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INVESTMENTS IN REHABILITATION AND OTHER FUNDS
 12 Months Ended
Jun. 30, 2022
Investments in rehabilitation obligation funds [Abstract]  
Investments in rehabilitation obligation funds
12
 
INVESTMENTS IN REHABILITATION
 
AND OTHER 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
(“old environmental rehabilitation policy”)
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
 
under
 
the
 
old
 
environmental
 
rehabilitation
 
policy
 
are
 
for
 
the
 
sole
 
use
 
of
 
material
 
future
environmental rehabilitation payments and are therefore included in non-current assets.
Investments in Guardrisk Cell Captive
Funds invested in the Guardrisk
 
Cell Captive, held within
 
Guardrisk Insurance Company Limited
 
(“
GICL
”) or “
Guardrisk
” are non-
derivative financial assets categorised as financial assets
 
measured at fair value through profit
 
and loss as the funds are invested
by Guardrisk in liquid money market
 
funds.
 
These assets are initially measured
 
at fair value and subsequent
 
changes in fair value
are recognised
 
in profit
 
or loss
 
as they
 
arise and
 
included in
 
finance income.
 
The investments
 
in GICL
 
are for
 
the sole
 
use of
environmental financial guarantees, Directors’ and Officers’ insurance and other insurance requirements.
The investment in the
 
Guardrisk Cell Captive is
 
for the sole
 
use as determined in
 
the insurance policies and
 
are therefore included
in non-current assets.
Investment in Guardrisk Cell Captive – Funding of environmental rehabilitation activities
(refer note 11)
During the current year
 
the Group made a
 
decision to change its
 
method of providing for
 
environmental rehabilitation from
 
funding
in
 
a
 
specific
 
rehabilitation
 
trust
 
to
 
financial
 
guarantees
 
which
 
is
 
an
 
allowed
 
method
 
in
 
terms
 
of
 
the
 
National
 
Environmental
Management
 
Act. A
 
new
 
ring-fenced policy
 
related
 
to the
 
funds
 
was concluded.
 
In
 
this
 
regard,
 
the rehabilitation
 
trust directly
transferred a total amount of R
579.5
 
million to the new ring-fenced policy with GICL in terms of which, GICL issued rehabilitation
financial guarantees. The new ring-fenced policy has replaced the old environmental rehabilitation
 
policy which lapsed during the
year. The funds are
 
ring-fenced for the sole objective of future rehabilitation during and at
 
the end of the relevant life of mine. All
the required approvals for the change in method and transfer of the rehabilitation trust funds were obtained from the Department
of Mineral Resources
 
and Energy (“
DMRE
”) and a
 
thorough consideration of
 
tax and legal
 
impacts were completed
 
prior to the
funds being transferred to GICL.
 
Environmental
 
rehabilitation
 
payments
 
to
 
reduce
 
the
 
environmental
 
rehabilitation
 
obligations
 
and
 
ongoing
 
rehabilitation
expenditure are mostly funded by cash generated from operations.
 
GICL has guarantees
 
in issue amounting
 
to R
614.0
 
million (2021: R
430.1
 
million) to the DMRE
 
on behalf of DRDGOLD
 
related
to
 
the
 
environmental
 
obligations.
 
The
 
funds
 
for
 
environmental
 
rehabilitation
 
in
 
the
 
cell
 
captive
 
serve
 
as
 
collateral
 
for
 
these
guarantees.
Investment in Guardrisk Cell Captive – Directors’ and Officers’ insurance
During
 
the current
 
year premiums
 
were paid
 
into the
 
Guardrisk Cell
 
Captive for
 
the creation
 
of self-insurance
 
for the
 
Group’s
Directors and Officers.
Investment in Guardrisk Cell Captive – Other funds
These are existing
 
funds within the cell
 
captive which were previously
 
part of the old
 
environmental rehabilitation policy held
 
for
purposes of obtaining environmental rehabilitation guarantees. The policy came to an end during the financial
 
year, but the funds
remained within the cell captive for future insurance applications.
Amounts in R million
Note
2022
2021
Cash and cash equivalents in environmental rehabilitation trust funds
-
564.7
 
Opening balance
564.7
542.2
 
Transfer to Investment in Guardrisk Cell Captive
(579.5)
-
 
Growth
6
14.8
22.5
Reimbursive right for environmental rehabilitation guarantees
-
87.5
 
Opening balance
87.5
83.8
 
Lapsing of old environmental rehabilitation policy retained in Guardrisk Cell Captive
(89.3)
-
 
Growth
6
1.8
3.7
Investment in Guardrisk Cell Captive (a)
710.8
-
 
Opening balance
-
-
 
Transfer to Guardrisk cell captive
668.8
-
 
Contributions
28.9
-
 
Growth
6
13.1
-
Investments in rehabilitation and other funds
710.8
652.2
(a) Investment in Guardrisk Cell Captive
The investment in the cell captive is allocated as follows:
 
710.8
-
 
Environmental rehabilitation
589.8
-
 
Directors’ and Officers’ insurance
29.5
-
 
Other funds
91.5
-
CREDIT RISK
The Group
 
is exposed
 
to credit
 
risk on
 
the total
 
carrying value
 
of the
 
investments held
 
in the
 
environmental rehabilitation
 
trust
funds and the Guardrisk Cell Captive.
The Group manages its exposure to credit risk
 
by mandating the Guardrisk Cell Captive to diversify
 
the funds 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
2022
2021
100
bp increase
7.1
5.6
100
bp (decrease)
(7.1)
(5.6)
FAIR VALUE
 
OF FINANCIAL INSTRUMENTS
The fair
 
value of
 
investment in
 
Guardrisk Cell
 
Captive approximate
 
their carrying
 
value due
 
to the
 
short-term maturities
 
of the
underlying funds invested by Guardrisk