDGOLD’s internal and external auditors have unrestricted access to the chairman of the Audit Committee and, where
necessary, to the chairman of the board and the CEO. All significant findings arising from audit procedures are brought to the attention of the
committee and, if necessary, to the board.
Section 404(a) of the Sarbanes-Oxley Act of 2002 stipulates that management is required to assess the effectiveness of the internal
controls surrounding the financial reporting process. The results of this assessment are reported in the form of a management attestation
report that is filed with the SEC as part of the Form 20-F. Additionally,
 
DRDGOLD’s external auditors are required to express an opinion on
the effectiveness of internal controls over financial reporting, which is also contained in the Company’s Form 20-F.
Risk Committee
As at June
 
30, 2021 the
 
Risk Committee consisted
 
of K.P. Lebina (Chairwoman), Mr D.J. Pretorius, J.J. Nel, C.D. Flemming and
T.J. Cumming.
All members of the Risk Committee are independent according to the definition set out in the NYSE Rules, except for T Cumming.
It is chaired by an independent NED.
 
An important aspect of risk management is the transfer of risk to third parties to protect the company from disaster. DRDGOLD’s
major assets and potential business interruption and liability claims are therefore covered by the group insurance policy, which encompasses
all the operations. Most of these policies are held through insurance companies operating in the United Kingdom, Europe and South Africa.
The various risk-management initiatives undertaken within the group as well as the strategy to reduce costs without compromising cover
have been successful and resulted in substantial insurance cost savings for the Group.
Social and
 
Ethics Committee
As at June 30, 2021, the Social and Ethics Committee consisted of Mr. E.A. Jeneker (Chairman), Mr. A.J. Davel, Mrs. TVBN
Mnyango and C.D. Flemming
 
The Social and Ethics Committee is a statutory body established in terms of section 72 of the Companies Act, 2008; the objectives
of which are to facilitate transformation and sustainable development by,
inter alia,
promoting transformation within the Company and
economic empowerment of previously disadvantaged communities particularly within the areas where the Company conducts business;
striving towards achieving the goal of equality as the South African Constitution and other legislation require within the context of the
demographics of the country at all levels of the Company and its subsidiaries; and conducting business in a manner which is conducive to
internationally acceptable environmental and sustainability standards.
The following terms of reference were approved by the board to enable the committee to function effectively. These are to be
responsible for and make recommendations to the board with respect to the following matters:
monitor the
 
Company’s activities
 
regarding the
 
10 principles
 
set out in
 
the United
 
Nations Global
 
Compact Principles
 
and the
OECD recommendations
 
regarding Corruption,
 
the Employment
 
Equity Act
 
and the Broad
 
Based Black
 
Economic Empowerment
Act;
maintaining
 
records of
 
sponsorship,
 
donations
 
and
 
charitable
 
giving;
reviewing
 
matters relating
 
to the environment,
 
health and
 
public safety, including
 
the impact
 
of the company’s
 
activities
 
and of its
products or
 
services;
 
reviewing
 
matters relating
 
to labor and
 
employment
reviewing and
 
recommending
 
the company’s code
 
of ethics;
reviewing and
 
recommending
 
any corporate
 
citizenship
 
policies;
reviewing significant
 
cases of employee
 
conflicts
 
of interests,
 
misconduct or
 
fraud, or any
 
other unethical
 
activity by
 
employees
 
or
the Company
6D. EMPLOYEES
Employees
 
The total
 
number of employees
 
at June 30,
 
2021, of 2,791
 
comprises
 
1,838 specialized
 
service providers
 
and 953 employees
 
who are
directly employed
 
by us and our
 
subsidiary
 
companies.
 
Of the 953
 
employees
 
directly employed
 
by us and our
 
subsidiary
 
companies,
 
42
employees
 
are on a fixed
 
term employment
 
contract.
 
 
The total
 
number of employees
 
at June 30,
 
2020, of 2,573
 
comprises
 
1,615 specialized
 
service providers
 
and 958 employees
 
who are
directly employed
 
by us and our
 
subsidiary
 
companies.
 
Of the 958
 
employees
 
directly employed
 
by us and our
 
subsidiary
 
companies,
 
34
employees
 
are on a fixed
 
term employment
 
contract.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
67
 
The total
 
number of employees
 
at June 30,
 
2019, of 2,617
 
comprises
 
1,591 specialized
 
service providers
 
and 1,026 employees
 
who are
directly employed
 
by us and our
 
subsidiary
 
companies.
 
Of the 1026
 
employees
 
directly employed
 
by us and our
 
subsidiary
 
companies,
 
34
employees
 
are on a fixed
 
term employment
 
contract.
 
 
The total
 
number of employees
 
at September
 
30, 2021, of
 
2,741 comprises
 
1,788 specialized
 
service providers
 
and 953 employees
who are directly
 
employed by us
 
and our subsidiary
 
companies.
 
Of the 953 employees
 
directly employed
 
by us and our
 
subsidiary
 
companies,
 
43
employees
 
are on a fixed
 
term employment
 
contract.
 
 
All of our
 
employees
 
are based at
 
our operations
 
that operate
 
exclusively
 
in South
 
Africa.
Labor Relations
 
As at June
 
30, 2021,
 
approximately
 
82% of our Ergo
 
employees
 
and 93% of our
 
FWGR employees
 
are members
 
of trade unions
 
or
employee associations.
 
South Africa's
 
labor relations
 
environment
 
remains a
 
platform for
 
social reform.
 
The National
 
Union of Mineworkers,
(“
NUM
”),
 
one of the
 
main South
 
African mining
 
industry unions,
 
is influential
 
in the tripartite
 
alliance between
 
the ruling African
 
National
Congress,
 
the Congress
 
of South African
 
Trade Unions,
 
(“
COSATU
”), and the
 
South African
 
Communist Party
 
as it is
 
the biggest
 
affiliate of
COSATU. The relationship
 
between management
 
and labor unions
 
remains
 
cordial. The
 
organized labor
 
coordinating
 
forum meets
 
regularly
 
to
discuss matters
 
pertinent to
 
both parties.
 
On February
 
28, 2021, ERGO
 
signed a one-year
 
wage extension
 
agreement
 
with organized
 
labour for the
 
period July
 
1, 2021 to
 
June
30, 2022 with
 
a 5.9% average
 
increase
 
per annum
 
across the
 
ERGO workforce
 
with individual
 
increases
 
ranging from
 
5.5% to 7% per
 
annum.
The transitional
 
arrangement
 
regarding wage
 
increases
 
with the workforce
 
at FWGR when
 
these employees
 
were incorporated
 
into DRDGOLD
have now come
 
to an end. As
 
a consequence,
 
negotiations
 
are currently
 
underway with
 
organized labour
 
at FWGR with
 
the intention
 
of trying to
reach a 3-year
 
wage agreement.
 
We recognize the
 
need for transformation
 
and have put
 
systems and
 
structures
 
in place to
 
address this
 
at both management
 
and board
level. We aim to recruit
 
in line with
 
our transformational
 
objectives.
 
The composition
 
of the Board
 
of Directors
 
specifically, changed
significantly
 
over the past
 
two fiscal
 
years
 
and is more
 
diverse and
 
reflective
 
of transformation
 
and South Africa’s
 
demographics.
Safety statistics
 
Due to the
 
importance
 
of our labor
 
force, we
 
continuously
 
strive to
 
create a
 
safe and healthy
 
working environment.
 
The following
 
are
our fiscal
 
2021 overall
 
safety statistics
 
for our operations:
(Per million man hours)
Ergo
FWGR
Consolidated
Year ended
 
June 30,
Year ended
 
June 30,
Year ended
 
June 30,
2021
2020
2021
2020
2021
2020
Lost time injury frequency rate (LTIFR)
1
0.78
1.25
0.97
1.3
0.80
1.27
Reportable incidence frequency rate (RIFR)
1
0.47
0.9
 
-
1.3
0.40
0.96
Fatalities
 
-
-
-
-
-
-
1 Calculated as follows: actual number of instances divided by the total number of man hours worked multiplied by one million.
6E. SHARE OWNERSHIP
 
To the best of our
 
knowledge,
 
we believe
 
that our ordinary
 
shares held
 
by prescribed
 
officers and
 
directors,
 
in aggregate,
 
do not exceed
one percent
 
of the Company’s
 
issued ordinary
 
share capital.
 
For details
 
of share
 
ownership
 
of directors
 
and prescribed
 
officers see
 
Item 7A.
 
Major
Shareholders.
As of June
 
30, 2021, directors
 
and prescribed
 
officers do not
 
hold any options
 
to purchase
 
ordinary shares.
 
Closed periods
 
apply to
 
share trading
 
by directors,
 
prescribed officers
 
and other
 
employees, whenever
 
persons become
 
or could
potentially become aware of
 
material price sensitive information, such
 
as information relating to
 
an acquisition, bi-annual results
 
etc., which
is not in
 
the public domain.
 
When these persons
 
have access to
 
this information an
 
embargo is placed
 
on share trading
 
for those individuals
concerned. The
 
embargo need
 
not involve
 
the entire
 
Company in
 
the case
 
of an
 
acquisition and
 
may only
 
apply to
 
the board
 
of directors,
executive committee, and the financial
 
and new business teams,
 
but in the case
 
of interim and year-end results
 
the closed-period is group-wide.
DRDGOLD Phantom
 
Share Scheme
 
(Amended November
 
2015) – Cash
 
Settled Long-Term
 
Incentive Scheme
Salient terms
 
of the
 
DRDGOLD Phantom
 
Share Scheme
 
are disclosed
 
in Item
 
18. ‘‘Financial Statements - Note
 
19. Cash Settled
Long-Term Incentive
 
Scheme’’
 
 
 
 
 
 
 
 
 
 
 
68
During fiscal year 2016, DRDGOLD’s Remuneration
 
Committee approved a revised long-term incentive scheme. On November 4,
2015,
 
the
 
committee
 
approved
 
an
 
allocation
 
of
 
20,527,978
 
phantom
 
shares
 
which
 
is
 
driven
 
by
 
share
 
price
 
performance
 
and
 
individual
performance and is based on phantom share allocations. The vesting of any shares allocated
 
is staggered over a five-year period commencing
in the third year after the allocation is
 
granted in line with King IV Report recommendations.
 
The objectives of the revised scheme are
 
to drive
the longer-term strategies
 
of DRDGOLD, to
 
align participants’ interests with
 
shareholders’ interest, to
 
incentivise and motivate participants,
to
 
attract
 
and
 
retain
 
scarce
 
human
 
resources
 
and
 
to
 
reward
 
superior
 
performance
 
by
 
the
 
Company
 
and
 
participants.
 
The
 
Remuneration
Committee has the authority to amend in part or in its entirety or withdraw the long-term incentive scheme at any time.
No phantom shares were granted during fiscal
 
year 2021 (2020: nil, 2019: 388,547). No phantom
 
shares were outstanding June 30,
2021 (2020: 9,845,638; 2019: 16,157,058).
 
Equity-Settled
 
Long-Term Incentive
 
Scheme
On December 2, 2019 shareholders approved an Equity-Settled Long-Term Incentive Scheme (“
Scheme
”) for purposes of
replacing the current Cash-Settled Long-Term Incentive Scheme. The Cash-Settled Long-Term
 
incentive scheme has a finite life and
comes to an end with the vesting of the last phantom shares during fiscal year 2021. Certain key features of the Scheme are:
Equity settled
The Scheme will be equity-settled.
 
Equity-settlement will be implemented by way of market acquisition of DRDGOLD ordinary shares
or through the issue of authorised but unissued shares or treasury shares.
Participants
Persons eligible to participate in the Scheme will be permanent employees (which, for the avoidance of doubt, includes an executive
director, but excludes a non-executive director) of the Company and its subsidiaries, in Category 19 and above (“
Participants
”).
 
Award of Conditional Shares
Pursuant to the Scheme, the Company’s Remuneration Committee will resolve, on an annual basis, to award “Conditional Shares”
(“
Award
”) which are comprised of:
 
“Performance Shares” which are subject to conditions, as set out in the rules of the Scheme and performance conditions; and
 
“Retention Shares” which are subject to conditions, as set out in the rules of the Scheme.
Participants are not required to pay for Awards or Shares Settled in terms of vested Awards.
 
Annual awards of Conditional Shares will be made, in two forms:
80% of the Award will be comprised of Performance Shares
20% of the Award will be comprised of Retention Shares
The target award value will be referenced to market-related award quanta, and will be adjusted based upon individual performance as
follows:
Individual Rating
% of Target Value
 
Awarded
< 2.75
0%
2.75 to < 3.00
50%
3.0 to < 3.75
100%
3.75 to < 4.5
133.33%
4.5 to < 5.0
166.67%
5.0
200%
Dividend and Voting
 
Rights
The Conditional Share Awards carry no dividend or voting rights, until Settled, and therefore any transfer and other rights associated
with the Conditional Shares will only vest following settlement.
Vesting
 
of the Conditional Shares
The first grant was made on December 2, 2019 and will vest in two tranches, 50% on the 2nd anniversary and the remaining 50% on the
3rd anniversary of the grant date respectively, provided the employee is still within the employment of the Group until the respective
vesting dates.
Retention shares:
 
100% of the retention shares will vest if the employee remains in the employ of the Company at vesting date and individual performance
criteria are met.
Performance shares:
Total shareholder’s return (“
TSR
”) measured against a hurdle rate of 15% referencing DRDGOLD’s Weighted
 
Average Cost of Capital
“WACC”:
 
 
50% of the performance shares are linked to this condition; and
 
all of these performance shares will vest if DRDGOLD’s TSR exceeds the hurdle rate over the vesting period
 
TSR measured against a peer group of 3 peers (Sibanye-Stillwater, Harmony Limited and Pan-African Resources Limited):
 
 
 
 
 
 
 
 
 
 
69
 
50% of the performance shares are linked to this condition; and
 
The number of performance shares which vest is based on DRDGOLD’s actual TSR performance in relation to percentiles of peer
group’s performance as follows
Percentile of Peers
% of Conditional Shares Vesting
< 25th percentile
0%
25th to < 50th percentile
25%
50th to < 75th percentile
75%
≥ 75th percentile
100%
Awarded Conditional Shares which do not Vest
 
to the Participant, as a result of forfeiture or which lapse, revert back to the Scheme.
Share Limits
Overall Company Limit
The aggregate number of Shares at any one time which may be awarded for Settlements under the Scheme shall not exceed 34,500,000
(thirty four million, five hundred thousand) Shares (representing approximately 4.95% of the total issued share capital of the Company at
the date of this Notice).
Individual Limit
Subject to certain dilution adjustments, the aggregate number of Shares at any one time which may be awarded under the Scheme to any
one Participant shall not exceed 14,500,000 Shares.
 
 
 
 
 
 
 
70
ITEM 7. MAJOR
 
SHAREHOLDERS
 
AND RELATED PARTY TRANSACTIONS
 
7A. MAJOR SHAREHOLDERS
As of September
 
30, 2021,
 
our issued
 
capital consisted
 
of:
 
864,588,711 ordinary
 
shares of
 
no par value;
 
and
 
5,000,000 cumulative
 
preference
 
shares.
 
 
To our knowledge, as
 
of June 30,
 
2021, we were
 
not directly
 
or indirectly
 
owned or controlled
 
by another
 
corporation
 
or any person
 
or
foreign government,
 
other than
 
the controlling
 
interest
 
held by Sibanye-Stillwater.
 
On July 31,
 
2018, 265 million ordinary shares were issued to
 
Sibanye-Stillwater
 
as settlement of the
 
purchase consideration for the
acquisition
 
of the WRTRP Assets.
 
On January 8,
 
2020, Sibanye-Stillwater
 
exercised the
 
option granted
 
to it to subscribe
 
for such number
 
of new
ordinary shares
 
in the share capital of DRDGOLD
 
for cash resulting in Sibanye-Stillwater
 
holding in aggregate
 
50.1% of all DRDGOLD shares
in issue
 
(including
 
treasury
 
shares).
 
Sibanye-Stillwater
 
subscribed
 
for 168,158,944
 
Subscription
 
Shares
 
at an
 
aggregate
 
subscription
 
price
 
of R1,086
million, on January
 
22, 2020. The
 
Subscription
 
Shares were
 
allotted and issued
 
at a price of
 
R6.46 per share,
 
being a 10% discount
 
to the 30-day
volume weighted
 
average traded
 
price.
Other than
 
the above there
 
are no arrangements,
 
the operation
 
of which may
 
at a subsequent
 
date result
 
in a change
 
in control of
 
us.
 
 
Based on information
 
available
 
to us, as of
 
September
 
30, 2021:
there were 10,468 record holders of
 
our ordinary shares in South
 
Africa, who held 559,688,990 or
 
approximately 64.7% of our
ordinary shares;
there was one record holder of our cumulative
 
preference shares in South Africa,
 
who held 5,000,000 ordinary
 
shares or 100% of
our cumulative
 
preference
 
shares;
there were
 
36 US record
 
holders of
 
our ordinary
 
shares,
 
who held
 
approximately
 
33,974,859 ordinary
 
shares
 
or approximately
 
3.9%
of our ordinary
 
shares excluding
 
those shares
 
held as part
 
of our ADR program;
 
and
there
 
were 664
 
registered
 
holders
 
of our
 
ADRs in
 
the United
 
States,
 
who held
 
approximately
 
215,869,190
 
shares
 
(21,586,919 ADRs)
or approximately
 
25.0% of our
 
ordinary shares.
 
 
The following
 
table sets
 
forth information
 
regarding the
 
beneficial
 
ownership of
 
our ordinary
 
shares as
 
of September
 
30, 2021,
 
by:
 
each of our
 
directors
 
and prescribed
 
officers; and
 
any person whom the
 
directors are
 
aware of as at September
 
30, 2021 who is interested
 
directly or indirectly
 
in 1% or more of our
ordinary shares.
 
There was
 
significant
 
change in
 
the percentage
 
ownership of
 
the major
 
shareholders
 
over the
 
preceding
 
three years.
Shares Beneficially owned
Holder
Number
Percent of outstanding
ordinary shares
Directors/prescribed officers
D.J. Pretorius
 
475,255
*
A.J. Davel
200,000
*
Other
Sibanye-Stillwater
433,158,944
50.10%
The Bank of New York Mellon
 
227,674,416
26.33%
Government Employees Pension Fund
31,135,434
3.60%
GSI Equity Seperation Account
14,739,438
1.70%
CLEARSTREAM BANKING S.A LUXEMBOURG
11,078,446
1.28%
Ergo Mining Operations Proprietary Limited
9,474,920
1.10%
*
 
Indicates share ownership of less than 1% of our outstanding ordinary shares.
 
No shareholder
 
has voting rights
 
which differ
 
from the voting
 
rights of
 
any other shareholder.
 
 
71
Cumulative
 
Preference Shares
 
Randgold and Exploration Company
 
Limited, or Randgold, owns 5,000,000
 
(100%) of our cumulative preference
 
shares. Randgold's
registered
 
address is
 
Suite 25, Katherine
 
& West Building, Corner
 
of Katherine
 
and West Streets,
 
Sandown, Sandton,
 
2196.
 
 
The holders of cumulative preference shares do not have voting rights unless any preference dividend is in arrears for more than six
months.
 
The terms
 
of issue
 
of the
 
cumulative
 
preference
 
shares are
 
that they
 
carry the
 
right, in
 
priority
 
to the
 
Company's
 
ordinary shares,
 
to receive
a dividend equal to 3%
 
of the gross future revenue generated by the exploitation or the
 
disposal of the Argonaut mineral rights acquired from
Randgold in
 
September
 
1997. Additionally,
 
holders
 
of cumulative
 
preference
 
shares may
 
vote on resolutions
 
which adversely
 
affect their
 
interests
and on
 
the disposal of
 
all, or
 
substantially all, of our
 
assets or
 
mineral rights. There is
 
currently no active trading
 
market for our
 
cumulative
preference shares. Holders
 
of cumulative preference shares will only obtain their potential
 
voting rights once the Argonaut Project becomes an
operational gold
 
mine, and
 
dividends accrue
 
to
 
them. The
 
prospecting rights
 
have since
 
expired and
 
the
 
Argonaut Project
 
terminated. The
development of the project is not expected to materialise and therefore no dividend is expected to be paid.
7B. RELATED PARTY TRANSACTIONS
Transactions with related parties are disclosed in Item 18. ‘‘Financial
 
Statements
 
- Note 5.2 –
 
Cost of sales’’
Remuneration
 
paid
 
to key
 
management is
 
disclosed
 
in
 
Item 18. ‘‘Financial
 
Statements - Note
 
19.3 –
 
Key management personnel
remuneration’’
7C. INTERESTS
 
OF EXPERTS AND COUNSEL
Not applicable.
ITEM 8. FINANCIAL
 
INFORMATION
8A. CONSOLIDATED STATEMENTS AND OTHER
 
FINANCIAL INFORMATION
1.
Please refer
 
to Item 18.
 
Financial Statements.
2.
Please refer
 
to Item 18.
 
Financial Statements.
3.
Please refer
 
to Item 18.
 
Financial Statements.
4.
The last year
 
of audited financial
 
statements
 
is not older
 
than 15 months.
5.
Not applicable.
6.
Not applicable.
7.
Please refer
 
to Item 4D.
 
Property, plant and
 
equipment—Ongoing
 
Legal Proceedings.
8.
Please refer
 
to Item 10B.
 
Memorandum of
 
Incorporation.
8B. SIGNIFICANT
 
CHANGES
Significant changes that have occurred since June 30, 2021, the date of the last
 
audited financial statements included in this Annual
Report, are discussed in the relevant notes to the financial statements under Item 18. Financial Statements.
72
ITEM 9. THE
 
OFFER AND LISTING
9A. OFFER AND
 
LISTING DETAILS
The principal trading market
 
for our
 
equity securities is the
 
JSE (symbol: DRD)
 
and our
 
ADSs that trade
 
on the
 
New York
 
Stock
Exchange
 
(symbol:
 
DRD). The
 
ADRs are
 
issued by
 
The Bank
 
of New
 
York Mellon, as
 
depositary. Each
 
ADR represents
 
one ADS
 
and each ADS
represents
 
ten of our ordinary
 
shares. Until
 
July 23, 2007,
 
each ADS
 
represented
 
one of our ordinary
 
shares.
 
The cumulative
 
preference
 
shares are
 
not traded
 
on any exchange.
 
There have
 
been no trading
 
suspensions
 
with respect
 
to our ordinary
 
shares on
 
the JSE during
 
the past three
 
years ended
 
June 30, 2021,
nor have there
 
been any trading
 
suspensions
 
with respect
 
to our ADRs
 
on the New
 
York Stock Exchange
 
since our
 
listing on that
 
market.
 
9B. PLAN OF
 
DISTRIBUTION
Not applicable.
9C. MARKETS
Nature of Trading Markets
 
See “Offer and
 
Listing Details”
 
above
.
9D. SELLING
 
SHAREHOLDERS
Not applicable.
9E. DILUTION
Not applicable.
9F. EXPENSES OF THE ISSUE
 
Not applicable.
 
ITEM 10. ADDITIONAL
 
INFORMATION
10A. SHARE CAPITAL
Not applicable.
10B. MEMORANDUM
 
OF INCORPORATION
As
 
of
 
June 30,
 
2021,
 
we
 
had
 
authorized for
 
issuance 1,500,000,000 ordinary
 
shares of
 
no
 
par
 
value (as
 
of
 
September 30,
 
2021:
1,500,000,000),
 
and 5,000,000
 
cumulative
 
preference
 
shares of
 
R0.10 par
 
value (as
 
of September
 
30, 2021:
 
5,000,000).
 
On this
 
date, we
 
had issued
864,588,711 ordinary shares (as of September 30, 2021:
 
864,588,711)
 
and 5,000,000 cumulative preference
 
shares (as of September 30, 2021:
5,000,000).
 
 
Set out below
 
are brief
 
summaries
 
of certain
 
provisions
 
of our Memorandum
 
of Incorporation,
 
or our
 
MOI, the
 
Companies
 
Act of South
Africa and
 
the JSE
 
Listings
 
Requirements,
 
all as
 
in effect
 
on June
 
30, 2021
 
and September
 
30, 2021.
 
The summary
 
does not
 
purport to
 
be complete
and is subject
 
to and qualified
 
in its entirety
 
by reference
 
to the full
 
text of the
 
MOI, the Companies
 
Act, and the
 
JSE Listings
 
Requirements.
 
We are registered
 
under
 
the Companies
 
Act of
 
South Africa
 
under
 
registration
 
number
 
1895/000926/06.
 
As set
 
forth
 
in our
 
Memorandum
of Incorporation,
 
the main object
 
and business
 
of our company
 
is mining
 
and exploration
 
for gold and
 
other minerals.
 
Borrowing Powers
 
73
 
Our directors may from time to time borrow for the purposes of the company, such sums as they think fit and secure the payment or
repayment of any such sums,
 
or any other sum, as they think fit, whether
 
by the creation and issue of securities,
 
mortgage or charge upon all or
any of
 
the property
 
or assets
 
of the company.
 
The directors
 
shall procure
 
that the
 
aggregate
 
principal
 
amount at
 
any one
 
time outstanding
 
in respect
of monies
 
so borrowed
 
or raised
 
by the company
 
and all the
 
subsidiaries
 
for the time
 
being of the
 
company shall
 
not exceed
 
the aggregate
 
amount
at that time
 
authorized
 
to be borrowed
 
or secured
 
by the company
 
or the subsidiaries
 
for the time
 
being of the
 
company (as
 
the
 
case may be).
Share Ownership
 
Requirements
 
Our directors
 
are not required
 
to hold any shares
 
to qualify or
 
be appointed
 
as a director.
 
Voting by Directors
 
A director may authorize any other
 
director to vote for him at any meeting at which neither
 
he nor his alternate director appointed
 
by
him is present.
 
Any
 
director so
 
authorized shall,
 
in addition
 
to his own
 
vote, have
 
a vote for
 
each director
 
by whom he
 
is authorized.
 
 
The quorum
 
necessary
 
for the
 
transaction
 
of the business
 
of the directors
 
is a majority
 
of the directors
 
present at
 
a meeting
 
before a
 
vote
may be called
 
at any meeting
 
of directors.
 
 
Directors
 
are required
 
to notify
 
our board
 
of directors
 
of interests
 
in companies
 
and contracts.
 
If a
 
director
 
has a
 
personal
 
financial
 
interest
in respect
 
of a matter
 
to be
 
considered
 
at a meeting
 
of the
 
board he
 
or she
 
must disclose
 
the interest
 
and its
 
nature,
 
any material
 
information
 
relating
to the matter and thereafter leave the meeting immediately
 
after making the disclosure. Such director
 
must not take part in consideration of the
matter. He is
 
not to be regarded
 
as being present
 
for the purpose
 
of determining
 
whether a
 
resolution has
 
sufficient
 
support to be
 
adopted.
 
The King IV Report on Corporate Governance for South Africa, 2016 (King IV) was published on 1 November 2016 and came into
effect on 1
 
April 2017 for companies with financial years commencing thereafter. The application regime for King IV is
 
"apply and explain",
requiring companies to substantially
 
and meaningfully strive towards good corporate
 
governance. King IV is principles and outcomes based: a
departure from mere
 
compliance-based mindset. King IV
 
recognises that sound
 
governance outcomes, exemplified by integrity,
 
competence,
responsibility,
 
accountability,
 
fairness
 
and transparency,
 
are the
 
cardinal
 
pillars of
 
good corporate
 
citizenship.
 
The JSE
 
Limited has
 
since made
 
the
adoption and
 
application
 
of King IV
 
mandatory
 
for all listed
 
companies.
 
The remuneration of non-executive directors is typically determined
 
by the board, but
 
subject to approval by the shareholders at the
AGM of the Company. In terms of section
 
65(11)(h) of the Companies
 
Act, 2008 read with sections
 
66(8) and 66(9) thereof,
 
remuneration may
only be paid
 
to directors
 
for their
 
services as
 
directors in
 
accordance
 
with a special
 
resolution approved
 
by the shareholders
 
within the
 
previous 2
(two) years.
 
A special resolution
 
was passed
 
at the 2019
 
AGM on December
 
2, 2019 to increase
 
the NED remuneration.
 
Under South
 
African common
 
law, directors are
 
required to
 
comply with
 
certain fiduciary
 
duties to the
 
company and
 
to exercise
 
proper
care and skill
 
in discharging
 
their responsibilities.
 
These common
 
law duties
 
have now been
 
codified by
 
the Companies
 
Act.
Age Restrictions
 
There is
 
no age limit
 
for directors.
 
Election of
 
Directors
 
Each
 
director
 
shall be
 
appointed
 
by election
 
by way
 
of an
 
ordinary
 
resolution
 
of shareholders
 
at a
 
general
 
or annual
 
meeting
 
of company
(“elected director (s)”) and
 
no appointment of
 
a director by
 
way of
 
a written
 
circulated shareholders resolution in terms of
 
section 60 of
 
the
Companies
 
Act shall
 
be competent.
 
One third of
 
our directors,
 
on a rotating
 
basis, are
 
subject to
 
re-election at
 
each annual
 
general shareholder’s
 
meeting. Retiring
 
directors
usually make themselves available
 
for re-election. An amendment to the MOI which also subjects executive
 
directors to re-election by rotation
was approved
 
by shareholders
 
at the 2014
 
annual general
 
meeting.
General Meetings
 
On the request
 
of any shareholder
 
or shareholders
 
holding not less
 
than 10 percent
 
of our share capital
 
which carries
 
the right of
 
voting
at general
 
meetings,
 
we shall
 
issue a
 
notice to
 
shareholders
 
convening
 
a general
 
meeting
 
for a
 
date not
 
less than
 
15 days from
 
the date
 
of the
 
notice.
Directors
 
may convene
 
general meetings
 
at any time.
 
 
Our annual general
 
meeting and a meeting
 
of our shareholders
 
for the purpose of passing
 
a special resolution
 
may be called by giving
15 days advance
 
written notice
 
of that meeting.
 
For any other
 
general meeting
 
of our shareholders,
 
15 days advance
 
written notice
 
is required.
 
 
Our MOI provides
 
that if at a
 
meeting convened
 
upon request
 
by our shareholders,
 
a quorum is not
 
present within
 
fifteen minutes
 
after
the time selected for the meeting,
 
such meeting shall be postponed
 
for one week. However the chairman has
 
the discretion to extend the fifteen
minutes for
 
a reasonable
 
period on certain
 
grounds. The
 
necessary
 
quorum is
 
three members
 
present with
 
sufficient
 
voting powers
 
in person or
 
by
proxy to exercise
 
in aggregate
 
25% of the voting
 
rights.
 
Voting Rights
74
 
The holders of our ordinary
 
shares are generally
 
entitled to vote at general
 
meetings and on a show
 
of hands have one vote per person
and on a poll have
 
one vote for every share held. The holders of our cumulative preference shares are not entitled to vote at a general meeting
unless any preference
 
dividend is in arrears
 
for more than six months
 
at the date on which the notice
 
convening the general
 
meeting is posted to
the shareholders. Additionally, holders of
 
cumulative preference shares may vote
 
on resolutions which
 
adversely affect their interests and
 
on
resolutions regarding the disposal of
 
all or
 
substantially all of
 
our assets
 
or mineral
 
rights. When entitled
 
to vote,
 
holders of
 
our cumulative
preference shares are entitled to one vote per person on a show
 
of hands and that portion of
 
the total votes which the aggregate amount of the
nominal value
 
of the shares
 
held by the relevant
 
shareholder
 
bears to the
 
aggregate
 
amount of the
 
nominal value
 
of all shares
 
issued by us.
 
Dividends
 
We may,
 
in certain
 
circumstances in a general meeting, or our directors may, from time to time, declare a dividend to be
 
paid to the
shareholders in proportion to the number of shares they each hold.
 
No dividend shall be declared except out of
 
our profits. Dividends may be
declared
 
either
 
free or
 
subject
 
to the
 
deduction
 
of income
 
tax or
 
duty in
 
respect
 
of which
 
we may
 
be charged.
 
Holders
 
of ordinary
 
shares
 
are entitled
to receive
 
dividends as
 
and when declared
 
by the directors.
Ownership
 
Limitations
 
There are
 
no limitations
 
imposed by our
 
MOI or South
 
African law
 
on the rights
 
of shareholders
 
to hold or vote
 
on our ordinary
 
shares
or securities
 
convertible
 
into our ordinary
 
shares.
 
Winding-up
 
If we are
 
wound-up, then
 
the assets
 
remaining
 
after payment
 
of all of
 
our debts
 
and liabilities,
 
including
 
the costs
 
of liquidation,
 
shall be
applied to repay
 
to the shareholders
 
the amount paid
 
up on our issued
 
capital and
 
thereafter the
 
balance shall
 
be distributed
 
to the shareholders
 
in
proportion to
 
their respective shareholdings. On
 
a
 
winding up,
 
our cumulative preference
 
shares rank,
 
in
 
regard to
 
all arrears
 
of
 
preference
dividends,
 
prior to the
 
holders of
 
ordinary shares.
 
As of June
 
30, 2021 and
 
September
 
30, 2021, no
 
such dividends
 
have been
 
declared.
 
Except for
the preference
 
dividend and
 
as described
 
in this Item
 
our cumulative
 
preference
 
shares are
 
not entitled
 
to any other
 
participation
 
in the distribution
of our surplus
 
assets on
 
winding-up.
 
Reduction
 
of Capital
 
We may,
 
by special resolution, reduce the share capital
 
authorized by our MOI, or reduce our issued share capital including,
 
without
limitation,
 
any stated
 
capital, capital
 
redemption reserve
 
fund and share
 
premium account
 
by making distributions
 
and buying
 
back our shares.
 
Amendment
 
of the
MOI
 
Our MOI may be altered
 
by the passing
 
of a special resolution
 
or in compliance
 
with a court order. The
 
Company may
 
also amend the
MOI by increasing
 
or decreasing
 
the number
 
of authorized
 
shares,
 
classifying
 
or reclassifying
 
shares,
 
or determining
 
the terms
 
of shares
 
in a class.
A special resolution is passed when
 
the shareholders holding at least 25% of
 
the total votes of
 
all the members entitled to
 
vote are present or
represented by proxy
 
at a meeting and, if the resolution
 
was passed on a show of hands, at least
 
75% of those shareholders
 
voted in favor of the
resolution
 
and, if a
 
poll was demanded,
 
at least
 
75% of the total
 
votes to which
 
those shareholders
 
are entitled
 
were cast
 
in favor of
 
the resolution.
An amendment
 
to the MOI to increase
 
the number of authorized
 
shares was approved
 
by shareholders
 
at the 2018 general
 
meeting on March
 
28,
2018.
Consent of
 
the Holders
 
of Cumulative
 
Preference
 
Shares
 
The rights
 
and conditions
 
attaching
 
to the cumulative
 
preference
 
shares may
 
not be cancelled,
 
varied or added,
 
nor may we
 
issue shares
ranking, regarding
 
rights to dividends
 
or on winding up, in priority
 
to or equal with our cumulative
 
preference shares,
 
or dispose of all or part
 
of
the Argonaut mineral
 
rights without
 
the consent
 
in writing of
 
the registered
 
holders of our
 
cumulative preference
 
shares or the
 
prior sanction
 
of a
resolution
 
passed at
 
a separate
 
class meeting
 
of the holders
 
of our cumulative
 
preference
 
shares.
 
Distributions
 
We are
 
authorized to make
 
payments in cash or
 
in specie to our shareholders
 
in accordance
 
with the provisions
 
of the Companies
 
Act
and other consents
 
required by
 
law from
 
time to time.
 
We may, for example, in
 
a general
 
meeting, upon
 
recommendation
 
of our directors,
 
resolve
that any
 
surplus funds
 
representing capital profits arising
 
from the
 
sale of
 
any capital
 
assets and
 
not
 
required for
 
the payment
 
of
 
any fixed
preferential
 
dividend, be
 
distributed
 
among our
 
ordinary
 
shareholders.
 
However, no
 
such profit
 
shall be
 
distributed
 
unless we
 
have sufficient
 
other
assets to
 
satisfy
 
our liabilities
 
and to cover
 
our paid
 
up share
 
capital.
 
We also need
 
to consider
 
the solvency
 
and liquidity
 
requirements
 
stated in
 
the
Companies
 
Act of South
 
Africa.
 
Directors’
 
power to vote
 
compensation
 
to themselves
 
The remuneration
 
of non-executive
 
directors
 
may not
 
exceed
 
in any
 
financial
 
year the
 
amount fixed
 
by the
 
Company
 
in general
 
meeting.
The Companies
 
Act requires that
 
remuneration
 
to non-executive
 
directors may be paid
 
only in accordance
 
with a special resolution
 
approved by
shareholders
 
within the
 
previous two
 
years.
75
Time limit for
 
dividend entitlement
 
 
 
All unclaimed monies that are due
 
to any shareholder/s shall be held
 
by the company in
 
trust for an indefinite period until
 
lawfully
claimed by
 
such shareholder/s,
 
subject to
 
the Prescription
 
Act, 1969 as
 
amended or
 
any other law
 
which governs
 
the law of
 
prescription.
Staggered director
 
elections
 
& cumulative
 
voting
At each annual general meeting of the Company one-third of the directors shall retire and be eligible for re-election. No provision is
made for
 
cumulative
 
voting.
Sinking fund
 
provisions
 
and liability
 
to further
 
capital calls
 
There are no
 
sinking fund provisions in
 
the MOI
 
attaching to any
 
class of
 
the company shares,
 
and the
 
company does not
 
subject
shareholders
 
to liability
 
to further
 
capital calls.
Provision
 
that would delay/prevent
 
change of control
 
 
The Companies
 
Act provides
 
that companies
 
which propose
 
to merge
 
or amalgamate
 
must enter
 
into a written
 
agreement
 
setting out
 
the
terms thereof.
 
They must
 
prove that
 
upon
 
implementation of the
 
amalgamation or
 
merger each
 
will
 
satisfy the
 
solvency and
 
liquidity test.
Companies
 
involved in disposals,
 
amalgamations
 
or mergers,
 
or schemes
 
of arrangement
 
must obtain a
 
compliance
 
certificate
 
from the Takeover
Regulation
 
Panel, pass
 
special resolutions
 
and in some
 
instances
 
they must obtain
 
an independent
 
expert report.
10C. MATERIAL CONTRACTS
Amendment
 
and extension
 
to ZAR300 million
 
Revolving
 
Credit Facility
 
On September
 
14, 2020,
 
DRDGOLD Limited
 
amended the
 
initial R300
 
million Revolving
 
Credit Facility
 
(“
RCF
”) secured
 
with
ABSA Bank Limited (acting through its Corporate and Investment Banking division) to a R200
 
million RCF and simultaneously extended the
final repayment date to September 14, 2022. The RCF remained undrawn at June 30, 2021.
 
The RCF
 
bears interest
 
at JIBAR
 
plus a
 
margin of
 
275 basis
 
points (initial
 
RCF: 325
 
basis points)
 
nominal annual
 
compounded
quarterly. A
 
commitment fee of 35% of the
 
applicable margin per annum is
 
due on the undrawn RCF.
 
A debt origination fee of 0.5%
 
(initial
RCF: 1%) is payable on the available commitment of R200 million.
Relevant covenants include that, during any rolling 12 month period, (i) the interest cover
1
 
shall not be less than 4 times and (ii) net
debt
2
 
to Adjusted EBITDA shall not exceed 2 times.
 
1 Interest cover means the ratio of Adjusted EBITDA to Total
 
Net Interest (interest charged on Financial Indebtedness after deducting all interest received on Cash and cash
equivalents (excluding interest received on restricted cash)).
2 Means Total Net Debt after deducting Cash and cash equivalents
 
(excluding restricted cash)
The description of the amended RCF is qualified by reference to the addendum to the RCF filed herewith as an Exhibit to our
Annual Report on Form 20-F for the year ended June 30, 2020.
Performance
 
Guarantee
On December 10, 2018, ABSA Bank Limited (acting through its Corporate and Investment Banking division) issued a performance
guarantee (“
Guarantee
”) to Ekurhuleni Metropolitan Municipality (refer to Item 18. “Financial Statements
 
- Note 24 – Payments made under
protest”). R125 million of the initial R300 million RCF was committed to the Guarantee.
The amended R200 million RCF dated September 14, 2020 does not include any commitment towards the Guarantee.
The description of the performance guarantee issued
 
to the Municipality is qualified by reference to the
 
Addendum to the RCF and
the Performance Guarantee filed herewith as Exhibits to this report.
76
10D. EXCHANGE
 
CONTROLS
The following
 
is a summary
 
of the material
 
South African
 
exchange control
 
measures,
 
which has been
 
derived from
 
publicly available
documents. The following
 
summary is not a comprehensive
 
description of all the exchange
 
control regulations.
 
The discussion in this section
 
is
based on
 
the current
 
law and
 
positions
 
of the South
 
African Government.
 
Changes in
 
the law
 
may alter
 
the exchange
 
control provisions
 
that apply,
possibly on
 
a retroactive
 
basis.
 
Introduction
 
Dealings in foreign currency, the
 
export of capital and
 
revenue, payments by residents to non-residents and
 
various other exchange
control matters
 
in South Africa
 
are regulated
 
by the South
 
African exchange
 
control regulations,
 
or the Regulations.
 
The Regulations
 
form part
 
of
the general
 
monetary policy
 
of South Africa.
 
The Regulations
 
are issued
 
under Section
 
9 of the Currency
 
and Exchanges
 
Act, 1933
 
(as amended).
In terms of
 
the Regulations,
 
the control
 
over South African
 
capital and
 
revenue reserves,
 
as well as
 
the accruals
 
and spending
 
thereof, is
 
vested in
the Treasury (Ministry
 
of Finance),
 
or the Treasury.
 
 
The Treasury has
 
delegated the
 
administration
 
of exchange
 
controls to
 
the Exchange
 
Control Department
 
of the South
 
African Reserve
Bank, or
 
SARB, which
 
is responsible
 
for the
 
day to day
 
administration
 
and functioning
 
of exchange
 
controls.
 
SARB has
 
a wide
 
discretion.
 
Certain
banks authorized by the Treasury to co-administer
 
certain of the exchange controls,
 
are authorized by the Treasury to deal in foreign exchange.
Such dealings
 
in foreign
 
exchange
 
by authorized
 
dealers
 
are undertaken
 
in accordance
 
with the
 
provisions
 
and requirements
 
of the
 
exchange
 
control
rulings, or Rulings, and contain
 
certain administrative
 
measures, as well as conditions
 
and limits applicable
 
to transactions in foreign exchange,
which may be
 
undertaken by authorized dealers. Non-residents have been granted general approval, in
 
terms of the
 
Rulings, to deal in
 
South
African assets,
 
to invest and
 
disinvest
 
in South Africa.
 
 
The Regulations provide for restrictions
 
on exporting capital from the Common Monetary
 
Area consisting of South Africa,
 
Namibia,
and the Kingdoms of Lesotho and Swaziland.
 
Transactions between residents
 
of the Common Monetary Area are not subject
 
to these exchange
control regulations.
 
 
There are
 
many inherent
 
disadvantages
 
to exchange
 
controls, including
 
distortion
 
of the price
 
mechanism,
 
problems encountered
 
in the
application
 
of monetary
 
policy, detrimental
 
effects on
 
inward foreign
 
investment
 
and administrative
 
costs associated
 
therewith.
 
The South
 
African
Finance Minister
 
has indicated
 
that all
 
remaining
 
exchange
 
controls
 
are likely
 
to be dismantled
 
as soon as
 
circumstances
 
permit. Since
 
1998, there
has been a gradual relaxation of exchange controls. The gradual approach to the abolition of exchange controls adopted
 
by the Government of
South Africa
 
is designed
 
to allow
 
the economy
 
to adjust
 
more smoothly
 
to the
 
removal
 
of controls
 
that have
 
been in
 
place for
 
a considerable
 
period
of time.
 
The stated
 
objective
 
of the authorities
 
is equality
 
of treatment
 
between
 
residents
 
and non-residents
 
with respect
 
to inflows
 
and outflows
 
of
capital. The focus
 
of regulation,
 
subsequent to the
 
abolition of exchange
 
controls, is expected
 
to favor the positive
 
aspects of prudential
 
financial
supervision.
 
 
The present
 
exchange control
 
system in
 
South Africa
 
is used
 
principally
 
to control
 
capital
 
movements.
 
South African
 
companies
 
are not
permitted to maintain foreign
 
bank accounts without SARB approval
 
and, without the approval of SARB, are generally
 
not permitted to export
capital from
 
South Africa
 
or hold foreign
 
currency. In addition,
 
South African
 
companies
 
are required
 
to obtain the
 
approval of
 
the SARB prior
 
to
raising foreign
 
funding on
 
the strength
 
of their South
 
African statements
 
of financial
 
position, which
 
would permit
 
recourse to
 
South Africa
 
in the
event of defaults. Where
 
75% or more of a South African company's
 
capital, voting power, power
 
of control or earnings
 
is directly or indirectly
controlled
 
by non-residents,
 
such a corporation
 
is designated
 
an “affected
 
person” by
 
the SARB,
 
and certain
 
restrictions
 
are placed
 
on its ability
 
to
obtain local
 
financial
 
assistance.
 
We are not, and have
 
never been,
 
designated
 
an “affected
 
person” by
 
the SARB.
 
 
Foreign investment
 
and outward loans
 
by South African companies
 
are also restricted.
 
In addition, without
 
the approval of the
 
SARB,
South African
 
companies
 
are generally
 
required to repatriate
 
to South Africa
 
profits of foreign
 
operations
 
and are limited
 
in their ability
 
to utilize
profits of one
 
foreign business
 
to finance operations
 
of a different
 
foreign business.
 
South African
 
companies establishing
 
subsidiaries,
 
branches,
offices or joint
 
ventures abroad
 
are generally
 
required to submit
 
financial statements
 
on these operations
 
as well as progress
 
reports to the
 
SARB
on an annual
 
basis. As
 
a result, a
 
South African
 
company's
 
ability to
 
raise and
 
deploy capital
 
outside the
 
Common Monetary
 
Area is restricted.
 
 
Although exchange controls have been gradually relaxed since 1998, unlimited outward transfers of capital are not permitted at this
stage. Some
 
of the more
 
salient changes
 
to the South
 
African exchange
 
control provisions
 
over the past
 
few years
 
have been as
 
follows:
 
corporations
 
wishing
 
to invest
 
in countries
 
outside
 
the Common
 
Monetary
 
Area,
 
in addition
 
to what
 
is set
 
out below,
 
apply
 
for permission
to enter into corporate
 
asset/share swap
 
and share placement
 
transactions to acquire
 
foreign investments.
 
The latter mechanism
 
entails
the placement of the locally quoted corporation's
 
shares with long-term overseas holders
 
who, in payment for the shares, provide the
foreign currency
 
abroad which
 
the corporation
 
then uses
 
to acquire
 
the target
 
investment;
corporations wishing to establish new
 
overseas ventures are permitted
 
to transfer offshore
 
up to
 
R500 million
 
to finance approved
investments abroad and up to R500 million to finance approved new investments in African countries on an annual bases. Approval
from the SARB is required in advance for investments in excess of R500 million. On application
 
to the SARB, corporations are also
allowed to use
 
part of
 
their local cash holdings
 
to finance up
 
to 10%
 
of approved new foreign
 
investments where the cost of
 
these
investments
 
exceeds the
 
current limits;
as a general
 
rule, the
 
SARB requires
 
that more than
 
10% of equity
 
of the acquired
 
off-shore venture
 
is acquired
 
within a predetermined
period of time,
 
as a prerequisite
 
to allowing
 
the expatriation
 
of funds.
 
If these
 
requirements
 
are not met,
 
the SARB may
 
instruct that
 
the
equity be disposed of. In our experience the SARB has taken a commercial
 
view on this, and has on occasion extended the period of
time for compliance;
 
and
77
remittance of
 
directors' fees
 
payable to
 
persons permanently
 
resident outside
 
the
 
Common
 
Monetary Area
 
may
 
be
 
approved by
authorized
 
dealers, in
 
terms of the
 
Rulings.
 
Authorized
 
dealers in
 
foreign exchange
 
may, against the production
 
of suitable
 
documentary
 
evidence, provide
 
forward cover
 
to South
African residents
 
in respect
 
of fixed and
 
ascertained
 
foreign exchange
 
commitments
 
covering the
 
movement
 
of goods.
 
 
Persons who emigrate
 
from South Africa
 
are entitled to take
 
limited amounts of
 
money out of South Africa
 
as a settling-in allowance.
The balance
 
of the emigrant's
 
funds will
 
be blocked
 
and held
 
under the
 
control of
 
an authorized
 
dealer. These
 
blocked funds
 
may only be
 
invested
in:
 
blocked current,
 
savings, interest
 
bearing deposit
 
accounts in
 
the books of
 
an authorized
 
dealer in
 
the banking sector;
 
securities quoted on
 
the JSE
 
and financial instruments listed
 
on the
 
Bond Exchange
 
of South
 
Africa which
 
are deposited
 
with an
authorized dealer and not released except temporarily
 
for switching purposes, without the approval
 
of the SARB. Authorized dealers
must at
 
all times
 
be able
 
to demonstrate
 
that listed
 
or quoted
 
securities
 
or financial
 
instruments
 
which are
 
dematerialized
 
or immobilized
in a central
 
securities
 
depository
 
are being held
 
subject to
 
the control
 
of the authorized
 
dealer concerned;
 
or
mutual funds.
 
Aside from
 
the investments
 
referred to above,
 
blocked rands
 
may only be utilized
 
for very limited
 
purposes. Dividends
 
declared out of
capital gains or out
 
of income earned prior to
 
emigration remain subject to the blocking procedure. It is
 
not possible to predict when
 
existing
exchange controls
 
will be abolished
 
or whether
 
they will be
 
continued or
 
modified by
 
the South
 
African Government
 
in the future.
Sale of Shares
 
Under present
 
exchange control
 
regulations
 
in South Africa,
 
our ordinary
 
shares and
 
ADRs are freely
 
transferable
 
outside the
 
Common
Monetary Area between
 
non-residents of the Common
 
Monetary Area. In addition,
 
the proceeds from the sale
 
of ordinary shares on the JSE on
behalf of shareholders
 
who are not residents
 
of the Common Monetary
 
Area are freely
 
remittable
 
to such shareholders.
 
Share certificates
 
held by
non-residents
 
will be endorsed
 
with the words
 
“non-resident,”
 
unless dematerialized.
 
Dividends
 
Dividends declared
 
in respect
 
of shares
 
held by a non-resident
 
in a company
 
whose shares
 
are listed
 
on the JSE
 
are freely
 
remittable.
 
 
Any cash dividends
 
paid by us are
 
paid in rands.
 
Holders of ADRs
 
on the relevant
 
record date
 
will be entitled
 
to receive any
 
dividends
payable in respect
 
of the shares
 
underlying the
 
ADRs, subject
 
to the terms
 
of the deposit
 
agreement entered
 
on August 12,
 
1996, and as
 
amended
and restated,
 
between the
 
Company and
 
The Bank of
 
New York, as the depository.
 
Subject to
 
exceptions
 
provided in
 
the deposit
 
agreement,
 
cash
dividends
 
paid in rand
 
will
 
be converted
 
by the depositary
 
to dollars
 
and paid
 
by the depositary
 
to holders
 
of ADRs,
 
net of conversion
 
expenses of
the depositary, in accordance with the deposit
 
agreement. The depositary
 
will charge holders of ADRs, to the extent applicable,
 
taxes and other
governmental
 
charges and
 
specified fees
 
and other expenses.
 
Voting rights
 
There are no limitations
 
imposed by South African law
 
or by our MOI on the right of non-South African
 
shareholders
 
to hold or vote
our ordinary
 
shares.
 
78
10E. TAXATION
Material South
 
African Income
 
Tax Consequences
 
The following
 
is a summary
 
of material
 
income tax
 
considerations
 
under South African
 
income tax
 
law. No representation
 
with respect
to the
 
consequences
 
to any
 
particular
 
purchaser
 
of our
 
securities
 
is made
 
hereby. Prospective
 
purchasers
 
are urged
 
to consult
 
their tax
 
advisers
 
with
respect to
 
their particular
 
circumstances
 
and the effect
 
of South African
 
or other tax
 
laws to which
 
they may be
 
subject.
 
South Africa imposes
 
tax on worldwide income of South
 
African residents.
 
Generally, individuals
 
not resident in South Africa
 
do not
pay tax in South
 
Africa except
 
in the following
 
circumstances:
 
Income Tax and Withholding
 
Tax on Dividends
 
Non-residents
 
will pay income
 
tax on any
 
amounts received
 
by or accrued
 
to them from
 
a source
 
within (or
 
deemed to
 
be within)
 
South
Africa. Interest
 
earned by a
 
non-resident
 
on a debt instrument
 
issued by a South
 
African company
 
will be regarded
 
as being derived
 
from a South
African
 
source
 
but will
 
be regarded
 
as exempt
 
from taxation
 
in terms
 
of Section
 
10(1)(i)
 
of the
 
South African
 
Income Tax Act,
 
1962 (as
 
amended),
or the Income
 
Tax Act. This exemption
 
applies to
 
so much of
 
any interest
 
and dividends
 
(which are
 
not otherwise
 
exempt) received
 
from a South
African source
 
not exceeding
 
(a) R34,500
 
if the taxpayer
 
is 65 years
 
of age or
 
older or (b)
 
R23,800 if
 
the taxpayer
 
is younger
 
than 65 years
 
of age
at the end
 
of the relevant
 
tax year.
 
 
No withholding
 
tax
 
is deductible
 
in respect
 
of interest
 
payments made
 
to non-resident
 
investors.
 
Section 64F of the amendments to the Income Tax Act as set out in Part VIII in Chapter II of the Income Tax Act sets out beneficial
owners
 
who are
 
exempt
 
from the
 
dividend tax
 
which includes
 
resident
 
companies
 
receiving
 
a dividend
 
after
 
the effective
 
date, being
 
April 1,
 
2012.
The Convention
 
between
 
the United
 
States
 
of America
 
and the
 
Republic
 
of South
 
Africa for
 
the Avoidance
 
of Double
 
Taxation and the
 
Prevention
of Fiscal
 
Evasion with
 
Respect to
 
Taxes on Income
 
and Capital
 
Gains, or
 
the Tax Treaty, would limit
 
the rate
 
of this tax
 
with respect
 
to dividends
paid on ordinary
 
shares or
 
ADRs
 
to a U.S.
 
resident
 
(within the
 
meaning of
 
the Tax Treaty)
 
to 5% of
 
the gross
 
amount of
 
the dividends
 
if such
 
U.S.
resident is
 
a company which
 
holds directly
 
at least 10%
 
of our voting
 
stock and 20%
 
of the gross
 
amount of the
 
dividends
 
in all other
 
cases.
The above
 
provisions
 
shall not
 
apply if
 
the beneficial
 
owner of
 
the dividends
 
is resident
 
in the
 
United States,
 
carries
 
on business
 
in South
Africa through a permanent
 
establishment
 
situated in South Africa,
 
or performs in South
 
Africa independent
 
personal services
 
from a fixed base
situated in
 
South Africa,
 
and the dividends
 
are attributable
 
to such permanent
 
establishment
 
or fixed base.
 
In fiscal years
 
2021 and 2020,
 
the corporate tax
 
rates for taxable mining
 
and non-mining income,
 
to which the
 
Companies in the
Group is subject, were 34% and
 
28%, respectively. The formula for determining the South African
 
gold mining tax rate for fiscal
 
years ended
2021 and 2020 is: Y = 34 – 170/X. Where
 
Y is the percentage rate of tax payable and X is
 
the ratio of taxable income, net of any qualifying
capital expenditure that bears to mining income derived, expressed as a percentage.
 
With effect from April 1, 2014, Section 8F of the
 
Income Tax Act results
 
in any amount of interest which is incurred in respect of a
hybrid debt
 
instrument
” is
 
deemed to
 
be a
 
dividend
in specie
 
declared by
 
the payor
 
and received
 
by the
 
recipient which
 
is exempt
 
from
income tax, as opposed
 
to interest which is
 
taxable. The terms of
 
some of our intercompany
 
loans cause the affected
 
loans to be deemed
 
as
hybrid debt instruments
” and the interest thereof
 
to be deemed to
 
be an exempt dividend
in specie
. This characterization of
 
the affected loans
as a “
hybrid debt instrument
” was not impacted by subsequent
 
amendments
 
to Section
 
8F of the
 
Income Tax Act
 
that became
 
effective
 
in fiscal
year 2017.
 
U.S. Federal
 
Income
 
Tax Considerations
 
The following discussion
 
is a summary of the U.S.
 
federal income
 
tax considerations
 
to U.S. holders of the ownership
 
and disposition
of ordinary shares or
 
ADRs. It
 
deals only with
 
U.S. holders who
 
hold ordinary shares or
 
ADRs
 
as capital assets
 
for U.S.
 
federal income tax
purposes.
 
This discussion
 
is based upon
 
the provisions
 
of the Internal
 
Revenue Code
 
of 1986, as
 
amended, or
 
the Code,
 
published rulings,
 
judicial
decisions and the
 
Treasury regulations, all as
 
currently in effect
 
and all
 
of which
 
are subject to
 
change, possibly on
 
a retroactive basis. This
discussion
 
has no binding
 
effect or official
 
status of any
 
kind; we cannot
 
assure holders
 
that the conclusions
 
reached below
 
would be sustained
 
by
a court if
 
challenged
 
by the Internal
 
Revenue Service.
 
 
This discussion
 
does not address
 
all aspects
 
of U.S. federal
 
income taxation
 
that may be
 
applicable
 
to holders
 
in light of
 
their particular
circumstances and
 
does not
 
address special
 
classes of
 
U.S. holders
 
subject to
 
special treatment (such
 
as
 
dealers in
 
securities or
 
currencies,
partnerships
 
or other
 
pass-through
 
entities,
 
banks and
 
other financial
 
institutions,
 
traders
 
in securities
 
that elect
 
mark-to-market
 
treatment,
 
insurance
companies,
 
tax-exempt
 
organizations
 
(including
 
private
 
foundations),
 
certain
 
expatriates
 
or former
 
long-term
 
residents
 
of the
 
United
 
States,
 
persons
holding ordinary shares or
 
ADRs
 
as part
 
of a
 
“hedge,” “conversion transaction,” “synthetic security,” “straddle,” “constructive sale” or other
integrated investment,
 
persons
 
who
 
acquired
 
the
 
ordinary
 
shares
 
or
 
ADRs
 
upon
 
the
 
exercise of
 
employee
 
stock
 
options
 
or
 
otherwise as
compensation,
 
persons whose
 
functional currency
 
is not the U.S. dollar,
 
or persons that
 
actually or constructively
 
own ten percent
 
or more of the
voting power
 
or value
 
of our shares).
 
This discussion
 
addresses
 
only U.S. federal
 
income tax
 
considerations
 
and does not
 
address
 
the effect
 
of any
state, local,
 
or foreign
 
tax laws
 
that may apply, the
 
alternative
 
minimum tax,
 
the Medicare
 
tax or the
 
application
 
of the federal
 
estate or
 
gift tax.
 
 
 
79
For purposes of this
 
discussion, a “U.S. holder” is
 
a beneficial owner of ordinary shares or
 
ADRs
 
who or
 
that is, for
 
U.S. federal income tax
purposes:
a citizen or
 
individual
 
resident of
 
the United
 
States;
 
a corporation (or any entity treated as a corporation for U.S. federal income
 
tax purposes) created or organized under the laws of the
United States
 
or any political
 
subdivision
 
thereof;
 
an estate,
 
the income
 
of which is
 
subject to U.S.
 
federal income
 
tax without
 
regard to
 
its source;
 
or
 
a trust, if a court within the United States is able to exercise primary
 
supervision over the administration
 
of the trust and one or more
U.S. persons
 
have the authority
 
to control all
 
substantial
 
decisions of the
 
trust or if the
 
trust has made a valid
 
election to
 
be treated as a
U.S. person.
 
 
If a partnership (or
 
an entity treated
 
as a partnership
 
for U.S. federal income
 
tax purposes) holds
 
any ordinary shares
 
or ADRs, the tax
treatment of a partner will generally
 
depend on the status of the partner and on the activities
 
of the partnership. Partners
 
in partnerships holding
any ordinary
 
shares or
 
ADRs
 
are urged to
 
consult their
 
tax advisors.
 
 
Because
 
individual
 
circumstances
 
may differ,
 
U.S. holders
 
of ordinary
 
shares
 
or ADRs
 
are urged
 
to consult
 
their tax
 
advisors
 
concerning
the U.S. federal
 
income tax
 
considerations
 
applicable
 
to their particular
 
situations
 
as well as any
 
considerations
 
to them arising
 
under the tax
 
laws
of any foreign,
 
state or
 
local taxing
 
jurisdiction.
Ownership
 
of Ordinary
 
Shares or ADRs
 
For purposes
 
of the
 
Code, a
 
U.S. holder
 
of ADRs
 
will be
 
treated
 
for U.S.
 
federal
 
income tax
 
purposes
 
as the
 
owner of
 
the ordinary
 
shares
represented by those ADRs.
 
Exchanges of ordinary
 
shares for ADRs
 
and ADRs
 
for ordinary shares generally
 
will not be subject to U.S. federal
income tax.
 
 
Subject to the discussion below under the heading “Passive
 
Foreign Investment Company”,
 
distributions with respect
 
to the ordinary
shares or
 
ADRs, other
 
than distributions
 
in liquidation
 
and distributions
 
in redemption
 
of stock that
 
are treated
 
as exchanges,
 
will be taxed
 
to U.S.
holders as ordinary
 
dividend
 
income to the
 
extent that the
 
distributions
 
do not exceed
 
our current and
 
accumulated
 
earnings and
 
profits. For U.S.
federal income
 
tax purposes,
 
the amount of any
 
distribution
 
received by a
 
U.S. holder will
 
equal the dollar
 
value of the sum
 
of the South African
rand payments made (including the amount of South African income taxes, if any, withheld with respect to such
 
payments), determined at the
“spot rate”
 
on the date
 
the dividend
 
distribution
 
is includable
 
in such U.S.
 
holder's income,
 
regardless
 
of whether
 
the payment
 
is in fact converted
into dollars. Generally,
 
any gain or loss resulting
 
from currency
 
exchange fluctuations
 
during the period
 
from the date a U.S. holder
 
includes the
dividend payment
 
in income to
 
the date such
 
holder converts
 
the payment into
 
dollars will
 
be treated as ordinary
 
income or loss.
 
Distributions,
 
if
any, in excess of our current and accumulated
 
earnings and profits
 
will constitute a non-taxable
 
return of capital and will
 
be applied against and
reduce the
 
holder's basis
 
in the ordinary
 
shares or
 
ADRs.
 
 
To the extent
 
that these
 
distributions
 
exceed
 
the U.S.
 
holder's
 
tax basis
 
in the
 
ordinary
 
shares
 
or ADRs,
 
as applicable,
 
the excess
 
generally
will be treated as capital gain, subject to the discussion below under the heading “Passive Foreign Investment
 
Company”. We do not
 
intend to
calculate
 
our earnings or
 
profits for U.S.
 
federal income
 
tax purposes.
 
U.S. holders
 
should therefore
 
assume that any
 
distributions
 
with respect
 
to
our ordinary
 
shares or
 
ADRs
 
will constitute
 
dividend income.
 
“Qualified dividend income” received by
 
individual U.S. holders (as
 
well as
 
certain trusts and
 
estates) generally will be
 
taxed at
 
a
maximum U.S.
 
federal income
 
tax rate applicable
 
to capital gains.
 
This reduced
 
rate generally
 
would apply to dividends
 
paid by us if,
 
at the time
such dividends
 
are paid,
 
either (i)
 
we are
 
eligible
 
for benefits
 
under a
 
qualifying
 
income tax
 
treaty with
 
the United
 
States or
 
(ii) our
 
ordinary shares
or ADRs
 
with respect to which such
 
dividends were paid
 
are readily tradable
 
on an established securities
 
market in the United States.
 
However,
this reduced rate is subject to certain important requirements
 
and exceptions, including, without
 
limitation, certain holding
 
period requirements
and an
 
exception
 
applicable
 
if we
 
are treated
 
as a passive
 
foreign investment
 
company
 
as discussed
 
under the
 
heading “Passive
 
Foreign Investment
Company”. U.S.
 
holders are
 
urged to consult
 
their tax
 
advisors regarding
 
the U.S. federal
 
income tax
 
rate that
 
will be applicable
 
to their receipt
 
of
any dividends
 
paid with respect
 
to the ordinary
 
shares and
 
ADRs.
 
 
For purposes
 
of this discussion,
 
the “spot
 
rate” generally
 
means a rate
 
that reflects
 
a fair market
 
rate of exchange
 
available to
 
the public
for currency
 
under a
 
“spot contract”
 
in a free
 
market and
 
involving representative
 
amounts. A
 
“spot contract”
 
is a contract
 
to buy or
 
sell a
 
currency
on or before two business days following the
 
date of the execution of the contract. If such a spot rate cannot be demonstrated,
 
the U.S. Internal
Revenue Service
 
has the authority
 
to determine
 
the spot rate.
 
 
Dividend
 
income
 
derived
 
with respect
 
to the
 
ordinary
 
shares or
 
ADRs will
 
not be eligible
 
for the
 
dividends
 
received
 
deduction
 
generally
allowed to
 
a U.S. corporation
 
under Section
 
243 of the Code.
 
Dividend income
 
will be treated
 
as foreign source
 
income for foreign
 
tax credit and
other purposes.
 
In computing the separate
 
foreign tax credit
 
limitations,
 
dividend income
 
should generally
 
constitute “passive
 
category income,”
or in the case
 
of certain
 
U.S. holders,
 
“general category
 
income.”
 
 
80
Passive Foreign
 
Investment
 
Company
 
A special
 
and adverse
 
set of
 
U.S. federal
 
income
 
tax rules
 
apply
 
to a
 
U.S. holder
 
that holds
 
stock
 
in a
 
passive
 
foreign
 
investment
 
company,
or PFIC. We would be a PFIC
 
for U.S. federal
 
income tax purposes
 
if for any taxable
 
year either (i)
 
75% or more of
 
our gross income,
 
including
our pro
 
rata share
 
of the
 
gross income
 
of any
 
company
 
in which
 
we are
 
considered
 
to own
 
25% or
 
more of
 
the shares
 
by value,
 
were passive
 
income
or (ii) 50%
 
or more of
 
our average
 
total assets
 
(by value),
 
including our
 
pro rata share
 
of the assets
 
of any company
 
in which we
 
are considered
 
to
own 25% or more of the shares by value, were
 
assets that produced
 
or were held for the production
 
of passive income.
 
If we were a PFIC, U.S.
holders
 
of the
 
ordinary
 
shares
 
or ADRs
 
would be
 
subject
 
to special
 
rules with
 
respect
 
to (i) any
 
gain recognized
 
upon the
 
disposition
 
of the
 
ordinary
shares
 
or ADRs
 
and (ii)
 
any receipt
 
of an
 
excess
 
distribution
 
(generally, any
 
distributions
 
to a
 
U.S. holder
 
during a
 
single
 
taxable
 
year that
 
is greater
than 125% of
 
the average
 
amount of distributions
 
received
 
by such U.S.
 
holder during
 
the three
 
preceding taxable
 
years in respect
 
of the ordinary
shares or
 
ADRs
 
or, if shorter, such
 
U.S. holder's
 
holding period
 
for the ordinary
 
shares or
 
ADRs). Under
 
these rules:
the gain
 
or excess
 
distribution
 
will
 
be allocated
 
ratably
 
over a
 
U.S.
 
holder's
 
holding period
 
for the
 
ordinary
 
shares
 
or ADRs,
 
as applicable;
 
the amount
 
allocated
 
to the taxable
 
year in
 
which a U.S.
 
holder realizes
 
the gain or
 
excess distribution
 
will be
 
taxed as
 
ordinary income;
 
the amount
 
allocated
 
to each
 
prior year
 
(other than
 
a pre-PFIC
 
year),
 
with certain
 
exceptions,
 
will be
 
taxed at
 
the highest
 
tax rate
 
in effect
for that year;
 
and
 
the interest
 
charge generally
 
applicable
 
to underpayments
 
of tax
 
will be
 
imposed
 
in respect
 
of the
 
tax attributable
 
to each
 
such year
 
(other
than a pre-PFIC
 
year).
 
 
Although
 
we generally
 
will be
 
treated
 
as a
 
PFIC as
 
to any
 
U.S. holder
 
if we
 
are a
 
PFIC for
 
any year
 
during a
 
U.S. holder's
 
holding period,
if we cease to satisfy
 
the requirements
 
for PFIC classification,
 
the U.S. holder may avoid
 
PFIC classification
 
for subsequent years
 
if such holder
elects to recognize
 
gain based on the unrealized
 
appreciation
 
in the ordinary shares
 
or ADRs through the
 
close of the tax year
 
in which we cease
to be a PFIC.
 
 
A U.S. holder of a PFIC is
 
required to file an annual
 
report with the Internal
 
Revenue Service
 
containing such
 
information as
 
the U.S.
Secretary
 
of Treasury may
 
require.
 
A U.S. holder of
 
the ordinary shares or ADRs
 
that are treated as “marketable stock” under the PFIC
 
rules may be able
 
to avoid the
imposition of the special
 
tax and interest charge
 
described above
 
by making a mark-to-market
 
election. Pursuant
 
to this election,
 
the U.S. holder
would include in ordinary
 
income or loss for each taxable
 
year an amount equal to the difference
 
as of the close of the taxable year
 
between the
fair market
 
value of
 
the ordinary
 
shares
 
or ADRs
 
and the
 
U.S. holder's
 
adjusted
 
tax basis
 
in such
 
ordinary
 
shares
 
or ADRs.
 
Losses
 
would be
 
allowed
only to the
 
extent of
 
net mark-to-market
 
gain previously
 
included
 
by the U.S.
 
holder under
 
the election
 
for prior
 
taxable years.
 
If a mark-to-market
election with respect
 
to ordinary shares
 
or ADRs
 
is in effect on the date of a U.S. holder's
 
death, the tax basis
 
of the ordinary shares
 
or ADRs in
the hands
 
of a U.S.
 
holder who
 
acquired them
 
from a decedent
 
will be the
 
lesser of
 
the decedent's
 
tax basis
 
or the fair
 
market value
 
of the ordinary
shares or ADRs. U.S.
 
holders desiring
 
to make the mark-to-market
 
election are urged
 
to consult their tax
 
advisors with respect
 
to the application
and effect
 
of making the
 
election for
 
the ordinary
 
shares or
 
ADRs.
 
 
In the case of
 
a U.S. holder who
 
holds ordinary
 
shares or ADRs
 
and who does not
 
make a mark-to-market
 
election, the
 
special tax
 
and
interest charge
 
described above
 
will not apply
 
if such holder
 
makes an election
 
to treat us as
 
a “qualified
 
electing fund”
 
in the first
 
taxable year
 
in
which such
 
holder owns
 
the ordinary
 
shares or
 
ADRs
 
and if we
 
comply with
 
certain reporting
 
requirements.
 
However, we
 
do not intend
 
to supply
U.S. holders
 
with the
 
information
 
needed
 
to report
 
income
 
and gain
 
pursuant
 
to a
 
“qualified
 
electing
 
fund”
 
election
 
in the
 
event
 
that we
 
are classified
as a PFIC.
 
 
We believe that we
 
were not a PFIC for
 
our fiscal year ended June 30, 2021. However, under the PFIC rules income and assets are
require to be measured
 
and classified in accordance
 
with U.S. federal income
 
tax principles.
 
Our analysis is based
 
on our financial statements
 
as
prepared in accordance
 
with IFRS, which
 
may substantially
 
differ from U.S.
 
federal income
 
tax principles.
 
Therefore, no
 
assurance can
 
be given
that we were not a PFIC. Furthermore,
 
the tests for determining
 
whether we would be a PFIC for any taxable
 
year are applied annually
 
and it is
difficult to
 
make accurate
 
predictions
 
of future
 
income and
 
assets,
 
which are
 
relevant to
 
this determination.
 
In addition,
 
certain factors
 
in the PFIC
determination, such as
 
reductions in
 
the market
 
value of
 
our capital
 
stock,
 
are not
 
within our
 
control and
 
can cause
 
us
 
to
 
become a
 
PFIC.
Accordingly, there
 
can be no assurance
 
that we will
 
not become
 
a PFIC.
 
The rules relating
 
to PFICs are very complex.
 
U.S. holders
 
are urged to consult
 
their tax advisors
 
regarding the application
 
of the PFIC
rules to their
 
investments
 
in our ordinary
 
shares or ADRs.
Disposition
 
of Ordinary
 
Shares or ADRs
 
Subject to the
 
discussion above under the heading “Passive Foreign Investment Company”, upon a
 
sale, exchange, or other taxable
disposition
 
of ordinary
 
shares
 
or ADRs,
 
a U.S.
 
holder will
 
recognize
 
gain or
 
loss in
 
an amount
 
equal to
 
the difference
 
between the
 
U.S. dollar
 
value
of the amount realized
 
on the sale or exchange
 
and such holder's adjusted
 
tax basis in the ordinary
 
shares or ADRs. Subject
 
to the application
 
of
the “passive foreign investment company”
 
rules discussed above, such gain or loss generally will be capital gain or loss and will be
 
long-term
capital gain
 
or loss if
 
the U.S. holder
 
has held the
 
ordinary shares
 
or ADRs for
 
more than
 
one year. The deductibility
 
of capital
 
losses is
 
subject to
limitations.
 
Gain or
 
loss recognized
 
by a U.S.
 
holder on
 
the taxable
 
disposition
 
of ordinary
 
shares
 
or ADRs
 
generally
 
will be
 
treated as
 
U.S.-source
gain or loss
 
for U.S. foreign
 
tax credit
 
purposes.
 
 
 
81
 
In the case of a cash basis U.S. holder who receives rands in connection
 
with the taxable disposition
 
of ordinary shares or ADRs, the
amount realized
 
will be
 
based on
 
the spot
 
rate as
 
determined
 
on the settlement
 
date of
 
such exchange.
 
A U.S. holder
 
who receives
 
payment in
 
rand
and converts rand
 
into U.S. dollars
 
at a conversion rate
 
other than the rate
 
in effect on the settlement
 
date may have a foreign
 
currency exchange
gain or loss
 
that would be
 
treated as
 
ordinary income
 
or loss.
 
 
An accrual basis U.S.
 
holder may elect
 
the same treatment required of
 
cash basis taxpayers with respect to
 
a taxable disposition of
ordinary
 
shares
 
or ADRs,
 
provided
 
that the
 
election
 
is applied
 
consistently
 
from year
 
to year.
 
Such election
 
may not
 
be changed
 
without
 
the consent
of the Internal
 
Revenue Service.
 
In the
 
event that
 
an accrual
 
basis holder
 
does not
 
elect to
 
be treated
 
as a cash
 
basis taxpayer,
 
such U.S.
 
holder may
have a foreign
 
currency gain
 
or loss for
 
U.S. federal
 
income tax
 
purposes because
 
of the differences
 
between the
 
U.S. dollar
 
value of the
 
currency
received prevailing
 
on the trade
 
date and the
 
settlement
 
date. Any such
 
currency gain
 
or loss will
 
be treated as
 
ordinary income
 
or loss and would
be in addition
 
to gain or
 
loss, if
 
any, recognized
 
by such U.S.
 
holder on the
 
disposition
 
of such ordinary
 
shares or
 
ADRs.
Information
 
with respect
 
to Foreign Financial
 
Assets
 
Certain U.S. holders may be required
 
to report on Internal Revenue Service
 
Form 8938 information relating
 
to an interest in ordinary
shares or ADRs,
 
subject to certain
 
exceptions (including an exception for assets held
 
in accounts maintained by
 
certain financial institutions,
although the account
 
itself may be reportable
 
if held at a non-U.S. financial
 
institution). U.S.
 
holders should consult
 
their tax advisers regarding
the effect, if any, of this reporting requirement on their acquisition,
 
ownership and disposition
 
of ordinary shares or ADRs. U.S. holders should
consult their
 
tax advisors
 
regarding application
 
of the information
 
reporting and
 
backup withholding
 
rules.
10F. DIVIDENDS AND PAYING AGENTS
Not applicable
10G. STATEMENT BY EXPERTS
Not applicable.
10H. DOCUMENTS
 
ON DISPLAY
DRDGOLD files annual
 
reports on Form 20-F and reports
 
on Form 6-K with the SEC. You may access this information
 
at the SEC’s
home page (http://www.sec.gov). Copies of the documents referred to herein may be inspected at DRDGOLD Limited’s offices by
 
contacting
DRDGOLD Limited,
 
P.O. Box 390, Maraisburg,
 
Johannesburg,
 
South Africa
 
1700. Attn:
 
Company Secretary.
 
Tel No. +27-11-470-2600.
10I. SUBSIDIARY
 
INFORMATION
Not applicable.
ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
 
RISK
 
General
 
In the normal
 
course of our
 
operations,
 
we are exposed
 
to market risk,
 
including commodity
 
price, foreign
 
currency, interest
 
and credit
risks. Refer to Item 18. ‘‘Financial Statements - Note 27 - Financial instruments’’ of the consolidated financial statements
 
for a qualitative and
quantitative
 
discussion
 
of our exposure
 
to these market
 
risks.
Our long-term strategy
 
is to
 
remain unhedged and
 
to keep
 
borrowings to a
 
minimum.
 
During fiscal 2021
 
we do
 
not hold
 
or issue
derivative financial instruments
 
for speculative purposes, nor did we hedge forward gold
 
sales.
However, in instances where we need
 
to incur
medium-term
 
borrowings
 
to finance
 
growth projects
 
that introduce
 
some liquidity
 
risk to
 
the Group,
 
we may
 
mitigate
 
this liquidity
 
risk by
 
entering
into an arrangement
 
to provide price
 
protection against
 
a possible decrease
 
in the Rand gold price
 
while borrowings
 
are in place.
 
For example in
fiscal 2019
 
we entered
 
into a hedging
 
instrument
 
in the form
 
of a collar
 
in respect
 
of 50,000 ounces
 
of gold that
 
expired at
 
the end of
 
May 2019.
Commodity
 
price risk
 
The rand market price of gold
 
has a significant effect
 
on our results of operations,
 
our ability and the ability
 
of our subsidiaries
 
to pay
dividends and
 
undertake
 
capital expenditures,
 
and the market
 
price of our
 
ordinary shares
 
or ADSs. Historically,
 
rand gold prices
 
have fluctuated
widely and are
 
affected by numerous
 
industry factors
 
over which we
 
have no control.
 
The aggregate
 
effect of these
 
factors on the
 
rand gold price
is impossible
 
for us to predict.
 
The rand price
 
of gold may
 
not remain
 
at a level
 
allowing us
 
to economically
 
exploit our reserves.
 
 
 
 
 
 
82
 
It is
 
our long-term
 
policy
 
not to
 
hedge
 
this commodity
 
price
 
risk. However,
 
in instances
 
where
 
we need
 
to incur
 
medium-term
 
borrowings
to finance growth
 
projects that introduce
 
some liquidity risk
 
to the Group, we may mitigate
 
this liquidity risk
 
by entering into an arrangement
 
to
provide price
 
protection
 
against a
 
possible decrease
 
in the Rand
 
gold price
 
while borrowings
 
are in place.
Concentration
 
of credit
 
risk
Credit risk
 
is the
 
risk of
 
financial
 
loss to
 
us if
 
a customer
 
or counterparty
 
to a
 
financial
 
instrument
 
fails to
 
meet its
 
contractual
 
obligations,
and arises
 
principally
 
from our trade
 
and other receivables
 
from customers
.
 
The Group
 
manages
 
its exposure
 
to credit
 
risk on
 
cash and
 
cash equivalents
 
and cash
 
and cash
 
equivalents
 
in environmental
 
rehabilitation
trust
 
funds (classified
 
as investments
 
in rehabilitation
 
obligation
 
funds
 
in the
 
statement
 
of financial
 
position),
 
by investing
 
cash
 
and cash
 
equivalents
across several
 
major financial
 
institutions,
 
considering
 
the credit
 
ratings of
 
the respective
 
financial institutions,
 
funds and
 
underlying
 
instruments.
 
The Group
 
manages its
 
exposure
 
to credit
 
risk on trade
 
receivables
 
by maintaining
 
a short
 
term cycle
 
to settlement
 
of 2 days.
 
The Group
manages its
 
exposure to
 
credit risk
 
on other receivables
 
by dealing with
 
a number of
 
counterparties,
 
ensuring that
 
these counterparties
 
are of good
credit standing
 
and transacting on
 
a
 
secured or
 
cash basis
 
where considered required.
 
Receivables are regularly
 
monitored and
 
assessed for
recoverability.
Foreign currency
 
risk
 
Our reporting
 
currency
 
is South
 
African
 
rand. Although
 
gold is
 
sold in
 
US dollars,
 
the Company
 
is obliged
 
to convert
 
this into
 
rands. No
hedges
 
were
 
entered
 
into during
 
fiscal
 
2021. We are
 
thus exposed
 
to fluctuations
 
in the
 
US dollar/rand
 
exchange
 
rate.
 
Foreign
 
exchange
 
fluctuations
affect the cash flow
 
that we will realize
 
from our operations
 
as gold is sold in US dollars,
 
while production
 
costs are incurred
 
primarily in rands.
Our results
 
are positively
 
affected when
 
the US dollar
 
strengthens
 
against the
 
rand and
 
adversely affected
 
when the
 
US dollar
 
weakens against
 
the
rand. Our cash
 
and cash equivalent
 
balances are
 
mostly held
 
in South African
 
rands. Holdings
 
denominated
 
in other currencies
 
are not material.
Liquidity risk - Long-term debt
Set out below is an analysis of our debt as at June 30, 2021 consisting of capital and interest related to lease liabilities. All of
our long-term debt is denominated in South African rand.
Interest rate
Total
 
8.8% - 10.3%
R'm
Repayment period
2022
20.5
2023
18.3
2024
12.6
2025
5.9
2026
5.2
2027
1.3
Total
 
63.8
Based on our fiscal year 2021 financial results, a hypothetical 100 basis points (increase)/decrease in interest rate activity would
(increase)/decrease our interest expense by R0.5 million.
ITEM 12. DESCRIPTION
 
OF SECURITIES
 
OTHER THAN EQUITY
 
SECURITIES
 
 
See Item 9.
 
"The Offer and
 
Listing Details".
12A. DEBT SECURITIES
Not applicable
.
12B. WARRANTS AND RIGHTS
Not applicable.
12C. OTHER SECURITIES
Not applicable.
 
 
83
12D. AMERICAN
 
DEPOSITARY SHARES
Depositary
 
Fees and Charges
 
DRDGOLD’s American Depository Shares,
 
or ADSs, each representing ten of DRDGOLD’s ordinary shares,
 
are traded on the New
York Stock Exchange, or
 
NYSE under
 
the symbol “DRD”
 
(until December
 
29, 2011 our ADSs
 
were traded
 
on the Nasdaq
 
Capital Market
 
under
the symbol “DROOY”). The ADSs are
 
evidenced by American Depository Receipts, or ADRs, issued by
 
The Bank of
 
New York
 
Mellon, as
Depository under
 
the Amended
 
and Restated
 
Deposit Agreement
 
dated as of
 
August 12, 1996,
 
as amended and
 
restated as
 
of October 2,
 
1996, as
further amended
 
and restated
 
as of August
 
6, 1998,
 
as further
 
amended and
 
restated
 
July 23, 2007,
 
among DRDGOLD
 
Limited, The
 
Bank of New
York
 
Mellon and owners and
 
beneficial owners of ADRs from
 
time to time.
 
ADR holders may have
 
to pay
 
the following service fees to
 
the
Depositary:
Service
Fees (USD)
Issuance of ADSs, including issuances resulting from a distribution of
ordinary shares or rights
 
$5.00 (or less) per 100 ADSs (or portion thereof)
1
Cancellation of ADSs for the purpose of withdrawal, including if the Deposit
Agreement terminates
 
$5.00 (or less) per 100 ADSs (or portion thereof)
1
Distribution of cash dividends or other cash distributions
 
2 cents (or less) per ADS (or portion thereof)
Distribution of securities distributed to holders of deposited securities which
are distributed by the Depositary to ADS registered holders
 
$5.00 (or less) per 100 ADSs (or portion thereof)
[1]
 
These fees are typically paid to the Depositary by the brokers on behalf of their clients receiving the newly-issued ADSs from the
Depositary or delivering the ADSs to the Depositary for cancellation. The brokers in turn charge these transaction fees to their clients.
In addition, ADR holders are responsible for certain fees and expenses incurred by the Depositary on their behalf including (1)
taxes and other
governmental charges, (2) such registration fees as may from time to time be in effect for the registration of transfers of ordinary shares
generally on the share register and applicable to transfers of ordinary shares to the name of the Depositary or its nominee or the Custodian
or its nominee on the making of deposits or withdrawals, (3) such cable, telex and facsimile transmission expenses as are expressly
provided in the Deposit Agreement, and (4)
 
such expenses as are incurred by the Depositary in the conversion of foreign currency to U.S.
Dollars.
The Depositary collects its fees for delivery and surrender of ADSs
 
directly from investors depositing or surrendering ADSs for the
purpose of withdrawal or from intermediaries acting for them. The Depositary, collects
 
fees for making distributions to investors by deducting
those fees
 
from the amounts
 
distributed
 
or by selling
 
a portion of
 
distributable
 
property to
 
pay the fees.
 
The Depositary
 
may collect
 
its annual fee
for depositary services by deductions from cash distributions or by directly billing investors or by charging the book-entry system accounts of
participants
 
acting for them.
 
The Depositary
 
may generally
 
refuse to provide
 
fee-attracting
 
services until
 
its fees
 
for those services
 
are paid.
 
Depositary
 
Payments
 
The Bank of
 
New York Mellon, as
 
Depositary, has
 
agreed to
 
reimburse DRDGOLD
 
an annual amount
 
of $75,000 mainly
 
consisting
 
of
accumulated contributions towards the Company’s
 
investor relations activities (including investor meetings, conferences and
 
fees of
 
investor
relations
 
service vendors).
 
After the
 
deduction
 
of other
 
fees, the
 
annual reimbursement
 
for the
 
year ended
 
June 30,
 
2021 amounts
 
to approximately
$51,944 (June 30, 2020:
 
$16,237, June 30, 2019:
 
$5,974). DRDGOLD is also entitled to
 
a 25%
 
share of the
 
dividend fees which amounts to
approximately
 
$65,551 for
 
the year
 
ended June
 
30, 2021 (June
 
30, 2020:
 
$nil, June
 
30, 2019: $20,195).
84
PART II
ITEM 13. DEFAULTS, DIVIDEND ARREARAGES
 
AND DELINQUENCIES
 
There have
 
been no material
 
defaults in the
 
payment of
 
principal, interest,
 
a sinking or purchase
 
fund installment,
 
or any other material
defaults with
 
respect to
 
any indebtedness
 
of ours.
ITEM 14. MATERIAL MODIFICATIONS
 
TO THE RIGHTS OF
 
SECURITY HOLDERS
 
AND USE OF PROCEEDS
 
None
ITEM 15. CONTROLS AND PROCEDURES
 
15A. Disclosure
 
Controls and
 
Procedures
As
 
of
 
June
 
30,
 
2021,
 
our
 
management,
 
with
 
the
 
participation
 
of
 
our
 
Chief
 
Executive
 
Officer
 
and
 
Chief
 
Financial
 
Officer
 
have
evaluated the effectiveness of our
 
disclosure controls and procedures (as
 
this term is defined in
 
Rules 13a-15(e) and 15d-15(e)
 
of the Exchange
Act).
 
Our
 
management,
 
including
 
the
 
Chief
 
Executive
 
Officer
 
and
 
Chief
 
Financial
 
Officer,
 
concluded
 
that
 
our
 
disclosure
 
controls
 
and
procedures were effective as of June 30, 2021.
Our disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed
 
by us
in the reports
 
that we file
 
or submit under
 
the Securities Exchange Act
 
of 1934 is
 
recorded, processed, summarized and
 
reported, within the
time periods specified in the
 
applicable rules and forms
 
and that such information required
 
to be disclosed by
 
us in the reports we
 
file or submit
under the Securities Exchange Act of 1934 is accumulated and communicated to our management, including our Chief Executive Officer and
Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures.
There are inherent limitations in the effectiveness of any system of disclosure controls and procedures.
 
These limitations include the
possibility of human error and the circumvention or
 
overriding of the controls and procedures. Accordingly, any such system can
 
only provide
reasonable assurance of achieving the desired control objectives.
15B. Management’s Annual
 
Report on Internal
 
Control Over
 
Financial Reporting
 
Our management is responsible for establishing
 
and maintaining adequate internal control over financial
 
reporting. Internal control
over financial reporting is
 
defined in Rule
 
13a-15(f) or 15d-15(f)
 
promulgated under the
 
Securities Exchange Act
 
of 1934 as
 
a process designed
by,
 
or under
 
the supervision
 
of, our
 
Chief Executive
 
Officer and
 
Chief Financial
 
Officer and
 
effected by
 
our board,
 
management and
 
other
personnel to provide
 
reasonable assurance regarding
 
the reliability of
 
financial reporting and
 
the preparation of
 
financial statements for
 
external
purposes in accordance
 
with IFRS. Under
 
Section 404(a) of
 
the Sarbanes Oxley
 
Act of 2002,
 
management is required
 
to assess our
 
internal
controls surrounding the
 
financial reporting process
 
as at the
 
end of each fiscal
 
year. Based
 
on that assessment, management
 
is to determine
whether or not our internal controls over financial reporting are effective.
 
Internal control over financial reporting includes those policies and procedures that:
 
pertain to the maintenance
 
of records that in reasonable
 
detail accurately and fairly
 
reflect the transactions and
 
dispositions of
our assets;
provide
 
reasonable
 
assurance
 
that
 
transactions
 
are
 
recorded
 
as
 
necessary
 
to
 
permit
 
preparation
 
of
 
financial
 
statements
 
in
accordance with
 
IFRS, and
 
that our
 
receipts and
 
expenditures are
 
being made
 
only in
 
accordance with
 
authorizations of
 
our
management and board; and
provide reasonable
 
assurance regarding
 
prevention or
 
timely detection
 
of unauthorized
 
acquisition, use
 
or disposition
 
of our
assets that could have a material effect on our financial statements.
Because of its inherent limitations, internal control
 
over financial reporting may not prevent
 
or detect misstatements. Instead, it must
be noted that even those systems that management
 
deems to be effective can only provide reasonable
 
assurance with respect to the preparation
and presentation of
 
our financial statements. Also,
 
projections of any evaluation
 
of effectiveness to
 
future periods are subject
 
to the risk that
controls may become inadequate because of changes in conditions, or the degree of compliance with the policies and procedures.
 
Our
 
management
 
assessed
 
the
 
effectiveness
 
of
 
our
 
internal
 
control
 
over
 
financial
 
reporting
 
as
 
of
 
June 30, 2021.
 
In
 
making
 
this
assessment, our
 
management used
 
the criteria
 
set forth
 
by the
Internal Control
 
-Integrated Framework
 
(2013)
issued by
 
the Committee
 
of
Sponsoring Organizations of the Treadway Commission (COSO). Based
 
on our assessment and those criteria,
 
our management concluded that
as of June 30, 2021 our internal control over financial reporting was effective.
 
15C. Attestation
 
Report of the
 
independent registered
 
public accounting
 
firm
The effectiveness of internal control over financial reporting as of June
 
30, 2021 was audited by KPMG Inc., independent registered
public accounting firm, as stated in their report on page F-1 of this Form 20-F.
 
 
 
 
85
15D. Changes
 
in Internal
 
Control Over
 
Financial Reporting
During the
 
year ended
 
June 30,
 
2021, there
 
have not
 
been any
 
changes in
 
our internal
 
control over
 
financial reporting
 
that have
materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
ITEM 16.
 
ITEM 16A. AUDIT
 
COMMITTEE FINANCIAL
 
EXPERT
 
Mr. J.A. Holtzhausen, Chairman
 
of the Audit Committee,
 
has been determined
 
by our board
 
to be an
 
audit committee financial expert
within the meaning
 
of the
 
Sarbanes-Oxley Act,
 
in accordance with
 
the Rules
 
of the New
 
York Stock Exchange, or
 
NYSE, and
 
rules promulgated
by the SEC
 
and independent both under
 
the New York Stock Exchange Rules and the South
 
African Johannesburg
 
Stock Exchange Rules.
 
The
board is satisfied
 
that the skills,
 
experience and attributes
 
of the members of
 
the Audit Committee
 
are sufficient to
 
enable those members to
discharge the responsibilities of the Audit Committee.
 
ITEM 16B. CODE
 
OF ETHICS
We have adopted a Code
 
of Conduct that
 
applies to all
 
senior executives including
 
our Non-Executive Chairman,
 
the Chief Executive
Officer,
 
Chief Financial Officer,
 
Chief Operating Officer
 
and the Financial
 
Director at our
 
mining operation as
 
well as all
 
other employees.
The Code of Conduct can be accessed on the Company’s website at the following web address: www.drdgold.com/about-us/governance.
ITEM 16C. PRINCIPAL ACCOUNTANT
 
FEES AND SERVICES
KPMG Inc. has served
 
as our independently
 
registered
 
public accountant
 
for the fiscal years
 
ended June 30, 2021,
 
2020 and 2019,
 
for
which audited
 
financial
 
statements
 
appear in
 
this Annual
 
Report. The
 
Annual General
 
Meeting elects
 
the auditors
 
annually.
 
The following
 
table presents
 
the aggregate
 
fees for professional
 
audit services
 
and other services
 
rendered by
 
KPMG Inc.
 
to us in fiscal
year 2021 and
 
2020:
Audit Fees
Audit fees billed for the annual audit services engagement,
 
which are those services that the external auditor reasonably
 
can provide,
include the company
 
audit; statutory
 
audits; comfort
 
letters and consents;
 
attest services;
 
and assistance with
 
and review of documents
 
filed with
the SEC.
Auditors' remuneration
Year ended
 
June 30,
2021
2020
R m
R m
Audit fees
9.1
8.4
All other fees
0.7
0.4
Total
9.8
8.8
All Other
 
Fees
 
The all other fees during fiscal year 2021 consist of the following:
R0.5 million with
 
respect to limited assurance
 
provided by KPMG on
 
specified items contained in
 
our Integrated Report
 
for fiscal
year 2020; and
R0.2 million with
 
respect to limited assurance
 
provided by KPMG on
 
specified items contained in
 
our Integrated Report
 
for fiscal
year 2021;
 
The all other fees during fiscal year 2020 consist of the following:
R0.2 million with
 
respect to limited assurance
 
provided by KPMG on
 
specified items contained in
 
our Integrated Report
 
for fiscal
year 2019; and
R0.2 million with
 
respect to limited assurance
 
provided by KPMG on
 
specified items contained in
 
our Integrated Report
 
for fiscal
year 2020
 
The Audit Committee
 
is directly responsible
 
for recommending the
 
appointment, re-appointment and
 
removal of the
 
external auditors
as well
 
as the
 
remuneration and
 
terms of
 
engagement of
 
the external
 
auditors. The
 
committee pre-approves,
 
and has pre-approved,
 
all non-
audit services provided by the external auditors. The Audit Committee
 
considered
 
all of the
 
fees mentioned
 
above and
 
determined
 
that such
 
fees
are compatible
 
with maintaining
 
KPMG Inc.’s independence.
86
ITEM 16D. EXEMPTIONS
 
FROM THE LISTING
 
STANDARDS FOR AUDIT COMMITTEES
Not applicable.
ITEM 16E. PURCHASES
 
OF EQUITY SECURITIES
 
BY THE ISSUER
 
AND AFFILIATED PURCHASERS
 
Not applicable
ITEM 16F. CHANGE IN REGISTRANT'S
 
CERTIFYING ACCOUNTANT
Not applicable.
ITEM 16G. CORPORATE GOVERNANCE
As a foreign private issuer with shares listed on the NYSE, we are subject to corporate governance
 
requirements imposed by NYSE.
Under section 303A.11 of the NYSE Listing Standards, a foreign private issuer such as us may
 
follow its home country corporate governance
practices in lieu
 
of certain of the NYSE Listing
 
Standards on corporate
 
governance. DRDGOLD's
 
home country corporate
 
governance practices
are regulated by the Listing Requirements of the
 
JSE
(the "
JSE Listing
 
Requirements
").
We
 
are also exempt from certain NYSE
 
corporate
governance requirements as a "controlled company". The following paragraphs summarize the significant ways in
 
which DRDGOLD's home
country
 
corporate
 
governance
 
standards
 
and its
 
corporate
 
governance
 
practices
 
differ from
 
those followed
 
by domestic
 
companies
 
under the
 
NYSE
Listing Standards.
Shareholder meeting
 
quorum requirements
Section 310.00 of the NYSE
 
Listing Standards
 
provides that the
 
quorum required for
 
any meeting of holders
 
of common stock should
be
 
sufficiently high
 
to
 
insure a
 
representative vote.
 
Consistent with
 
the
 
practice of
 
companies incorporated
 
in
 
South
 
Africa, our
Memorandum of Incorporation requires a quorum of
 
three members present with sufficient voting
 
powers in person or
 
by proxy
 
to
exercise
 
in aggregate
 
25% of the voting
 
rights and
 
we have elected
 
to follow our
 
home country
 
rule.
The NYSE Listing
 
Standards require
 
that the non-management
 
directors of
 
US-listed companies
 
meet at regularly
 
scheduled executive
sessions without
 
management.
 
The JSE Listings
 
Requirements
 
do not require
 
such meetings
 
of listed
 
company non-executive
 
directors.
The board
 
has unrestricted access
 
to all
 
company information, records, documents and
 
property. Directors
 
may,
 
if necessary,
 
take
independent professional advice at the
 
Company’s expense and
 
non-executive directors have access to
 
management and may
 
meet
separately
 
with management,
 
without the
 
attendance
 
of executive
 
directors.
The NYSE Listing Standards
 
require U.S. listed companies
 
to have a nominating/corporate
 
governance committee
 
composed entirely
of independent
 
directors.
 
The JSE
 
Listing
 
Requirements
 
also require
 
the appointment
 
of such
 
a committee,
 
and stipulate
 
that all
 
members
of
 
this
 
committee must
 
be
 
non-executive
 
directors, the
 
majority of
 
whom
 
must
 
be
 
independent. DRDGOLD has
 
a
 
Nominations
Committee
 
which currently
 
comprises
 
six non-executive
 
directors,
 
all of whom
 
are independent
 
under the
 
NYSE Listing
 
Standards
 
and
the JSE Listing
 
Requirements,
 
except for
 
T.J. Cumming. The Nominations
 
Committee
 
is chaired
 
by the Chairman
 
of DRDGOLD.
The NYSE
 
Listing Standards require
 
U.S. listed
 
companies to
 
have a
 
compensation committee composed entirely
 
of
 
independent
directors.
 
The JSE Listing
 
Requirements
 
merely require
 
the appointment
 
of such a committee
 
but not that its
 
members be
 
independent.
DRDGOLD has appointed
 
a Remuneration Committee,
 
currently comprising
 
five board members,
 
all of whom are independent
 
under
both the JSE
 
Listing Requirements
 
and the NYSE
 
Listing Standards,
 
except for
 
T.J. Cumming.
 
The NYSE Listings
 
Standards require
 
U.S. listed companies
 
to have an Audit Committee
 
composed entirely
 
of independent directors.
The South African Companies Act requires
 
that the audit committee be approved by shareholders
 
on an annual basis at a company’s
annual general
 
meeting. The Companies
 
Act and the JSE Listings
 
Requirements also
 
require an audit
 
committee composed
 
entirely of
independent non-executive
 
directors. DRDGOLD
 
has appointed an Audit
 
Committee, currently
 
comprised of four board
 
members, all
of whom
 
are non-executive
 
and independent,
 
as defined
 
under both
 
the JSE
 
Listings
 
Requirements
 
and the
 
NYSE Listing
 
Requirements
The Companies
 
Act and
 
the JSE
 
Listings
 
Requirements
 
require the
 
appointment
 
of a Social
 
and Ethics
 
Committee,
 
and DRDGOLD
 
has
appointed a
 
Social and
 
Ethics Committee,
 
comprising four
 
directors,
 
three of whom
 
are independent
 
non-executive
 
directors.
ITEM 16H. MINE
 
SAFETY DISCLOSURES
 
Not applicable.
 
87
 
 
 
88
PART III
ITEM 17. FINANCIAL
 
STATEMENTS
Not applicable.
ITEM 18 FINANCIAL STATEMENTS
The following annual financial statements and related auditor’s report are filed as part of this Annual
Report
Page
Report of the Independent Registered Public Accounting Firm
 
F‑1
Consolidated statement of profit or loss and other comprehensive income for the years ended June 30, 2021,
2020 and 2019
F-4
Consolidated statement of financial position at June 30, 2021 and 2020
F‑5
Consolidated statement of changes in equity for the years ended June 30, 2021, 2020 and 2019
F‑6
Consolidated statement of cash flows for the years ended June 30, 2021, 2020 and 2019
F‑5
Notes to the consolidated financial statements
 
F‑1 to F‑29
About these consolidated financial statements
1
Use of accounting assumptions, estimates and judgements
2
New standards, amendments to standards and interpretations not yet adopted
3
Performance
Revenue
 
4
Results from operating activities
 
5
Cost of sales
 
5.1
Other income
 
5.2
Administration expenses and other costs
5.3
Finance income
 
6
Finance expense
 
7
Earnings per share
 
8
Resource assets and related liabilities
Property, plant and equipment
 
9
Right of use assets and leases
10
Provision for environmental rehabilitation
 
11
Investment in rehabilitation obligation funds
 
12
Working capital
Cash and cash equivalents
 
13
Cash generated by operations
 
14
Trade and other receivables
 
15
Trade and other payables
 
16
Inventories
 
17
 
Tax
Income tax
 
18
 
Income tax expense
 
18.1
Deferred tax
 
18.2
Employee matters
Employee benefits
 
19
Cash-settled tong-term incentive scheme
19.1
Equity-settled tong-term incentive scheme
19.2
Transactions with key management personnel
19.3
Capital and equity
Capital management
 
20
Equity
 
21
Disclosure items
Interest in subsidiaries
 
22
Operating segments
 
23
Payments made under protest
24
Other investments
25
Contingencies
26
Financial instruments
 
27
Related parties
 
28
Subsequent events
 
29
F-1
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors
 
DRDGOLD Limited:
Opinions on the Consolidated Financial Statements and Internal Control Over Financial Reporting
 
We
 
have audited the
 
accompanying consolidated statements of
 
financial position of DRDGOLD
 
Limited and subsidiaries
 
(the Company) as
 
of June
30, 2021 and 2020,
 
the related consolidated statements of
 
profit or loss and other
 
comprehensive income, changes in equity,
 
and cash flows for each
of the
 
years in
 
the three-year
 
period ended
 
June 30,
 
2021, and
 
the related
 
notes (collectively,
 
the consolidated
 
financial statements).
 
We
 
also have
audited the
 
Company’s
 
internal control
 
over financial
 
reporting as
 
of June
 
30, 2021,
 
based on
 
criteria established
 
in Internal
 
Control –
 
Integrated
Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
 
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as
of June 30,
 
2021 and 2020,
 
and the results of
 
its operations and its
 
cash flows for
 
each of the years
 
in the three-year
 
period ended June
 
30, 2021, in
conformity
 
with International
 
Financial Reporting
 
Standards
 
as issued
 
by the
 
International Accounting
 
Standards
 
Board. Also
 
in our
 
opinion, the
Company maintained,
 
in all material
 
respects, effective
 
internal control over
 
financial reporting as
 
of June
 
30, 2021 based
 
on criteria established
 
in
Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
Basis for Opinions
 
The
 
Company’s
 
management
 
is
 
responsible
 
for
 
these
 
consolidated
 
financial
 
statements,
 
for
 
maintaining
 
effective
 
internal
 
control
 
over
 
financial
reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the
 
accompanying Management’s Annual
Report on Internal Control Over Financial Reporting. Our responsibility is to
 
express an opinion on the Company’s consolidated
 
financial statements
and an
 
opinion on the
 
Company’s internal
 
control over financial
 
reporting based on
 
our audits. We
 
are a public
 
accounting firm registered
 
with the
Public Company Accounting Oversight
 
Board (United States)
 
(PCAOB) and are
 
required to be
 
independent with respect
 
to the Company
 
in accordance
with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We
 
conducted our
 
audits in
 
accordance with
 
the standards
 
of the
 
PCAOB. Those
 
standards require
 
that we
 
plan and
 
perform the
 
audits
 
to obtain
reasonable assurance about whether the consolidated
 
financial statements are free of material
 
misstatement, whether due to error or fraud,
 
and whether
effective internal control over financial reporting was maintained in all material respects.
 
Our audits
 
of the
 
consolidated financial
 
statements included
 
performing procedures
 
to assess
 
the risks
 
of material
 
misstatement of
 
the consolidated
financial statements, whether due to error or
 
fraud, and performing procedures that respond to those risks. Such procedures
 
included examining, on a
test basis, evidence regarding the amounts and disclosures in the consolidated financial
 
statements. Our audits also included evaluating the accounting
principles used and significant estimates made by management, as well as evaluating the overall presentation
 
of the consolidated financial statements.
Our audit of internal control
 
over financial reporting included
 
obtaining an understanding of internal
 
control over financial reporting, assessing
 
the risk
that a material
 
weakness exists, and
 
testing and evaluating the
 
design and operating
 
effectiveness of internal
 
control based on
 
the assessed risk.
 
Our
audits also included
 
performing such other
 
procedures as we
 
considered necessary in
 
the circumstances. We believe that
 
our audits provide
 
a reasonable
basis for our opinions.
Definition and Limitations of Internal Control Over Financial Reporting
 
A
 
company’s
 
internal
 
control over
 
financial
 
reporting
 
is
 
a process
 
designed
 
to provide
 
reasonable
 
assurance
 
regarding
 
the
 
reliability
 
of
 
financial
reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s
internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance
 
of records that, in reasonable detail,
accurately and
 
fairly reflect
 
the transactions
 
and dispositions
 
of
 
the assets
 
of
 
the company;
 
(2) provide
 
reasonable assurance
 
that transactions
 
are
recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of
 
the company are
 
being made
 
only in
 
accordance with authorizations
 
of management
 
and directors of
 
the company; and
 
(3) provide
reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have
a material effect on the financial statements.
Because of its
 
inherent limitations, internal
 
control over financial
 
reporting may
 
not prevent or
 
detect misstatements.
 
Also, projections of
 
any evaluation
of effectiveness to
 
future periods are subject
 
to the risk that
 
controls may become inadequate
 
because of changes in
 
conditions, or that the
 
degree of
compliance with the policies or procedures may deteriorate.
Critical Audit Matters
The critical
 
audit matters
 
communicated below
 
are matters
 
arising from
 
the current
 
period audit
 
of the
 
consolidated financial
 
statements that
 
were
communicated or required
 
to be communicated
 
to the audit
 
committee and that:
 
(1) relate to
 
accounts or
 
disclosures that are
 
material to the
 
consolidated
financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does
not alter in any way
 
our opinion on the consolidated
 
financial statements, taken as
 
a whole, and we are
 
not, by communicating the critical
 
audit matters
below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Evaluation of the provision for environmental rehabilitation
As discussed in
 
note 11
 
to the consolidated
 
financial statements, the
 
Company has recorded
 
a provision for
 
environmental rehabilitation of
 
R 570.8
million
 
as
 
of
 
June
 
30,
 
2021.
 
The
 
Company’s
 
estimates
 
of
 
undiscounted
 
environmental
 
rehabilitation
 
costs
 
used
 
in
 
calculating
 
the
 
provision
 
are
determined with the
 
assistance of an
 
independent expert and
 
are based on
 
the Company’s
 
environmental management plans
 
which are developed
 
in
accordance
 
with
 
current
 
regulatory
 
requirements,
 
the
 
Company’s
 
life-of-mine
 
(“LOM”)
 
plan
 
(discussed
 
in
 
note
 
9
 
to
 
the
 
consolidated
 
financial
statements) and the planned method of rehabilitation.
 
We
 
identified the evaluation
 
of the provision
 
for environmental rehabilitation
 
as a critical
 
audit matter.
 
Subjective auditor judgment
 
and specialized
F-2
skills and knowledge were required to evaluate the current
 
regulatory requirements, the Company’s LOM plan, specifically the estimated quantities of
economically recoverable gold, and the planned method of rehabilitation.
The following are the primary procedures we performed to address this critical audit matter:
We evaluated the design and tested the
 
implementation and operating effectiveness of
 
certain internal controls relating
 
to the Company’s process
to determine
 
the environmental
 
rehabilitation provision.
 
This included
 
controls related
 
to the
 
assessment of
 
current regulatory
 
requirements,
determination of the
 
Company’s LOM
 
plan, specifically related
 
to the estimated
 
quantities of economically
 
recoverable gold, and
 
the planned
method of rehabilitation;
 
We
 
involved
 
environmental
 
rehabilitation
 
professionals
 
with
 
specialised skills
 
and knowledge,
 
who
 
assisted in
 
evaluating
 
the
 
results of
 
the
Company’s undiscounted estimated environmental costs detailed in the independent environmental expert’s reports.
 
This was performed by:
-
evaluating the objectivity, knowledge, skills and ability of the Company’s
 
expert by comparing their professional qualifications, experience
and affiliations against industry norms and obtained and understanding of their scope of work; and
 
-
evaluating a
 
selection of sites
 
by performing site
 
inspections and challenging
 
the planned method
 
of rehabilitation that
 
was determined in
respect
 
of
 
each
 
selected
 
site.
 
This
 
was
 
performed
 
by
 
comparing
 
the
 
planned
 
method
 
of
 
rehabilitation
 
to
 
the
 
estimated
 
quantities
 
of
economically recoverable gold as indicated in the approved LOM plan, confirming that it is compliant with the environmental management
plans
 
as
 
approved
 
by
 
the
 
Department
 
of
 
Mineral
 
Resources
 
and
 
Energy,
 
where
 
applicable,
 
aligned
 
with
 
current
 
industry
 
practices
 
and
regulatory requirements, and
 
comparing selected inputs
 
to the Company’s
 
mineral reserves and
 
resources report that
 
was reviewed by
 
the
Company’s independent mineral resources expert.
We evaluated the objectivity, knowledge,
 
skills and
 
ability of
 
the Company’s independent
 
mineral resources
 
experts, that reviewed
 
management’s
mineral reserves and resources estimates, by comparing their professional qualification, experience and affiliation against industry norms;
We
 
evaluated the
 
mineral resources
 
experts’ reports
 
by vouching
 
a selection
 
of the
 
reported reclamation
 
sites to
 
environmental approvals
 
or
mining
 
rights and
 
evaluated the
 
methodology
 
and certain
 
key assumptions
 
used to
 
measure the
 
quantities of
 
economically recoverable
 
gold
against industry norms; and
We evaluated
 
the reasonableness of the total estimated quantities of economically recoverable gold as indicated
 
in the LOM plan by agreeing a
selection of
 
period to
 
period movements to
 
the current
 
period actual recovered
 
gold and
 
increments or adjustments
 
to the
 
data in
 
the expert’s
report.
Evaluation of deferred tax liabilities related to the Ergo and FWGR operations
As discussed in Note
 
18 to the consolidated
 
financial statements, the Company
 
has recorded a deferred
 
tax liability of R377.1
 
million as of June 30,
2021, a portion of which
 
related to the Ergo and
 
FWGR operations. The deferred tax
 
liabilities related to the Ergo and
 
FWGR operations are calculated
by applying a
 
forecast weighted average tax
 
rate to the
 
temporary differences. The
 
calculation of the
 
forecast weighted average
 
tax rate requires the
use of assumptions and
 
estimates, including the Company’s life-of-mine
 
(“LOM”) plan (as discussed
 
in note 9 to
 
the consolidated financial
 
statements)
that is applied to calculate the expected future profitability.
We identified the valuation
 
of deferred tax liabilities related to the Ergo and FWGR
 
operations as a critical audit matter.
 
Subjective auditor judgment
and specialised skills and knowledge were required to
 
evaluate the expected future profitability, that is based on the LOM
 
plan, which includes certain
key assumptions about the estimated quantities of economically recoverable gold and the forecasted rand gold price.
The following are the primary procedures we performed to address this critical audit matter:
We
 
evaluated
 
the
 
design
 
and
 
tested
 
operating
 
effectiveness
 
of
 
certain
 
internal
 
controls
 
relating
 
to
 
the
 
Company’s
 
process
 
to
 
develop
 
the
assumptions and estimates used in
 
calculating the forecast weighted average tax
 
rate. This included controls related to
 
certain key assumptions
about the
 
forecasted rand
 
gold price
 
and estimated
 
quantities of
 
economically recoverable
 
gold that
 
are applied
 
in determining
 
the expected
future profitability;
We
 
evaluated
 
the
 
objectivity,
 
knowledge,
 
skills
 
and
 
ability
 
of
 
the
 
Company’s
 
independent
 
mineral
 
resources
 
experts,
 
who
 
reviewed
management’s
 
mineral
 
reserves
 
and
 
resources
 
estimates,
 
by
 
comparing
 
their
 
professional
 
qualifications,
 
experience
 
and
 
affiliations
 
against
industry norms;
We
 
evaluated the
 
mineral resources
 
experts’ reports
 
by vouching
 
a selection
 
of the
 
reported reclamation
 
sites to
 
environmental approvals
 
or
mining
 
rights and
 
evaluated the
 
methodology
 
and certain
 
key assumptions
 
used to
 
measure the
 
quantities
 
of economically
 
recoverable gold
against industry norms;
 
We evaluated the
 
reasonableness of the total estimated quantities of economically recoverable gold as indicated in
 
the LOM plan by agreeing a
selection of
 
period to period
 
movements to the
 
current period
 
actual recovered gold
 
and increments or
 
adjustments to
 
the data in
 
the expert’s
report;
 
We evaluated the forecast rand gold price by comparing it to independent analyst reports;
We
 
evaluated the Company’s
 
ability to accurately
 
forecast its expected
 
future profitability by
 
comparing the historical
 
projections of the
 
rand
gold price and estimated quantities of economically recoverable gold to actual results; and
We performed a sensitivity analysis to assess the impact that changes in the forecasted rand gold price and estimated quantities of economically
recoverable gold, could have had on the expected future profitability and resultant calculated forecast weighted average tax rate.
Valuation
 
of the investment in Rand Refinery Proprietary Limited
As discussed
 
in Note
 
25.1 to
 
the consolidated
 
financial statements,
 
the
 
Company has
 
an unlisted
 
equity
 
investment in
 
Rand Refinery
 
Proprietary
Limited (RR) that is valued at R119.3 million as
 
of 30 June 2021. The fair value
 
of the RR investment includes the valuation
 
of the refining operations
F-3
(excluding Prestige Bullion) using a free cash flow
 
(“FCF”) model and the valuation of RR’s
 
investment in Prestige Bullion (Prestige) using a
 
finite-
life dividend discount (“DD”) model.
 
We identified the
 
valuation of the investment in RR as a critical audit
 
matter. Subjective auditor judgment and specialised skills and
 
knowledge were
required to evaluate certain key
 
inputs used in the FCF
 
and DD models, specifically the
 
forecasted average gold and
 
silver prices and discount rates,
including the weighted
 
average cost of capital,
 
cost of equity and
 
the marketability and
 
minority discount rates, applied
 
to calculate the
 
overall total
fair value for RR.
The following are the primary procedures we performed to address this critical audit matter:
We evaluated the design and tested the operating effectiveness of certain internal
 
controls related to the Company’s process to determine the fair
value of the investment in RR. This included controls related to the determination of key inputs including the
 
forecasted average gold and silver
prices and discount rates;
We involved valuation professionals with specialized skills and knowledge, who assisted in:
-
evaluating the forecasted
 
average gold and silver
 
prices used in the
 
FCF and DD models
 
by comparing them to
 
independent analysts’ reports;
-
evaluating the discount rates used by management in the FCF and DD valuation models by
 
comparing them against the discount rate ranges
that were independently developed using publicly available macroeconomic indicators and market data for comparable entities;
-
developing an independent range of fair values, using the independently developed discount
 
rates and the forecasted average gold and silver
prices, and compared our range of fair values to the Company’s calculated fair value for the investment in RR; and
-
performing a sensitivity analyses
 
to assess the impact
 
on the calculated fair
 
value of changes to
 
the certain key inputs
 
used in the FCF
 
and
DD models.
 
/s/ KPMG Inc.
We have served as the Company’s
 
auditor since 2003.
 
Johannesburg,
 
Republic of South Africa
October 28, 2021
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
CONSOLIDATED STATEMENT
 
OF PROFIT OR LOSS
AND OTHER COMPREHENSIVE INCOME
for the year ended June 30, 2021
F-4
Amounts in R million
Note
2021
2020
2019
Revenue
4
5,269.0
4,185.0
2,762.1
Cost of sales
5.1
(3,388.2)
(2,937.9)
(2,553.9)
Gross profit from operating activities
1,880.8
1,247.1
208.2
Other income
5.2
0.1
0.7
7.9
Administration expenses and other costs
5.3
(64.0)
(309.9)
(90.9)
Results from operating activities
1,816.9
937.9
125.2
Finance income
6
216.2
109.8
58.3
Finance expense
7
(69.5)
(68.8)
(78.4)
Profit before tax
1,963.6
978.9
105.1
Income tax
18.1
(523.7)
(343.9)
(26.6)
Profit for the year
1,439.9
635.0
78.5
Other comprehensive income
Items that will not be reclassified to profit or loss, net of tax
Net fair value adjustment on equity investments at fair value through other
comprehensive income
(34.4)
190.6
(5.9)
Fair value adjustment on equity investments at fair value through other
comprehensive income
25
(28.2)
191.8
(5.9)
Deferred tax thereon
18.2
(6.2)
(1.2)
-
Total other comprehensive income for the year
(34.4)
190.6
(5.9)
Total comprehensive income for the year
1,405.5
825.6
72.6
Earnings per share
Basic earnings per share (SA cents per share)
8
168.4
82.5
11.8
Diluted earnings per share (SA cents per share)
8
167.2
81.0
11.5
The accompanying notes are an integral part of these consolidated financial statements.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
CONSOLIDATED STATEMENT
 
OF FINANCIAL POSITION
at June 30, 2021
F-5
Amounts in R million
Note
2021
2020
ASSETS
Non-current assets
3,675.3
3,485.4
Property, plant and equipment
9
2,809.7
2,621.1
Investments in rehabilitation obligation funds
12
652.2
626.0
Payments made under protest
24
40.5
35.0
Other investments
25
167.1
195.3
Deferred tax asset
18.2
5.8
8.0
Current assets
2,672.7
2,189.8
Inventories
17
340.0
323.4
Current tax receivable
8.6
4.9
Trade and other receivables
15
144.1
146.4
Cash and cash equivalents
13
2,180.0
1,715.1
TOTAL ASSETS
6,348.0
5,675.2
EQUITY AND LIABILITIES
Equity
4,820.4
4,040.2
Stated share capital
21.1
6,157.9
6,157.9
Retained earnings
(1,337.5)
(2,117.7)
Non-current liabilities
996.1
889.1
Provision for environmental rehabilitation
11
570.8
568.9
Deferred tax liability
18.2
377.1
273.1
Liability for post-retirement medical benefits (2020: Employee benefits)
10.3
10.1
Lease liabilities
10.2
37.9
37.0
Current liabilities
531.5
745.9
Trade and other payables
16
509.8
478.8
Liability for cash-settled long-term incentive scheme (2020: Employee benefits)
19.1
-
227.6
Current portion of lease liabilities
10.2
16.9
10.1
Current tax liability
4.8
29.4
TOTAL LIABILITIES
1,527.6
1,635.0
TOTAL EQUITY AND LIABILITIES
6,348.0
5,675.2
The accompanying notes are an integral part of these consolidated financial statements.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
CONSOLIDATED STATEMENT
 
OF CHANGES IN EQUITY
for the year ended June 30, 2021
F-6
Stated
share
Other
Retained
Total
Amounts in R million
Note
capital
reserves
earnings
equity
Balance at June 30, 2018
4,177.7
-
(2,910.4)
1,267.3
Total comprehensive income
Profit for the year
78.5
78.5
Other comprehensive income
(5.9)
(5.9)
Total comprehensive income
-
-
72.6
72.6
Transactions with the owners of the parent
Contributions and distributions
Equity instruments issued as purchase consideration for the
acquisition of Far West Gold Recoveries ("
FWGR
")
895.7
453.6
1,349.3
Expenses incurred on issue of ordinary shares
(0.3)
(0.3)
Treasury shares acquired through subsidiary
21.1
(0.3)
(0.3)
Total contributions and distributions
895.1
453.6
-
1,348.7
Balance at June 30, 2019
5,072.8
453.6
(2,837.8)
2,688.6
Total comprehensive income
Profit for the year
635.0
635.0
Other comprehensive income
190.6
190.6
Total comprehensive income
-
-
825.6
825.6
Transactions with the owners of the parent
Contributions and distributions
Issue of ordinary shares
21.1
1,085.6
1,085.6
Expenses incurred on issue of ordinary shares
(0.5)
(0.5)
Reallocation of the equity instruments on exercise of the Sibanye-
Stillwater option
21.2
(453.6)
453.6
-
Dividend on ordinary shares
21.2
(565.1)
(565.1)
Equity-settled share-based payment
19.2
6.0
6.0
Total contributions and distributions
1,085.1
(453.6)
(105.5)
526.0
Balance at June 30, 2020
6,157.9
-
(2,117.7)
4,040.2
Total comprehensive income
Profit for the year
1,439.9
1,439.9
Other comprehensive income
(34.4)
(34.4)
Total comprehensive income
-
-
1,405.5
1,405.5
Transactions with the owners of the parent
Contributions and distributions
Dividend on ordinary shares
21.2
(641.3)
(641.3)
Equity-settled share-based payment
19.2
16.0
16.0
Total contributions and distributions
-
-
(625.3)
(625.3)
Balance at June 30, 2021
21.1
6,157.9
-
(1,337.5)
4,820.4
The accompanying notes are an integral part of these consolidated financial statements.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
CONSOLIDATED STATEMENT
 
OF CASH FLOWS
for the year ended June 30, 2021
F-7
Amounts in R million
Note
2021
2020
2019
CASH FLOWS FROM OPERATING ACTIVITIES
Cash generated from operations
14
1,851.0
1,309.6
282.0
Finance income received
105.9
63.8
16.8
Dividends received
76.1
4.3
-
Finance expenses paid
(7.5)
(8.7)
(9.3)
Income tax paid
(452.1)
(240.1)
(1.2)
Net cash inflow from operating activities
1,573.4
1,128.9
288.3
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of property, plant and equipment
(395.7)
(181.1)
(347.4)
Environmental rehabilitation payments to reduce decommissioning liabilities
11
(51.0)
(22.1)
(16.6)
Proceeds on disposal of property, plant and equipment
5.2
0.1
0.7
5.8
Funds received from environmental obligation funds
12
-
-
55.2
Net cash outflow from investing activities
(446.6)
(202.5)
(303.0)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issue of ordinary shares
21.1
-
1,085.6
-
Share issue expenses
-
(0.5)
(0.3)
Acquisition of treasury shares
21.1
-
-
(0.3)
Dividends paid on ordinary shares
(640.9)
(564.5)
-
Borrowings raised
-
-
192.0
Borrowings paid
-
-
(192.0)
Initial fees incurred on facility
(1.0)
-
(3.6)
Repayment of lease liabilities
10.2
(11.6)
(11.4)
(3.7)
Net cash (outflow)/inflow from financing activities
(653.5)
509.2
(7.9)
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS
473.3
1,435.6
(22.6)
Impact of fluctuations in exchange rate on cash held
(8.4)
-
-
Cash and cash equivalents at the beginning of the year
1,715.1
279.5
302.1
CASH AND CASH EQUIVALENTS AT
 
THE END OF THE YEAR
13
2,180.0
1,715.1
279.5
The accompanying notes are an integral part of these consolidated financial statements.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended June 30, 2021
F-8
1
 
ABOUT THESE CONSOLIDATED
 
FINANCIAL STATEMENTS
Reporting entity
The DRDGOLD
 
Group is
 
primarily involved
 
in the
 
retreatment of
 
surface gold.
 
The consolidated
 
financial statements
 
comprise
DRDGOLD Limited (the “
Company
”) and its subsidiaries
 
who are all wholly
 
owned subsidiaries and
 
solely operate in South
 
Africa
(collectively
 
the “
Group
” and
 
individually “
Group Companies
”).
 
The Company
 
is domiciled
 
in South
 
Africa
 
with a
 
registration
number of
 
1895/000926/06. The
 
registered address
 
of the
 
Company is
 
Constantia Office
 
Park, Cnr
 
14th Avenue
 
and Hendrik
Potgieter Road, Cycad House, Building 17, Ground Floor,
 
Weltevreden Park, 1709.
The DRDGOLD Group
 
is
50.1
% held by
 
Sibanye Gold Limited,
 
which in turn
 
is a wholly
 
owned subsidiary of
Sibanye Stillwater
Limited
 
(“
Sibanye-Stillwater
”).
Basis of accounting
The
 
consolidated
 
financial
 
statements
 
have
 
been
 
prepared
 
in
 
accordance
 
with
 
International
 
Financial
 
Reporting
 
Standards
(“
IFRS
”)
 
and
 
its
 
interpretations
 
issued
 
by
 
the
 
International
 
Accounting
 
Standards
 
Board
 
(“
IASB
”).
 
The
 
consolidated
 
financial
statements were approved by the board for issuance on October 28, 2021.
Functional and presentation currency
The functional and presentation currency of
 
DRDGOLD and its subsidiaries is
 
South African rand (“
Rand
”). The amounts in
 
these
consolidated financial statements
 
are rounded to
 
the nearest million
 
unless stated otherwise.
 
Significant exchange rates
 
during
the year are set out in the table below:
South African rand / US dollar
2021
2020
2019
Spot rate at year end
14.27
17.32
14.07
Average prevailing rate for the financial year
15.40
15.66
14.18
Basis of measurement
The consolidated financial statements are prepared on the historical cost basis, unless otherwise stated.
Basis of consolidation
Subsidiaries
Subsidiaries are
 
entities controlled
 
by the
 
Group. The
 
Group controls
 
an entity
 
when it
 
is exposed
 
to, or
 
has rights
 
to, variable
returns from its
 
involvement with the
 
entity and has
 
the ability to
 
affect those returns through
 
its power over
 
the entity. The financial
statements of subsidiaries
 
are included in
 
the consolidated financial
 
statements from the
 
date that control
 
commences until the
date that control ceases.
Loss of control
When the Group loses control
 
over a subsidiary,
 
it derecognises the assets and
 
liabilities of the subsidiary,
 
and any related NCI
and
 
other components
 
of equity.
 
Any
 
resulting gain
 
or
 
loss is
 
recognized
 
in
 
profit
 
or
 
loss.
 
Any interest
 
retained in
 
the forme
 
r
subsidiary is measured at fair value when control is lost.
Transactions eliminated on consolidation
Intra-group
 
balances,
 
transactions
 
and
 
any
 
unrealised
 
gains
 
and
 
losses
 
or
 
income
 
and
 
expenses
 
arising
 
from
 
intra-group
transactions, are eliminated in preparing the consolidated financial statements.
2
 
USE OF ACCOUNTING ASSUMPTIONS, ESTIMATES
 
AND JUDGEMENTS
The preparation of the consolidated
 
financial statements requires management to
 
make accounting assumptions, estimates and
judgements that affect the application of the Group's accounting policies and reported
 
amounts of assets and liabilities, income
and expenses.
Accounting
 
assumptions,
 
estimates
 
and
 
judgements
 
are
 
reviewed
 
on
 
an
 
ongoing
 
basis.
 
Revisions
 
to
 
reported
 
amounts
 
are
recognised in the
 
period in which
 
the revision is
 
made and in
 
any future periods
 
affected. Actual
 
results may differ
 
from these
estimates.
Information about
 
assumptions and
 
estimates in
 
applying accounting
 
policies that
 
have the
 
most significant
 
effect on the
 
amounts
recognised in the consolidated financial statements are included in the notes:
NOTE 9
 
PROPERTY,
 
PLANT AND EQUIPMENT
NOTE 11
 
PROVISION FOR ENVIRONMENTAL REHABILITATION
NOTE 18
 
INCOME TAX
NOTE 24
 
PAYMENTS
 
MADE UNDER PROTEST
NOTE 25
 
OTHER INVESTMENTS
Information about
 
significant judgements
 
in applying
 
accounting policies
 
that have
 
the most
 
significant effect
 
on the
 
amounts
recognised in the consolidated financial statements are included in the notes:
NOTE 24
 
PAYMENTS
 
MADE UNDER PROTEST
NOTE 25
 
OTHER INVESTMENTS
NOTE 26
 
CONTINGENCIES
 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continued
for the year ended June 30, 2021
F-9
3
 
NEW STANDARDS,
 
AMENDMENTS TO STANDARDS
 
AND INTERPRETATIONS
New standards, amendments to standards and interpretations effective for the year ended June 30, 2021
During
 
the financial
 
period, the
 
following relevant
 
new and
 
revised
 
accounting standards,
 
amendments to
 
standards and
 
new
interpretation were adopted by the Group:
Definition of Material (Effective July 1, 2020)
The amendment
 
clarifies the definition
 
of material to
 
make it easier
 
to understand
 
and provides guidance
 
on how the
 
definition
should be applied. The
 
changes in the definition now
 
ensures that the definition
 
is consistent across all
 
IFRS standards and the
Conceptual Framework.
old definition (IAS
 
1): Omissions or
 
misstatements of items
 
are material if
 
they could, individually
 
or collectively,
 
influence the
economic decisions that users make on the basis of the financial statements;
new definition (IAS
 
1): Information is
 
material if omitting,
 
misstating or obscuring
 
it could reasonably
 
be expected to
 
influence
the decisions that
 
the primary users of
 
general-purpose financial statements make
 
on the basis of
 
those financial statements,
which provide financial information about a specific reporting entity.
The
 
definition of
 
material
 
omissions or
 
misstatements from
 
IAS
 
8
Accounting Policies,
 
Changes in
 
Accounting Estimates
and
Errors
 
has been removed.
 
The amendments to IAS 1 and IAS 8 did not have a significant impact on the Group.
Amendments to References to Conceptual Framework in IFRS (Effective July 1, 2020)
The IASB decided to revise the Conceptual Framework because certain important issues were not covered and certain guidance
was unclear or out of date. The revised Conceptual Framework, issued by the IASB in March 2018, includes:
new concepts on measurement including factors to be considered when selecting the measurement basis;
new concepts on presentation
 
and disclosure, including when
 
to classify income and
 
expenses in other comprehensive
 
income;
new guidance on when assets and liabilities are removed from financial statements;
updated definitions of an asset and liability;
updated recognition criteria for including assets and liabilities in financial statements;
clarified concepts of prudence, stewardship, measurement uncertainty and substance over form; and
the
 
IASB
 
also
 
updated
 
references
 
to
 
the
 
Conceptual
 
Framework
 
in
 
IFRS
 
by
 
issuing
 
Amendments
 
to
 
References
 
to
 
the
Conceptual Framework in IFRS.
The amendments to the References to the Conceptual Framework did not have a significant impact on the Group.
New standards, amendments to standards and interpretations not yet effective
At the date
 
of authorisation
 
of these consolidated
 
financial statements, the
 
following relevant
 
standards, amendments to
 
standards
and interpretations that may be
 
applicable to the business of
 
the Group were in issue
 
but not yet effective and
 
may therefore have
an impact on
 
future consolidated financial
 
statements. These new
 
standards, amendments to
 
standards and interpretations
 
will
be adopted at their effective dates.
 
These new standards, amendments to standards and
 
interpretations are not expected to have a significant
 
impact on the Group
unless stated otherwise.
Annual Improvements to IFRS Standards 2018-2020 (Effective July 1, 2022)
As
 
part
 
of
 
its process
 
to
 
make
 
non-urgent
 
but
 
necessary
 
amendments
 
to
 
IFRS
Standards,
 
the
 
IASB
 
International
 
Accounting
Standards Board has issued the
Annual Improvements to IFRS Standards 2018–2020.
Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 16) (Effective July 1, 2022)
The IASB has amended IAS
 
16
Property, Plant and Equipment
to provide guidance on
 
the accounting for such
 
sale proceeds and
the related production costs.
Under the amendments, proceeds from
 
selling items before the related
 
item of property,
 
plant and equipment (PPE) is
 
available
for use should
 
be recognised in
 
profit or loss,
 
together with the
 
costs of producing
 
those items. IAS
 
2
Inventories
 
should be applied
in identifying and measuring these production costs.
The amendments apply retrospectively,
 
but only to items of property,
 
plant and equipment made available for use on or after the
beginning of the
 
earliest period presented in
 
the financial statements
 
in which the amendments
 
are adopted.
 
Management has
begun performing evaluation of whether the amendment will have a significant impact on the
 
Group. More detail will be disclosed
in future financial statements.
Definition of Accounting Estimate
 
(Amendments to IAS 8) (Effective July 1, 2023)
The amendments introduce
 
a new definition for
 
accounting estimates: clarifying that
 
they are monetary
 
amounts in the financial
statements that are subject to measurement uncertainty.
The amendments also
 
clarify the relationship between
 
accounting policies and
 
accounting estimates by
 
specifying that a
 
company
develops an accounting estimate to achieve the objective set out by an accounting policy.
 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continued
for the year ended June 30, 2021
F-10
3
 
NEW STANDARDS,
 
AMENDMENTS TO STANDARDS
 
AND INTERPRETATIONS
continued
New standards, amendments to standards and interpretations not yet effective
(continued)
Deferred Tax
 
related to Assets and
 
Liabilities Arising from a single
 
transaction – Amendments to
 
IAS 12
Income Taxes
(Effective July 1, 2023)
IAS
 
12
Income
 
taxes
 
clarifies
 
how
 
companies
 
should
 
account
 
for
 
deferred
 
tax
 
on
 
certain
 
transactions
 
 
e.g.
 
leases
 
and
decommissioning provisions. The amendments
 
narrow the scope of
 
the initial recognition exemption
 
so that it does
 
not apply to
transactions that give rise to equal and offsetting temporary differences. As a result, companies will need to recognize a deferred
tax asset
 
and a
 
deferred tax
 
liability for
 
temporary differences
 
arising on
 
initial recognition
 
of a
 
lease and
 
a decommissioning
provision.
Classification of liabilities as current or non-current (Amendments to IAS 1) (Effective July 1, 2023)
To
promote consistency in application and clarify the requirements on determining if a liability is current or non-current, the IASB
has amended IAS 1 as follows:
 
Right to defer settlement must have substance
Under existing IAS 1 requirements, companies classify a liability as current when they do not have an
unconditional right
 
to defer
settlement of the liability for at least twelve months after the end of the reporting period.
As part of its amendments, the IASB
 
has removed the requirement for a
 
right to be unconditional and instead,
 
now requires that
a right to defer settlement must have substance and exist at the end of the reporting period.
Classification of debt may change
A company
 
classifies a
 
liability as
 
non-current if
 
it has
 
a right
 
to defer
 
settlement for
 
at least
 
twelve months
 
after the
 
reporting
period. The IASB
 
has now clarified that
 
a right to defer
 
exists only if
 
the company complies with
 
conditions specified in
 
the loan
agreement at the end of the reporting period, even if the lender does not test compliance until a later date.
Disclosure of Accounting Policy (Amendments to IAS 1 and IFRS Practice Statement 2) (Effective July 1, 2023)
The
 
Board
 
has
 
recently
 
issued
 
amendments
 
to
 
IAS
 
1
Presentation
 
of
 
Financial
 
Statements
 
and
 
an
 
update
 
to
 
IFRS
 
Practice
Statement 2
Making Materiality Judgements
 
to help companies provide useful accounting policy disclosures.
The key amendments to IAS 1 include:
 
requiring companies to disclose their material accounting policies rather than their significant accounting policies;
 
clarifying that accounting policies related to immaterial
 
transactions, other events or conditions are themselves immaterial and
as such need not be disclosed; and
 
clarifying that not all accounting policies that relate to material transactions, other events or conditions are themselves material
to a company’s financial statements.
The amendments are applied prospectively.
Management has commenced an evaluation
 
of the impact of
 
the amendment will have on
 
the Group. More detail will
 
be disclosed
in future financial statements.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continued
for the year ended June 30, 2021
F-11
4
 
REVENUE
ACCOUNTING POLICIES
Revenue comprises
 
the sale
 
of gold
 
bullion and
 
silver bullion
 
(produced as
 
a by-product).
 
Revenue is
 
measured based
 
on the
consideration specified in a
 
contract with the
 
customer, which is based on the
 
London Bullion Market fixing
 
price on the date
 
when
the Group transfers control over the goods to the customer.
 
The Group recognises revenue at a point in time when Rand Refinery, acting as an agent for the sale of all gold produced by the
Group, delivers the Gold to the buyer and the sales price is fixed, as evidenced by the certificate of sale. It is at this
 
point that the
revenue can
 
be measured
 
reliably and
 
the recovery
 
of the
 
consideration is
 
probable. Rand
 
Refinery is
 
contractually obliged
 
to
make payment to
 
the Group within
 
two business days
 
after the sale
 
of the gold
 
and silver and
 
therefore no significant
 
financing
component exists.
Amounts in R million
2021
2020
2019
Gold revenue
5,263.8
4,179.3
2,758.8
Silver revenue
5.2
5.7
3.3
Total
 
revenue
5,269.0
4,185.0
2,762.1
A disaggregation of revenue by operating segment is presented in note 23 OPERATING SEGMENTS.
MARKET RISK
Commodity price sensitivity
The Group's profitability
 
and the cash
 
flows are significantly affected
 
by changes in
 
the market price of
 
gold which is sold
 
in US
Dollars. The Group
 
did not enter into
 
forward sales of gold
 
production, derivatives or other
 
hedging arrangements to establish
 
a
commodity price in advance for the sale of future gold production during the year.
A change of
20
% in the average US Dollar gold price received during the financial year would
 
have increased/(decreased) equity
and profit/(loss)
 
by the
 
amounts shown
 
below.
 
This analysis
 
assumes that
 
all other
 
variables remain
 
constant and
 
specifically
excludes the impact on income tax.
Amounts in R million
2021
2020
2019
20
% increase in the US Dollar gold price
1,053.8
837.0
552.4
20
% decrease in the US Dollar gold price
(1,053.8)
(837.0)
(552.4)
Exchange rate sensitivity
The Group's profitability and the cash flows
 
are significantly affected by changes in the Rand
 
to the US Dollar exchange rate. The
Group did not enter into forward sales of US Dollars, derivatives or other hedging arrangements to establish an exchange rate in
advance for the sale of US Dollars to be received in the future.
A
 
change
 
of
20
%
 
in
 
the
 
average
 
Rand
 
to
 
US
 
Dollar
 
exchange
 
rate
 
received
 
during
 
the
 
financial
 
year
 
would
 
have
increased/(decreased) equity and profit/(loss)
 
by the amounts shown
 
below. This analysis assumes that
 
all other variables
 
remain
constant and specifically excludes the impact on income tax.
Amounts in R million
2021
2020
2019
20
% increase in the Rand to US Dollar exchange rate
1,053.8
837.0
552.4
20
% decrease in the Rand to US Dollar exchange rate
(1,053.8)
(837.0)
(552.4)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continued
for the year ended June 30, 2021
F-12
5
 
RESULTS FROM
 
OPERATING
 
ACTIVITIES
5.1
 
COST OF SALES
Amounts in R million
Note
2021
2020
2019
Cost of sales
(3,388.2)
(2,937.9)
(2,553.9)
Operating costs (a)
(3,122.5)
(2,692.1)
(2,471.1)
Movement in gold in process and finished inventories - Gold Bullion
(25.6)
3.1
32.6
Depreciation
 
9
(252.5)
(270.8)
(169.1)
Change in estimate of environmental rehabilitation
11
12.4
21.9
60.0
Retrenchment costs (b)
-
-
(6.3)
The most significant components of operating costs include:
Consumable stores
(880.2)
(801.0)
(866.5)
Labour including short term incentives
(598.4)
(573.0)
(476.7)
Electricity
(488.2)
(420.9)
(399.4)
Specialist service providers
(510.7)
(447.5)
(437.1)
Machine hire
(127.4)
(95.2)
(77.7)
Security expenses
(122.8)
(87.8)
(59.9)
Water
(57.1)
(47.0)
(44.1)
Pre-production costs capitalised
-
-
93.7
Voluntary staff retrenchments
-
-
(6.3)
RELATED PARTY
 
TRANSACTIONS
FWGR entered into an agreement with Sibanye-Stillwater effective July 31, 2018 for the pumping and supply of water and
electricity to the FWGR operations for which FWGR is invoiced based on metered usage of water and electricity.
FWGR also entered into a smelting agreement with Sibanye-Stillwater effective July 31, 2018 to smelt and recover gold from gold
loaded carbon produced at FWGR, and deliver the gold to Rand Refinery. As consideration for this service, Sibanye-Stillwater
receives a fee based on the smelting costs plus 10% of the smelting costs.
Rand Refinery performs the final refinement and marketing of all gold and silver produced by the Group. As consideration for this
service, Rand Refinery receives a variable refining fee plus fixed marketing and administration fees.
All transactions and outstanding balances with related parties are to be settled in cash within 30 days of the invoice date. None
of the balances are secured. No expense has been recognised in the current year as a credit loss allowance in respect of amounts
charged to related parties.
Amounts in R million
2021
2020
2019
Services rendered by related parties and included in operating costs:
Supply of water and electricity
 
1
68.1
50.0
16.9
Gold smelting and related charges
 
1
21.1
19.8
12.9
Other charges
 
1
0.7
1.6
-
Charges to Sibanye-Stillwater
 
2
-
(0.2)
(6.5)
Gold refining and related charges
 
3
6.8
4.9
3.6
96.7
76.1
26.9
1
 
Paid to Sibanye-Stillwater by FWGR
2
 
2019 charges relate to material processed on behalf
 
of Sibanye-Stillwater in terms of a toll treatment
 
agreement and recovered the related
costs from Sibanye-Stillwater. 2020 charges relate to miscellaneous
 
items
3
 
Paid to Rand Refinery
5.2
 
OTHER INCOME
ACCOUNTING POLICIES
Other income is
 
recognised where it
 
is probable that
 
the economic benefits
 
associated with a
 
transaction will flow
 
to the Group
and it can be reliably measured.
Other income is generally income earned from transactions outside the course of the Group’s ordinary activities and may include
gains on disposal of property, plant and equipment and gains on financial instruments at fair value through profit or loss
.
Amounts in R million
2021
2020
2019
Gain on disposal of property, plant and equipment
0.1
0.7
5.8
Gain on financial asset at fair value through profit or loss
-
-
2.1
0.1
0.7
7.9
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continued
for the year ended June 30, 2021
F-13
5
 
RESULTS FROM
 
OPERATING
 
ACTIVITIES
continued
5.3
 
ADMINISTRATION
 
EXPENSES AND OTHER COSTS
Amounts in R million
Note
2021
2020
2019
Included in administration expenses and other costs are the following:
Share based payment benefit/(expenses)
28.3
(224.1)
(21.4)
Cash settled Long-Term
 
Incentive ("
CLTI
") scheme
19.1
44.3
(218.1)
(21.4)
Equity settled Long-Term
 
Incentive ("
ELTI
") scheme
19.2
(16.0)
(6.0)
-
6
 
FINANCE INCOME
ACCOUNTING POLICY
Finance income includes interest received, growth in cash and cash equivalents in environmental rehabilitation trust funds, growth
in the reimbursive
 
right for environmental rehabilitation
 
guarantees, dividends received and
 
the unwinding of
 
the Payments made
under protest
Amounts in R million
Note
2021
2020
2019
Interest on financial assets measured at amortised cost
13
108.7
63.1
16.9
Growth in cash and cash equivalents in environmental rehabilitation trust
funds
12
22.5
33.3
30.5
Growth in reimbursive right for environmental rehabilitation guarantees
12
3.7
5.2
7.9
Dividends received
25
76.1
4.3
-
Unwinding of Payments made under protest
24
4.8
3.9
3.0
Other finance income
0.4
-
-
216.2
109.8
58.3
7
 
FINANCE EXPENSE
ACCOUNTING POLICY
Finance expenses
 
comprise interest
 
payable on
 
financial instruments
 
measured at
 
amortised cost
 
calculated using
 
the effective
interest method, unwinding of the provision for environmental rehabilitation, interest on lease liabilities, the discount recognised on
Payments made under protest and foreign exchange losses.
Amounts in R million
Note
2021
2020
2019
Interest on financial liabilities measured at amortised cost
(2.3)
(2.0)
(10.2)
Interest on financial liabilities measured at amortised cost capitalised
-
-
9.4
Unwinding of provision for environmental rehabilitation
11
(44.7)
(52.0)
(66.3)
Discount recognised on Payments made under protest
24
(7.4)
(7.1)
(6.5)
Interest on lease liabilities
10.2
(4.5)
(5.1)
(2.0)
Unrealised foreign exchange loss
(8.4)
-
-
Other finance expenses
(2.2)
(2.6)
(2.8)
(69.5)
(68.8)
(78.4)
8
 
EARNINGS PER SHARE
Amounts in R million
2021
2020
2019
The calculations of basic and diluted earnings per ordinary share
are based on the following:
Profit for the year
1,439.9
635.0
78.5
Reconciliation of weighted average number of ordinary shares to
diluted weighted average number of ordinary shares
Note
2021
2020
2019
Weighted average number of ordinary shares in issue
855,113,791
769,941,874
664,553,283
Effect of Sibanye-Stillwater Option
21.1
-
9,464,684
15,387,695
Effect of equity-settled share-based payment
19.2
5,935,215
4,283,001
-
Diluted weighted average number of ordinary shares
861,049,006
783,689,559
679,940,978
SA cents per share
2021
2020
2019
Basic earnings per share
168.4
82.5
11.8
Diluted earnings per share
167.2
81.0
11.5
 
 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continued
for the year ended June 30, 2021
F-14
9
 
PROPERTY,
 
PLANT AND EQUIPMENT
SIGNIFICANT ACCOUNTING ASSUMPTIONS AND ESTIMATES
Mineral reserves and resources estimates
The Group is required to determine and report
 
mineral reserves and resources in accordance with the
 
South African Code for the
Reporting
 
of
 
Exploration
 
Results,
 
Mineral
 
Resources
 
and
 
Mineral
 
Reserves
 
(SAMREC
 
Code).
 
In
 
order
 
to
 
calculate
 
mineral
reserves and
 
resources, estimates
 
and assumptions
 
are required
 
about a
 
range of
 
geological, technical
 
and economic
 
factors,
including but not
 
limited to quantities,
 
grades, production techniques,
 
recovery rates, production
 
costs, transport costs,
 
commodity
demand, commodity prices and exchange rates. Estimating the quantity
 
and/or grade of mineral reserves and resources
 
requires
the size, shape and
 
depth of reclamation sites
 
to be determined by
 
analysing geological data such
 
as the logging and
 
assaying
of
 
drill
 
samples.
 
This
 
process may
 
require complex
 
and
 
difficult
 
geological
 
judgements
 
and calculations
 
to
 
interpret
 
the data.
Because the assumptions used to estimate
 
mineral reserves and resources change from period
 
to period and because additional
geological
 
data is
 
generated
 
during
 
the course
 
of
 
operations, estimates
 
of mineral
 
reserves and
 
resources may
 
change from
period to
 
period. Mineral reserves
 
and resources estimates
 
prepared by management
 
are reviewed by
 
an independent mineral
resources expert.
Changes
 
in
 
reported
 
mineral
 
reserves
 
and
 
resources
 
may
 
affect
 
the
 
Group’s
 
life-of-mine
 
plan,
 
financial
 
results
 
and
 
financial
position in a number of ways including the following:
• asset carrying values may be affected due to changes in estimated future cash flows;
• depreciation
 
charged to
 
profit or
 
loss may
 
change where
 
such charges
 
are determined
 
by the
 
units-of-production method,
 
or
where the useful lives of assets change;
• decommissioning, site restoration and environmental provisions may change where changes in
 
estimated mineral reserves and
resources affect expectations about the timing or cost of these activities; and
• the carrying value of deferred tax assets and liabilities may change due to changes in estimates of the likely recovery of the tax
benefits and charges.
Depreciation
The calculation of
 
the units-of-production rate
 
of depreciation could
 
be affected if
 
actual production in
 
the future varies
 
significantly
from
 
current
 
forecast
 
production.
 
This
 
would
 
generally
 
arise
 
when
 
there
 
are
 
significant
 
changes
 
in
 
any
 
of
 
the
 
factors
 
or
assumptions used in estimating mineral reserves and resources. These factors could include:
 
• changes in mineral reserves and resources;
• the grade of mineral reserves and resources may vary from time to time;
• differences between actual commodity prices and commodity price assumptions;
• unforeseen operational issues at mine sites including planned extraction efficiencies; and
• changes in capital, operating, mining processing and reclamation costs, discount rates and foreign exchange rates.
ACCOUNTING POLICIES
Recognition and measurement
Property,
 
plant and equipment comprise
 
mine plant facilities and
 
equipment, mine property
 
and development (including mineral
rights) and
 
exploration assets.
 
These assets
 
(excluding exploration
 
assets) are
 
initially measured
 
at cost,
 
whereafter they
 
are
measured at cost
 
less accumulated depreciation
 
and accumulated impairment
 
losses. Exploration assets
 
are initially measured
at cost, whereafter they are measured at cost less accumulated impairment losses.
Cost includes expenditure
 
that is directly attributable
 
to the acquisition
 
or construction of the
 
asset, borrowing costs capitalised,
as well
 
as the
 
costs of
 
dismantling and
 
removing an
 
asset and
 
restoring the
 
site on
 
which it
 
is located.
 
Subsequent costs
 
are
included in
 
the asset’s
 
carrying amount
 
or recognised
 
as a
 
separate asset,
 
as appropriate,
 
only when
 
it is
 
probable that
 
future
economic benefits associated with the item
 
will flow to the Group and
 
the cost of the item can be
 
measured reliably.
 
Exploration
and evaluation
 
costs are capitalised
 
as exploration assets
 
on a project-by-project
 
basis, pending
 
determination of the
 
technical
feasibility and commercial viability of the project.
Exploration
 
assets
 
consists
 
of
 
costs
 
of
 
acquiring
 
rights,
 
activities
 
associated
 
with
 
converting
 
a
 
mineral
 
resource
 
to
 
a
 
mineral
reserve - the
 
process thereof includes
 
drilling, sampling and other
 
processes necessary to evaluate
 
the technical feasibility
 
and
commercial viability of a mineral
 
resource to prove whether a
 
mineral reserve exists. Exploration assets
 
also include geological,
geochemical and geophysical studies associated with prospective projects and tangible assets which comprise of property, plant
and equipment used
 
for exploratory activities. Costs
 
are capitalised to
 
the extent that
 
they are a directly
 
attributable exploration
expenditure and classified
 
as a separate class
 
of assets on a
 
project by project basis.
 
Once a mineral
 
reserve is determined or
the
 
project
 
ready
 
for
 
development,
 
the
 
asset
 
attributable
 
to
 
the
 
mineral
 
reserve
 
or
 
project
 
is
 
tested
 
for
 
impairment
 
and
 
then
reclassified to the appropriate class of assets. Depreciation commences when the assets are available for use.
Depreciation
Depreciation of
 
mine plant
 
facilities and
 
equipment, as
 
well as
 
mining property
 
and development
 
(including mineral
 
rights) are
calculated using the units of production method which
 
is based on the life-of-mine of each site.
 
The life-of-mine is primarily based
on
 
proved
 
and
 
probable
 
mineral
 
reserves.
 
It
 
reflects
 
the
 
estimated
 
quantities
 
of
 
economically
 
recoverable
 
gold
 
that
 
can
 
be
recovered from
 
reclamation sites
 
based on
 
the estimated
 
gold price.
 
Changes in
 
the life-of-mine
 
will impact
 
depreciation on
 
a
prospective
 
basis.
 
The
 
life-of-mine
 
is
 
prepared
 
using
 
a
 
methodology
 
that
 
takes
 
account
 
of
 
current
 
information
 
to
 
assess
 
the
economically recoverable gold from specific reclamation sites and includes the consideration of historical experience.
The
 
depreciation
 
method,
 
estimated
 
useful
 
lives
 
and
 
residual
 
values
 
are
 
reassessed
 
annually
 
and
 
adjusted
 
if
 
appropriate.
Changes to the useful lives may affect prospective depreciation rates. The current estimated
 
useful lives are based on the life-of-
mine of each
 
site, currently between
three
 
(2020:
four
; 2019:
three
) and 13
 
years(2020:
13
; 2019:
11
) years for
 
Ergo mining assets
and between
three
 
(2020:
four
; 2019:
five
) and 18 years (2020:
20
; 2019:
15
) years for FWGR mining assets.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continued
for the year ended June 30, 2021
F-15
ACCOUNTING POLICIES continued
Impairment
The carrying
 
amounts of
 
property,
 
plant and
 
equipment are
 
reviewed at
 
each reporting
 
date to
 
determine whether
 
there is
 
any
indication
 
of
 
impairment,
 
or
 
whenever
 
events
 
or
 
changes
 
in
 
circumstances
 
indicate
 
that
 
the
 
carrying
 
amount
 
may
 
not
 
be
recoverable. If any
 
such indication exists,
 
the asset’s recoverable
 
amount is estimated.
 
For the
 
purposes of assessing
 
impairment,
assets are grouped at the
 
lowest levels for which there
 
are separately identifiable cash flows
 
(CGUs). The key assets of
 
a surface
retreatment operation which constitutes a
 
CGU are a reclamation site, a
 
metallurgical plant and a tailings
 
storage facility.
 
These
key
 
assets
 
operate
 
interdependently
 
to
 
produce
 
gold.
 
The
 
Ergo
 
and
 
FWGR
 
operations
 
each
 
have
 
separately
 
managed
 
and
monitored reclamation sites, metallurgical plants and tailings storage facilities and are therefore separate CGUs.
The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. The recoverable
amount was
 
determined by
 
estimating the
 
value in
 
use. The
 
estimated future
 
cash flows
 
are discounted
 
to their
 
present value
using a
 
pre-tax discount
 
rate that
 
reflects current
 
market assessments
 
of the
 
time value
 
of money
 
and the
 
risks specific
 
to the
asset. An impairment
 
loss is recognised
 
in profit or
 
loss if the
 
carrying amount of
 
an asset or
 
CGU exceeds its
 
recoverable amount.
Amounts in R million
Note
Mine plant
facilities and
equipment
Mine
property and
development
Exploration
assets
Total
June 30, 2021
Cost
2,604.3
2,154.0
110.5
4,868.8
Balance at the beginning of the year
2,203.5
2,147.0
266.3
4,616.8
Additions - property, plant and equipment owned
237.7
113.3
44.7
395.7
Additions - right-of-use assets
10.1
16.7
-
-
16.7
Lease modifications
10.1
-
2.3
-
2.3
Lease derecognitions
10.1
(1.0)
-
-
(1.0)
Disposals and scrapping
(54.7)
(133.4)
-
(188.1)
Change in estimate of decommissioning asset
11
14.9
14.2
(2.7)
26.4
Transfers between classes of property,
 
plant and
 
equipment
187.2
10.6
(197.8)
-
Accumulated depreciation and impairment
(1,074.0)
(975.4)
(9.7)
(2,059.1)
Balance at the beginning of the year
(1,017.5)
(968.5)
(9.7)
(1,995.7)
Depreciation
5.1
(112.2)
(140.3)
-
(252.5)
Lease derecognitions
1.0
-
-
1.0
Disposals and scrapping
54.7
133.4
-
188.1
Carrying value at end of the year
1,530.3
1,178.6
100.8
2,809.7
Comprising:
Property, plant and equipment owned
1,509.7
1,150.1
100.8
2,760.6
Right-of-use assets
10.1
20.6
28.5
-
49.1
Carrying value at end of the year
1,530.3
1,178.6
100.8
2,809.7
June 30, 2020
Cost
2,203.5
2,147.0
266.3
4,616.8
Balance at the beginning of the year
2,156.2
2,106.8
256.7
4,519.7
Impact of adopting IFRS 16 on July 1, 2019
7.5
23.4
-
30.9
Additions - property, plant and equipment owned
121.2
46.5
15.0
182.7
Additions - right-of-use assets
3.8
14.2
-
18.0
Lease modifications
-
7.5
-
7.5
Lease derecognitions
(26.7)
(0.1)
-
(26.8)
Disposals and scrapping
(1.6)
-
-
(1.6)
Change in estimate of decommissioning asset
11
(56.7)
(51.5)
(5.4)
(113.6)
Transfers between classes of property,
 
plant and
 
equipment
(0.2)
0.2
-
-
Accumulated depreciation and impairment
(1,017.5)
(968.5)
(9.7)
(1,995.7)
Balance at the beginning of the year
(909.9)
(824.8)
(9.7)
(1,744.4)
Depreciation
5.1
(127.1)
(143.7)
-
(270.8)
Lease derecognitions
17.9
-
-
17.9
Disposals and scrapping
1.6
-
-
1.6
Carrying value at end of the year
1,186.0
1,178.5
256.6
2,621.1
Comprising:
Property, plant and equipment owned
1,177.8
1,141.8
256.6
2,576.2
Right-of-use assets
10.1
8.2
36.7
-
44.9
Carrying value at end of the year
1,186.0
1,178.5
256.6
2,621.1
 
 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continued
for the year ended June 30, 2021
F-16
9
 
PROPERTY,
 
PLANT AND EQUIPMENT
continued
CONTRACTUAL COMMITMENTS
Contractual commitments not
 
provided for in
 
the consolidated financial
 
statements at June
 
30, 2021 amounted
 
to R
65.5
 
million
(2020: R
130.6
 
million).
Capital expenditure related to
 
material growth projects are
 
financed on a project-by-project
 
basis which may include
 
bank facilities
and existing cash
 
resources. Sustaining capital
 
expenditure is financed
 
from cash generated
 
from operations and
 
existing cash
resources.
10
 
RIGHT OF USE ASSETS AND LEASES
ACCOUNTING JUDGEMENTS
At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or contains a lease if the
contract conveys the right to control the use of an identified asset for a
 
period of time in exchange for consideration. The contract
must
 
also
 
be
 
enforceable.
To
assess
 
whether
 
a
 
contract
 
conveys
 
the
 
right
 
to
 
control
 
the
 
use
 
of
 
an
 
identified
 
asset,
 
requires
judgement particularly on contracts with service contractors, which may contain embedded leases.
The Group assesses whether:
 
the contract involves the use of an identified asset;
 
the Group has the right to obtain substantially
 
all the economic benefits from use of the asset
 
throughout the period of use; and
 
the Group has the right to direct the use of the asset.
At
 
inception
 
or on
 
reassessment
 
of a
 
contract
 
that contains
 
a
 
lease component,
 
the
 
Group allocates
 
the consideration
 
in
 
the
contract to each lease component on the
 
basis of their relevant stand-alone prices. However,
 
for the lease of land and buildings
in which
 
it is
 
a lessee,
 
the Group
 
has elected
 
not to
 
separate non-lease
 
components and
 
account for
 
the lease
 
and non-lease
component as a single lease component.
Some property leases contain
 
options to renew under
 
the contract. Judgement is
 
applied in whether the
 
renewable option periods
must be included in the lease term i.e. it is reasonably certain that the options to renew will be exercised. In applying judgement,
the
 
Group
 
also
 
considers
 
whether
 
the
 
lease
 
term
 
is
 
commensurate
 
with
 
estimated
 
future
 
mine
 
plans
 
requirements
 
and
environmental rehabilitation obligations associated with the property post reclamation.
ACCOUNTING POLICIES
Right of use asset
The right of use asset is initially measured at cost, which comprises the initial amount of the lease liability and is adjusted by any
lease payments
 
made at
 
or before
 
the commencement
 
date, plus
 
any initial
 
direct costs
 
incurred
 
and an
 
estimate of
 
costs to
dismantle and
 
remove the
 
underlying asset
 
or to
 
restore the
 
underlying asset
 
or the
 
site on
 
which it
 
is located,
 
less any
 
lease
incentives received. The Group recognises a right of use asset and lease liability at the lease commencement date.
 
The right of
 
use asset is
 
subsequently depreciated using
 
the straightline method
 
from the commencement
 
date to the
 
earlier of
the end of the useful life of the right of use asset or the end of
 
the lease term. The right of use asset carrying value is allocated to
the CGU it belongs to
 
and the CGU is reviewed at
 
each reporting date to determine
 
whether there is any indication
 
of impairment.
The carrying value is reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.
 
Lease liability
The lease liability
 
is initially measured
 
at the present
 
value of the
 
outstanding lease payments
 
at commencement date
 
over the
lease
 
term,
 
discounted
 
using
 
the
 
interest
 
rate
 
implicit
 
in
 
the
 
lease
 
or
 
if
 
that
 
rate
 
is
 
undeterminable,
 
the
 
Group’s
 
incremental
borrowing rate. The lease term includes the non-cancellable period
 
for which the lessee has the right to use an underlying
 
asset
including optional periods when the Group is reasonably certain to exercise an option to extend a lease.
 
Lease payments comprise fixed payments, variable lease payments that depend on an index or rate, initially
 
measured using the
index
 
or rate as at the commencement date, and the exercise price under a purchase option
 
that the Group is reasonably certain
to exercise.
The lease liability is measured using the effective interest rate method. The Group re-measures the lease liability when the lease
contract is modified and
 
this does not give
 
rise to modification accounting,
 
when the lease term
 
has been changed or
 
when the
lease payments have
 
changed as a
 
result of a change
 
in an index
 
or rate or a
 
change in the
 
assessment of a purchase
 
option.
Upon remeasurement, a corresponding adjustment is
 
made to the carrying
 
amount of the right of
 
use asset or is recorded
 
in profit
or loss if the carrying amount of the right of use asset has been reduced to zero.
 
Right of use assets
 
are presented in “property, plant and
 
equipment” and lease liabilities
 
are separately disclosed
 
in the statement
of financial position.
 
Short term leases and leases of low value assets
The Group has elected not to recognise right
 
of use assets and lease liabilities for short-term
 
leases of machinery and equipment
that have a lease term of 12 months
 
or less and leases of low value assets
 
which include IT equipment, security equipment and
administration equipment.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continued
for the year ended June 30, 2021
F-17
10.1
 
RIGHT OF USE ASSETS
Included in property, plant and equipment are the following leased assets:
Amounts in R million
Note
Mine plant
facilities and
equipment
Mine property
and
development
Total
June 30, 2021
Cost
26.8
47.3
74.1
Opening balance
11.1
45.0
56.1
Additions
16.7
-
16.7
Lease modifications
-
2.3
2.3
Lease derecognitions
(1.0)
-
(1.0)
Accumulated depreciation
(6.2)
(18.8)
(25.0)
Opening balance
(2.9)
(8.3)
(11.2)
Depreciation
(4.3)
(10.5)
(14.8)
Lease derecognitions
1.0
-
1.0
Carrying value
20.6
28.5
49.1
June 30, 2020
Cost
11.1
45.0
56.1
Impact of adopting IFRS 16 on July 1, 2019
Right-of-use assets recognised on July 1, 2019
7.5
23.4
30.9
Transfers and other movements
 
1
26.5
-
26.5
Additions
3.8
14.2
18.0
Lease modifications
-
7.5
7.5
Lease derecognitions
(26.7)
(0.1)
(26.8)
Accumulated depreciation
(2.9)
(8.3)
(11.2)
Impact of adopting IFRS 16 on July 1, 2019
Transfers and other movements
 
1
(15.9)
-
(15.9)
Depreciation
5.1
(4.9)
(8.3)
(13.2)
Lease derecognitions
17.9
-
17.9
Carrying value
8.2
36.7
44.9
1
 
Relates to contracts previously classified as leases
 
under IAS 17 and presented as property, plant and equipment which
 
the Group has
reassessed as right-of-use assets upon adoption
 
of IFRS 16 as of July 1, 2019
10.2
 
LEASE LIABILITIES
Amounts in R million
Note
2021
2020
Reconciliation of the lease liabilities balance:
Balance at the beginning of the year
47.1
11.0
Impact of adopting IFRS 16 on July 1, 2019
9
-
30.9
New leases
9
16.7
18.0
Lease modifications
2.3
7.5
Leases derecognised
-
(8.9)
Interest charge on lease liabilities
7
4.5
5.1
Repayment of lease liabilities
(11.6)
(11.4)
Interest repaid
(4.2)
(5.1)
Balance at the end of the year
54.8
47.1
Current portion of lease liabilities
(16.9)
(10.1)
Non-current lease liabilities
37.9
37.0
Maturity analysis of undiscounted contractual cash flows:
Less than a year
(20.5)
(13.0)
One to five years
(42.0)
(37.0)
More than 5 years
(1.3)
(9.0)
Total
 
undiscounted lease liabilities at the end of the year
(63.8)
(59.0)
Lease payments not recognised as a liability but expensed during the year:
Short-term leases
(1.4)
(2.4)
Leases of low value assets
 
(7.7)
(5.0)
Cash flows included in cash generated from operating activities
(9.1)
(7.4)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continued
for the year ended June 30, 2021
F-18
11
 
PROVISION FOR ENVIRONMENTAL
 
REHABILITATION
SIGNIFICANT ACCOUNTING ASSUMPTIONS AND ESTIMATES
Estimates of future environmental
 
rehabilitation costs are determined
 
with the assistance of
 
an independent expert and
 
are based
on the
 
Group’s environmental
 
management plans
 
which are developed
 
in accordance
 
with regulatory
 
requirements, the
 
life-of-
mine plan
 
(as discussed
 
in note 9)
 
which influences
 
the estimated
 
timing of
 
environmental rehabilitation cash
 
outflows and
 
the
planned method of rehabilitation which in turn is influenced by developments in trends and technology.
An average discount rate ranging between
8.9
% and
9.0
% (2020: between
8.1
% and
9.5
%), average inflation rate of
5.2
% (2020:
5.1
%) and the discount
 
periods as per the
 
expected life-of-mine were used in
 
the calculation of the
 
estimated net present value
of the rehabilitation liability.
ACCOUNTING POLICIES
The net present value of the
 
estimated rehabilitation cost as at reporting
 
date is provided for in
 
full. These estimates are reviewed
annually and are
 
discounted using a
 
pre-tax risk-free rate
 
that is adjusted to
 
reflect the current
 
market assessments of
 
the time
value of money and the risks specific to the obligation.
Annual changes
 
in the
 
provision consist
 
of financing
 
expenses relating
 
to the
 
change in
 
the present
 
value of
 
the provision
 
and
inflationary increases in the provision, as well as changes in estimates.
The present value
 
of dismantling and
 
removing the asset
 
created (decommissioning liabilities)
 
are capitalised to
 
property,
 
plant
and equipment against an increase in the rehabilitation provision. If a decrease in the liability exceeds the carrying
 
amount of the
asset, the excess is recognised in profit or loss. If the asset value is increased and there is
 
an indication that the revised carrying
value is not
 
recoverable, an impairment
 
test is performed
 
in accordance
 
with the accounting
 
policy dealing with
 
impairments of
property,
 
plant
 
and
 
equipment.
 
Over
 
time,
 
the
 
liability
 
is
 
increased
 
to
 
reflect
 
an
 
interest
 
element,
 
and
 
the
 
capitalised
 
cost
 
is
depreciated over the life of the related asset. Cash costs incurred to
 
rehabilitate these disturbances are charged to the provision
and are presented as investing activities in the statement of cash flows.
The present value
 
of environmental rehabilitation
 
costs relating to
 
the production of
 
inventories and sites
 
without related assets
(restoration liabilities) as
 
well as changes
 
therein are expensed
 
as incurred and
 
presented as operating
 
costs. Cash costs
 
incurred
to
 
rehabilitate
 
these
 
disturbances
 
are
 
presented
 
as
 
operating
 
activities
 
in
 
the
 
statement
 
of
 
cash
 
flows.
 
The
 
cost
 
of
 
ongoing
rehabilitation is recognised in profit or loss as incurred.
Amounts in R million
Note
2021
2020
Opening balance
 
568.9
682.6
Unwinding of provision
7
44.7
52.0
Change in estimate of environmental rehabilitation recognised in profit or loss (a)
5.1
(12.4)
(21.9)
Change in estimate of environmental rehabilitation recognised to decommissioning asset (b)
9
26.4
(113.6)
Environmental rehabilitation payments (c)
(56.8)
(30.2)
To
 
reduce decommissioning liabilities
(51.0)
(22.1)
To
 
reduce restoration liabilities
14
(5.8)
(8.1)
Closing balance
570.8
568.9
Environmental rehabilitation payments to reduce the liability
(56.8)
(30.2)
Ongoing rehabilitation expenditure
 
1
23
(48.3)
(24.3)
Total
 
cash spent on environmental rehabilitation
(105.1)
(54.5)
1
 
The Group also performs ongoing environmental rehabilitation
 
arising from its current activities concurrently with production.
 
These costs do
not represent a reduction of the above liability and
 
are expensed as operating costs
(a)
Change in estimate of environmental rehabilitation recognised in profit or loss
This is as a result of changes in the estimated timing of the vegetation of reclamation sites.
(b) Change in estimate of environmental rehabilitation recognised to decommissioning asset
Increase is as a
 
result of an
 
increase in contractor rates
 
for the establishment of
 
vegetation based on
 
ongoing test work
 
performed
as well as inflationary increases on other contractor rates.
(c) Environmental rehabilitation payments
69ha of the Brakpan/Withok TSF,
 
20ha of the Daggafontein TSF,
 
6ha of the Crown Complex TSF,
 
and 19ha of the Driefontein 4
TSF was vegetated during the year. 1ha of the Dam 5
 
tailings dam was concurrently vegetated.
GROSS COST TO REHABILITATE
The Group estimates that, based
 
on current environmental and regulatory
 
requirements, the total undiscounted rehabilitation
 
cost
is approximately R
742.2
 
million (2020: R
752.5
 
million).
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continued
for the year ended June 30, 2021
F-19
12
 
INVESTMENTS IN REHABILITATION
 
OBLIGATION
 
FUNDS
ACCOUNTING POLICIES
Cash and cash equivalents in environmental rehabilitation trusts
Cash
 
and
 
cash
 
equivalents
 
included
 
in
 
environmental
 
rehabilitation
 
trusts
 
comprise
 
low-risk,
 
interest-bearing
 
cash
 
and
 
cash
equivalents and are non-derivative financial assets categorised as financial assets measured at amortised cost.
Cash and cash
 
equivalents are initially
 
measured at fair
 
value. Subsequent to
 
initial recognition, cash
 
and cash equivalents
 
are
measured at amortised cost, which is equivalent to their fair value.
The
 
cash
 
and
 
cash
 
equivalents
 
in
 
environmental
 
rehabilitation
 
trusts
 
are
 
for
 
the
 
sole
 
use
 
of
 
material
 
future
 
environmental
rehabilitation payments and are therefore included in non-current assets.
Reimbursive right for environmental rehabilitation guarantees
Funds held in the cell captive that secure the environmental rehabilitation guarantees issued are recognised as a right to receive
a reimbursement and are
 
measured at the
 
lower of the
 
amount of the
 
consolidated environmental rehabilitation liability
 
recognised
and the consolidated fair value of the fund assets.
Changes in the carrying value
 
of the fund assets, other
 
than those resulting from contributions and
 
payments, are recognised in
finance income.
The funds held in the
 
cell captive are for the
 
sole use of material future environmental
 
rehabilitation payments and are
 
therefore
included in non-current assets
Funding of environmental rehabilitation activities
(refer note 11)
Environmental
 
rehabilitation
 
payments
 
to
 
reduce
 
the
 
environmental
 
rehabilitation
 
obligations
 
and
 
ongoing
 
rehabilitation
expenditure are mostly funded by cash generated from operations.
 
Guardrisk Insurance Company Limited ("
Guardrisk
") has guarantees in issue amounting
 
to R
430.1
 
million (2020: R
427.3
 
million)
to the Department of Mineral Resources and Energy ("
DMRE
") on behalf of DRDGOLD related to the environmental
 
obligations.
The funds in the cell captive serve as collateral for these guarantees.
Amounts in R million
Note
2021
2020
Cash and cash equivalents in environmental rehabilitation trust funds
564.7
542.2
 
Opening balance
542.2
508.9
 
Growth
6
22.5
33.3
Reimbursive right for environmental rehabilitation guarantees
87.5
83.8
 
Opening balance
83.8
78.6
 
Growth
6
3.7
5.2
652.2
626.0
CREDIT RISK
The Group
 
is exposed
 
to credit
 
risk on
 
the total
 
carrying value
 
of the
 
investments held
 
in the
 
environmental rehabilitation
 
trust
funds.
The Group manages its exposure
 
to credit risk by diversifying these
 
investments across a number of major
 
financial institutions,
as well as investing funds in low-risk, interest-bearing cash and cash equivalents.
MARKET RISK
Interest rate risk
A change of 100 basis points (bp) in interest rates at the reporting date would have increased/(decreased) equity and profit/(loss)
by the amounts shown below. This analysis assumes that all other variables, in particular the balance of the funds, remain
constant. The analysis excludes income tax.
Amounts in R million
2021
2020
100
bp increase
5.6
5.4
100bp (decrease)
(5.6)
(5.4)
FAIR VALUE
 
OF FINANCIAL INSTRUMENTS
The fair
 
value of
 
the cash
 
and cash
 
equivalents in
 
the environmental
 
rehabilitation trust
 
funds approximate
 
their carrying
 
value
due to their short-term maturities.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continued
for the year ended June 30, 2021
F-20
13
 
CASH AND CASH EQUIVALENTS
ACCOUNTING POLICIES
Cash and cash equivalents are short-term, highly liquid investments that are readily convertible to cash without significant risk of
changes in
 
value and
 
comprise cash
 
on hand,
 
demand deposits,
 
and highly
 
liquid investments which
 
are readily
 
convertible to
known amounts of cash.
Cash and cash equivalents are non-derivative financial assets categorised as financial assets measured at amortised
 
cost. Cash
and
 
cash
 
equivalents
 
are
 
initially
 
measured
 
at
 
fair
 
value.
 
Subsequent
 
to
 
initial
 
recognition,
 
cash
 
and
 
cash
 
equivalents
 
are
measured at amortised cost, which is equivalent to their fair value.
Amounts in R million
Note
2021
2020
Cash on hand
100.5
63.5
Access deposits and income funds
 
1
2,069.2
1,632.3
Restricted cash
 
2
10.3
19.3
2,180.0
1,715.1
Interest earned on cash and cash equivalents
6
108.7
63.1
1
These consist of access deposit notes and conservatively
 
managed income funds that are diversified
 
across the major financial institutions in
South Africa.
At reporting date all of these instruments had
 
same day or next day liquidity and effective
 
annualised yields of between
4
% and
5.6
%
2
This consists of cash held on call as collateral for guarantees
 
issued by the Standard Bank of South
 
Africa Limited on behalf of the Group for
environmental rehabilitation amounting to R
5.2
 
million and various utilities amounting to R
5.1
 
million.
CREDIT RISK
The Group is exposed to credit risk
 
on the total carrying value of its
 
cash and cash equivalents. The Group manages
 
its exposure
to credit risk
 
by investing cash
 
and cash equivalents
 
across several major
 
financial institutions, considering
 
the credit ratings
 
of
the respective financial institutions, funds and underlying instruments.
Impairment
 
on
 
cash
 
and
 
cash
 
equivalents,
 
if
 
any,
 
are
 
measured
 
on
 
a
 
12-month
 
expected
 
loss
 
basis
 
and
 
reflects
 
the
 
short
maturities of the
 
exposures. The Group considers
 
that its cash
 
and cash equivalents
 
have low credit
 
risk based on
 
the external
credit ratings of the counterparties.
MARKET RISK
Interest rate risk
A change of
100
 
basis points (bp) in the interest rates would have
 
increased/(decreased) equity and profit/(loss) by the amounts
shown below. This analysis is performed on the average balance of cash and cash equivalents for the year and assumes that
 
all
other variables remain constant. The analysis excludes income tax
.
Amounts in R million
2021
2020
100
bp increase
19.5
10.0
100bp (decrease)
(19.5)
(10.0)
Foreign
 
denominated cash
 
is held
 
in a
 
foreign currency
 
bank
 
account accruing
 
negligible interest
 
and is
 
usually converted
 
to
South African Rand on the day of receipt. Foreign cash is therefore not exposed to significant interest rate risk.
Foreign currency risk
US
 
Dollars
 
received
 
on
 
settlement
 
of
 
the
 
trade
 
receivables
 
are
 
exposed
 
to
 
fluctuations
 
in
 
the
 
US
 
Dollar/South
 
African
 
Rand
exchange rate until it is converted to South African Rands.
US Dollars not converted to South African Rands at reporting date are as follows
:
Figures in USD million
2021
2020
Foreign denominated cash at 30 June
3.4
-
A
10
% strengthening of the Rand against the US Dollar at 30 June would have increased/(decreased) equity and profit/(loss) by
Amounts in R million
2021
2020
Strengthening of the Rand against the US Dollar
(4.9)
-
Weakening of the Rand against the US Dollar
4.9
-
FAIR VALUE
 
OF FINANCIAL INSTRUMENTS
The fair value of cash and cash equivalents approximates their carrying value due to their short-term maturities.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continued
for the year ended June 30, 2021
F-21
14
 
CASH GENERATED
 
FROM OPERATIONS
Amounts in R million
Note
2021
2020
2019
Profit for the year
1,439.9
635.0
78.5
Adjusted for
Income tax
18.1
523.7
343.9
26.6
Depreciation
 
9
252.5
270.8
169.1
Movement in gold in process and finished inventories - Gold Bullion
5.1
25.6
(3.1)
(32.6)
Change in estimate of environmental rehabilitation
11
(12.4)
(21.9)
(60.0)
Environmental rehabilitation payments
11
(5.8)
(8.1)
(10.9)
Share-based payment (benefit)/expense
5.3
(28.3)
224.1
21.4
Gain on disposal of property, plant and equipment
5.2
(0.1)
(0.7)
(5.8)
Finance income
6
(216.2)
(109.8)
(58.3)
Finance expense
7
69.5
68.8
78.4
Other non-cash items
(2.5)
2.6
1.8
Operating cash flows before other changes
2,045.9
1,401.6
208.2
Changes in
(194.9)
(92.0)
73.8
Trade and other receivables
6.9
(79.0)
22.5
Consumable stores and stockpiles
(44.7)
(26.4)
(24.8)
Payments made under protest
24
(8.1)
(10.6)
(11.7)
Trade and other payables and employee benefits
(149.0)
 
1
24.0
 
1
87.8
 
1
Cash generated from operations
1,851.0
1,309.6
282.0
 
1
Includes settlement of cash-settled long-term incentives
 
of R
183.3
 
million (2020: R
41.5
 
million, 2019: R
15.5
 
million)
15
 
TRADE AND OTHER RECEIVABLES
ACCOUNTING POLICIES
Recognition and measurement
Trade
 
and other
 
receivables, excluding
 
Value
 
Added Tax
 
and prepayments,
 
are non-derivative
 
financial assets
 
categorised as
financial assets at amortised cost.
These assets are initially measured at fair value plus directly attributable transaction costs. Subsequent to initial recognition, they
are measured at
 
amortised cost using
 
the effective interest
 
method less any
 
expected credit losses
 
using the Group’s
 
business
model for managing its financial assets.
 
The Group derecognises
 
a financial asset
 
when the contractual
 
rights to the cash
 
flows from the
 
asset expire, or it
 
transfers the
rights to receive the contractual cash
 
flows in a transaction in which substantially
 
all of the risks and rewards of
 
ownership of the
financial asset are transferred,
 
or it neither transfers
 
nor retains substantially all
 
of the risks and
 
rewards of ownership and
 
does
not retain control over the
 
transferred asset. Any interest in
 
such derecognised financial assets that
 
is created or retained by
 
the
Group is recognised as a separate asset or liability.
Impairment
The Group recognises loss
 
allowances for trade and
 
other receivables at an
 
amount equal to expected
 
credit losses (“ECLs”). The
Group uses the simplified ECL approach. When determining whether the credit risk of a financial asset has increased since initial
recognition and when estimating
 
ECLs, the Group
 
considers reasonable and supportable
 
information that is
 
relevant and available
without undue
 
cost or
 
effort. This
 
includes both
 
quantitative and
 
qualitative information
 
and analysis,
 
based on
 
informed credit
assessments and including forward-looking information. The maximum period considered when estimating ECLs is the maximum
contractual period over which the Group is exposed to credit risk.
 
ECLs are a probability
 
weighted estimate of credit
 
losses. Credit losses are
 
measured as the present
 
value of all cash
 
shortfalls
(i.e. the
 
difference between
 
the cash
 
flows due
 
to the
 
entity in
 
accordance with
 
the contract
 
and the
 
cash flows
 
that the
 
Group
expects to receive). The Group assesses whether the financial asset is credit impaired at each reporting
 
date. A financial asset is
credit impaired when one or more events that have a detrimental
 
impact on the estimated future cash flows of the financial asset
have occurred, including but not limited to financial difficulty or default of payment. The Group will write off a financial asset when
there is no
 
reasonable expectation of
 
recovering it
 
after considering whether
 
all means to
 
recovery the asset
 
have been exhausted,
or the counterparty has been liquidated and the Group has assessed that no recovery is possible.
Any impairment losses are recognised in the statement of profit or loss.
Trade
 
receivables relate
 
to gold
 
sold on
 
the bullion
 
market by
 
Rand Refinery
 
in its
 
capacity as
 
an agent.
 
Settlement is
 
usually
received two working days from gold sold date.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continued
for the year ended June 30, 2021
F-22
15
 
TRADE AND OTHER RECEIVABLES
 
continued
Amounts in R million
2021
2020
Trade receivables
56.5
23.1
Value Added Tax
50.2
83.5
Other receivables
 
1
21.2
17.3
Prepayments
17.4
25.1
Allowance for impairment
(1.2)
(2.6)
144.1
146.4
1
 
Other receivables consist of a number of individually
 
insignificant amounts receivable
CREDIT RISK
The Group
 
is exposed
 
to credit
 
risk on
 
the total
 
carrying value
 
of its
 
trade receivables
 
and other
 
receivables excluding
 
Value
Added Tax
 
and prepayments.
The Group manages its exposure to
 
credit risk on trade receivables by maintaining a
 
short term cycle to settlement of
2
 
working
days. The Group manages its
 
exposure to credit risk on other
 
receivables by establishing a maximum payment
 
period of
30
 
days,
and
 
ensuring
 
that
 
counterparties
 
are
 
of
 
good
 
credit
 
standing
 
and
 
transacting
 
on
 
a
 
secured
 
or
 
cash
 
basis
 
where
 
considered
necessary. The majority of
 
other receivables comprises
 
of balances with
 
counterparties who have
 
been transacting with
 
the Group
for
 
over
 
5
 
years
 
and
 
in
 
some
 
of
 
these
 
cases,
 
the
 
counterparties
 
are
 
also
 
suppliers
 
of
 
the
 
Group.
 
Receivables
 
are
 
regularly
monitored and assessed for recoverability.
The balances of counterparties who have been assessed as being credit impaired at reporting date are as follows:
2021
2020
Amounts in R million
Non-credit
impaired
Credit
impaired
Non-credit
impaired
Credit
impaired
Trade receivables
56.5
-
23.1
-
Other receivables
20.0
1.2
14.7
2.6
76.5
1.2
37.8
2.6
Loss allowance
-
(1.2)
-
(2.6)
Movement in the allowance for impairment in respect of trade and other receivables during the year was as follows:
Amounts in R million
2021
2020
Balance at the beginning of the year
(2.6)
(4.9)
Credit loss allowance/impairments recognised included in operating costs
(0.2)
(0.2)
Credit loss allowance/impairments reversed included in operating costs
1.3
0.4
Credit loss allowance written off against related receivable
0.3
2.1
Balance at the end of the year
(1.2)
(2.6)
MARKET RISK
Interest rate risk
Trade and other receivables do not earn interest and are therefore not subject to interest rate risk.
Foreign currency risk
Gold is
 
sold at
 
spot rates
 
and is
 
denominated in
 
US Dollars.
 
Gold sales
 
are therefore
 
exposed to
 
fluctuations in
 
the US
 
Dollar/South
African Rand exchange rate. All foreign currency transactions are entered into during the year ended June 30, 2021 were
 
at spot
rates and no hedges are entered into. Rand Refinery, acting as an agent for the Group, sells the USD to be received from bullion
sales on
 
the same
 
date as the
 
respective bullion
 
sale since
 
November 2020.
 
As a
 
result, trade receivables
 
are not
 
exposed to
fluctuations in the US Dollar/South African Rand exchange rate from this date.
Figures in USD million
2021
2020
Foreign denomination of trade receivables at June 30
-
1.3
A
20
% strengthening of the Rand against the US Dollar at 30 June would have increased/(decreased) equity and profit/(loss) by
the amounts shown below. This analysis assumes that all other variables remain constant.
Amounts in R million
2021
2020
Strengthening of the Rand against the US Dollar
-
(2.3)
Weakening of the Rand against the US Dollar
-
2.3
FAIR VALUE
 
OF FINANCIAL INSTRUMENTS
The fair value of trade and other receivables approximate their carrying value due to their short-term maturities.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continued
for the year ended June 30, 2021
F-23
16
 
TRADE AND OTHER PAYABLES
ACCOUNTING POLICIES
Trade and other payables, excluding Value Added Tax,
 
payroll accruals, accrued leave pay and provision for performance
 
based
incentives, are non-derivative financial liabilities categorised as financial liabilities measured at amortised cost.
These liabilities
 
are initially
 
measured at
 
fair value
 
plus directly
 
attributable transaction
 
costs. Subsequent
 
to initial
 
recognition,
they are
 
measured at
 
amortised cost
 
using the
 
effective interest
 
method. The
 
Group derecognises
 
a financial
 
liability when
 
its
contractual rights are discharged, or cancelled or expire.
Short-term employee benefits are
 
expensed as the related
 
service is provided. A
 
liability is recognised for
 
the amount expected
to be paid if the Group has
 
a present legal or constructive obligation to
 
pay this amount as a result
 
of past service provided by the
employee and the obligation can be estimated reliably.
Amounts in R million
Note
2021
2020
Trade payables and accruals
352.9
348.0
Value Added Tax
4.5
-
Accrued leave pay
53.2
46.9
Provision for short term performance based incentives
74.2
50.5
Payroll accruals
25.0
33.4
509.8
478.8
Interest relating to trade payables and accruals included in profit or loss
(1.8)
(1.9)
RELATED PARTY
 
BALANCES
Trade payables and accruals include the following amounts payable to related parties:
Sibanye-Stillwater
12.0
14.0
Rand Refinery
0.6
0.2
LIQUIDITY RISK
Trade payables and accruals are all expected to be settled within 12 months from reporting date.
FAIR VALUE
 
OF FINANCIAL INSTRUMENTS
The fair value of trade payables and accruals approximate their carrying value due to their short-term maturities.
17
 
INVENTORIES
ACCOUNTING POLICIES
Gold
 
in process
 
is stated
 
at the
 
lower of
 
cost
 
and net
 
realisable value.
 
Costs are
 
assigned to
 
gold
 
in process
 
on a
 
weighted
average cost basis. Costs comprise all costs incurred to the stage immediately
 
prior to smelting, including costs of extraction and
processing as they are
 
reliably measurable at that
 
point. Gold bullion is
 
stated at the lower
 
of cost and net
 
realisable value. Selling
and general administration costs are excluded from inventory valuation.
Consumable stores
 
are stated
 
at cost
 
less allowances
 
for obsolescence.
 
Cost of
 
consumable stores
 
and stockpile
 
material is
based on
 
the weighted
 
average cost
 
principle and
 
includes expenditure
 
incurred in
 
acquiring inventories
 
and bringing
 
them to
their existing location and condition.
Net realisable value
 
is the estimated
 
selling price in
 
the ordinary course
 
of business, less
 
the estimated cost
 
of completion and
selling expenses.
Amounts in R million
2021
2020
Consumable stores
177.6
165.6
Ore stockpile
52.9
9.0
 
1
Gold in process (a)
59.6
86.6
 
1
Finished inventories - Gold Bullion
49.9
62.2
Total inventories
340.0
323.4
 
1
During 2021, the Group disaggregated “Gold
 
in process” into “Gold in process” and “Ore
 
stockpile” respectively to present material items
separately
 
 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continued
for the year ended June 30, 2021
F-24
18
 
INCOME TAX
SIGNIFICANT ACCOUNTING ASSUMPTIONS AND ESTIMATES
Management periodically evaluates
 
positions taken where
 
tax regulations are
 
subject to interpretation.
 
This includes the
 
treatment
of both Ergo and FWGR as single mining operations respectively, pursuant to the relevant ring-fencing legislation.
The deferred tax liability is calculated
 
by applying a forecast weighted
 
average tax rate that is
 
based on a prescribed formula.
 
The
calculation of the forecast weighted average tax rate requires the use of assumptions and estimates and are inherently uncertain
and could change
 
materially over time.
 
These assumptions and
 
estimates include expected
 
future profitability and
 
timing of the
reversal of
 
the temporary
 
differences. Due
 
to the
 
forecast weighted
 
average tax
 
rate being
 
based on
 
a prescribed
 
formula that
increases the effective
 
tax rate with an
 
increase in forecast
 
future profitability,
 
and vice versa,
 
the tax rate can
 
vary significantly
year on year and can move contrary to current period financial performance.
A
100
 
basis points increase
 
in the effective
 
tax rate will
 
result in an
 
increase in the
 
net deferred tax
 
liability at June
 
30, 2021 of
approximately R
14.2
 
million (2020: R
10.3
 
million; 2019: R
8.6
 
million).
The assessment of the
 
probability that future taxable profits
 
will be available against
 
which the tax losses and
 
unredeemed capital
expenditure
 
can
 
be
 
utilised
 
requires
 
the
 
use
 
of
 
assumptions
 
and
 
estimates
 
and
 
are
 
inherently
 
uncertain
 
and
 
could
 
change
materially over time.
Capital expenditure
 
is assessed
 
by the
 
South African
 
Revenue Service
 
(“SARS”) when
 
it is
 
redeemed against
 
taxable mining
income rather than when
 
it is incurred. A
 
different interpretation by
 
SARS regarding the deductibility
 
of these capital allowances
may therefore become evident subsequent to the year of assessment when the capital expenditure is incurred.
ACCOUNTING POLICIES
Income tax
 
expense comprises
 
current and deferred
 
tax. Each
 
company is taxed
 
as a
 
separate entity
 
and tax
 
is not
 
set-off between
the companies.
Current tax
Current tax comprises the expected
 
tax payable or receivable on
 
the taxable income or loss
 
for the year and any
 
adjustment on
tax payable
 
or receivable
 
in respect
 
of the
 
previous year.
 
Amounts are
 
recognised in
 
profit or
 
loss except
 
to the
 
extent that
 
it
relates to items recognised directly in equity or
 
OCI. The current tax charge is calculated on
 
the basis of the tax laws enacted or
substantively enacted at the reporting date.
 
Deferred tax
Deferred tax
 
is recognised
 
in respect
 
of temporary
 
differences between
 
the carrying
 
amounts and
 
the tax
 
bases of
 
assets and
liabilities. Deferred
 
tax is
 
not recognised
 
on the
 
initial recognition
 
of assets
 
or liabilities
 
in a
 
transaction that
 
is not
 
a business
combination and that affects neither accounting nor taxable profit.
Deferred tax
 
assets relating
 
to unutilised
 
tax losses
 
and unutilised
 
capital allowances
 
are recognised
 
to the
 
extent that
 
it is
 
probable
that future taxable profits will
 
be available against which
 
the unutilised tax losses
 
and unutilised capital allowances
 
can be utilised.
The recoverability of these assets is reviewed at each reporting date and adjusted if recovery is no longer probable.
Deferred tax related to gold mining income is measured at a forecast weighted
 
average tax rate that is expected to be applied to
temporary differences when they
 
reverse, using tax rates enacted or
 
substantially enacted at the reporting
 
date.
 
The calculation
of the forecast weighted average tax rate
 
requires the use of assumptions and estimates, including
 
the Group’s life-of-mine plan
(as discussed in note 9 to the consolidated financial statements) that is applied to calculate the expected future profitability.
Tax
 
on gold mining income is determined based on a
 
formula: Y = 34 - 170/X where Y is the
 
percentage rate of tax payable and
X is the ratio of taxable income, net of any qualifying capital expenditure that bears to gold mining income derived, expressed as
a percentage. Non-mining income, which consists primarily
 
of interest accrued, is taxed at a
 
standard rate of
28
% for all periods
presented.
All mining capital expenditure is deducted in the year
 
it is incurred to the extent that it does
 
not result in an assessed loss. Capital
expenditure not deducted
 
from mining
 
income is
 
carried forward as
 
unutilised capital
 
allowances to be
 
deducted from future
 
mining
income.
Amendment in the corporate income tax rate
On February 24, 2021 the Minister
 
of Finance announced in his budget speech that
 
the corporate income tax (“
CIT
”) rate will be
lowered from
28
% to
27
% for companies
 
with years of assessment
 
commencing on or after
 
1 April 2022. It
 
was further announced
that the lowering
 
of the CIT
 
rate will be
 
implemented alongside additional
 
amendments to broaden
 
the CIT base
 
by limiting interest
deductions and assessed losses. These additional amendments have not been announced to date.
The lowering of
 
the CIT rate
 
is therefore inextricably
 
linked to the
 
additional amendments to the
 
CIT laws that
 
are not known
 
at
the date of the budget speech or at the date of
 
publishing of these consolidated financial statements. As a result, the lowering
 
of
the CIT rate is not regarded as
 
having been substantively enacted to date due
 
to a significant degree of uncertainty that exists
 
if
the proposed lowering of
 
the CIT rate from
28
% to
27
% as announced will
 
be promulgated by the
 
South African parliament in
 
a
substantially unchanged manner.
 
The mining operations
 
of the Group
 
accounts for income
 
tax using the
 
gold mining formula
 
as opposed to
 
the CIT rate.
 
Only Group
companies that
 
do not
 
conduct mining
 
operations account
 
for income
 
tax by
 
applying the
 
CIT.
 
These Group
 
companies do
 
not
generate significant
 
taxable income.
 
As a
 
result, the
 
change in
 
the CIT
 
rate is
 
not expected
 
to have
 
a material
 
impact on
 
the
consolidated
 
financial
 
statements
 
of
 
the
 
Group.
 
A
 
final
 
assessment
 
will
 
be
 
completed
 
on
 
the
 
promulgation
 
of
 
the
 
additional
amendments to the CIT laws.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continued
for the year ended June 30, 2021
F-25
18
 
INCOME TAX
continued
18.1
 
INCOME TAX EXPENSE
Amounts in R million
2021
2020
2019
Current tax
(423.7)
(263.2)
1.6
Mining tax
(423.7)
(263.2)
-
Non-Mining, company and capital gains tax
-
-
1.6
Deferred tax
(100.0)
(80.7)
(28.2)
Deferred tax charge - Mining tax
(104.0)
(59.1)
(14.8)
Deferred tax charge - Non-mining, company and capital gains tax
(19.1)
(2.1)
1.6
Deferred tax rate adjustment
-
(20.7)
(15.0)
Recognition of previously unrecognised tax losses
7.8
-
-
(Derecognition)/recognition of previously unrecognised tax losses of a capital
nature
(1.2)
1.2
-
Recognition of previously unrecognised deductible temporary differences
16.5
-
-
(523.7)
(343.9)
(26.6)
Tax reconciliation
Major items causing the Group's income tax expense to differ from the statutory rate
were:
Tax
 
on net profit before tax at the South African corporate tax rate of
28
%
(549.9)
(274.1)
(30.2)
Rate adjustment to reflect the actual realised company tax rates applying the
gold mining formula
3.7
(0.9)
7.4
Deferred tax rate adjustment (a)
-
(20.7)
(15.0)
Depreciation of property, plant and equipment exempt from deferred tax on
 
initial recognition (b)
(21.2)
(21.4)
 
1
(4.9)
 
1
Non-deductible expenditure (c)
 
(6.2)
(7.9)
 
1
(7.0)
 
1
Exempt income and other non-taxable income (d)
22.8
2.4
4.4
Recognition of previously unrecognised deductible temporary differences
16.5
-
-
(Derecognition)/recognition of previously unrecognised tax losses of a capital
nature
(1.2)
1.2
-
Utilisation of tax losses for which deferred tax assets were previously
 
unrecognised
7.8
-
-
Current year tax losses for which no deferred tax was recognised
(0.1)
(23.5)
(2.7)
Other items
3.3
0.4
16.8
Tax
 
incentives
0.8
0.6
1.7
Over provided in prior periods
-
-
2.9
Income tax
(523.7)
(343.9)
(26.6)
 
1
During 2021, the Group disaggregated “Non-deductible
 
expenditure” into “Non-deductible expenditure”
 
and “Depreciation of property, plant
and equipment exempt from deferred tax on initial
 
recognition” respectively to present material items
 
separately
(a) Deferred tax rate adjustment
 
Ergo’s forecast weighted average deferred tax rate remained unchanged at
25.0
% (2020: increased from
22.0
% to
25.0
% due to
the increase
 
in forecast
 
taxable income
 
of Ergo;
 
2019: increased
 
from
20.3
% to
22.0
% due
 
to an
 
increase in
 
forecast taxable
income of Ergo).
FWGR’s forecast weighted average deferred tax rate remained unchanged at
30.0
% (2020:
30.0
%; 2019:
30.0
%).
(b) Depreciation of property, plant and equipment exempt from deferred tax on initial recognition
Depreciation of R
68.7
 
million (2020: R
73.2
 
million; 2019: R
16.6
 
million) on the
 
fair value of
 
FWGR’s property, plant and equipment
that was exempt from deferred tax on initial recognition in terms of IAS 12
Income Taxes
.
(c) Non-deductible expenditure
The most significant non-deductible expenditure incurred by the Group during the year includes:
 
R
7.4
 
million discount recognised on Payments made under protest (2020: R
7.1
 
million; 2019: R
6.5
 
million);
 
R
17.0
 
million
 
expenditure
 
not
 
incurred
 
in
 
generation
 
of
 
taxable
 
income
 
or
 
capital
 
in
 
nature
 
(2020:
 
R
2.7
 
million;
 
2019:
 
R
6.0
million);
 
and
 
Nil net
 
operating cost
 
related to
 
Ergo Business
 
Development Academy
 
Not for
 
Profit Company
 
that is
 
not deductible
 
as it
 
is
exempt from income tax (2020: R
14.6
 
million; 2019: R
11.3
 
million).
(d) Exempt income and other non-taxable income
The most significant exempt income earned by the Group during the year includes:
 
R
76.1
 
million dividends received (2020: R
4.3
 
million; 2019: nil);
 
R
4.8
 
million unwinding recognised on Payments made under protest (2020: R
4.0
 
million; 2019: R
3.0
 
million); and
 
R
1.0
 
million net operating
 
income related to
 
Ergo Business Development
 
Academy Not for Profit
 
Company that is not
 
taxable
as it
 
is exempt
 
from income
 
tax (2020
 
and 2019
 
Ergo Business
 
Development Academy
 
Not for
 
Profit Company
 
incurred net
operating cost that is not deductible as it is exempt from income tax – refer to (c) non-deductible expenditure).
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continued
for the year ended June 30, 2021
F-26
18
 
INCOME TAX
continued
18.2
 
DEFERRED TAX
Amounts in R million
2021
2020
Included in the statement of financial position as follows:
Deferred tax assets
5.8
8.0
Deferred tax liabilities
(377.1)
(273.1)
Net deferred tax liabilities
(371.3)
(265.1)
Reconciliation of the deferred tax balance:
Balance at the beginning of the year
(265.1)
(183.2)
Recognised in profit or loss
(100.0)
(80.7)
Recognised in other comprehensive income
(6.2)
(1.2)
Balance at the end of the year
(371.3)
(265.1)
The detailed components of the net deferred tax liabilities which result from the differences between the amounts of assets and
liabilities recognised for financial reporting and tax purposes are:
Amounts in R million
2021
2020
Deferred tax liabilities
Property, plant and equipment (excluding unredeemed capital allowances)
(494.4)
(422.4)
Environmental rehabilitation obligation funds
(60.2)
(51.4)
Other investments
(7.4)
(1.2)
Gross deferred tax liabilities
(562.0)
(475.0)
Deferred tax assets
Environmental rehabilitation obligation
124.5
126.5
Other provisions
46.7
72.6
Other temporary differences
 
1
14.3
8.5
Estimated tax losses
4.1
-
Estimated tax losses - Capital nature
-
1.2
Estimated unredeemed capital allowances
1.1
1.1
Gross deferred tax assets
190.7
209.9
Net deferred tax liabilities
(371.3)
(265.1)
1
 
Includes the temporary differences on the lease liability
Deferred tax assets have not been recognised in respect of the following:
Amounts in R million
2021
2020
Provisions
-
20.3
Estimated tax losses
16.7
22.0
Estimated tax losses - Capital nature
325.2
324.0
Unredeemed capital expenditure
253.3
254.7
Deferred tax
 
assets for
 
tax losses,
 
unredeemed capital
 
expenditure and
 
capital losses
 
have not
 
been recognised
 
where future
taxable profits against which these can be utilised are not anticipated. These do not have an expiry date.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continued
for the year ended June 30, 2021
F-27
19
 
EMPLOYEE BENEFITS
ACCOUNTING POLICIES
Cash settled share-based payments (“outgoing long-term incentive”)
Cash settled
 
share-based payments
 
are measured
 
at fair
 
value and
 
remeasured at
 
each reporting
 
date to
 
reflect the
 
potential
outflow of
 
cash resources
 
to settle
 
the liability,
 
with a
 
corresponding adjustment
 
in profit
 
or loss.
 
Vesting
 
assumptions for
 
non-
market conditions are reviewed at each reporting date to ensure they reflect current expectations.
Equity settled share-based payments (“new long-term incentive”)
The grant date fair
 
value of equity settled
 
share-based payment arrangements is
 
recognised as an expense,
 
with a corresponding
increase in equity,
 
over the vesting period of
 
the awards. The expense is
 
adjusted to reflect the number
 
of awards for which the
related service
 
and non-market
 
performance conditions
 
are expected
 
to be
 
met, such
 
that the
 
amount ultimately
 
recognised is
based on the number of awards that meet the related service and non-market performance conditions at vesting date.
19.1
 
CASH SETTLED LONG-TERM INCENTIVE SCHEME (“outgoing
 
LTI scheme” or “CLTI
 
scheme”)
Terms
 
of the November 2015 grant made under the DRDGOLD Group's outgoing LTI scheme are:
 
The scheme has a finite term of
5 years
 
and thus no top-up awards are made when the shares vest;
 
The phantom shares are issued at an exercise price of nil and will vest in 3 tranches:
20
%,
30
% and
50
% on the 3
rd,
 
4
th
 
and 5
th
anniversaries respectively, subject to individual service and performance conditions being met; and
 
The phantom shares will be settled at the 7 day volume weighted average price ("VWAP") of the DRDGOLD share.
The last
 
tranche of
 
the November
 
2015 grant
 
vested and
 
was fully
 
settled on
 
November 5,
 
2020. The
 
outgoing LTI
 
scheme is
replaced by a new equity settled long-term incentive scheme (refer note 19.2).
Amounts in R million
Note
2021
2020
Movements in the total liability for long-term incentive scheme is as follows:
Opening balance
227.6
51.0
Share-based payment (benefit)/expense - CLTI scheme
5.3
(44.3)
218.1
Vested and paid
(183.3)
(41.5)
Liability for CLTI scheme at the end of the year
-
227.6
The total liability for long-term incentive scheme is expected to be settled as follows:
-
227.6
Within 12 months after reporting date
-
227.6
After 12 months after reporting date
-
-
Reconciliation of outstanding phantom shares
2021
2020
Weighted
Weighted
average
average
Shares
price
Shares
price
Number
R per share
Number
R per share
Opening balance
9,845,638
16,157,058
Vested and paid
(9,845,638)
18.62
(5,674,252)
7.31
Forfeited
-
-
(637,168)
7.08
Closing balance
-
9,845,638
Fair value
The fair value of
 
the liability for
 
the long-term incentive scheme
 
is mostly influenced
 
by the DRDGOLD
 
Limited share price. Other
inputs influencing the fair value are the forward dividend yield and estimates of staff retention and performance conditions. The
inputs most significantly influencing the measurement of the fair values are as follows
:
2021
2020
Grant date
7-day VWAP of the DRDGOLD Limited share
-
25.14
2.26
Annualised forward dividend yield
-
1.0%
4.3%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continued
for the year ended June 30, 2021
F-28
19
 
EMPLOYEE BENEFITS
continued
19.2
 
EQUITY SETTLED LONG-TERM INCENTIVE SCHEME
 
(“new LTI scheme”
 
or “ELTI scheme”)
Amounts in R million
2021
2020
2019
Share-based payment expense - ELTI scheme
16.0
6.0
-
On December 2,
 
2019, the shareholders
 
approved a new
 
equity settled long-term
 
incentive scheme to
 
replace the cash
 
settled
long-term
 
incentive
 
scheme
 
established
 
in
 
November
 
2015.
 
Under
 
the
 
new
 
LTI
 
scheme,
 
qualifying
 
employees
 
are
 
awarded
conditional shares on
 
an annual
 
basis, comprising
 
performance shares
 
(
80
% of
 
the total
 
conditional shares
 
awarded) and
 
retention
shares (
20
% of the
 
total conditional shares
 
awarded). Conditional shares
 
will vest
3 years
 
after grant date
 
and will be
 
settled in
the form of DRDGOLD shares at a zero-exercise price.
The key conditions of the grants made under the ELTI scheme are:
Retention shares:
 
100
% of the retention shares will vest if the employee remains in the active
 
employ of the Company at vesting date, is not under
notice period and individual performance criteria are met.
Performance shares:
Total
 
shareholder’s return
 
(TSR) measured
 
against a
 
hurdle rate
 
of
15
%
 
referencing DRDGOLD’s
 
Weighted
 
Average
 
Cost of
Capital “WACC”:
 
 
50
% of the performance shares are linked to this condition; and
 
all of these performance shares will vest if DRDGOLD’s TSR exceeds the hurdle rate over the vesting period
 
TSR measured against a peer group of 3 peers (Sibanye-Stillwater, Harmony Limited and Pan-African Resources Limited):
 
 
50
% of the performance shares are linked to this condition; and
 
The number of
 
performance shares which vest
 
is based on
 
DRDGOLD’s actual TSR
 
performance in relation to
 
percentiles of
peer group’s performance as follows:
Percentile of peers
% of performance shares vesting
< 25th percentile
0%
25th to < 50th percentile
25%
50th to < 75th percentile
75%
Reconciliation of the number of conditional shares
2021
2020
Opening balance
5,860,760
-
Granted
December 2, 2019
-
5,860,760
October 22, 2020
1,979,860
-
Closing balance
7,840,620
5,860,760
Vesting on
7,840,620
5,860,760
December 2, 2021
2,930,380
2,930,380
December 2, 2022
2,930,380
2,930,380
October 22, 2023
1,979,860
-
Fair value
The weighted average fair value of the performance and retention shares at grant date were determined using the Monte Carlo
simulation pricing model applying the following key inputs:
Grant date
October 22, 2020
December 2, 2019
Vesting date
October 22, 2023
December 2, 2022
December 2, 2021
Weighted average fair value of 80% performance shares
 
1
10.49
4.12
4.26
Weighted average fair value of 20% retention shares
18.67
5.49
5.69
Expected term (years)
3
3
2
Grant date share price of a DRDGOLD share
19.43
6.15
6.15
Expected dividend yield
1.33%
3.81%
3.86%
Expected volatility
 
2
63.07%
53.80%
53.80%
Expected risk free rate
3.82%
6.80%
6.68%
1
 
The performance conditions are included in the
 
measurement of the grant date fair value as they
 
are classified as market-based performance
2
 
Expected volatility has been based on an evaluation
 
of the historical volatility of DRDGOLD’s share price,
 
commensurate with the expected
term of the options
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continued
for the year ended June 30, 2021
F-29
19.3
 
TRANSACTIONS WITH KEY MANAGEMENT PERSONNEL
Interests in contracts
None
 
of
 
the
 
directors,
 
officers
 
or
 
major
 
shareholders
 
of
 
DRDGOLD or,
 
to
 
the
 
knowledge
 
of
 
DRDGOLD’s
 
management,
 
their
families, had any interest, direct or indirect, in any transaction entered into during the year ended June 30, 2021 or
 
the preceding
financial years, or in any proposed
 
transaction which has affected or will
 
materially affect DRDGOLD or its subsidiaries other
 
than
disclosed in these financial statements. None of the directors or officers of DRDGOLD or any associate of such director or officer
is currently or has been at any time during the past financial year materially indebted to DRDGOLD.
Key management personnel remuneration
Amounts in R million
Note
2021
2020
2019
- Board fees paid
7.6
6.2
5.8
- Salaries paid
75.5
67.3
61.7
- Short term incentives relating to this cycle
73.8
63.6
31.5
- Long term incentives paid during the cycle
19.1
183.3
41.5
15.5
- Retrenchments
-
-
1.6
340.2
178.6
116.1
20
 
CAPITAL MANAGEMENT
The
 
primary
 
objective
 
of
 
the
 
Group's
 
capital
 
management
 
policy
 
is
 
to
 
ensure
 
that
 
adequate
 
capital
 
is
 
available
 
to
 
meet
 
the
requirements
 
of
 
the
 
Group
 
from
 
time
 
to
 
time,
 
including
 
capital
 
expenditure.
 
The
 
Group
 
considers
 
the
 
appropriate
 
capital
management strategy for specific growth projects as and when required. Lease liabilities are not considered to be debt.
Liquidity management
 
At June
 
30, 2021
 
and June
 
30, 2020
 
the Group’s
 
facilities included
 
an undrawn
 
Revolving Credit
 
Facility (“
RCF
”) which
 
was
initially secured
 
to finance
 
the development
 
of Phase
 
1 of
 
FWGR as
 
well as
 
the general
 
working capital
 
requirements of
 
the
Group. In December 2018, R
125
 
million of the RCF was committed to issue a guarantee to Ekurhuleni Local Municipality (refer
note 24).
 
In September 2020, the initial R
300
 
million RCF was amended to a R
200
 
million RCF and extended for an additional term of 2
years with a final repayment date of
September 14, 2022
.
 
The initial
 
and amended RCF
 
permits a consolidated
 
debt ratio (net
 
debt to adjusted
 
EBITDA (refer note
 
23) of no
 
more than
2:1
 
and a
 
consolidated interest
 
coverage ratio
 
(net interest
 
to adjusted
 
EBITDA) of
 
no less
 
than
4:1
 
calculated on
 
a twelve-
month rolling basis respectively.
 
Management monitors the covenant
 
ratio levels to ensure compliance
 
with the covenants, as
well as maintain sufficient facilities to ensure satisfactory liquidity
 
for the Group. The covenant ratios were
 
not breached as at or
during the year ended June 30, 2021 or June 30, 2020.
The amendment
 
included the
 
reduction of
 
the initial
 
interest rate
 
margin of
3.25
% to
2.75
%. A
 
pledge and
 
cession of
 
DRDGOLD’s
shares in
 
and shareholder
 
claims against
 
Ergo Mining
 
Proprietary Limited
 
and Far
 
West Gold
 
Recoveries Proprietary
 
limited
remains
 
in
 
place
 
as
 
security
 
for
 
the
 
RCF.
The
 
amended
 
RCF
 
does
 
not
 
include
 
any
 
commitment
 
towards
 
the
 
guarantee
 
to
Ekurhuleni Local Municipality.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continued
for the year ended June 30, 2021
F-30
21
 
EQUITY
ACCOUNTING POLICIES
Stated share capital
Ordinary shares and the cumulative preference shares are
 
classified as equity. Incremental costs directly attributable to the issue
of ordinary shares are recognised as a deduction from equity, net of any tax effect.
Repurchase and reissue of share capital (treasury shares)
When shares
 
recognised as
 
equity are
 
repurchased, the
 
amount of
 
the consideration
 
paid, which
 
includes directly
 
attributable
costs is
 
recognised as
 
a deduction
 
from equity.
 
Repurchased shares
 
are classified
 
as treasury
 
shares and
 
are presented
 
as a
deduction from stated share capital.
Dividends
Dividends are recognised
 
as a liability
 
on the date on
 
which they are declared
 
which is the date
 
when the shareholders’
 
right to
the dividends vests.
21.1
 
STATED
 
SHARE CAPITAL
All ordinary shares rank equally regarding the Company’s residual assets. Holders of ordinary shares are entitled to dividends as
declared from time to
 
time and are entitled to
 
one vote per share
 
at general meetings of the
 
Company. All
 
rights attached to the
Company’s shares held by the Group are suspended until those shares are reissued.
In terms of an ordinary resolution passed at
 
the previous annual general meeting, the remaining unissued ordinary shares
 
in the
company are under the control of the directors until the next general meeting.
Amounts in R million
2021
2020
2019
Authorised share capital
1,500,000,000
, (2020 and 2019:
1,500,000,000
) ordinary shares of
no
 
par value
5,000,000
 
(2020 and 2019:
5,000,000
) cumulative preference shares of
10
 
cents each
0.5
0.5
0.5
Issued share capital
864,588,711
 
(2020:
864,588,711
, 2019:
696,429,767
) ordinary shares of no par value (a)
6,208.4
6,208.4
5,123.3
9,474,920
 
(2020:
9,474,920
, 2019:
9,361,071
) treasury shares held within the Group (b)
(51.0)
(51.0)
(51.0)
5,000,000
 
(2020 and 2019:
5,000,000
) cumulative preference shares of 10 cents each
0.5
0.5
0.5
6,157.9
6,157.9
5,072.8
RELATED PARTY
 
RELATIONSHIPS AND TRANSACTIONS
(a)
 
Ordinary shares issued
Sibanye-Stillwater and its
 
subsidiaries and associates
 
became related parties
 
to the Group
 
on July 31,
 
2018 when the
 
acquisition
of FWGR became unconditional. DRDGOLD issued
265
 
million new ordinary shares (
38.05
% of its outstanding shares) and an
option to subscribe
 
for new ordinary shares
 
up to a total
 
of
50.1
% of the total
 
issued ordinary shares
 
of DRDGOLD (“
Option
”)
as purchase consideration for these assets.
On January
 
8, 2020
 
Sibanye-Stillwater exercised
 
the Option
 
and on
 
January 22,
 
2020 it
 
subscribed for
168,158,944
 
Shares
(“
Subscription
 
Shares
”) at
 
an
 
aggregate
 
subscription
 
price
 
of
 
R
1,085.6
 
million.
 
The
 
Subscription
 
Shares
 
were
 
allotted
 
and
issued at a price of R
6.46
 
per Share, being a
10
% discount to the 30-day volume weighted average
 
traded price of a Share on
the day immediately prior to the date of exercise of the Option.
(b)
 
Treasury shares
Shares
 
in
 
DRDGOLD Limited
 
are
 
held
 
in treasury
 
by
 
Ergo Mining
 
Operations Proprietary
 
Limited
 
("
EMO
").
No
 
shares were
acquired in the market
 
during the year ended June
 
30, 2021 or the year
 
ended June 30, 2020
 
(June 30, 2019
113,849
 
shares
were acquired at an average price of R
2.68
).
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continued
for the year ended June 30, 2021
F-31
21
 
EQUITY
continued
21.2
 
DIVIDENDS
Amounts in R million
2021
2020
2019
Dividends paid during the year net of treasury shares:
Final dividend declared relating to prior year:
35
 
SA cents per share (2020:
20
 
SA cents
per share; 2019: nil SA cents per share)
299.3
137.5
-
First interim dividend:
40
 
SA cents per share (2020:
25
 
SA cents per share; 2019: nil SA
cents per share)
342.0
213.8
-
Second interim dividend nil SA cents per share (2020:
25
 
SA cents per share; 2019: nil
SA cents per share)
-
213.8
-
Total
641.3
565.1
-
After June 30, 2021, a dividend of
40
 
cents per qualifying share amounting to R
342.0
 
million was approved by the directors as
a final dividend for the year ended June 30, 2021.
 
The dividend has not been provided as at June 30, 2021
 
and does not have
any tax impact on the Group.
22
 
INTEREST IN SUBSIDIARIES
ACCOUNTING POLICIES
Significant subsidiaries
 
of the Group
 
are those subsidiaries
 
with the most
 
significant contribution to
 
the Group's profit
 
or loss or
assets.
Ergo Mining
 
Proprietary Limited
 
and Far
 
West
 
Gold Recoveries
 
Proprietary Limited
 
are the
 
only significant
 
subsidiaries of
 
the
Group. They are both wholly owned subsidiaries and are incorporated in South Africa,
 
are primarily involved in the retreatment of
surface gold and all their operations are based in South Africa.
23
 
OPERATING SEGMENTS
ACCOUNTING POLICIES
Operating segments
 
are reported
 
in a
 
manner consistent
 
with internal
 
reports that
 
the Group’s
 
chief operating
 
decision maker
(CODM)
 
reviews
 
regularly
 
in
 
allocating
 
resources
 
and
 
assessing
 
performance
 
of
 
operating
 
segments.
 
The
 
CODM
 
has
 
been
identified as the
 
Group’s Executive Committee.
 
The Group has
 
one material revenue
 
stream, the sale
 
of gold. To identify operating
segments, management reviewed
 
various factors, including
 
operational structure and
 
mining infrastructure. It
 
was determined that
an
 
operating
 
segment
 
consists of
 
a single
 
or multiple
 
metallurgical plants
 
and reclamation
 
sites
 
that, together
 
with its
 
tailings
storage facility, is capable of operating independently.
When assessing profitability, the
 
CODM considers,
inter alia
, the revenue and cash operating costs of each segment. The
 
net of
these amounts
 
is the
 
segment operating
 
profit or
 
loss. Therefore,
 
segment operating
 
profit has
 
been disclosed
 
in the
 
segment
report as the primary
 
measure of profit or
 
loss. The CODM also
 
considers other costs that, in
 
addition to the segment
 
operating
profit or loss, result in the segment working profit or loss (before and after property, plant and equipment additions).
Ergo
 
is a surface gold retreatment operation
 
which treats old slime dams
 
and sand dumps to the south
 
of Johannesburg’s central
business district
 
as well
 
as the East
 
and Central
 
Rand goldfields. The
 
operation comprises
 
three plants.
 
The Ergo
 
and Knights
plants continue to operate as metallurgical plants. The City Deep plant
 
continues to operate as a pump/milling station feeding the
metallurgical plants.
FWGR
 
is a surface gold retreatment operation and treats old slime dams in the West Rand goldfields. Phase 1, which entails the
reconfiguration of
 
the Driefontein
 
2 plant
 
and relevant
 
infrastructure to
 
process tailings
 
from the
 
Driefontein 5
 
slimes dam
 
and
deposit residues on the Driefontein 4 Tailings
 
Storage Facility, was commissioned on 1 April 2019.
Corporate
 
office
 
and
 
other
 
reconciling
 
items
 
(collectively
 
referred
 
to
 
as
"Other
 
reconciling
 
items"
)
 
are
 
taken
 
into
consideration in
 
the strategic
 
decision-making process
 
of the
 
chief operating
 
decision maker
 
and are
 
therefore included
 
in the
disclosure here, even though they do not earn revenue. This includes
 
taking into consideration the Group’s adjusted EBITDA for
the purpose of the covenants imposed by the Company’s borrowings that was initially entered into to finance the development of
Phase 1 of FWGR and working capital requirements of the Group (refer note 20).
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continued
for the year ended June 30, 2021
F-32
23
OPERATING SEGMENTS
 
continued
Other
2021
reconciling
Amounts in R million
Ergo
FWGR
items
 
Total
Financial performance
Revenue (External)
3,943.0
1,326.0
-
5,269.0
Cash operating costs
(2,666.5)
(406.2)
-
(3,072.7)
Movement in gold in process and finished inventories - Gold Bullion
(31.9)
6.3
-
(25.6)
Segment operating profit
1,244.6
926.1
-
2,170.7
Administration expenses and other costs
15.0
1.8
(80.8)
(64.0)
Interest income
 
1
1.3
0.1
107.7
109.1
Dividends received
7.1
-
69.0
76.1
Interest expense
 
2
(4.2)
(0.3)
(12.9)
(17.4)
Current tax
(196.1)
(227.6)
-
(423.7)
Working profit before additions to property, plant and equipment
1,067.7
700.1
83.0
1,850.8
Additions to property, plant and equipment
(250.9)
(143.3)
(1.5)
(395.7)
Working profit after additions to property, plant and equipment
816.8
556.8
81.5
1,455.1
1
 
Interest income excludes the unwinding of the Payments
 
made under protest
2
 
Interest expense excludes the discount recognised on
 
the initial recognition of the Payments made under
 
protest and unwinding of provision for
environmental rehabilitation
Reconciliation of cost of sales to cash operating costs
 
Cost of sales
 
(2,871.0)
(517.2)
-
(3,388.2)
- Depreciation
 
135.6
115.6
1.3
252.5
- Change in estimate of environmental rehabilitation recognised in
profit or loss
(7.2)
-
(5.2)
(12.4)
- Movement in gold in process and finished inventories - gold Bullion
31.9
(6.3)
-
25.6
- Ongoing rehabilitation expenditure
46.6
1.7
-
48.3
- Care and maintenance
-
-
3.9
3.9
- Other operating income/(costs)
 
(2.4)
-
-
(2.4)
Cash operating costs
(2,666.5)
(406.2)
-
(3,072.7)
Reconciliation of profit for the year to working profit before additions to property, plant and equipment
Profit for the year
751.7
528.8
159.4
1,439.9
- Deferred tax
66.6
37.4
(4.0)
100.0
- Net other operating costs/(income)
45.4
24.2
(68.1)
1.5
- Ongoing rehabilitation expenditure
46.6
1.7
-
48.3
- Discount recognised on Payments made under protest including
subsequent unwinding
2.6
-
-
2.6
- Unwinding of provision for environmental rehabilitation
34.2
9.5
1.0
44.7
- Growth in investment in environmental obligation funds
(7.7)
(17.1)
(1.4)
(26.2)
- Other income
(0.1)
-
-
(0.1)
- Change in estimate of environmental rehabilitation recognised in
profit or loss
(7.2)
-
(5.2)
(12.4)
- Depreciation
135.6
115.6
1.3
252.5
Working profit before additions to property, plant and equipment
1,067.7
700.1
83.0
1,850.8
Statement of cash flows
Cash inflows from operating activities
842.2
649.7
81.5
1,573.4
Cash outflows from investing activities
(290.8)
(149.2)
(6.6)
(446.6)
Cash (outflows)/inflows from financing activities
(549.9)
(501.4)
397.8
(653.5)
Reconciliation of adjusted EBITDA
Profit for the year
1,439.9
Income tax
523.7
Profit before tax
1,963.6
Finance expense
69.5
Finance income
(216.2)
Results from operating activities
1,816.9
Depreciation
252.5
Share-based payment benefit
(28.3)
Change in estimate of environmental rehabilitation recognised in profit
or loss
(12.4)
Gain on disposal of property, plant and equipment
(0.1)
IFRS 16 lease payments
' 1
(15.8)
Transaction costs
3.1
Adjusted EBITDA
 
2
2,015.9
1
 
The amended RCF includes IFRS 16 lease payments
 
in the calculation of the adjusted EBITDA
2
 
Adjusted EBITDA (that was considered from the year ended
 
30 June 2019 following the initial RCF agreement)
 
may not be comparable to
similarly titled measures of other companies. Adjusted
 
EBITDA is not a measure of performance
 
under IFRS and should be considered in
addition to, and not as a substitute for, other measures of financial
 
performance and liquidity.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continued
for the year ended June 30, 2021
F-33
23
OPERATING SEGMENTS
 
continued
Other
2020
reconciling
Amounts in R million
Ergo
FWGR
items
 
Total
Financial performance
Revenue (External)
3,064.3
1,120.7
-
4,185.0
Cash operating costs
(2,274.0)
(352.0)
-
(2,626.0)
Movement in gold in process and finished inventories - Gold Bullion
1.8
1.3
-
3.1
Segment operating profit
792.1
770.0
-
1,562.1
Administration expenses and other costs
 
(131.6)
(20.7)
(157.6)
(309.9)
Interest income
 
1
13.9
2.9
46.3
 
3
63.1
 
3
Dividends received
-
-
4.3
 
3
4.3
 
3
Interest expense
 
2
(5.2)
-
(4.5)
(9.7)
Current tax
(145.8)
(117.4)
-
(263.2)
Working profit/(loss) before additions to property, plant and equipment
523.4
634.8
(111.5)
1,046.7
Additions to property, plant and equipment
(114.4)
(68.0)
(0.3)
(182.7)
Working profit/(loss) after additions to property, plant and equipment
409.0
566.8
(111.8)
864.0
1
 
Interest income excludes the unwinding of the Payments
 
made under protest
2
 
Interest expense excludes the discount recognised on
 
the initial recognition of the Payments made under
 
protest and unwinding of provision
for environmental rehabilitation
3
 
During 2021, the Group disaggregated “Interest
 
income” into “Interest income” and “Dividends
 
received” respectively to present material
dividends received
Reconciliation of cost of sales to cash operating costs
Cost of sales
(2,453.4)
(473.3)
(11.2)
(2,937.9)
- Depreciation
150.4
119.6
0.8
270.8
- Change in estimate of environmental rehabilitation recognised in
profit or loss
(19.1)
(2.1)
(0.7)
(21.9)
- Movement in gold in process and finished inventories - gold Bullion
(1.8)
(1.3)
-
(3.1)
- Ongoing rehabilitation expenditure
22.3
2.0
-
24.3
- Care and maintenance
-
-
11.1
(11.1)
- Other operating income/(costs)
27.6
3.1
-
30.7
Cash operating costs
(2,274.0)
(352.0)
-
-
(2,626.0)
Reconciliation of profit/(loss) for the year to working profit/(loss) before additions to property, plant and equipment
Profit/(loss) for the year
297.1
424.9
(87.0)
635.0
- Deferred tax
(6.6)
86.5
0.8
80.7
- Net other operating costs/(income)
51.5
14.8
(24.5)
41.8
- Ongoing rehabilitation expenditure
22.3
2.0
-
24.3
- Discount recognised on Payments made under protest including
subsequent unwinding
3.2
-
-
3.2
- Unwinding of provision for environmental rehabilitation
36.5
14.3
1.2
52.0
- Growth in investment in environmental obligation funds
(11.2)
(25.2)
(2.1)
(38.5)
- Other income
(0.7)
-
-
(0.7)
- Change in estimate of environmental rehabilitation recognised in
profit or loss
(19.1)
(2.1)
(0.7)
(21.9)
- Depreciation
150.4
119.6
0.8
270.8
Working profit/(loss) before additions to property, plant and equipment
523.4
634.8
(111.5)
1,046.7
Statement of cash flows
Cash inflows from operating activities
546.1
563.1
19.7
1,128.9
Cash outflows from investing activities
(135.7)
(60.1)
(6.7)
(202.5)
Cash (outflows)/inflows from financing activities
(405.5)
(500.8)
1,415.5
509.2
Reconciliation of adjusted EBITDA
Profit for the year
635.0
Income tax
343.9
Profit before tax
978.9
Finance expense
68.8
Finance income
(109.8)
Results from operating activities
937.9
Depreciation
270.8
Share-based payment expense
224.1
Change in estimate of environmental rehabilitation recognised in
profit or loss
(21.9)
Gain on disposal of property, plant and equipment
(0.7)
Transaction costs
1.4
Adjusted EBITDA
 
1
1,411.6
1
Adjusted EBITDA (that was considered from the year ended
 
30 June 2019 following the initial RCF agreement)
 
may not be comparable to
similarly titled measures of other companies. Adjusted
 
EBITDA is not a measure of performance
 
under IFRS and should be considered in
addition to, and not as a substitute for, other measures of financial
 
performance and liquidity.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continued
for the year ended June 30, 2021
F-34
23
OPERATING SEGMENTS
 
continued
Other
2019
reconciling
Amounts in R million
Ergo
FWGR
items
 
Total
Financial performance
Revenue (External)
2,577.5
184.6
-
2,762.1
Cash operating costs
(2,311.1)
(111.8)
-
(2,422.9)
Movement in gold in process and finished inventories - Gold Bullion
16.4
16.2
-
32.6
Segment operating profit
282.8
89.0
-
371.8
Retrenchment costs
(1.6)
(4.7)
-
(6.3)
Administration expenses and other costs
(12.0)
(2.3)
(76.6)
(90.9)
Interest income
 
1
6.5
-
10.4
16.9
 
1
Interest expense
 
2
(2.4)
-
(3.2)
(5.6)
 
2
Current tax
1.6
-
-
1.6
Working profit/(loss) before additions to property, plant and equipment
274.9
82.0
(69.4)
287.5
Additions to property, plant and equipment
(22.8)
(330.7)
(0.2)
(353.7)
Working profit/(loss) after additions to property, plant and equipment
252.1
(248.7)
(69.6)
(66.2)
1
Interest income excludes the unwinding of the Payments
 
made under protest
2
Interest expense excludes the discount recognised on
 
the initial recognition of the Payments made under
 
protest
Reconciliation of cost of sales to cash operating costs
Cost of sales
(2,414.7)
(131.3)
(7.9)
(2,553.9)
- Depreciation
142.8
25.7
0.6
169.1
- Change in estimate of environmental rehabilitation recognised in
profit or loss
(58.6)
-
(1.4)
(60.0)
- Movement in gold in process and finished inventories - gold Bullion
(16.4)
(16.2)
-
(32.6)
- Ongoing rehabilitation expenditure
16.6
1.7
-
18.3
- Care and maintenance
-
-
8.8
8.8
- Other operating income/(costs)
19.2
8.3
(0.1)
27.4
Cash operating costs
(2,311.1)
(111.8)
-
(2,422.9)
Reconciliation of profit/(loss) for the year to working profit/(loss) before additions to property, plant and equipment
Profit/(loss) for the year
82.3
28.7
(32.5)
78.5
- Deferred tax
16.2
13.4
(1.4)
28.2
- Net other operating costs/(income)
40.2
15.4
(25.7)
29.9
- Ongoing rehabilitation expenditure
16.6
1.7
-
18.3
- Discount recognised on Payments made under protest including
subsequent unwinding
3.5
-
-
3.5
- Unwinding of provision for environmental rehabilitation
45.4
19.6
1.3
66.3
- Other income
(2.2)
-
(5.7)
(7.9)
- Growth in environmental rehabilitation obligation funds
(11.3)
(22.5)
(4.6)
(38.4)
- Change in estimate of provision for environmental rehabilitation
recognised in profit or loss
(58.6)
-
(1.4)
(60.0)
- Depreciation
142.8
25.7
0.6
169.1
Working profit/(loss) before additions to property, plant and equipment
274.9
82.0
(69.4)
287.5
Statement of cash flows
Cash inflows/(outflows) from operating activities
221.7
89.3
(22.7)
288.3
Cash (outflows)/inflows from investing activities
(39.4)
(324.4)
60.8
(303.0)
Cash (outflows)/inflows from financing activities
(291.7)
236.7
47.1
(7.9)
Reconciliation of adjusted EBITDA
Profit for the year
78.5
Income tax
26.6
Profit before tax
105.1
Finance expense
78.4
Finance income
(58.3)
Results from operating activities
125.2
Depreciation
169.1
Share-based payment expense
21.4
Change in estimate of environmental rehabilitation recognised in profit
(60.0)
Gain on financial instruments at fair value through profit or loss
(2.1)
Gain on disposal of property, plant and equipment
(5.8)
Retrenchment costs
6.3
Adjusted EBITDA
1
254.1
 
1
1
 
Adjusted EBITDA (that was considered from the year ended
 
30 June 2019 following the initial RCF agreement)
 
may not be comparable to
similarly titled measures of other companies. Adjusted
 
EBITDA is not a measure of performance
 
under IFRS and should be considered in
addition to, and not as a substitute for, other measures of financial
 
performance and liquidity.
 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continued
for the year ended June 30, 2021
F-35
24
 
PAYMENTS
 
MADE UNDER PROTEST
SIGNIFICANT ACCOUNTING JUDGEMENTS
Payments made under protest
The determination
 
of whether the
 
payments made under
 
protest give
 
rise to an
 
asset or
 
a contingent asset
 
or neither,
 
required
the use of significant judgement.
 
The definition of an asset
 
in the conceptual framework was
 
applied as well as the
 
considerations
in the outcome
 
of the IFRS Interpretations
 
Committee (“
IFRIC
”) agenda decision
 
– Deposits relating to
 
taxes other than income
tax (IAS 37 Provisions, Contingent Liabilities
 
and Contingent Assets) (“
IFRIC Agenda Decision
”) published in January 2019.
 
The
IFRIC Agenda Decision has a similar fact pattern to that of the payments made under protest. With the consideration of the facts
and circumstances
 
surrounding the
 
payments made
 
under protest
 
in applying
 
the definition
 
of an
 
asset and
 
the IFRIC
 
Agenda
Decision, management considered the following:
 
 
payments
 
were
 
made
 
under
 
protest
 
and
 
without
 
prejudice
 
or
 
admission
 
of
 
liability.
 
Such
 
payments
 
were
 
not
 
made
 
as
 
a
settlement of debt or recognition of expenditure;
 
the
 
Group
 
therefore
 
retains
 
a
 
right
 
to
 
recover
 
the
 
payments
 
from
 
the
 
City
 
of
 
Ekurhuleni
 
Metropolitan
 
Municipality
(“
Municipality
”) if the Group is successful in the Main Application;
 
if the Group
 
is not successful
 
in the Main
 
Application, the
 
payments will
 
be used
 
to settle
 
the resultant
 
liability to the
 
Municipality;
and
 
 
these two possible outcomes
 
(i.e. success in
 
the Main Application or
 
not) therefore, will
 
lead to economic
 
benefits to the Group.
Therefore, the
 
right to
 
recover the
 
payments made
 
under protest
 
is not
 
a contingent
 
asset because
 
it meets
 
the definition
 
and
recognition
 
criteria
 
of
 
an
 
asset.
 
No
 
specific
 
guidance
 
exists
 
in
 
developing
 
an
 
accounting
 
policy
 
for
 
such
 
asset.
 
Therefore,
management applied judgement in developing an accounting policy that
 
would lead to information that is relevant to the users of
these financial statements and information that can be relied upon.
Contingent liabilities
The assessment
 
of whether
 
an obligating
 
event results
 
in a
 
liability or
 
a contingent
 
liability requires
 
the exercise
 
of significant
judgement of the outcome of future events that are not wholly within the control of the Group.
Litigation and other judicial
 
proceedings inherently entail complex
 
legal issues that are subject
 
to uncertainties and complexities
and are subject to interpretation.
SIGNIFICANT ACCOUNTING ASSUMPTIONS AND ESTIMATES
The discounted amount of the
 
payments made under protest is
 
determined using assumptions about the
 
future that are inherently
uncertain and can change materially over time and includes the discount rate and discount period.
 
These assumptions about the future include estimating the timing of concluding on
 
the Main Application, i.e. the discount period,
the ultimate settlement terms, the discount rate applied and the assessment of recoverability.
ACCOUNTING POLICIES
Payments made under protest
Recognition and measurement
The
 
payment
 
made
 
under
 
protest
 
asset
 
that
 
arises
 
from
 
the
 
Municipality
 
Electricity
 
Tariff
 
Dispute
 
is
 
initially
 
measured
 
at
 
a
discounted amount, and any
 
difference between the face
 
value of payments made under
 
protest and the discounted
 
amount on
initial recognition is recognised in profit or loss
 
as a finance expense. Subsequent to initial recognition,
 
the payments made under
protest is measured using the effective interest method to unwind the discounted amount to the original face value less any write
downs for recovery. Unwinding of the carrying value and changes in the discount period are recognised in profit or loss.
Assessment of recoverability
The
 
discounted
 
amount of
 
the payments
 
under
 
protest is
 
assessed
 
at each
 
reporting date
 
to
 
determine whether
 
there is
 
any
objective
 
evidence
 
that
 
the
 
full
 
amount
 
is
 
no
 
longer
 
expected
 
to
 
be
 
recovered.
 
The
 
Group
 
considers
 
the
 
reasonable
 
and
supportable
 
information
 
related
 
to
 
the
 
creditworthiness
 
of
 
the
 
Municipality
 
and
 
events
 
surrounding
 
the
 
outcome
 
of
 
the
 
Main
Application.
 
Any write down is recognised in profit or loss.
Contingent liabilities
A contingent liability
 
is a possible obligation
 
arising from past events
 
and whose existence will
 
be confirmed only
 
by occurrence
or non-occurrence of one
 
or more uncertain future
 
events not wholly within
 
the control of the
 
Group. A contingent liability
 
may also
be a present obligation arising from past events
 
but is not recognised on the basis that
 
an outflow of economic resources to settle
the obligation
 
is not
 
viewed as
 
probable, or
 
the amount
 
of the
 
obligation cannot
 
be reliably
 
measured. When
 
the Group
 
has a
present obligation, an outflow of economic resources
 
is assessed as probable and the Group
 
can reliably measure the obligation,
a provision is recognised.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continued
for the year ended June 30, 2021
F-36
24
 
PAYMENTS
 
MADE UNDER PROTEST
continued
Amounts in R million
Note
2021
2020
Balance at the beginning of the year
35.0
27.6
Payments made under protest
8.1
10.6
Discount on initial payment made under protest
7
(7.4)
(7.1)
Unwinding
6
4.8
3.9
Balance at the end of the year
40.5
35.0
Ekurhuleni Metropolitan Municipality ("Municipality") Electricity Tariff Dispute
There are primarily 3
 
(three) legal proceedings for
 
which relief has been sought
 
in the appropriate legal
 
fora and all of
 
which fall
within the jurisdiction of the High Court of South Africa, Gauteng Local Division, Johannesburg. These comprise of an
 
application
brought by Ergo and actions brought under two summonses by the Municipality.
In order
 
to operate
 
the Ergo
 
Plant and
 
conduct its
 
business operations,
 
Ergo requires
 
a reliable
 
and steady
 
feed of
 
electricity
which it draws from the Ergo Central Substation.
 
Over the past several
 
years the Municipality has
 
charged Ergo for such
 
electricity, at the Megaflex tariff at
 
which ESKOM Holdings
SOC Limited (“
ESKOM
”) charges its large power users plus an additional surcharge, as it still does; and Ergo paid therefor.
Pursuant to
 
its own investigations,
 
and after having
 
sought legal
 
advice on the
 
matter,
 
Ergo determined
 
that only
 
ESKOM may
legitimately charge it
 
for the electricity so
 
drawn and consumed at
 
the Ergo Plant, specifically
 
from the Ergo Central
 
Substation.
 
Despite
 
this, ESKOM
 
refused to
 
either accept
 
payment from
 
Ergo in
 
respect of
 
such electricity
 
consumption or
 
to conclude
 
a
consumer agreement with it.
In December 2014, Ergo instituted legal proceedings
 
by way of an application (“
Main Application
”) against the Municipality and
ESKOM as well as the National Energy Regulator of
 
South Africa (“
NERSA
”), the Minister of Energy, the Minister of Co-operative
Governance &
 
Traditional
 
Affairs and
 
the South
 
African Local
 
Government Association,
 
the latter
 
4 (four)
 
respondents against
whom Ergo does not seek any relief.
Ergo seeks the undermentioned relief:
 
declaring that the Municipality does not supply electricity to it at the Ergo Plant;
 
declaring that
 
the Municipality
 
is in
 
breach of
 
its temporary
 
Distribution License
 
(issued by
 
NERSA) by
 
purporting to
 
supply
electricity to Ergo at the Ergo Plant;
 
declaring that neither the Municipality
 
nor ESKOM may lawfully insist
 
that only the Municipality may
 
supply electricity to Ergo
at the Ergo Plant;
 
declaring that ESKOM presently supplies electricity to Ergo at the Ergo Plant; and
 
directing ESKOM to
 
conclude a consumer
 
agreement with Ergo
 
for the supply
 
of electricity at
 
the Ergo Plant
 
at its Megaflex
tariff.
The Municipality has since issued two summonses (“
Summonses
”) for the recovery of arrears it alleges it
 
is owed amounting to
R
74.0
 
million and R
31.6
 
million, respectively.
In the interest of the proper administration of justice, the Main Application was postponed by agreement between the parties and
a case manager
 
was appointed to determine
 
a collaborative process to
 
facilitate the effective
 
and efficient court
 
scheduling and
coordination of both the Main Application and the Summonses.
In
 
order
 
to
 
secure
 
uninterrupted
 
supply
 
of
 
electricity,
 
Ergo
 
has
 
made
 
payment
 
and
 
continues
 
to
 
pay
 
for
 
consumption
 
at
 
the
amended and
 
lower “J-Tariff”,
 
albeit under
 
protest and
 
without prejudice
 
and/or admission
 
of liability.
 
Whilst still
 
deemed to
 
be
disproportionate, the J-Tarif is significantly lower than the previously imposed “D-Tariff”. The Group recognised an asset for these
payments that are made “under protest”.
 
Ergo
 
has
 
also
 
brought
 
an
 
application
 
for
 
the
 
consolidation
 
of
 
both
 
the
 
Main
 
Application
 
and
 
the
 
actions
 
brought
 
under
 
the
Summonses, which is still ongoing.
The Group supported by the
 
external legal team is
 
confident that there is a
 
high probability that Ergo will
 
be successful in the
 
Main
Application and defending
 
the Summonses. Therefore,
 
there is no
 
present obligation as
 
a result of
 
a past event
 
to pay the
 
amounts
claimed by the Municipality
.
The balance at the end of the year was based on the following assumptions:
 
 
discount rate:
11.68
% (2020:
11.68
%) representing the Municipality maximum cost of borrowing on bank loans as disclosed in
their June 30, 2020 annual report; and
 
 
discount period:
June 30, 2024
 
(2020:
June 30, 2022
) representing management’s
 
best estimate of
 
the date of
 
conclusion of
the Main Application and is supported by external legal counsel.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continued
for the year ended June 30, 2021
F-37
25
 
OTHER INVESTMENTS
ACCOUNTING JUDGEMENTS
The Group has one (1) director representative on
 
the Rand Refinery board. Therefore, judgement had to be applied
 
to ascertain
whether significant influence exists, and
 
if the investment should be
 
accounted for as an associate
 
under IAS 28 Investments in
Associates
 
and
 
Joint
 
Ventures.
 
The
 
director
 
representation
 
is
 
not
 
considered
 
significant
 
influence,
 
as
 
it
 
does
 
not
 
constitute
meaningful representation.
 
It represents
11.11
% of the entire board and
 
is proportional to the
11.3
% shareholding that the Group
has.
 
SIGNIFICANT ACCOUNTING ASSUMPTIONS AND ESTIMATES
The fair value of the listed equity instrument is determined
 
based on quoted prices on an active market. Equity instruments
 
which
are not listed on an
 
active market are measured using
 
other applicable valuation techniques depending
 
on the extent to which
 
the
technique maximises
 
the use
 
of relevant
 
observable inputs
 
and minimizes
 
the use
 
of unobservable
 
inputs. Where
 
discounted
cash flows are used, the estimated cash flows are based on management’s best estimate based on readily available information
at measurement
 
date. The
 
discounted cash
 
flows contain
 
assumptions about
 
the future
 
that are
 
inherently uncertain
 
and can
change materially over time.
ACCOUNTING POLICIES
On initial recognition of
 
an equity investment that is
 
not held for trading, the
 
Group may make an irrevocable
 
election to present
subsequent changes in
 
the investment’s
 
fair value in
 
other comprehensive income.
 
This election is
 
made on an
 
investment-by-
investment basis.
 
These assets are initially recognised at fair value plus any directly attributable transaction costs. Subsequent to initial recognition
they
 
are measured
 
at
 
fair value
 
and changes
 
therein are
 
recognised
 
in
 
OCI, and
 
are
 
never reclassified
 
to profit
 
or
 
loss, with
dividends recognised in profit or loss unless the dividend clearly represents a recovery of part of the cost of the investment.
The Group’s
 
listed and
 
unlisted investments
 
in equity
 
securities are
 
classified as
 
equity instruments
 
at fair
 
value through
 
other
comprehensive income (OCI).
Amounts in R million
Shares
% held
 
1
2021
2020
Listed investments (Fair value hierarchy Level 1):
West Wits Mining Limited ("
WWM
")
47,812,500
3.5%
43.5
12.0
Total
 
listed investments
43.5
12.0
Unlisted investments (Fair value hierarchy Level 3):
Rand Refinery Proprietary Limited ("
Rand Refinery
")
44,438
11.3%
119.3
178.4
Rand Mutual Assurance Company Limited B Share Business Fund ("
RMA
")
 
2
12,659
2
1.3%
 
2
4.1
4.7
Guardrisk Insurance Company Limited (Cell Captive A170)
 
3
20
3
100.0%
0.1
0.1
Chamber of Mines Building Company Proprietary Limited
42,292
4.5%
0.1
0.1
Total
 
unlisted investments
123.6
183.3
Balance at the end of the year
 
167.1
195.3
Fair value adjustment on equity instruments at fair value through OCI
(28.2)
191.8
Dividends received on equity instruments at fair value through OCI
(76.1)
(4.3)
Rand Refinery
(72.3)
-
RMA
(3.8)
(4.3)
1
The number and percentage shares held remained
 
unchanged for the prior year with the exception
 
of WWM that issued new shares thereby
diluting DRDGOLD's effective shareholding from
5.1
% to
3.5
%
2
The "B Share Business Fund" shares relate to all
 
the businesses of the RMA Group that do not relate
 
to the Compensation for Occupational
Injuries and Diseases Act
3
The shares held entitles the holder to
100
% of the residual net equity of Cell Captive
 
A 170 after settlement of the reimbursive right
MARKET RISK
Other market price risk
Equity price risk arises from changes in quoted market prices
 
of listed investments as well as changes in the fair
 
value of unlisted
investments due to changes in the underlying net asset values.
FAIR VALUE
 
OF FINANCIAL INSTRUMENTS
Listed investments
The
 
fair
 
values
 
of
 
listed
 
investments
 
are
 
determined
 
by
 
reference
 
to
 
published
 
price
 
quotations
 
from
 
recognised
 
securities
exchanges and constitute level 1 instruments in the fair value hierarchy.
Unlisted investments
The fair
 
values of
 
unlisted investments
 
are determined
 
through valuation
 
techniques that
 
include inputs
 
that are
 
not based
 
on
observable market data and constitute level 3 instruments in the fair value hierarchy.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continued
for the year ended June 30, 2021
F-38
25
 
OTHER INVESTMENTS
continued
25.1
 
RAND REFINERY
Amounts in R million
2021
2020
Balance at the beginning of the year
178.4
-
Fair value adjustment on equity investments at fair value through other comprehensive income
(59.1)
178.4
Balance at the end of the year
119.3
178.4
In accordance
 
with IFRS
 
13
Fair Value
 
Measurement
, the
 
income approach
 
has been
 
established to
 
be the
 
most appropriate
basis
 
to estimate
 
the fair
 
value of
 
the investment
 
in Rand
 
Refinery.
 
This method
 
relies on
 
the future
 
budgeted cash
 
flows as
estimated by Rand Refinery. Management used a model developed by an external expert to perform the valuation.
 
Rand
 
Refinery’s
 
refining
 
operations
 
(excluding
 
Prestige
 
Bullion)
 
were
 
valued
 
using
 
the
 
Free
 
Cash
 
Flow
 
model,
 
whereby
 
an
enterprise
 
value using
 
a
 
Gordon Growth
 
formula for
 
the terminal
 
value was
 
estimated.
 
The forecasted
 
dividend income
 
to be
received
 
from Prestige
 
Bullion was
 
valued using
 
a
 
finite-life dividend
 
discount model
 
as Rand
 
Refinery’s
 
shareholding will
 
be
reduced to nil in 2032 per agreement with the South African Mint (partner in Prestige Bullion). These valuations revealed that the
fair value of the investment in Rand Refinery
 
consist mainly of Rand Refinery’s cash on
 
hand and the forecasted dividend income
to be received from Prestige Bullion.
The
 
enterprise
 
value
 
of
 
Rand
 
Refinery’s
 
refining
 
operations
 
decreased
 
mainly
 
due
 
to
 
a
 
decrease
 
in
 
forecast
 
gold
 
prices,
 
a
decrease in budgeted
 
production volumes, and
 
an increase in
 
budgeted operating costs.
 
The value of
 
the forecasted dividends
for Prestige Bullion
 
decreased mainly due
 
to a
 
decrease in the
 
demand in Krugerrands
 
and an increase
 
in the discount
 
rate applied
to the forecasted dividends of Prestige Bullion. The discount rate increased due to an increase in the risk premium to account for
increased volatility in demand for Krugerrands in the medium- to long-term.
The fair value measurement uses significant unobservable
 
inputs and relates to a fair value
 
hierarchy level 3 financial instrument.
Marketability and minority
 
discounts (both unobservable
 
inputs) of
16.5
% and
17.0
% (2020:
16.5
% and
17.0
%), respectively, were
applied. The
 
latest budgeted
 
cash flow
 
forecasts provided
 
by Rand
 
Refinery as
 
at June
 
30, 2021
 
was used,
 
and therefore
 
classified
as an unobservable input into the models. Key observable/unobservable inputs into the model include:
Amounts in R million
Observable/unobservable input
Unit
2021
2020
Rand Refinery operations
Forecast average gold price
 
Observable input
R/kg
847,317
852,098
Forecast average silver price
 
Observable input
R/kg
11,751
9,453
Average South African CPI
Observable input
%
4.4
4.8
South African long-term government bond rate
Observable input
%
9.5
9.5
Terminal
 
growth rate
Unobservable input
%
4.4
5.0
Weighted average cost of capital
Unobservable input
%
15.1
15.1
Investment in Prestige Bullion
Discount period
Unobservable input
years
12
13
Cost of equity
Unobservable input
%
16.5
13.2
Sensitivity analysis
The fair value
 
measurement is most
 
sensitive to the
 
Rand denominated gold
 
price and volumes.
 
The higher the
 
gold price and
volumes, the higher the fair value of
 
the Rand Refinery investment. The fair value measurement
 
is also sensitive to the discount
rate and
 
minority and
 
marketability discounts
 
applied. The
 
below table
 
indicates the
 
extent of
 
sensitivity of
 
the Rand
 
Refinery
equity value to the inputs:
Input
Change in OCI, net of tax
Amounts in R million
% Increase
% Decrease
% Increase
% Decrease
Rand Refinery operations
Rand US Dollar exchange rate
Observable inputs
1
(1)
3.8
(3.8)
Commodity prices (Gold and silver)
Observable inputs
1
(1)
3.0
(3.0)
Volumes
 
Unobservable inputs
1
(1)
2.6
(2.6)
Weighted average cost of capital
Unobservable inputs
1
(1)
(0.3)
0.3
Minority discount
Unobservable inputs
1
(1)
(1.2)
1.2
Marketability discount
Unobservable inputs
1
(1)
(1.2)
1.2
Investment in Prestige Bullion
Cost of equity
Unobservable inputs
1
(1)
(1.5)
1.5
Prestige Bullion dividend forecast
Unobservable inputs
1
(1)
0.4
(0.4)
Impact of the COVID-19 pandemic
The COVID-19 pandemic had an impact on the gold market and the operations of Rand Refinery as a result of the South African
national lockdown and the assumptions as disclosed were adjusted with relevant information at the reporting date.
 
 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continued
for the year ended June 30, 2021
F-39
26
 
CONTINGENCIES
SIGNIFICANT ACCOUNTING JUDGEMENTS
The assessment
 
of whether
 
an obligating
 
event results
 
in a
 
liability or
 
a contingent
 
liability requires
 
the exercise
 
of significant
judgement
 
of
 
the
 
outcome
 
of
 
future
 
events
 
that
 
are
 
not
 
wholly
 
within
 
the
 
control
 
of
 
the
 
Group.
 
Litigation
 
and
 
other
 
judicial
proceedings
 
inherently
 
entail
 
complex
 
legal
 
issues
 
that
 
are
 
subject
 
to
 
uncertainties
 
and
 
complexities
 
and
 
are
 
subject
 
to
interpretation.
ACCOUNTING POLICIES
Contingent liabilities
A contingent liability is a possible obligation arising from
 
past events and whose existence will be confirmed only
 
by occurrence
or non-occurrence
 
of one
 
or more uncertain
 
future events not
 
wholly within
 
the control of
 
the Group.
 
A contingent liability
 
may
also be a present obligation arising from past events but is not recognised on
 
the basis that an outflow of economic resources to
settle the obligation is not
 
viewed as probable, or the amount
 
of the obligation cannot be
 
reliably measured. When the Group
 
has
a
 
present
 
obligation,
 
an
 
outflow
 
of
 
economic
 
resources
 
is
 
assessed
 
as
 
probable
 
and
 
the
 
Group
 
can
 
reliably
 
measure
 
the
obligation, a provision is recognised.
Contingent assets
Contingent assets are
 
possible assets whose
 
existence will be
 
confirmed by the
 
occurrence or
 
non-occurrence of uncertain
 
future
events that are not wholly within the control of the entity. Contingent assets are not recognised, but they are disclosed when it is
more
 
likely
 
than not
 
that an
 
inflow
 
of benefits
 
will occur.
 
However,
 
when the
 
inflow
 
of
 
benefits
 
is virtually
 
certain
 
an asset
 
is
recognised in the statement of financial position, because that asset is no longer considered to be contingent.
26.1
 
CONTINGENT LIABILITY FOR OCCUPATIONAL
 
LUNG DISEASES
On May 3, 2018, former mineworkers and dependents of deceased mineworkers (“Applicants”) and Anglo American South
Africa Limited, AngloGold Ashanti Limited, Sibanye Gold Limited trading as Sibanye-Stillwater, Harmony Gold Mining Company
Limited, Gold Fields Limited, African Rainbow Minerals Limited and certain of their affiliates (“Settling Companies”) settled the
class certification application in which the Applicants in each sought to certify class actions against gold mining houses cited
therein on behalf of mineworkers who had worked for any of the particular respondents and who suffer from any occupational
lung disease, including silicosis or tuberculosis.
The DRDGOLD Respondents, comprising DRDGOLD Limited and East Rand Proprietary Mines Limited, are not a party to the
settlement between the Applicants and Settling Companies. The settlement agreement is not binding on the DRDGOLD
Respondents. The dispute, insofar as the class certification application and appeal thereof is concerned, still stands and has
not terminated in light of the settlement agreement.
DRDGOLD maintains the view that it is too early to consider settlement of the matter, mainly for the following reasons:
• the Applicants have as yet not issued and served a summons (claim) in the matter;
• there is no indication of the number of potential claimants that may join the class action against the DRDGOLD Respondents;
• many principles upon which legal responsibility is founded, are required to be substantially developed by the trial court (and
possibly subsequent courts of appeal) to establish liability on the bases alleged by the Applicants.
In light of the above there is inadequate information to determine if a sufficient legal and factual basis exists to establish liability,
and to quantify such potential liability.
26.2
 
CONTINGENT LIABILITY FOR ENVIRONMENTAL
 
REHABILITATION
Mine residue deposits may have a potential pollution impact on ground water through seepage. The Group has taken certain
preventative actions as well as remedial actions in an attempt to minimise the Group’s exposure and environmental
contamination.
The flooding of the western and central basins has the potential to cause pollution due to Acid Mine Drainage (“AMD”)
contaminating the ground water. The government has appointed Trans-Caledon Tunnel Authority (“TCTA”) to construct a partial
treatment plant to prevent the ground water being contaminated. TCTA completed the construction of the neutralisation plant
for the Central Basin and commenced treatment during July 2014. As part of the heads of agreement signed in December 2012
between EMO, Ergo, ERPM and TCTA, sludge emanating from this plant since August 2014 has been co-disposed onto the
Brakpan/Withok Tailings Storage facility. Partially treated water has been discharged by TCTA into the Elsburg Spruit.
This agreement includes the granting of access to the underground water basin through one of ERPM’s shafts and the rental of
a site onto which it constructed its neutralisation plant. In exchange, Ergo and its associate companies including ERPM have a
setoff against any future directives to make any contribution toward costs or capital of up to R250 million. Through this
agreement, Ergo also secured the right to purchase up to 30 Ml of partially treated AMD from TCTA at cost, to reduce Ergo’s
reliance on potable water for mining and processing purposes.
While the heads of agreement should not be seen as an unqualified endorsement of the state’s AMD solution, and do not affect
our right to either challenge future directives or to implement our own initiatives should it become necessary, it is an encouraging
development.
In view of the limitation of current information for the accurate estimation of a potential liability, no reliable estimate can be made
for the possible obligation.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continued
for the year ended June 30, 2021
F-40
26
 
CONTINGENCIES
continued
26.3
 
CONTINGENCIES
 
REGARDING
 
EKURHULENI
 
METROPOLITAN
 
MUNICIPALITY
 
ELECTRICITY
 
TARIFF
DISPUTE
Refer note 24 PAYMENTS
 
MADE UNDER PROTEST for a full description of the matter.
Contingent liability
The Municipality has issued two summonses for
 
the recovery of arrears it alleges
 
it is owed amounting to R
74.0
 
million and R
31.6
million, respectively.
 
The group supported by the
 
external legal team is confident
 
that there is a
 
high probability that Ergo will
 
be
successful in defending the Summonses. Therefore, there is no present obligation as a result of
 
a past event to pay the amounts
claimed by the Municipality.
Contingent asset
Ergo
 
instituted
 
a
 
counterclaim against
 
the
 
Municipality
 
for
 
the recovery
 
of
 
the
 
surcharges which
 
were
 
erroneously paid
 
to
 
the
Municipality in the
 
bona fide belief
 
that they were
 
due and payable
 
prior to the
 
Main Application of
 
approximately R
43
 
million (these
surcharges were expensed for accounting purposes).
27
 
FINANCIAL INSTRUMENTS
CLASSIFICATION AND MEASUREMENT OF FINANCIAL ASSETS
Financial
 
assets
 
are
 
not
 
reclassified
 
subsequent
 
to
 
their
 
initial
 
recognition
 
unless
 
the
 
Group
 
changes
 
its
 
business
 
model
 
for
managing financial assets, in
 
which case all affected
 
financial assets are reclassified
 
on the first day
 
of the first reporting
 
period
following the change in business model.
 
A financial asset shall be measured at amortised cost if both the following conditions are met:
 
the financial asset is held within a
 
business model whose objective is to hold
 
financial assets in order to collect
 
contractual cash
flows; and
 
 
the contractual terms of
 
the financial asset give
 
rise on specified dates to
 
cash flows that are solely
 
payments of principal and
interest on the principal amount outstanding.
 
An investment is
 
measured at fair
 
value through other
 
comprehensive income if
 
it meets both
 
of the following
 
conditions and is
not designated as at fair value through profit or loss:
 
It is held with a business model whose objective achieved by both collecting
 
contractual cash flows and selling financial assets;
and
 
 
Its contractual terms give rise on specified dates to
 
cash flows that are solely payments of principal and interest
 
on the principal
amount outstanding.
FINANCIAL RISK MANAGEMENT FRAMEWORK
Overview
The Group has exposure to credit risk, liquidity risks, as well as other market risks from its use of financial instruments. This note
presents information about the
 
Group’s exposure to
 
each of the above
 
risks, the Group’s
 
objectives and policies and
 
processes
for measuring
 
and managing risk.
 
The Group’s
 
management of capital
 
is disclosed in
 
note 20. This
 
note must be
 
read with the
quantitative disclosures included throughout these consolidated financial statements.
The board of
 
directors (“
Board
”) has
 
overall responsibility for
 
the establishment and
 
oversight of the
 
Group’s risk
 
management
framework. During the current year
 
the Board established the
 
Risk Committee (“
RC
”) (previously a subcommittee
 
of the Audit and
Risk
 
Committee),
 
which
 
is
 
responsible
 
for
 
developing
 
and
 
monitoring
 
the
 
Group’s
 
risk
 
management
 
policies.
 
The
 
committee
reports regularly to the Board on its activities.
The Group’s risk management policies
 
are established to identify
 
and analyse the risks
 
faced by the Group,
 
to set appropriate risk
limits and controls, and
 
to monitor risks and
 
adherence to limits. Risk
 
management policies and systems
 
are reviewed regularly
to reflect
 
changes to
 
market conditions
 
and the
 
Group’s activities.
 
The Group,
 
through its
 
training and
 
management standards
and procedures, aims to develop
 
a disciplined and constructive control
 
environment in which all employees
 
understand their roles
and obligations.
The RC oversees
 
how management monitors
 
compliance with
 
the Group’s risk
 
management policies
 
and procedures, and
 
reviews
the adequacy of
 
the risk management
 
framework in relation
 
to the risks
 
faced by the
 
Group. The RC
 
is assisted in
 
its oversight
role by
 
the internal
 
audit function.
 
The internal
 
audit function
 
undertakes both
 
regular and
 
ad hoc
 
reviews of
 
risk management
controls and procedures, the results of which are reported to the RC.
CREDIT RISK
Credit risk is
 
the risk of
 
financial loss to
 
the Group
 
if a customer
 
or counterparty to
 
a financial instrument
 
fails to meet
 
its contractual
obligations, and arises principally from the Group’s trade and other receivables.
The Group’s financial instruments do not represent
 
a concentration of credit risk
 
due to the exposure to
 
credit risk being managed
as disclosed in the following notes:
NOTE 12
 
INVESTMENTS IN REHABILITATION
 
OBLIGATION FUNDS
NOTE 13
 
CASH AND CASH EQUIVALENTS
NOTE 15
 
TRADE AND OTHER RECEIVABLES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continued
for the year ended June 30, 2021
F-41
27
 
FINANCIAL INSTRUMENTS continued
 
 
FINANCIAL RISK MANAGEMENT FRAMEWORK
continued
 
MARKET RISK
Market risk is the risk that changes in market prices, such as commodity prices, foreign exchange rates, interest rates and equity
prices will affect the consolidated profit or loss or the
 
value of its financial instruments. The objective of market risk management
is to manage and control market risk exposures within acceptable parameters, while optimising returns.
 
Commodity price risk
Additional disclosures are included in the following note:
NOTE 4
 
REVENUE
Other market risk
Additional disclosures are included in the following note:
NOTE 25
 
OTHER INVESTMENTS
 
Interest rate risk
Fluctuations in
 
interest rates
 
impact on
 
the value
 
of short-term
 
cash investments
 
and financing
 
activities, giving
 
rise to
 
interest
rate risk. In
 
the ordinary course
 
of business, the
 
Group receives cash
 
from its operations
 
and is obliged
 
to fund working
 
capital
and
 
capital
 
expenditure
 
requirements.
 
This
 
cash
 
is
 
managed
 
to
 
ensure
 
surplus
 
funds
 
are
 
invested
 
in
 
a
 
manner
 
to
 
achieve
maximum returns while
 
minimising risks. Lower
 
interest rates result
 
in lower returns
 
on investments and
 
deposits and also
 
may
have the effect
 
of making it
 
less expensive to
 
borrow funds. Conversely,
 
higher interest rates
 
result in higher
 
interest payments
on loans and overdrafts.
 
Additional disclosures are included in the following notes:
 
NOTE 12
 
INVESTMENTS IN REHABILITATION
 
OBLIGATION FUNDS
 
NOTE 13
 
CASH AND CASH EQUIVALENTS
Foreign currency risk
The Group
 
enters into
 
transactions denominated
 
in foreign
 
currencies, such
 
as gold
 
sales denominated
 
in US
 
dollar, in the
 
ordinary
course of business. This exposes the Group to fluctuations in foreign currency exchange rates.
 
Additional disclosures are included in the following notes:
 
NOTE 4
 
REVENUE
 
NOTE 15
 
TRADE AND OTHER RECEIVABLES
 
NOTE 13
 
CASH AND CASH EQUIVALENTS
 
LIQUIDITY RISK
Liquidity risk is the
 
risk that the Group will
 
not be able to meet
 
its financial obligations as they
 
fall due. The Group’s approach
 
to
managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under
both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation.
The
 
Group
 
ensures
 
that
 
it
 
has
 
sufficient
 
cash
 
on
 
demand
 
to
 
meet
 
expected
 
operational
 
expenses,
 
including
 
the
 
servicing
 
of
financial obligations;
 
this excludes
 
the potential impact
 
of extreme circumstances
 
that cannot reasonably
 
be predicted, such
 
as
natural disasters.
 
Additional disclosures are included in the following note:
 
NOTE 10.2
 
LEASES
 
NOTE 16
 
TRADE AND OTHER PAYABLES
 
NOTE 20
 
CAPITAL MANAGEMENT
28
 
RELATED PARTIES
Disclosures are included in the following notes:
NOTE 5.1
 
COST OF SALES
NOTE 16
 
TRADE AND OTHER PAYABLES
NOTE 19.3
 
TRANSACTIONS WITH KEY MANAGEMENT PERSONNEL
NOTE 21
 
EQUITY
NOTE 22
 
INTEREST IN SUBSIDIARIES
29
 
SUBSEQUENT EVENTS
There were no significant
 
subsequent events between the
 
year-end reporting date of
 
June 30, 2021 and
 
the date of issue
 
of these
financial statements other than described below and included in the preceding notes to the consolidated financial statements.
Declaration of dividend
 
On August
 
25 2021, the
 
Board declared a
 
final dividend
 
for the year
 
ended June
 
30, 2021 of
40
 
SA cents
 
per qualifying share
amounting to R
342.0
 
million, which was paid on September 27, 2021.
 
 
 
 
 
 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continued
for the year ended June 30, 2021
F-42
29
 
SUBSEQUENT EVENTS continued
Conditional shares granted
On 20 October
 
2021,
3,508,232
 
conditional shares were
 
granted to qualifying
 
employees under the
 
current equity settled
 
long-
term incentive scheme.
 
These are expected
 
to vest on
 
20 October 2024.
 
The number of
 
conditional shares granted
 
includes those
granted to directors and prescribed officers as follows:
 
Number of conditional
shares awarded
Executive directors
D J Pretorius
549,986
A J Davel
292,796
Prescribed officers
W J Schoeman
292,796
E Beukes
39,375
 
 
88
SIGNATURES
 
The
 
registrant hereby
 
certifies that
 
it
 
meets all
 
of
 
the
 
requirements for
 
filing on
 
Form 20-F and
 
that it
 
has
 
duly
 
caused and
authorized the
 
undersigned
 
to sign this
 
annual report
 
on its behalf.
 
DRDGOLD LIMITED
By:
/s/ D.J. Pretorius
D.J. Pretorius
Chief Executive
 
Officer
By:
/s/ A.J. Davel
 
A.J. Davel
Chief Financial
 
Officer
Date: October
 
28, 2021