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, 20212022
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,
Manager Tel. no. +27
11 470 2600, Email
 
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,
 
2021.2022.
 
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
 
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
 
67
ITEM 2.
OFFER STATISTICS
 
AND EXPECTED TIMETABLE
 
67
ITEM 3.
KEY INFORMATION
 
67
3A.
Selected Financial Data
[Reserved]
67
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
 
2524
4C.
Organizational Structure
 
3329
4D.
Property, Plant And Equipment
 
3430
ITEM 4A.
UNRESOLVED STAFF
 
COMMENTS
 
4143
ITEM 5.
OPERATING AND FINANCIAL REVIEW AND PROSPECTS
 
4244
5A.
Operating Results
 
4244
5B.
Liquidity And Capital Resources
 
5253
5C.
Research And Development, Patents And Licenses, Etc
 
5354
5D.
Trend Information
 
5354
5E.
Off-Balance Sheet Arrangements
Critical Accounting Estimates
57
5F.
Tabular Disclosure Of Contractual Obligations
57
5G.
Safe Harbor
5758
ITEM 6.
DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
 
5758
6A.
Directors And Senior Management
 
5758
6B.
Compensation
 
6062
6C.
Board Practices
 
6365
6D.
Employees
69
6E.
Share Ownership
 
6770
ITEM 7.
MAJOR SHAREHOLDERS AND RELATED PARTY
 
TRANSACTIONS
 
7072
7A.
Major Shareholders
 
7072
7B.
Related Party Transactions
 
7173
7C.
Interests Of Experts And Counsel
 
7173
ITEM 8.
FINANCIAL INFORMATION
 
7173
8A.
Consolidated statements And Other Financial Information
 
7173
8B.
Significant Changes
 
7173
ITEM 9.
THE OFFER AND LISTING
 
7274
9A.
Offer And Listing Details
 
7274
9B.
Plan Of Distribution
 
7274
9C.
Markets
 
7274
9D.
Selling Shareholders
 
7274
9E.
Dilution
 
7274
9F.
Expenses Of The Issue
 
7274
ITEM 10.
ADDITIONAL INFORMATION
 
7274
10A.
Share Capital
 
7274
10B.
Memorandum and articles of Incorporation
association
7274
10C.
Material Contracts
 
7577
10D.
Exchange Controls
 
7678
10E.
Taxation
 
7880
10F.
Dividends And Paying Agents
 
8185
10G.
Statement By Experts
 
8185
10H.
Documents On Display
 
8185
10I.
Subsidiary Information
 
8185
ITEM 11.
QUANTITATIVE
 
AND QUALITATIVE
 
DISCLOSURES ABOUT MARKET RISK
 
8185
TABLE OF CONTENTS
Page
PART II
ITEM 12.
DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
 
8286
12A.
Debt Securities
 
8286
12B.
Warrants and Rights
 
8286
12C.
Other Securities
 
8286
12D
American Depositary Shares
 
8387
ITEM 13.
DEFAULTS,
 
DIVIDEND ARREARAGES AND DELINQUENCIES
 
8488
ITEM 14.
MATERIAL
 
MODIFICATIONS TO
 
THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
 
8488
ITEM 15.
CONTROLS AND PROCEDURES
 
8488
ITEM 16.
[RESERVED]
89
ITEM 16A.
AUDIT COMMITTEE FINANCIAL EXPERT
 
8589
ITEM 16B.
CODE OF ETHICS
 
8589
ITEM 16C.
PRINCIPAL ACCOUNTANT
 
FEES AND SERVICES
 
8589
ITEM 16D.
EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
 
8690
ITEM 16E.
PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
90
ITEM 16F
CHANGE IN REGISTRANT'S CERTIFYING ACCOUNTANT
 
8690
ITEM 16G.
CORPORATE
 
GOVERNANCE
 
8690
ITEM 16H.
MINE SAFETY DISCLOSURES
 
8691
ITEM 16I.
DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
91
PART III
ITEM 17.
FINANCIAL STATEMENTS
 
8892
ITEM 18.
FINANCIAL STATEMENTS
 
8892
ITEM 19.
EXHIBITS
 
8595
SIGNATURES
8898
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 in this Annual Report, 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
 
South African rands.
 
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 R14.27R16.27 per $1.00, the year end exchange rate on June 30, 2021.2022.
 
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, and 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,
cash generated from operating activities, 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, these
measures,
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 “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;
●
statements made in or with respect to the Technical Report Summaries (“
TRS
” or “
TRSs
”) including statements with respect to
Mineral Reserves and Resources and assumptions, gold prices, projected revenue and cash flows and capital expenditures and
other forward looking statements in the TRSs;
●
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;2023;
 
●
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 the Regional Tailings Storage Facility (“
RTSF
”), 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:
 
2
●
the global
 
impact of
 
the COVID-19
 
pandemic and
 
potential announcementnew
 
of further
national lockdowns,variants,
 
including in
 
South Africa;
 
●
the global
impact of
Ukraine conflict
and global inflation;
●
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;assets
and the reclamation
sites on the
east of Ergo’s plant;
●
challenges
 
in replenishing
 
mineral ore
reserves;
●
changes in
 
our competitive
 
position;
●
changes in,
 
or that affect,
 
our business
 
strategy;
●
that assumptions
underlying our
Mineral Reserves
and Mineral
Resources as
set forth in
this report
and our TRSs
prove to be
incorrect;
●
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,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’our
 
mineral reserveMineral 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);diseases;
 
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
 
are cautioned not
 
not to place undue
 
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
LinksAny 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
and no websites
are incorporated
by reference
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,
exploration expenses and
transaction costs, and retrenchment
costs. This is
a non-IFRS financial measure
 
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.
Brakpan/Withok final life design
The Brakpan/Withok Tailings
Storage Facility final life design is the engineering
design that ultimately brings
the
tailings
storage facility
to
its
finality
in
terms
of
extent, operation,
rehabilitation and
management. The
implemented final design
would result in
alignments with the
Global Industry Standard
on Tailings Management
(“
GISTM
”)
and
regulatory
bodies,
increase
deposition
capacity,
improve
operation/management
and
bring
about the sustainable closure of the facility.
$/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
 
of costs and expenses
 
expenses reported by us
 
us in accordance with
 
with IFRS.
Cut‑off grade
 
The minimum
in-situ grade
 
of ore
blocks for
which(i.e., the
 
cash operatingconcentration of
 
costs permetal or
 
ounce, excludingmineral in
 
overheadrock) that
distinguishes material
deemed to
have no
costs, is equaleconomic value from material deemed to a projected gold price per ounce.have economic value.
CIL Circuit
Carbon-in-leach circuit.
Definitive Feasibility Study
("
DFS
")
A definitive
engineering estimate
of all
costs, revenues,
equipment requirements
and production
at a
-5% to
+10% level of accuracy. The study
is used to define the
economic viability of a
project and to support
the search
for project financing.
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.
 
Dilution
Waste or material below the cut-off grade that contaminates the ore during the course of mining operations and
thereby reduces the average grade mined.
Doré
 
Unrefined gold and silver
 
bullion bars consisting of
 
approximately 90% precious metals
 
which will be further
refined to almost pure metal.
Footwall
The underlying side of a stope or ore body.
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.
5
Indicated Mineral Resources
That part of a Mineral Resource for which quantity and grade or
quality are estimated on the basis of adequate
geological
evidence
and
sampling.
The
level
of
geological
certainty
associated
with
an
indicated
Mineral
Resource is sufficient to allow a qualified person to apply modifying factors
in sufficient detail to support mine
planning and evaluation of the economic viability of the deposit. Because an indicated
Mineral Resource has a
lower level of
confidence than the
level of confidence
of a measured
Mineral Resource, an
indicated Mineral
Resource may only be converted to a probable Mineral Reserve.
Inferred Mineral Resources
That part of
a Mineral Resource
for which quantity
and grade or
quality are estimated
on the basis
of limited
geological
evidence
and
sampling.
The
level
of
geological
uncertainty
associated
with
an
inferred
Mineral
Resource
is
too
high
to
apply
relevant
technical
and
economic
factors
likely
to
influence
the
prospects
of
economic
extraction
in
a
manner
useful
for
evaluation
of
economic
viability.
Because
an
inferred
Mineral
Resource has the lowest level
of geological confidence of
all Mineral Resources, which prevents
the application
of the modifying factors in a manner useful for evaluation of economic viability,
an inferred Mineral Resource
may not be considered when assessing the economic viability of a
mining project and may not be converted to
a Mineral Reserve.
Measured Mineral Resources
That part of a Mineral
Resource for which quantity and
grade or quality are estimated
on the basis of conclusive
geological
evidence
and
sampling.
The
level
of
geological
certainty
associated
with
a
measured
Mineral
Resource is
sufficient
to allow
a
qualified person
to apply
modifying factors,
in sufficient
detail
to support
detailed mine planning
and final evaluation
of the
economic viability
of the
deposit. Because
a measured Mineral
Resource has a higher level of confidence than the level of confidence of
either an indicated Mineral Resource
or an inferred Mineral Resource, a measured Mineral Resource may be converted to a proven
Mineral Reserve
or to a probable Mineral Reserve.
Metallurgical plant
 
A processing plant (mill) erected to treat ore and extract the contained gold.
Mineral Reserves
An estimate of tonnage and
grade or quality of indicated
and measured Mineral Resources that, in
the opinion
of the qualified person, can be the basis of an economically viable project. More specifically, the economically
mineable part of a
measured or indicated Mineral
Resource, which includes diluting materials
and allowances
for losses that may occur when the material is mined or extracted.
Mineral Resources
A concentration or occurrence of material of economic interest in or on the Earth's crust in such form, grade or
quality,
and
quantity
that
there
are
reasonable
prospects
for
economic
extraction.
A
Mineral
Resource
is
a
reasonable estimate of mineralization, taking into
account relevant factors such as
cut-off grade, likely mining
dimensions, location or continuity, that, with the assumed and justifiable technical and economic conditions, is
likely to, in
whole or in
part, become economically
extractable. It is
not merely an
inventory of all
mineralization
drilled or sampled.
Mine call factor
 
The gold content recovered expressed as a percentage of the called gold content.
Modifying factors
The factors that a qualified person must
apply to indicated and measured Mineral Resources and
then evaluate
in order
to establish
the economic
viability of
Mineral Reserves.
A qualified person
must apply
and evaluate
modifying
factors
to
convert
measured
and
indicated
Mineral
Resources
to
proven
and
probable
Mineral
Reserves.
These
factors
include,
but
are
not
restricted
to:
Mining;
processing;
metallurgical;
infrastructure;
economic;
marketing;
legal;
environmental
compliance;
plans,
negotiations,
or
agreements
with
local
individuals or groups; and governmental
factors. The number, type and specific
characteristics of the modifying
factors applied will necessarily be a function of and depend upon the mineral, mine, property, or project
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
 
estimate of rehabilitation provision, movement in
gold in process and
finished inventory –
gold bullion, ongoing
rehabilitation expenditure, care
and maintenance,
other operating income 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.
Prefeasibility study ("
PFS
")
A comprehensive study of a range of
options for the technical and economic
viability of a mineral project that
has
advanced
to
a
stage
where
a
preferred
mining
method,
in
the
case
of
underground
mining,
or
the
pit
configuration,
in
the
case
of
an
open
pit,
is
established
and
an
effective
method
of
mineral
processing
is
determined. It includes a
financial analysis based on
reasonable assumptions on the
modifying factors and the
evaluation
of
any
other
relevant
factors
which
are
sufficient
for
a
competent
person,
acting
reasonably,
to
determine if all or part of the Mineral Resource may
be converted to a Mineral Reserve at the time of
reporting.
A prefeasibility study is at a lower confidence level than a feasibility study.
Proven Mineral Reserves
The economically mineable part of a measured Mineral Resource and can only result from conversion of a
measured Mineral Resource and can only result from conversion of a measured Mineral Resource.
Probable Mineral Reserves
The economically mineable part of an indicated and in some cases, a measured Mineral Resource.
Qualified Person
An individual who is a
mineral industry professional with at least 5
years of relevant experience in the
type of
mineralization
and
type
of
deposit
under
consideration
and
in
the
specific
type
of
activity
that
person
is
undertaking on behalf of
the registrant, and an eligible
member or licensee in
a good standing of a
recognized
professional organization at the time the technical report is prepared.
Refining
 
The final purification process of a metal or mineral.
6
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
 
costs and expenses
reported by us in accordance with IFRS.
t’000T’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
 
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
 
of ore.
67
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.[Reserved]
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 climate change;
●
Risks related to government regulation; and
●
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
 
could
result
in
the
closure
of
 
some
or
all
of
our
operations
 
which
would
result
in
significant
costs
 
and expenditure, such as, incurring
 
expenditure,
such
as,
incurringretrenchment
retrenchment costs earlier than expected
 
expected which could
lead to a decline
 
decline in profits,
or losses, as well
 
well as impairment
losses.
In addition, as
 
most
of our
production
costs are
in rands, while
 
while gold
is sold
in dollars
and then converted
 
converted to
rands, our
results of
operation and financial
 
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 strengthening of the South African rand against
 
rand against the dollar would negatively and
 
and adversely affect our business, operating
results
operating results and financial condition.
In the wakewake-of
 
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. Although
 
Changes
in these
conditions
in the
future (e.g.
global recovery
from the
COVID-19 pandemic)
could
lead to
a decrease impact
 
of the gold
 
COVID-19
pandemic
has diminished
and the
gold prices
have marginally
decreased,
the average
gold price
for fiscal
2022 remained
high due to
 
pre-pandemiccontinued
 
levels oreconomic
 
lower.uncertainty
as the
global economies
attempt to
recover
from all
the after
effects of
COVID19
and deal
with,
the conflict
in Ukraine
and rapidly
rising
inflation.
 
In addition,
 
we wereare
 
impacted by
 
by movements
in the exchange
 
rate of the
 
rand
against the
dollar during
 
the COVID-19dollar
 
pandemic as described
 
described below.
 
Exchange rates are influenced by global economic trends. The closing exchange rate of
 
the rand against the dollar
 
at June 30,
 
20212022
strengthenedweakened
 
by 18%14% compared
 
to June 30,
 
2020.2021.
 
The closing
 
price of the
 
rand against
 
the dollar
 
at June 30,
 
2020 weakened2021 strengthened
 
by 23%18% compared
 
to
June 30, 2019.
 
2020. At
September
 
30, 2021, the2022,
 
the rand traded
 
traded at R14.51
R18.15 =
 
$1.00 (based
 
on closing
rates),
 
a 2%12% weakening
 
of the rand
 
against the
 
Dollar
from June
 
30, 2021.
The rand/dollar
exchange
rate remained
volatile
throughout2022 as
 
the fiscaldollar
 
year 2021strengthened
 
mainly as
a result
 
of quantitative
tightening
and the raising
of interest
rates by the
US Federal
Reserve.
The
rand/dollar exchange
rate was volatile throughout
the fiscal year 2022
mainly as a result of global,
 
emerging market and
 
market
and South Africa economic
uncertainty including
 
including uncertainties
 
resulting from the COVID-19 pandemic,
global economic slowdown sentiment,
tensions
between
 
the USAglobal economic
 
and China,slowdown sentiment,
rapidly rising global
inflation,
geopolitical
tensions
in
Ukraine,
 
perceived political and
 
political
economic instability,
 
and fiscal
strength
and structurally
weak economic
 
growth of
 
the South
 
African
economy including
 
a seeminglyexacerbated by
increasing
 
terminallyloadshedding
 
distressedby power utility
 
power utility, Eskom Holdings
 
Holdings SOC Limited
 
Limited (“(“
Eskom
”). as it battles
with supply.
 
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
Up to April 11, 2022 we sold gold at
 
spot prices
based on
the afternoon
 
London Bullion
Market
 
fixing price on the
day when Rand Refinery, acting
 
on the
day when
Rand Refinery,
acting as an agent for the sale
 
sale of all gold produced by the
 
Group, delivers
 
the Gold to the buyer. Our foreign currency
 
iscurrency
was usually sold at the
spot
price in
the market
on the
 
market on the date of
 
trade. Subsequent to April 11, 2022
gold is sold at
a dollar gold price and
spot
exchange rate
specified
in a contract
with the South
African bullion
banks to
deliver the
gold at a
specified
settlement
date.
 
If the dollar
gold price
should fall
and/or the
rand should
strengthen
against the
 
dollar, goldthis
 
price shouldwould adversely
 
fall and/oraffect us,
 
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
 
may be forced
 
to curtail or
suspend some
 
or suspend
some or all
our operations.
 
A failure
to acquire
 
new Ore ReservesMineral
 
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 OreMineral Reserves. A failure to
acquire new OreMineral Reserves in sufficient
quantities and quality to maintain or grow
the current level
and
level and quality of our reserves will negatively affect our future cash flow,
results of operations and financial condition. In addition, if we
 
if we are
unable to
identify Ore
Mineral Reserves
 
that have
reasonable
prospects
 
for economic
extraction
 
while maintaining sufficient
 
sufficient controls on production
and other costs,
 
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
 
and such reduction would adversely
 
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.
 
TheOur 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
current life of mine and for the future. Key projects to increase
 
Key projects
such a deposit capacity include
the development
 
of the regional tailings storage
facility as part of Phase 2
 
regionalFWGR project or identifying interim alternate deposition facilities as well as obtaining regulatory approvals for the
Brakpan/Withok
 
tailings
storage
facility
as part
of Phase
2 FWGR
project
as well
as obtaining
regulatory
approvals for
alternative
depositioningTSF final design
 
at ErgoErgo.
However, their
products may
not be successful
or sufficient
to maintain
or increase
deposit capacity
.
 
 
Our large projects, most notably the development
 
the development of FWGR arePhase 2, the Solar Plant Project and
 
Brakpan/Withok TSF final life
design implementation to enable mining on the
east of the
Ergo plant, 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
 
intensive processes carried
out over long durations
and requires us to commit significant
capital expenditure
 
and allocate
 
considerable
 
management
 
resources in
 
utilisingutilizing our
 
existing experience
 
and know-how.
 
Projects like
 
the
development of
Phase 2
 
of Phase 2 of
the
 
FWGR assets acquired
 
acquired from Sibanye-Stillwater
 
is subject toSibanye-Stillwater, the
 
Solar Plant
Project and
the
implementation
of the Brakpan/Withok TSF final life design are subject
to the risk of delays,
 
regulatory approvals
and cost
overruns which are
inherent in
 
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;pandemics;
•
 
failure or
 
delay of third-party
 
service providers;
 
and
•
 
changes to
 
regulations,
 
such as environmental
 
regulations.
We also face the
risk that expected
benefits of
our projects
are not achieved.
10
 
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
 
related to Phase 2,
 
2,
will be delayedcommence
 
fromin fiscal
 
year 2022 2031.
As the
Driefontein
4 TSF is
expected
to reach
full capacity
during fiscal
 
year 2024.2025,
whereafter
the depositional
rate would
have to
decrease
materially. Plans
are in
place to
redirect
material
to Sibanye
Gold’s Leeudoorn
TSF until
the Regional
Storage
Tailings
Facility is
ready for commissioning
expected in
fiscal year
2031.
 
Ergo is currently
10
developing a
Solar Power
Plant to reduce
its reliance
on Eskom and
to reduce
its future
cost of electricity
(“
the Solar
Plant
”).
The Solar
Plant
definitive
feasibility
study was
completed
during
fiscal
year 2022
and is
currently
under
development.
A significant
capital
investment
is needed to
complete the
project. It
is estimated
that benefit
from the project
in reduced electricity
costs and reduced
carbon footprint
will start
to materialize
from April
2023 onwards.
Regulatory approvals
for the final life design of the Brakpan/Withok TSF are yet to be obtained. The
implementation
of the final life
design is expected
to be crucial
in the increase
of the life
of mine of
Ergo as it will
accommodate
material in
toward the
east of the
Ergo plant.
 
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
 
FWGR,
the Solar
Power Project
and the
implementation of the
final life
design Brakpan/Withok TSF
are
particularly
material
to DRDGOLD,
significant
cost overruns
 
or adverse
changes
 
in assumptions
affecting the
 
viability ofaffecting
 
the projectviability
of these
projects
 
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
 
a function
of,
inter alia
, macroeconomic
 
conditions,
 
rising cost
of debt,
our credit
 
rating, our
 
gearing and
other risk
 
metrics,
the condition of
 
of the financial
markets, future
 
gold prices, the
 
the prospects for our
 
for our industry, our
 
operational performance and
operating cash
 
performanceflow and debt
 
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.
Management
is estimating
a significant
capital investment
in major projects
in the next
few years.
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
 
sources
and any
such financing
 
may not
be permitted
 
under the terms
 
terms of
our financing
arrangements
or may not
be possible
on attractive
terms or
at all
due
to rising
interest
rates,
or may not
 
be available
 
on acceptable
 
terms, or at
 
at all.
If we do
 
do not generate
 
sufficient cash
 
flows or have
 
have access
to adequate
financing,
our ability
to respond to
changing business and economic conditions, make
future acquisitions, react to
adverse operating results, meetfinancing, 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
 
unplanned maintenance
and load shedding
or power dips,
 
destruction of
 
infrastructure,
 
spillages, higher
than expected operating
 
than expectedcosts, or
 
operating costs,
or
lower than
 
expected production as
a
 
result of
 
decreases in
 
extraction efficiencies due
to
 
imbalances in the
metallurgical
 
the metallurgical process
as
 
well as
inconsistent
 
volume throughput
 
or other factors.
 
 
WeOur FWGR operations are reliant
 
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 Apriluse and access to
 
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.
 
EachAny of these conditionsthe risks
above or other weather
 
conditions or
other interruptions
 
could adversely impact
 
impact our operations
which could have
 
a material
material
adverse effect
 
on our business,
 
operating results
 
and financial
 
condition.
11
 
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 and
active TSFs
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
 
to surface.
Progressive flooding
of
these abandoned
 
underground mining areas
 
areas and surrounding underground
 
surrounding underground mining areas could eventually
cause the
 
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
:
 
•
 
rising global
and national
inflation;
•
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;
•
 
shortages
or availability
of materials
used in production;
•
environmental
 
factors; and
•
 
pollution.
 
Our production costs
consist mainly
of materials
including reagents
and steel, labor, electricity,
specialized
service providers,
 
water,machine
hire,
security,
water, fuels,
lubricants
 
and other
oil and
petroleum-based
products.
Production
costs
have in
the past,
 
and petroleum-based
products. Production
costs havecould
 
in the past,
future,
increase
at rates
in excess
of our
annual inflation
rate and
 
could in the future,impact our
 
increase at
rates in excess
of our annual
inflation rate
and impact
our results
 
of operation
 
and can result
 
result in
the restructuring
 
of these
operations
 
at substantial
cost.
 
 
 
On February 28, 2021,The transitional arrangement regarding wage increases with the workforce at
 
ERGO signed a oneFWGR when these
 
year wage extensionemployees were incorporated into
DRDGOLD have now come to an end. A three-year
 
wage agreement was reached
 
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
labor at FWGR whenin November
 
these employees
were incorporated
into DRDGOLD2021 and wage
have now come
to an end. As
a consequence,
negotiations
 
are currently
 
underway withunder
 
organized labour
way at FWGR with
 
the intentionERGO
 
of tryingoperations
after the
previous
extended
agreement
came to
an end
reach a 3 year
on June
30, 2022.
A new
 
wage agreement.
agreement
was concluded
after June
30, 2022.
 
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 reliance on Eskom’s grid through self-generation of power, for example through the
 
such asSolar Power project at
Ergo, 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
 
to offset
the increases
affecting
 
our operations
and could
 
adversely affect
 
affect our
business,
operating
 
results
and financial
condition.
 
 
Uncertainties regarding
 
regarding the
 
impact
of
the
 
COVID-19
pandemic
 
on and
potential new
variants could
impact
current
 
and future
 
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 haveglobally. The
national
 
implementedstate
 
programsof disaster
imposed
by the
South African
Government
ended on
April 4,
2022,
which reduced
the overall
risk related
 
to addressthe
pandemic.
We continue to monitor
 
the risk related
 
of COVID-19
infections
at our
operations,
to the COVID-19
 
pandemic and
 
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 measures
 
in furtherplace to
 
restrictivereact in the
 
national lockdowns,case that the
 
which couldCOVID-19 pandemic
worsens.
 
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.
 
Uncertainties
regarding supply
chain
The
global
economic
environment,
geopolitical
tensions
as
well
as
inflationary
pressures
worldwide
have
highlighted
the
interdependencies
of supply
chains.
The risk
of dependency
on key
suppliers
requires
ongoing focus
and proactive
management.
The unavailability
of critical
material
such as
reagents
and critical
equipment
may affect
production
and operating
costs
resulting
in loss
of revenue.
Delays
in supplies,
freight costs
and higher
than inflationary
increases
for capital
equipment are
crucial elements
for new projects.
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
 
R570.8R517.7 million which is
 
included in
 
our
statement of
 
of financial
position
 
as
at
 
June
30,
 
20212022
 
(Refer
 
to
Item
 
18.
‘‘ ‘‘Financial
 
Statements -
 
- Note
 
11
–
 
Provision
 
for environmental
 
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,
 
as changinghigher than expected
 
legislation, higher thancost increases,
 
expected costor unidentified
 
increases, or
unidentified rehabilitation costs. We
fund these
environmental
rehabilitation
 
costscosts. We used to 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
 
trust fundsfor our
operations.
 
or fundsDuring fiscal
 
year 2022
we
changed the
method of
provision to
funds held
in
 
insurance products.
 
instrumentsIf
 
established
for our
operations. If any
 
of our
 
our operations are prematurely closed, the
 
are
prematurely
closed,
the rehabilitation
funds may be
 
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 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. This is further impacted and expected to intensify with the
effects of climate change. In
addition, the dams could overflow or
 
overflow or a side wall
 
could
collapse and the health
 
health and safety of
our employees and
communities living
around these dams could
be jeopardized. In the event of
 
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,
 
business, operating
results and
 
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
 
exclusions and
limitations on coverage.
 
The insured value for property
and loss of profits
due to business interruption
 
interruption is R11.35R14.7
billion, with a total loss limit
 
loss limit of R1 billion for Ergo and R650 million for FWGR
 
for the 20222023 fiscal
year. Business interruption
 
is only covered
from
the time the loss occurs
 
and is
subject to time and amount
 
and amount deductibles that
 
that vary between
categories.
 
To cover legal liability
to third parties
for damage, injury, illness
 
illness or death a
total of R1.5R1
 
billion insurance
cover is in
 
place for the
 
the 20202023 fiscal
 
year,
subject to
 
certain exclusions and
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,
 
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
 
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 20212022 the
 
gold price reached a
 
a high of U$2,070
per ounce
and a low of
 
U$2,072 per ounce and1,684.
We benefited from
 
a lowsustained
 
of U$1,676.
We
benefited from a sustainedhigh
upswing in
gold price
 
in thedue to slow
 
first quarter,global economic
recovery,
economic uncertainty
 
and ingeopolitical
 
the fourth
quarter, following
the global
response
to the
COVID-19
pandemic,
the gold
price surged
further to
all-time highs.tensions.
 
 
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 insustained high gold price for fiscal 2022 after the highs experienced
 
average goldin fiscal 2021.
 
price duringThe rand/dollar exchange
 
rate remained volatile throughout
fiscal 20202022 mainly as a result
of economic uncertainty
 
and fiscalperceived political
 
2021. The rand/dollarinstability,
 
exchange rateincrease of interest
 
remained volatilerates by the US Federal Reserve
 
throughout fiscalas
they attempt
 
2021 mainly
as a result of economicto reduce
 
uncertainty and perceived
political instability,inflation,
 
global market
 
slowdown
sentiment,
 
tensions betweenUkraine
 
conflict,
tensions
between the
USA and China,
low economic growth,
 
China, low
economic
growth
and increased load shedding from Eskom as it struggles to keep up with demand., and a seemingly terminally
continually distressed Eskom.
Further volatility
 
in the
Rand was fueled by Moody’s downgrade
 
upgrading of South
Africa’s sovereign credit rating to stable after the rating was
 
ratingdowngraded to sub-investment
grade in fiscal
 
sub-investment grade as
a result
of “continuing deterioration in
fiscal strength and
structurally very weak
economic growth.”2021.
 
14
 
COVID-19 (or
an alleviation
of the pandemic)
or otherThe factors
 
mentioned above
 
could put negative
 
negative pressure on
 
the price
of
 
gold or the
USD –
 
rand exchangethe rand/dollar
 
exchange rate in
 
the future.
 
Our
profitability may
 
may be
negatively
impacted
 
by a decline in the gold price as
 
declinewe incur losses when revenue
 
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 ReserveMineral Reserves
and Mineral Resources estimates.
 
Our OreMineral Reserve and Mineral Resources figures described in this document
 
document are the best estimates of our current management as
of the dates stated and are
reported
 
reported in
accordance
with
the
requirements
 
of
Industry
Guide
7
of
the
SEC.
SEC’s Regulation S-K (Subpart 1300). These
 
estimates
may
not
reflect
actual
reserves
or
future
reflect actual Mineral Reserves and Mineral Resources 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
electricityMineral Reserves
 
and other
production
costs increase
or recovery
rates decrease,
it may become
uneconomical
to recover
Ore
Reserves,Mineral Resources,
 
particularly
 
those containing
 
relatively lower
 
lower grades
of mineralization.
 
Under these
circumstances,
 
we
would be required
 
required to re-evaluate our Mineral
 
re-evaluate
our Ore Reserves. Short-termReserves and Mineral
 
operating factorsResources.
 
Short-term operating
factors relating
to the ability to reclaim
 
to reclaim our Ore
Mineral Reserves,
 
at the required rate,
 
rate, such
as an interruption
 
or
reduction in
 
in the supply of
 
of electricity,
 
limited deposition
capacity or
a shortage
 
of
water may have
 
have the effect that we
 
that we are unable to
 
to achieve critical
 
mass, which may
 
render the
recovery of
 
Oreof Mineral Reserve,
 
or parts of the
 
Ore Mineral
Reserve
 
no longer
feasible,
 
which
could
 
negatively
 
affect
production
 
rate
and costs
 
and decrease
 
our profitability
during
profitability during
any given period. Estimates
 
period.
Estimates
of reserves Mineral Reserves
and Mineral Resources
are based on drilling
results and because
unforeseen conditions
may occur in these
mine
 
mine dumps that
may not
 
have been
 
identified
 
by the drilling
 
drilling results,
 
the actual
 
results may
 
may vary from
 
from the initial
 
initial estimates.
 
These factors have in the past and
could
couldin the future result in reductions in our Ore Reserve
Mineral Reserves
and Mineral
Resources 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;
15
●
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-19sustained
 
pandemichigh unemployment
rate of
33.9% and 46.5%,
for 2022,
amongst the
youth has
 
increased the
 
the risk of
 
of social
unrest,
 
such as
protests and conflict, in
our surrounding communities already
 
already created from a growing frustration
 
a growing
frustration of society
at large on slow reformative action
action being taken
by all spheres of the
South African
government, specifically,
 
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
committing crimes, vandalising property,
 
property, and damaging infrastructure
during July 2021. A prolonged economic downturn
 
infrastructure around our
operations during July
2021. There
is no
assurance that
a
prolonged economic
downturn will
notcould result in
an extended
period of high
unemployment,
 
further exacerbating
 
anti-mining
sentiments
 
in South Africa.
Africa. Furthermore,
 
the rise of
 
of ESG factors,
such as electricity
usage, social
unrest, social
license to
operate, climate
change,
water usage
and environmental
stewardship,
 
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. countries,
although many
countries
around the
world are
currently
facing inflation
challenges.
As of June
30, 2021,2022, the
annual Consumer
Consumer Price Inflation
Index (“
CPI
”),
 
stood at 7.4%
compared
to 4.9%
 
compared toin June 2021 and 2.2%
 
in June 2020
and 4.5%
in June 2019.
2020. Annual CPI was 5.0%
7.5%
 
as at
September 30, 2021.2022. Inflation
 
Inflation in South
Africa generally
 
results
 
in an
increase in our rand
operational
 
costs, unlesscosts.
 
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
 
inflation in the future,
with a consequent increase
 
in operational costs could have a
a material adverse effect
on our results of operations
and our financial condition
and
could result
in operations
being discontinued
 
or reduced or
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
 
still result in losses of
 
of gold or
 
or other damage which could
 
could have a
 
material adverse impact on our
business,
 
financial
 
results or
 
condition.
 
 
Theft at our
 
sites, particularly
 
of copper and
pipelines,
may result
 
in greater
 
risks to employees
 
or interruptions
 
in production.
 
Crime statistics
 
in South Africa
 
indicate an
 
increase in
 
in theft. This
 
This together with
 
with price
increases
 
for copper and
 
steel has resulted
 
in theft
of copper
 
of coppercables
and pipelines.
cable.
Our operations
 
experience
high incidents
 
of copper
cable
theft and
pipelines
 
despite
the implementation
 
of enhanced
security measures.measures
which have increased
our security
spend. At times,
the incidences
have resulted
in serious injuries
of our security
personnel.
 
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
 
of power
interruptions
caused by
 
cable theft
 
and theft of
 
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. Loadshedding
has intensified
over the past
year.
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 groupGroup has a load-curtailment agreement in
place with Eskom in terms of which we
 
we reduce power consumption by between 10%
and 20% when the grid is under pressure, but Eskom maintains uninterrupted power supply to the operations.
 
TheEskom has
approached
the National
 
Energy Regulator
 
of South
Africa
 
(“
NERSA
”) initiallyfor a
 
approved
an average
tariff32% increase
 
of 5.2%in tariffs
 
averagefor 2023,
 
effectivea request
 
Aprilthat
1, 2021.
In July 2020,
the High
Court of
South Africa
ordered that
the average
tariff for
April 1,
2021 be increasedhas been met
 
by a furtherstrong push
 
9.8%. NERSAfrom business
 
has
applied for leave to appealand society.
 
this ruling. These increases
 
have had an adverse
effect on our
production
 
costs and
similar or higher
future increases
 
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.
condition.
 
 
In February 2019,
 
2019, the
President of
 
South Africa
announced the
 
vertical unbundling of Eskom
 
Eskom. Whileto improve efficiencies and
 
have an
independent
grid operator
and open
competition
for energy
generation
at lower
cost to
the consumer.
While full
state
 
ownership will
 
will be
maintained,
maintained, the unbundling
is expected to result
in the separation
 
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 2022 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
 
(load shedding) having
 
having been implemented
implemented
intermittently
through the
last
number of
 
fiscal
years.
 
Should we
 
experience further power tariff increases, our business operating results and
financial
 
furthercondition may
 
power tariffbe adversely
 
increases,impacted.
Ergo is currently
developing a
Solar Power
Plant to reduce
 
its businessreliance
 
operating
resultson Eskom and
 
financialto reduce
 
conditionits future
cost of electricity
but we face
risks in the
development
of this plant
as such plant
 
may not be completed
 
adverselywithin expected
timeframe or
budget and may
not reduce
our
impacted.dependence
on Eskom as
17expected.
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
 
OurAs a result
 
operations areof climate
 
alsochange,
 
exposed toour operations
 
are exposed
to severe weather
 
events that
 
couldhas in the past
 
and could interrupt production. Major
 
production.
Major property, infrastructure
 
infrastructure and/or
environmental damage
 
as well as loss of human life could be caused by extreme weather events. Extreme
Extreme weather conditions
 
such as droughts,
extreme
 
droughts,
extreme rainfall
 
and high wind
 
wind volumes are
 
are on
the increase.
 
Specifically, we
 
thehave experienced
an 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.
 
17
 
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, 2021.2022.
 
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
 
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
is a relatively
dry area and
predictions
are that
dry conditions
will escalate.
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.
 
municipalities.
This may result in rationing
or increased water costs in the
 
future.costs. Such changes
would adversely
 
impact our surface
 
surface retreatment
operations,
 
which use water
water to
transport
 
the slimes
 
or sand from
reclaimed
 
areas to the
 
processing plant
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
 
us to adjust
production at
 
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.
GovernmentRisks related
 
Regulationto 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
 
the government
enforces its
regulations through the
 
through the various government departments. Lack
 
governmentof
 
departments.communication between government and
regulators as
well as
ineffective
regulators remains
an issue that may increase
the cost of compliance
and obtaining permits.
 
The formulation or
implementation of government
policies may
be discretionary and
unpredictable on
certain issues, including changes
 
changes in conditions
for the issuance
of licenses insofar as
 
as social
and labor plans
 
labor plans are
concerned,
transformation of
 
the workplace, laws relating
 
relating to
mineral rights, ownership
 
of mining assets and
 
assets and the
rights to
prospect
and mine,
 
additional taxes
taxes on the mining industry
 
industry and in
extreme cases,
nationalization. A change
 
change in regulatory or government
 
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
 
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
”).
18
 
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.
The MRE
Minister
confirmed
that they
will not appeal
the ruling.
 
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
 
total mining goods
 
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
 
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.
 
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
 
Financial Provisioning Regulations
 
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
2021July 2022 which,
inter alia
, extends
the compliance
with these
regulations
 
to three
months following
the fiscal
year end June
 
30, 2022.2023.
 
 
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
 
business –
 
Financial Provision for
Rehabilitation.
19
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
 
material financial impact. impact
on the Group.
The second
phase will
be implemented
from January
1, 2023 to December
31, 2030.
During the
 
the first
 
phase,
tax-free
 
emission
allowances
 
ranging from
 
from 60 per cent to
 
95 per cent are
 
available to 95
 
per cent
are available
to emitters
in this
 
first phase.
This includes
 
phase.
This includes
a basic
 
tax-free
 
allowance
 
of 60 per
 
per cent for
 
for all
activities,
 
a 10 per
 
per cent
process
 
and fugitive
 
emissions
 
allowance,
 
a maximum
 
10 per
cent allowance
 
cent allowance
for companies
that use carbon offsets
 
carbon offsets to reduce their tax
 
tax liability, a performance
 
performance allowance of up to
 
5 per
cent for companies that reduce
 
thethat
emissionsreduce the
 
emissions intensity of their
 
their activities, a 5
 
a 5 per cent
 
carbon budget allowance for
 
allowancecomplying with the
 
for complyingreporting requirements and a
maximum 10
 
with the reporting
requirements
and a maximum
10 per
cent allowance
 
for trade exposed
 
exposed sectors. The
 
The South African
 
government
 
indicated that
 
that a review of
the impact of
the carbon tax
will be conducted
before the
second phase
 
of the impactSouth
 
African Carbon
Tax Act is implemented.
The draft explanatory memorandum of the Taxation
Laws Amendment Bill proposes that amendment to section 5(2) of
the Carbon
Tax
Act to provide
for the carbon
 
tax rate adjustment
by US$1, US$2
and US$3/
t CO2e for
2023, 2024 and
2025 tax period
ending on
31
December using the
average exchange rate as
defined in the Income
Tax
Act. The rate will
 
be conducted
before the second phase of the South Africanthereafter increase gradually to
 
Carbon Tax Act US$20t CO2e in
2026 and at
least to US$30/t
CO2e in 2030.
Currently under phase
1 an amount
of R120/t CO2e
is implemented. The carbon tax has not hadlevied.
Although the decarbonization
of
electricity as an
energy supply must
nevertheless be prioritized
by both the
country and industries
at large to
de-carbonize the economy,
the
increased proposed rates denominated to US Dollar is expected to have an adverse impact on business.
The carbon
tax has
not had
an impact
on the
price
of electricity.
However, should
 
Eskom be
 
required
 
to pass
 
on the cost
 
cost of
the tax
 
from its
 
emissions
to its customers,
 
electricity
 
tariffs may rise
 
rise significantly. This may
 
This
may also
affect the
electricity
 
prices charged
to our
 
suppliers who
 
who may
pass on the
the tax
to us increasing
 
the price
 
of goods and
 
and services
 
we consume
in our operation.
 
 
Regulations detailing
 
the tax-free emission allowances
 
during the second phase have not been published
 
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
 
the potential
increases
 
in costs resulting
 
from suppliers
 
passing through
 
their Carbon
 
Tax exposure to
 
the Company
 
may have a
 
direct or
indirect material
 
material adverse effect
 
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. The
proposed amendment
will come
into operation
on March 31,
2023 and apply
in respect
 
of the redemptionyears of
 
allowanceassessment
 
and balanceending on or
 
of unredeemedafter that
 
capital
expenditure,
to certain
mining operations.
date.
 
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
”) assessedassesses capital
 
expenditure when
 
it is redeemed against
 
against taxable mining income
 
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.
20
 
Labor costs
 
are significant
 
for Ergo, constituting
 
19%18% of Ergo’s
 
production
 
costs for
 
fiscal year
 
2021 (2020:2022 (2021:
 
22%19%). As
 
of June
 
30, 2021,2022,
our Ergo operations
 
provided full-time
 
employment
 
for 771763 employees
 
while our main
 
service providers
 
deployed an
 
additional
 
1,4951,677 employees
to our operations,
 
of whom approximately
 
82%85% are members
 
of trade unions
 
or employee
 
associations.
 
 
Labor costs
 
are significant
 
for FWGR, constituting
 
20%21% of FWGR’s production
 
costs for fiscal
 
year 2021 (2020:2022 (2021:
 
22%20%). As of June
 
30,
2021,2022, our FWGR
 
operations provided full-time employment for 154152 employees while our
 
main service providers deployed an additional 343339
employees to our operations,
 
of whom approximately
 
93%82% 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 2018March
2022 to April 2019
June 2022
there was
strike action
by staff
 
at the
Sibanye-Stillwater
gold mines
adjacent
to FWGR.
 
SuchFWGR’s gold
bars are smelted
at Sibanye’s Driefontein
plant. This resulted
in Ergo having to smelt
FWGR gold on their behalf.
Such events at
our operations
or at our reclamation
 
sites couldhas
 
in the past
and could in
future 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
 
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
 
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.
 
21
 
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
 
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
 
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
 
required to provide security for costs in the event
 
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.
22
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
 
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 stockshare 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
 
surface gold tailings
 
tailings
retreatment in South
 
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
 
this 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
 
Limited (“(“
Crown
”), ERPM
 
Cason Dump
 
operation
and
 
the ErgoGoldErgo
 
Gold business units.
 
units. On July
 
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 expansionfinal life design
 
 
To extendThe Brakpan/Withok TSF
final life design is the lifeengineering
design that ultimately brings the
tailings storage facility to its finality
in terms of our Ergo
extent, operation, it is necessary torehabilitation
and management. The
implemented final design
would result in
alignments with the
Global Industry
23
Standard on Tailings Management (“
GISTM
”) and regulatory bodies, increase residue tailings deposition
capacity, at our Brakpan/Withok TSF.improve operation/management and bring
about the sustainable closure of the facility.
 
A legal review
of the existing
authorizations
was undertaken
 
for increasing the deposition capacityfinal
life design
 
of the Brakpan/Withok
TSF. The
results indicated
that most of the current
authorizations
are sufficient. An updated application
 
application was
submitted to the Department
of Water Affairs
and Sanitation (“
(“
DWAS
”) for which we are awaiting
approval.
 
RecommissioningFinal designs for
the final stage
of the Brakpan/Withok TSF
are being reviewed,
in anticipation
of the DWAS approval.
The Ergo life
of mine has
been increased
to 19 years
 
and design studies are ongoing in anticipation of the DWAS
approval. We expect this could increase the potential deposition capacity by approximatelyDaggafontein
 
800Mt, and thus, our life of mine from 12TSF classified
 
years to
more thanas a Mineral
 
20 years.Reserve.
 
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,
 
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
 
envisionsinvolves 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
 
year 2019. The
 
conversion
 
has been
 
completed
 
and this
 
allows a
 
deposition
capacity
 
of 500,000
 
tonnes per
 
month until
until at least the
 
the end of calendar
 
calendar year 2024.
2025.
Although the Phase
1 upgrade of the Driefontein
2 Plant was essentially
complete by the end
of fiscal year 2019,
a decision was
made to
to bypass the
mill so that
 
further improvements
 
to the mill
liner configuration
 
could be made. These
 
These modifications
 
were successfully
 
completed,
and
and the mill
 
was recommissioned
 
in September
 
2019. A further
 
upgrade to convert
 
convert the mill to closed
 
mill tocircuit from
 
closed circuit
from the
open circuit
 
to improve the
grind of
 
the grind
of thematerial and
 
materialyield more
 
and yieldgold was
 
more goldcompleted in
 
was completed
in fiscal year
 
2021.
 
A new
 
thickener was
 
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 yielded
 
is expected
to yield a better
grind of material
with a concomitant improvement
 
in leaching conditions and
 
and gold recovery,
 
lower maintenance
 
costs
and increased
 
water storage capacity
 
capacity in
the current
thickeners.
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
 
cost of approximately
R12 million
during fiscal
year 2021.
 
TheOn average,
the plant is
expected toresulted
 
result in an
additional
 
1.2kg to 1.8kgof gold
 
of gold per month
 
which would
 
otherwise
 
have been lost
 
lost due to penalty
 
penalty refining charges
 
charges for the
copper in its
 
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
initially included the construction of
a new Central Processing Plant
 
Plant (“(“
CPP
”) with a
capacity of between 1.2
to 2.4 million
tonnes per month
 
tonnes
per month and the equipping of
the required reclamation sites and
pipeline infrastructure to supply
the relevant resources to
the CPP.
The capital spent on final design work on the CPP, with the design work is also applicable to the
potential expansion of DP2 from to 1.2 Mt as
an alternative to CPP is currently being considered.
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.
Delays in
obtaining
regulatory approval
have
affected
the
previously
reported
expected dates of approximately 800 million tonnesthe construction.
The Sibanye-Stillwater Leeudoorn tailings storage facility
was evaluated as a viable interim alternative
to
the RTSF whilst regulatory approvals are obtained.
The Definitive Feasibility Study (“
DFS
”) for Phase 2 was completed
in the 3rd
quarter of the fiscal
year 2021 and that the
project was found
to be
economically viable in a number of scenarios.
24
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
 
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 2024.2027. 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
 
have commenced the nextfinal design work
 
step in ouron the CPP,
 
Phase 2 project whichwith the design work also
 
entails the Front End
Engineering Design ofbeing applicable to the
 
CPP.potential expansion of DP2.
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
 
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 2017.2017
and since
then substantially
rehabilitated.
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 has arranged
its operations into two wholly
owned entities covering
their East Rand (east of Johannesburg)
and far West
Rand (far west of
Johannesburg) businesses. The East Rand operations are run
by Ergo
and the West
Rand operations by FWGR. A
detailed
overview of
the operations
is provided under
Item 4D. Property,
Plant and Equipment
and in the Technical
Report Summary
attached as exhibits
in this annual
report.
25
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
 
each of which is essential
 
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 oneanyone 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 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,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 they have
a safe
haven asset,
as has
been the
case in so many
previous
 
times of crisis,
 
turned to gold and gold stocks as a safe haven asset,global economic
 
leadingcrisis.
This has
led to
a surge
in the
average
surge in gold price
during fiscal year
2020 and
fiscal year 2021.
Although the impact
of the
COVID-19 pandemic has
reduced and
gold prices have
marginally decreased,
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 20212022 remained
 
increased by 19%high due to continued economic
 
to
R917,996 per kg compareduncertainty as the
 
global economies
attempt to the previous year at R768,675recover
 
per kg and for fiscal year 2020 increasedfrom all the after
 
by 33% to R768,675 per kg comparedeffects of COVID-19,
 
to
and deal with the previous
 
year at R577,483conflict in Ukraine
 
per kg.and rapidly rising
inflation. In
addition, we
were
impacted by
movements
in the exchange
rate of the
rand against
the dollar during
described
below.
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.
The average
 
We benefited from a sustained upswing in gold spot price in fiscal 2020 and
fiscal 2021,
 
followingdecreased
by 1% from
$1,850 per
ounce to
$1,834 per
ounce during
fiscal year
2022 after
having increased
by 18% from $1,562
per ounce to $1,850 per ounce during the fiscal year 2021 and having increased
by 24% from $1,263
per ounce to $1,562
per ounce during
 
the globalfiscal year
 
response to2020.
As a
result,
 
the COVID-19average
 
pandemic,gold price
 
whenreceived
by us
in Rands
for fiscal
year 2022
decreased
by 3%
to R894,409
per kg compared
to the previous
year at
R917,996 per
kg and for
fiscal year
2021 increased
by 19% to R917,996
per kg compared
to the previous
26
year at
R768,675 per
kg. The
decrease
in 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 increasea 3%
decrease
 
in our total revenue for
fiscal year 20212022 amounting to
to R5,118.5 million (2021: R5,269.0 million (2020:and 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 duringincluding escalating
 
the COVID-19 pandemic), includingsovereign and
 
escalating
sovereign
and personal
levels
 
of debt, economic
economic
volatility
 
and the
oversupply
 
of foreign
 
currency, will
continue
 
to make gold
 
gold attractive
 
to investors.
The supply of
 
of gold
has shrunk
 
in recent years
years and
is likely
to shrink
even more
due to
the significantly
 
reduced
capital
expenditure
 
and development occurring
occurring in the sector.
 
We believe that
this, coupled with
 
with global economic
 
economic uncertainty,
is likely to provide
 
provide support
to the gold
 
price in the
long
term.
 
 
AllUntil April
11, 2022, all gold
 
we produce
 
iswas sold on
 
on our
behalf
 
by Rand
Refinery
 
Proprietary
 
Limited
(Rand (Rand
 
Refinery)
 
in accordance
with a refining agreement
 
with a
refining
agreement
entered into
in October
 
2001 and updated
 
in July
2018.
 
The sales price
was fixed at the London
afternoon fixed
dollar
price on
the day
the gold bars
was delivered
to the
buyer. Before
November
2020, the
dollar proceeds
sold were
remitted
to us
within two
days at
 
which we produce
date the dollars
 
consist of approximatelywere sold.
 
85% gold, 7-8%Since November
 
silver and the
remaining balance2020 up to
 
comprises copperApril 11, 2022,
 
and other common elements.the dollars
are also
sold on the
day the gold
is delivered
to the buyer.
After
April 11,
2022, gold
is sold
directly to South
African Bullion banks after
being refined to
the required purity
by Rand
Refinery.
 
The gold bars are sent
to Rand Refinery for
assaying and final
refining whereGroup
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 daywhen the gold is delivered
to the buyer.South African
 
Before November 2020, the dollar proceedsBullion bank on
 
sold werean agreed upon date,
remitted togold price
 
us within twoand exchange
 
days at rate.
The gold
bars
which
 
date the dollarswe produce
 
were sold.consist
 
Since Novemberof approximately
 
202085% gold,
7-8% silver
and the dollars
remaining
balance
comprises
copper and other common
elements. The gold bars
 
are also soldsent to Rand Refinery
 
on the dayfor assaying and final
refining where the
 
gold is deliveredpurified to 99.9%
to the buyer. Inand cast
 
into troy
ounce bars
of varying
weights.
In exchange
for this
service,
 
we pay
Rand Refinery
a variable
refining fee plus fixed marketing
and administration
 
fees. We ownfees
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
up 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:April
 
11, years).
The life of mine for FWGR2022, a fixed
 
based on proven andmarketing
 
probablecharge.
 
ore reserves
under Industry Guide
7 of the SEC as at June 30,We own 11.3% (fiscal year
 
2021 was 18
years (June
30,and 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 11.3%) of
 
the three-yearRand Refinery.
 
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
 
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
 
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,
 
20212022 and
September
 
30, 20212022 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
 
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
 
within six
months
of commencement
 
of the
MPRDA beginning
 
May 1,
2004. The
Mining
Charter 2004 and
 
was initially
published
in August
2004 and was
subsequently
 
amended in
September
 
2010. Its objectives
It is
 
include:used an
 
●
increasedinstrument to achieve mutually symbiotic sustainable growth and broad
 
directbased and meaningful transformation of the
 
indirect ownership
of mining entities
by qualifying
parties as
defined in
the Mining
Charter;and
●
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.mineral industry.
 
The Mining Charter
 
sets certain
 
goals on equity
 
participation
 
(amount of
 
equity participation
 
and time frames)
 
by historically
disadvantaged
 
disadvantaged
South Africans
 
of South African
 
mining assets.
 
It recommends
 
that these
 
are achieved
 
by, among other methods,
 
methods, disposal of
assets by
 
of assets
by mining
companies
 
to historically
 
disadvantaged
 
persons on
 
a willing seller,
 
willing buyer
 
basis at
 
fair market
 
value. The goals
 
goals set by
the Mining Charter
 
Mining Charter
require each
 
mining company
 
to achieve
 
15 percent
 
ownership by
 
historically
 
disadvantaged
 
South Africans
 
of its South
African mining
 
assets
within five
 
five years and
 
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
 
achieving 40 percent
 
percent participation
 
by historically
 
disadvantaged
 
persons in
 
management
 
and ten
percent
participation
 
by
women in the
 
the mining
industry, each
 
within five
 
years from
 
May 1, 2004.
 
Compliance
 
with these
 
objectives is
 
is measured
on the weighted
 
average
“scorecard” “scorecard”
 
approach in
 
accordance
 
with a scorecard
 
which was
 
first published
 
around August
 
2010. In April
 
2018,
judgment was
 
was handed down
 
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 partnermining company,
 
after the exit
of a Black
partner that
held a stake
in the company
 
stake in the
company
consequent
 
to a result
 
of a BEE transaction,
 
continues to
 
to be BEE compliant.
 
The judgment
 
was appealed
 
by the DMRE.
 
The
DMRE in August
 
August
2020, withdrew
 
their notice
 
to appeal
 
to the Supreme
 
Court of Appeal
 
in respect
 
of the judgment
 
issued in April
 
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
27
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
 
industry by increasing the number
 
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
 
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
 
2016, The President
of South Africa
 
announced that a new
 
a new mining charter would
 
would be developed and will
 
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:
•
 
Thethe conditional
acceptance
 
of the continued
consequences
 
of previous
compliance
 
of the BEE
ownership threshold
 
of 26% in respect
of existing
 
respect of
existing mining
rights;
•
 
Ofof the 30% HDP
 
HDP ownership component,
 
component, qualifying
employees
 
and communities
 
are each to hold
 
hold a 5% carried
 
interest (as
 
opposed to a
free carry
interest
 
as per
Mining Charter III)
 
III) the
cost of
which may
be recovered
 
by the mining
right holder from
 
from the development of
the asset.
 
The communitydevelopment
 
of the
asset. the
community interest
 
in turn may
 
be offset by
 
way of an
 
equity equivalent;
•
 
Removalremoval of
 
the so-called
 
1% of EBITDA
 
trickle dividend
 
provided for
 
in the 2017
 
Mining Charter;
 
and
•
 
Thethe 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.
 
On November
23, 2021,
the MRE
Minister
confirmed
that the
MRE Minister
will not
appeal
the ruling
made by
the High
Court of
South
Africa.
28
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
 
to third
parties
outside the
scope of
employment.
 
In fiscal
year 2021, 2022,
we contributed
 
approximately
 
R4.3R5.9 million
under the COID
 
COID Act (2020: R3.7
million and
 
2019: R3.6(2021: R4.3
million
and 2020: R3.7
 
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
 
or is still
 
still to be
 
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
 
managers and directors of mining
 
mining corporations that are found to
 
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
 
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.
 
drd20220630p32i1 drd20220630p32i0
29
 
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. This can be done through the use of rehabilitation trusts or through financial
 
cease. We fund theseguarantees issued to the DMRE. During
fiscal year
 
2022,
a change
in method
was decided
upon as providing
for environmental
 
rehabilitation
 
costs by irrevocablefrom funding
 
contributionsin a specific
 
rehabilitation
trust
to environmentalfinancial
guarantees
which is an
allowed method
in terms
of the National
Environmental
Management Act.
The financial
guarantees
are issued
through approved
insurance
products
from Guardrisk
Insurance
Company Limited
(“
GICL
”).
All the
required
approvals
for the
change in
method
and transfer
of the rehabilitation
 
trust funds
 
that functionwere obtained
from the
under the authority
DMRE and a
thorough consideration
 
of trusteestax and
 
that havelegal impacts
 
been appointedwere completed
prior to the funds being
 
by, and who owe
a statutory
duty of trusttransferred
 
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 allGICL directly from
 
the rehabilitation
 
obligations
of those operations.
Whereas the old Minerals
Act allowed fortrust where the
 
establishmentfunds were previously
 
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.
held. As of June 30, 2022,
 
30, 2021, we
held
 
held a total
 
total of R87.5
R589.8 million
 
(2020: R83.82021: R87.5
 
million) in
 
funds held
 
in insurance
 
instruments.insurance instruments after
the
transfer,
of
R579.5
million from
the
rehabilitation
trusts
was completed.
 
As at
June 30,
2022 guarantees
amounting
to R614.0
million
(2021:
R430.1
million)
were
issued
to the
DMRE.
As of June
 
30, 2021
guarantees2022, subsequent
 
amounting to the transfer
 
R430.1 millionto GICL, the
 
(2020: R427.3
million) were
issued tobalance in
 
the DMRE.rehabilitation
trust was
R nil (2021:
R564.7 million).
 
The provision
 
for environmental
 
rehabilitation
 
for the group was
 
R570.8R517.7 million
 
at June 30, 2021,2022,
 
compared to
 
R568.9R570.8 million
 
at June
30, 2020.2021.
 
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
 
of which
DRDGOLD
 
has R564.7
R0.0 million,
 
may be
used only
 
for post
closure
activities
and may
 
no longer be
 
be utilized
for their
 
intended purpose of
 
purpose
of concurrent
and final rehabilitation on
 
rehabilitation
on closure.
As a
 
result, new
provisions will
 
new methods
for provisions
will have
to be made
 
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
 
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,
 
20212022
 
and
 
as
 
of
 
September 30,
 
20212022 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.
 
3430
4D. PROPERTY, PLANT AND EQUIPMENT
Description
 
of Significant
 
Subsidiaries'
 
Properties and
 
Mining Operations
ErgoMineral Reserves
and Mineral
Overview
Resources summary
disclosures
 
Previously mining property disclosures
were reported in accordance with the requirements of the SEC’s Industry Guide 7.
The SEC
adopted amendments
to modernize
the property
disclosure
requirements
for mining
registrants,
and related
guidance.
The amendments
consolidate
the SEC’s mining property disclosure requirements
by relocating them to a new subpart of Regulation S-K 1300 (Subpart
1300) (“
S-K 1300
”).
These amendments closely align disclosure requirements
to current industry and global regulatory practices and standards as embodied by the
Committee for
Reserves International
Reporting Standards
(“
CRIRSCO
”). The amendments
were effective
for the first fiscal
year beginning on
or after January 1,
2021. We
 
own 100%have therefore adopted the new amendments in
this Annual Report and
going forward. The new
rules require a
registrant to obtain a dated and Technical Report Summary or Summaries (“
TRSs
”) from the qualified person or persons, which identifies
and
summarizes the information reviewed and conclusions reached by each qualified person about the registrant’s Mineral Resources and Mineral
Reserves
determined
to be on each
material
property. Key changes
in the amendments
include the
following:
●
The reporting
 
of Ergo.Mineral
 
Ergo Resources and
not only Mineral
Reserves. This
is therefore
the first time
that we report
on Mineral Resources
and no comparatives
are provided
●
Statement
of Mineral
Resources exclusive
of Mineral
Reserves
●
Removal
of the
requirement
to use
 
a surface tailingsthree-year
 
retreatment operation operatinghistorical
 
across central gold price
to use
in determining
Mineral
Reserves,
but rather
that of
a reasonable
and east Johannesburg.justifiable
gold price
●
Application
of modifying
factors in
indicated
or measured
Mineral Resources
in order to
convert them
to Mineral
Reserves
The financial and technical assumptions
underlying the Mineral Resources
and Mineral Reserves estimations
contained in this report
and in the
TRSs included as exhibits in this
report are current as at
June 30, 2022, the
period covered by each of
the respective reports. Such
assumptions rely on various
factors that may change after the reporting
period, including as a result
of operational reviews which
the Company
undertakes
from time to time
and when necessary.
The TRSs which
are filed as exhibits
to this report
in accordance
with Item 601(86)
and Item
1300 of Regulation
S-K have been
prepared by
the Qualified
Persons named
therein'.
 
In South
Africa,
we are
legally
required
to publicly
report
Mineral
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.
South Africa
is a
member of
CRIRSCO.
The following information is detailed for material properties of the Companies in Item 4D:
●
History of operations
●
Overview of operations
●
Properties and location
●
Geology
●
Mining method
●
Mineral Processing and Recovery Methods
●
Infrastructure
●
Exploration
●
Environmental
and Closure
Aspects
●
Water usage and reduction in use of potable water
●
Water pollution
●
Environmental rehabilitation closure providing and funding
●
Legal aspects and permitting
●
Production
●
Capital Expenditure
●
Mineral Reserves and Mineral Resources Estimation
History of operations
For a detailed review of the history of the operations, refer to Item 4A. History and development of the Company.
Overview of operations
DRDGOLD owns 100% of Ergo
and 100% of FWGR. Both are surface
tailings retreatment
operations producing
gold. Ergo operates
across central
and east Johannesburg,
within the Gauteng
Province and
FWGR in Carletonville
on the far West Rand
of the Gauteng
Province. In
order to
improve synergies, effect cost
 
effect cost savings and establish
a simpler group structure,
 
DRDGOLD restructured
 
the Group’s surface operations
(Crown,
ERPM’s
 
Cason Dump
 
Dumpsurface operation
and ErgoGold)
into Ergo with
effect from
July 1, 2012.
On July 31,
2018, DRDGOLD
acquired
WRTRP
Assets,
which
are
 
surface
 
operationgold
processing assets
 
and
 
ErgoGold) intotailing
 
Ergostorage
facilities associated
 
with effect
 
fromSibanye-Stillwater’s WRTRP,
 
July 1,and
subsequently
 
2012. ERPM’srenamed it
 
CasonFWGR.
 
DumpDRDGOLD also owns 100% ERPM. In December 2018, ERPM concluded
 
surfacerevised agreements to dispose
 
tailingscertain of its underground
retreatment operation was depleted in
drd20220630p34i0
31
assets to
OroTree Limited
(“OroTree”) which
included the
 
first halfdisposal of fiscal year 2015.
ERPM’s underground
mining and
prospecting
rights. Underground
mining
infrastructure
was not sold.
ERPM’s underground
gold mining
infrastructure
is under care
and maintenance.
 
At June 30, 2021,
 
30, 2022, Ergo
employed
 
771763 full-time
 
employees.
 
In addition,
specialist
 
service providers
 
deployed a
 
further 1,4951,677
 
employees
to our operations
bringing the
total number
of in-house and
outsourced
employees to
2,440 at June
30, 2022 (at
June 30, 2021:
2,266
;
at June 30,
2020:
2,155
)
.
At June
30, 2022,
FWGR employed 152
full-time employees. In addition, specialist service providers deployed
a further
339
employees
 
to our
operations
 
bringing the
 
total number
 
of in-house
 
and outsourced
 
employees
to 2,266 at
 
June 30, 2021to 491.
 
(at June 30,
2020: 2,155
;
at June 30,
2019: 2,214
)
.Below is geographical representation of the location on Ergo and FWGR within South Africa:
 
Properties and location
 
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
the2014.The Crown
 
Mines plant
 
whichand sites
operated aswere closed
 
a pump/millingdown in March
 
station feeding2017 and rehabilitated.
 
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, 20212022 and
 
September 30, 2021,2022, no material
 
encumbrances
 
exist on Ergo's
 
property.
As of June
30, 2022, the
net book value
of Ergo’s mining assets
was R1,707.0
million (2021:
R 1,427.8
million).
drd20220630p35i0
drd20220630p35i1
32
Below is
a geographical
representation
of the location
of individual
material
properties
of Ergo:
 
Mining and ProcessingBelow is a geographical representation of the location of individual material properties of FWGR:
 
Ergo undertakes the retreatment of surface tailings.
Material processed
 
FWGR’s assets
consists of
the currently operational
Driefontein 2 plant
(“
DP2
”), Driefontein 3
plant (“
DP3
”), Driefontein 4
TSF
which is
a current
active tailings
deposition facility,
pilot plant,
which is
a 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.
FWGR currently own six
tailings storage
facilities on the West Rand between Roodepoort and Carletonville, approximately 70km South West
of Johannesburg (Figure A).
There are an
additional four
TSFs which will
be transferred from
Sibanye-Stillwater to
FWGR once no
longer required by
the existing
operations (Available
TSFs). These are
Driefontein 1,
and 2, Kloof
2 and
Leeudoorn. Numerous
other TSFs
are potentially available
in the
area for future reclamation. FWGR also owns land
on which the Central Processing Plant (“
CPP”
) and RTSF and
the return water dam were
originally planned to be built.
As of June
30, 2022, and
September 30, 2022, no material
encumbrances
exist on FWGR's
property.
At June 30, 2022,
the net book value of FWGR’s mining assets was R1,340.6 million (2021:
R1,341.3 million).
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, 2022,
and September 30, 2022,
no encumbrances
exist on ERPM's
property.
At June
30, 2022,
the net book
value of ERPM’s
mining assets
was zero (2021:
zero).
33
Geology
DRDGOLD’s
surface deposits
are the
residue (“
tailings
”) of
the mining
and metallurgical
process recovery
of gold
and uranium
ores of the gold bearing
late Archaean (2.7Ga to
3.2Ga) Witwatersrand sedimentary basin. The Witwatersrand Basin is
the largest gold bearing
metallogenic province
globally and
 
is sourcedunconformably
 
overlain by units
of the
Ventersdorp
Supergroup (~2.7Ga),
the Transvaal
Supergroup
(~2.6Ga), and the Karoo Supergroup (~280Ma).
The deposits
consist of
gold, uranium
and sulphur-bearing
sand dumps
and slimes
dams, and
the composition
reflects the
major
constituents of the
Witwatersrand Basin: quartz
(70%-80%), mica
(10%), chlorite
and chloritoid
(9%-18%) and
pyrite (1%-2%).
Gold, uranium,
zirconium and chromium may be minor constituents averaging <100ppm each.
Deposits possess characteristics, determined by the geometry,
material source and processing plants in which the original ores were processed.
Mining method
Material processed by
Ergo is sourced from primary
 
surface sources namely,
sand and
 
slime and are
reclaimed separately. FWGR only source
is slime.
No selective mining takes place on a dump with the entire TSF being processed. This is due to the following:
●
No place exists on mining sites to dump below cut-off grade material;
●
The mining method is not conducive to selective mining; and
●
The
operation
is
also
a
rehabilitation
exercise,
and
all
mineralized
material
must
be
removed
from
the
site,
and
it
is,
therefore,
economically beneficial to process all material, even low-grade material.
TSFs
are
mined
through
hydro-mining
using
high-pressure
jets
of
water
to
dislodge
tailings
material
or
move
sediment
for
transportation as
a slurry
to processing
plants. The
hydro-mining removes
the tailings
material from the
top of
a TSF
to the
natural ground
level in 15m layers. Hydraulic
mining provides slurry feedstock to
the plants continuously. Ergo also uses mechanical
front end loaders to load
slimes/sand material. Material is re-pulped with water and pumped to the plants.
Mineral Processing and Recovery Methods
Our metallurgical plants use carbon-in-leach (“
CIL
”) metallurgical processes to recover gold from slurry.
The
 
surface
sources
 
have
generally
undergone
undergone
a
 
complex
depositional
 
history
resulting
 
in
grade
 
variations
associated
 
with
improvements
in plant
 
recovery over
the
 
period the material
material was deposited. At
 
Ergo, our two
 
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
 
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
 
in significant changes
 
changes to
the
 
processing circuits. The
 
circuits.
The City
Deep plant
 
continues to operate
 
operate as a pump/milling
 
astation feeding
 
pump/milling station
feeding the
metallurgical
 
plants.
At FWGR, DP2 has a
 
Ergo’s assets include: accessinstalled capacity to
treat approximately 7.2 million tons of material per year.
 
to tailings deposited
The re-pulped slime
 
across the western,
central and eastern
Witwatersrand; a 50km
pipeline; and tailings
deposition facilities
includingis pumped to 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
 
treated using screens, cyclones, ball mills
 
mills and Carbon-Carbon-in-Leach, or
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
 
deposits wasterwaste on the
 
on the Brakpan/Withok TSF. The
 
TSF. The Knights plant
 
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,
Driefontein 2 Plant:
Recommissioned
in fiscal year 2019, this surface/underground
plant was refurbished
and modifications
made to
the milling
and cyclone
circuit to
ensure the
production
of a finer
grind for gold
liberation.
Infrastructure
The hydro-mining, reprocessing
and re-deposition of
tailings material requires
a network of
pipes. Slurry pipelines
will be needed
34
from
the
hydro-mining
sites at
the
TSFs
to
 
the net bookplants
 
value of Ergo’s miningand tailings
 
assets waspipelines
 
R1,427.8 millionfrom
 
(2020: R 1,283.9the plants
 
million).to the
respective
depositional
facilities. High
Capital Expenditurepressure water pipelines are necessary to supply the mining operations while separate low-pressure water pipes are
needed for returning water
to the plants from return water dams at the various TSFs. These have all been adequately designed and included in the LoM planning.
 
 
For aErgo currently uses the Brakpan/Withok tailings facility as deposition facility, and FWGR, the Driefontein 4 TSF. Ergo
 
discussionrequires the
implementation 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 expansionfinal design of the Brakpan/Withok
 
TSF to accommodate higherreceive an additional 800Mt in order to deliver into its life of mine. FWGR
requires the RTSF
 
grade resources in to ensure adequate
storage facilities for
the Far Eastlong-term deposition
of all tailings
arising from FWGR
operations. It will
be
areabuilt on Transvaal Supergroup lithology (Figure D), to mitigate any risk of
 
the Gauteng provincedolomite related sink holes. The design and cost estimate
 
further extend the
life of mine
of ERGO. A
legal review of
the existing authorizations was undertakencaters for
increasing the depositiona storage 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 a potential disposal rate of
mine from
13 years up 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.
3.0Mtpm.
 
 
The majorityWe are seeking
 
to obtain the last regulatory approval for
the final life design of the Company’s carbonBrakpan/Withok
 
emissionsTSF. Designs
for the final life
stage of the TSF are being reviewed. The
permitting for the RTSF has
been approved based on the initial design with a
geomembrane barrier
and FWGR
 
are the scopepursuing
 
2 carbon emissionsapproval for
 
for electricitythe more
 
consumption purchasedrecent scavenger
well design.
FWGR have
reached an
in-principle agreement
with Sibanye
Gold to co-deposit tailings on the Leeudoorn TSF.
This will allow FWGR to increase production to 750ktpm for an interim period
while also
mitigating against the risk of an interruption to the planned production in the event that the approval sought for the RTSF is delayed.
Both operations obtain
their power ultimately
 
from the
Eskom grid and
therefore are currently
exposed to
the material
risks associated
who produces electricity, predominatelywith Eskom. Ergo operations receive power
 
from coal powered fire stations. In the current yearseveral substations and mining
 
the Company generated 404sites are supplied power
 
609 tonnes of scope 2via several separate feeds. Currently,
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 generationErgo
 
plant anddemands
 
batterypeaks at
 
storage18MVa
and the
Brakpan/Withok Tailings
Storage facility
 
at Ergo. The8MVa.
 
successfulErgo operates
 
completion24-7-365 and
the plant
receives power at 6.6KV via Eskom’s 88KV Vlakfontein distribution. At FWGR, power is currently supplied from
Eskom’s 132kV and 44kV
grid to various Sibanye owned gold mines in the vicinity
 
of this
project
is expected
to reduce
our carbonFWGR’s operations. The power requirement of FWGR remains within the current
emissions
footprint. The
project is
subject to
regulatory
approval.surplus capacity of the Driefontein and Kloof mining complexes.
 
Exploration
 
and Development
 
Exploration and development
 
activity at Ergo involve involves
the drilling of surface
dumps and evaluating the potential
 
gold bearing surface
material.material in
the determination
of its Mineral
Resources and
Mineral Reserves.
These exploration
programmes
comprise:
●
surveying to determine physical dimensions and volumes;
●
auger or reverse circulation drilling programs to permit sampling for gold content and mapping of the gold distribution;
●
metallurgical and flow sheet development test work; and
●
tailings toxicity tests and specific gravity determination.
Environmental
 
and Closure
 
Aspects
In accordance
 
Municipal infrastructurewith South
 
as well as commercialAfrican mining
legislation,
all mining
companies
are required
to rehabilitate
the land on
which they
work to a
determined
standard
for alternative
use. DRDGOLD’s
business
involves
the reclamation
of previously
discarded
material
deposited,
in many
cases,
by other companies,
most of which
are no longer
in business.
As a result
we deal with
legacy environmental
issues.
Before we
embark on
new mining
projects, we
undertake an
environmental authorization process which is
performed by
external
consulting specialists
that conduct detailed specialist studies, an environmental
impact assessment and residentialenvironmental management
 
developmentsprogramme
(“EMP”)
for the
management
of these
projects.
These reports
are discussed
and reviewed
by our stakeholders
through an
open public
participation
process. Through this process, we are
able to identify,
address and minimize the effects of
our activities on the
environment and identify and
mitigate
the potential
impacts
our activities
may have
 
encroached towardson surrounding
communities
and the
receiving
environment.
Our environmental
management
systems and
policies
have been
designed
in compliance
with South
Africa’s National
Environmental
Management
Act 107 of
1998 and
associated
regulations. Internal and
external environmental audits
are performed
annually and
recorded in
a
database to
ensure compliance. Our
EMP
encompasses
all the activities
of our operations
and assesses
 
the environmental
impacts of mining
at reclamation
sites, plants
and tailings
storage
facilities.
It also outlines
the closure
process,
including financial
provisions.
At
Ergo,
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. At Ergo operation.the monitoring
system incorporates
existing EMPs and
water use licenses.
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.
The Group actively manages
and monitors the consumption
of natural resources
(including potable water
and energy) at monthly and
weekly meetings.
This entails the analysis
of trends to identify excess
use and discuss various
focus areas to ensure
responsible natural
resource
usage. The major
environmental risks are associated with dust
 
with dust from various reclamation sites, and effective management of relocated process
material
on certain
tailings
dams. At Ergo,
Municipal
infrastructure
as well as
commercial
and residential
developments
have encroached
towards
the Ergo operation.
The impact
 
of relocated process material on certainnuisance
tailings dams. The impact of windblown dust fallout
on the surrounding
 
environment
and community
 
is addressed
through a scientificcomprehensive
 
monitoring and
evaluation
process,
with active
input from
Professor
H. Annagran
from the
Cape Peninsula University of Technology andnetwork including
 
appropriate
 
community
involvement.
 
Environmental managementThe monitoring
 
programs,reports are
 
addressingsent to regulators,
 
amunicipalities,
 
wideand interested
 
rangeand affected
35
parties.
For a residential
zoned monitoring
bucket, an
exceedance
is defined
as above the
dust limit
 
of 600mg/m
2
/day. For a non-residential
 
environmental issues,zoned
monitoring bucket,
 
havean exceedance
 
beenis defined
 
preparedas above the
 
bydust limit
 
specialistof 1200mg/m
environmental consultants,2
/day.
 
which are audited annually. Water
Mitigation
measures include
environmentally
friendly dust
suppressants
applied to
high impact
areas, active
wetting of access
roads by
water bowsers, and a network of high velocity sprayers on our active TSFs. In the long-term, dust suppression and water pollution
 
is controlled by means
of a comprehensive
system of return water damsmanaged
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
 
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
Water usage and reduction in use of areas affected
by mining operations
during the life
of thepotable water
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.
 
 
The primary
uses for
Environmental management
water are in
the plants
 
and compliancehydro-mining for
the various
TSFs. Ergo
constructed a central
water reticulation
plant in 2017 to
give it the ability
to deliver water to
all corners of the
operation and return it
through a fully integrated
closed system.
Between
60%- 70% of all
process water make up
at Ergo is further assisteddrawn
from the Brakpan/Withok
TSF to various reclamation sites
 
by the in–house developed electronicway of return
 
monitoring system (Compliancewater
Management Tool) that incorporatescolumns. Another 15%-20% water is drawn from lakes and dams in the region in terms of the
 
all existing Environmentalrequisite extraction licenses. A further 6%-11%
of
 
Impact Assessmentsprocess
water
top
up
needs
are
from
treated
underground
acid
mine
drainage
 
(“
EIAAMD
s””), EMPs, Mining Right Conversions,
 
Performancedrawn
from
Trans-Caledon
Tunnel
Authority
Assessments(“
TCTA
”). DRDGOLD has the right to use up to 30 Ml of AMD water per day. Less than 1% of water is drawn from a wastewater treatment
facility.
Potable water is
used only
where the
sensitivity of
equipment requires
it and
for certain early
stages of
irrigation to settle
in newly
established vegetation on TSFs.
At FWGR, all water
harvested from Driefontein 4
TSF is used. This
amounts to approximately 54%
of process
water requirements.
The balance is
made up
from underground
mine dewatering. Water
use licenses are
available for
the pumping of
water
from underground
workings at Kloof
10 shaft
 
and SocialDriefontein
 
10 shaft, and Labor
 
Plans (“
SLP
s”) associatedthe consumption
 
with eachplanned from these
 
mining right.shafts will
 
The existingnot exceed
 
the
pumping rates approved in the respective WULs. Potable water consumption is limited to drinking and mostchange houses and flocculant make
 
recent studiesup
for usage in the plant.
 
are used
Water
pollution
A closed
water system
is designed
 
to supplement
the management components with regards to the mining right boundaries and its required compliance parameters.avoid
 
The individual management
itemshaving to
 
are integratedtreat water
or having
 
to providedischarge
 
a holisticinto surface
 
overviewwater courses.
Overflows of
return water dams may,
depending on their location, pollute
surrounding streams and wetlands. Ergo and FWGR have 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. Any water discharge is contained through paddocks on
reclaimed sites, storm water run-off and
water systems that pump rain or excess water
into the system. Another possible source water discharge is attributed
mainly to compromised or
aging pipes
that may
cause leaks.
An external
expert continuously
monitors pipelines
to timeously
identify water
leaks to
minimize water
seepages. A comprehensive maintenance plan is in place for replace compromised pipelines.
ERPM acid mine drainage
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
 
staterate of
 
rise of eachwater
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 appointed
TCTA
to
construct a
partial treatment
plant
(neutralisation plant)
to
prevent the
ground
water
being
contaminated.
TCTA completed the construction
 
of the neutralisation
 
miningplant for the
 
rightCentral Basin
 
areas.and commenced
 
Spatialtreatment during
 
dataJuly 2014. As
part of
 
pertainingthe 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
 
miningright to
 
rightpurchase
up to 30 ML of partially
 
boundaries
is stored onto a centraltreated AMD,
 
databasea day, from TCTA at cost, in order to reduce Ergo’s reliance
on potable water
for mining and is utilizedprocessing
purposes.
 
to create a live map
Refer Item
 
which illustrates18. ‘‘Financial Statements -
 
the mining right areaNote 26.2
 
and variousContingent liability for environmental rehabilitation” for disclosures on potential pollution
impact on
 
monitoring
systems. Thisground water
 
map depicts
the mining right
boundaries,
roads, rails,
mine dumps,
plants, rivers,
pipeline routes,
servitudes,
way leaves,
municipal
through seepage
36
servicesEnvironmental rehabilitation closure providing and
other spatial
data relevant
to our mining
operations. funding
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
 
terms as at June 30,
2022 is approximately
R414.4 million.
As at June 30,
2022, a total
of R132.8 million
(2021: R62.7
million) is
held
in insurance
instruments
in the
Guardrisk
Cell Captive,
as security
for financial
guarantees
issued for
rehabilitation
costs. As
 
at June
 
30, 2021 is2022,
 
approximatelyafter
the change in method for providing
 
R445.8 million.for rehabilitation
 
As at Juneand subsequently
 
30, 2021, athe rehabilitation
 
funds were transferred
to the Guardrisk Cell Captive,
a
total of
 
R127.2R0.0 million
 
(2020: R122.12021: R127.2
 
million)
 
is held
in the Ergo
Rehabilitation
 
Trust Fund, previously
 
called the Crown
 
Crown Rehabilitation
 
Trust Fund,
which
is an irrevocable
 
trust, managed by specific
 
by specific
responsible
 
people who we nominated
 
and who are appointed
 
as trustees by the Master
 
Master of the
High Court
of South Africa.
 
In addition,
We have estimated that the total cost for FWGR, in current
monetary terms as at June 30, 2022 is approximately
R93.9 million (June
30, 2021: R116.4 million).
As at June 30, 2022, a total
of
R62.7 R444.1 million
 
(2020: R59.92021: R0.0 million)
 
is held in insurance
instruments in the
Guardrisk
Cell Captive,
as security for
financial
guarantees
issued for rehabilitation
costs. As at
June 30, 2022, after
the change in
method for providing
for
rehabilitation and subsequently the rehabilitation funds were transferred to the
Guardrisk Cell Captive, a
total of
R0.0 million (2021: R425.1
36
million) is
held in the
Ergo Rehabilitation
Trust Fund.
We have estimated that as at June 30, 2022 the present discounted
value of the total cost of rehabilitation
for ERPM is approximately
R9.3 million (2021: R8.6 million).
A total of R0.0 million (2021: R12.4
million) is held in the Ergo Rehabilitation
Trust Fund
for the benefit of
ERPM and R51.6
million (2021:
R24.8 million)
 
is held in
 
insurance
 
instruments.instruments
and is available
for the settlement
of these rehabilitation
costs.
OreLegal aspects and permitting
Mining Rights
and Prospecting
Rights held
are listed
under the
Ergo Mining
Proprietary
Limited subsidiary.
DRDGOLD
has numerous
Surface, Mining
and Prospecting
Rights and ownership
of the surface
rights and mine
dumps vests in
various legal
entities.
Ergo is one of only a
few surface operators that holds Mining Rights under the MPRDA over a large portion of its reserves. The provisions of the MPRDA, and the
definition
of ‘mineral’
had inadvertently
created
a gap
in the
Act placing
the ‘minerals’
in certain
TSFs beyond
the regulatory
reach of
the MPRDA
and limiting its competency to
issue rights upon application. However, in
terms of the
transitional arrangements of the MPRDA, which were
peremptory upon the DMRE
in the event that the petitioner
met the conditions for conversion
from ‘old order’ to ‘new
order’, Ergo was able to
convert its
old
order rights,
thus extending
its “license
to
mine” into
the dispensation introduced
by the
MPRDA. Ergo
has also
submitted
applications to renew
all its Mining and Prospecting
Rights with the DMRE. The
current Mining and Prospecting
Rights have expired (with
the
exception of 7L4 TSF) but remain in force
until such time that the renewal applications
have been granted or refused by the DMRE. Water use
licenses are
applied for
as and when
required to
remain compliant
with relevant
legislation.
Ergo complies
with all the
conditions for
renewal and
has no reason
to believe that
the submitted
renewals would
not be granted.
Ergo is in constant
communication
with the DMRE and
is submitting
the required
information
as per their
requests
to finalize
these renewal
applications.
The Mineral Resources and
Mineral Reserves held by
FWGR were acquired from
Sibanye Gold Limited, a
subsidiary of Sibanye-
Stillwater
Limited, in
a transaction
in which
common law
ownership
was established
over the
various TSFs
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
(“
EAs
”) 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 of which
FWGR operates,
pending the transfer
to FWGR
of those that
are transferable.
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. Up
to April
11, 2022,
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. After April 11, 2022, FWGR
continued
to engage Ergo Mining Proprietary Limited, to act as its agent and representative to sell gold directly to the
South African Bullion banks. This
agreement is expected
to be in
place until FWGR
obtains its own
precious metals beneficiation
license and its
own depository account
with
Rand Refinery.
 
DRDGOLD and its
 
As at June 30, 2021, our Proven and Probablesubsidiaries own the
 
Ore Reserves of Ergo was 2.81 millionrights to
 
ounces, some of
the properties where the
Mineral Resources are located.
In other
cases,
agreements are
in place with the landowners
to mine the dump material
and rehabilitate
the land for other uses.
The details of the related
surface
rights are
not material
for the purpose
of this report.
The necessary
agreements
are in place
for all properties
in the LoM plan.
Impediments on rights to mine
Grootvlei Complex
Ergo has submitted
a decreaserenewal application
of its prospecting
rights over
Grootvlei
dumps 6L16,
6L17 and 6L17A
to the DMRE.
During
the 2022 financial year, an external party raised a conflicting claim of common law ownership of 6L16, 6L17 and 6L17A TSFs. Although the
claim was based on common
law ownership and
no attempt has been
made to set aside
the prospecting
rights over the TSFs,
the Grootvlei
TSFs
have been
excluded from
 
3.13 million ounces at
June 30, 2020
due to depletion
resulting from
ongoing mining.
Athe Mineral
 
Reserves statement
and the Life-of-Mine
(LoM) plan
but included
in the Mineral
Resources
statement.
Marievale Complex
Ergo acquired the 7L5,
7L6 and 7L7 TSFs in terms
of a written notarial executed
deed of sale during 2019 and
 
Mineral Resourcestook possession
 
competentof the
TSFs on 8 April 2019. It has since also obtained the requisite National
 
person isEnvironmental Management
 
appointed atAct, 1998 (Act No. 107 of 1998) (NEMA)
regulatory approvals
 
each
operation to retreat the said TSFs. During
 
review ourthe 2022 financial year, the owner
 
Ore Reserveof the land on which 7L5, 7L6 and 7L7 are situated,
 
calculationsan
estimated 36,524t
 
for accuracy. Forout of the total 54,114t comprising
the Marievale cluster,
notified Ergo that in its view, the said TSFs
had acceded to the land
and that it
had become
the owner
of the TSFs.
 
Ergo Professordisputes
 
Steven Rupprechtthe claim
of legal title
and the matter
 
is the designatedto be referred
 
competentto arbitration.
All ownership requirements
 
person in terms
ofwere met when the SAMRECTSFs
 
Code responsible
for the compilationwere purchased by Ergo
 
and reportingtherefore
the TSFs are still
included in the Mineral
Reserves.
Whilst Ergo
has received
confident
legal advice
on the merits
 
of ore reserves.its claim,
in the event
that the arbitration
goes against
Ergo, its Mineral
Reserves
will reduce
by 35.52Mt
(0.35Moz
at 0.29g/t).
Inasmuch
as it
then enters
into a
commercial
arrangement
with the
land-owner,
the financial
benefit of
this portion
of the Marievale
cluster will
be reduced
by whatever
benefit is agreed
to in favor
of the land-owner.
Ergo has
a submitted
renewal
application
to the
DMRE for
the prospecting
rights it
holds over
7L4 TSF. The
entity (who
holds common
law ownership
rights over
the land on which
the TSF is
situated and
the TSF itself)
has agreed
to relinquish
ownership in
favor of Ergo,
provided
that Ergo undertakes
to:
●
make a notional
amount payment;
drd20220630p40i0
37
●
suitably remove
the TSF; and
●
rehabilitate
the land.
A draft contract
stipulating
the terms
of such agreement
is awaiting
final signature.
Below is a graphical representation of the permits and licenses held within the Group:
Production
Ergo
 
 
For fiscal
year 2021,
2022, production
 
increaseddecreased to 133,618.0
ounces from 137,059.0 ounces
in fiscal year 2021 mainly due to
the volume
throughput
that decreased
from 23.0Mt
 
to 137,05922.1Mt
 
ouncesas a result
 
fromof increased
 
128,249 ouncesrainfall experienced
 
in fiscal
 
year 20202022 in
 
mainly due the
volume
throughput
that increased
from 20.2Mtcomparison
 
to 23.0Mt,previous
 
a consequenceyears.
The impact
 
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 increasedecrease
 
was offset by
 
by the decreaseincrease
 
in the average yield from 0.197g/t in fiscal 2020 to 0.186g/t in fiscal 2021.year 2021 to 0.188g/t in fiscal year 2022.
 
 
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$198.0 per
ounce,
or 13%16.0%, from
$1,129 $1,272.0 per
ounce in fiscal year 2021 to $1,470.0 per ounce in
fiscal year
 
year 2020 to
$1,272 per
ounce in fiscal
year
20212022 mainly
 
due to the
 
6% decreaseabove inflationary
increases
 
in yield andthe costs
 
a 15% tariffof key consumables,
 
increasediesel, steel
 
by power utility, Eskom,and cyanide.
 
which came
 
into effect
 
in April 2021.
 
38
The following table details certain production and financial results of Ergo for the past two fiscal years.
20212022
20202021
Production (imperial)
Ore milled ('000 tons)
 
22,95222,111
20,22822,952
Recovered grade (oz/ton)
 
0.006
0.006
Gold produced (ounces)
 
137,059133,618
128,249137,059
Results of Operations
 
Revenue (R million)
3,943.03,704.9
3,064.33,943.0
 
Cost of sales (R million)
2,871.03,141.8
2,453.52,871.0
 
Cash operating costs (R million)
2,666.51
2,274.03,009.8
2,666.5
 
Cash operating costs (R/kilogram)
1
629,585718,676
568,476629,585
 
All-in sustaining costs (R/kilogram)
 
1
704,503826,891
614,861704,503
 
All-in cost (R/kilogram)
 
1
717,755848,683
621,316717,755
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 theFor fiscal
 
acquisition, we issued to Sibanye-Stillwateryear 2022,
 
new shares equal to 38.05%
of our then outstanding shares
and
granted Sibanye-Stillwater
an option
to acquire
upproduction increased to
 
a total50,284 ounces
 
of 50.1%from 46,940
 
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
madeounces produced
 
in
 
the
definitivefiscal year
 
level2021. Although
 
designvolume
throughput decreased
 
offrom 6.2Mt in
 
thefiscal year
 
full2021 to 6.1Mt in
 
scalefiscal 2022,
 
retreatmentthis was offset
 
ofby an increase
 
dumps
as
part
of
the
WRTRP
Assets
and
located
ataverage yield form 0.237g/t in fiscal
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 datayear 2021 to 0.257g/t 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:
·fiscal year 2022.
 
the CPP will be located after the subdivision of the Farm Rietfontein No 347 Registration Division I.Q.Cash operating
 
Portioncosts increased
by $38 per ounce,
or 7%, from
$558 per ounce
in fiscal year
2021 to $596 per
ounce in fiscal
year 2022
35 mainly due
to an above
inflationary
increases
in the costs
of key consumables,
diesel, steel
and 73, Gauteng Province;cyanide.
The following table details certain production and financial results of FWGR for the past two fiscal years.
·2022
2021
Production (imperial)
Ore milled ('000 tons)
6,078
6,159
Recovered grade (oz/ton)
0.008
0.008
Gold produced (ounces)
50,284
46,940
Results of Operations
 
the Regional Tailing Storage FacilityRevenue (R million)
1,413.6
1,326.0
Cost of sales (R million)
592.1
517.2
Cash operating costs (R million)
1
454.0
406.2
Cash operating costs (R/kilogram)
1
291,302
276,174
All-in sustaining costs (R/kilogram)
1
396,762
377,210
All-in cost (R/kilogram)
1
422,540
400,829
1 Cash operating cost, cash operating costs per kilogram, all-in sustaining costs per kilogram and Return Waterall-in costs per kilogram are financial measures of performance that we use to determine cash generating capacities
 
Dam will be located.of the
Active Tailings Dams
The Driefontein 1mines and 2, Kloof 2 and Leeudoorn currently active tailings dams are also required to be transferred
undermonitor
 
performance of our mining operations.
These are all non IFRS
measures. For a reconciliation of
these measures to the
 
acquisitionnearest IFRS measure see Item
 
agreement,5A.: “Operating Results - Reconciliation
 
for
no
additional
consideration,
once
they
have
been
decommissioned
byof
Sibanye-Stillwater.cash cost per kilogram, all-in sustaining costs per kilogram and all-in costs per kilogram.”
LicencesLicenses to Operate
All
 
the
 
licences,licenses,
 
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
 
cost of WRTRP,
 
the required quantities of
 
water, as licenced,licensed,
 
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
Ergo
 
 
For a
discussion of capital
expenditures in fiscal year 2021,
 
years 2020,
2021 and
2022, see "Item
"Item 5.A.
Operating and Financial
Review and
39
Prospects—Capital
expenditure".
 
 
Financing for significant growth projects may
be obtained through specific financing
arrangements if required. In
fiscal year 2019,
capitalCapital expenditure
 
incurredrelated 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.
Advance planning
is underway
for the
implementation
of the final
life design
of the
Brakpan/Withok
TSF to
accommodate
higher grade
resources
in the area
east of the
of the
Ergo Plant and
further extend
the life
of mine of
Ergo.
During fiscal
year 2022
capital was
expended to
commence
with the development
 
of Phase 1 of FWGR of approximatelya solar
 
R330.7 million were
financed through
a combination
of
borrowings (referpower project,
 
to the Revolving Credit Facilityreduce
 
described in Item 10C.Ergo’s reliance
 
Material Contracts) and cash resources and operational
cash flows ofon
the Group.Eskom
grid and
reduce
its carbon
footprint.
A large
percentage
of the
planned
capital
expenditure
in fiscal
year 2023
will be
applied
to complete
the first
phase of the
project. The
project is
expected to
be completed
in FY2024.
FWGR
 
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
 
Mining.Solution (Pty)Ltd.
 
The
project
includes
the
includes the construction of a new CPP with a capacity of between 1.2 Mtpm to 2.4Mtpm2.4 Mtpm 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 up
to 3 Mtpm
to a capacity
of approximately 800Mt.
The definitive feasibility
study was concluded
in the fiscal
2021 year and
is
subject to
obtaining regulatory
approvals on
the amended
design of
the RTSF.
During the
current year,
management considered
alternative
plans
should
the
RTSF
be
delayed
further,
based
on
information
at
hand.
The
Sibanye-Stillwater
Leeudoorn
tailings
storage
facility
was
evaluated as a viable interim alternative to the CPP.RTSF
 
Phase 2 also includeswhilst regulatory approvals are obtained. Furthermore, the constructionexpansion of a new RTSF capable of accepting 3Mtpm
DP2 to a 1.2Mt
processing 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.per month has been planned.
 
 
 
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 Estimation
Mineral Resources
Mineral Resources
 
competent personare estimates
that contain
inherent risk
and uncertainties
and depend
upon geological
interpretations and
data
statistics drawn from
drilling and sampling
programmes, which may prove
to be unreliable.
For detailed description of
risks associated with
the Company’s material properties, refer to Item 3D: Risk Factors.
Mineral
Resources consist
of sand
dumps,
slimes dams
and silted
‘vlei’ areas
and dams.
Before dumps
are included
as Mineral
Resources, they are evaluated by drilling and an initial assessment is completed by the Qualified Person.
appointedWith respect to the Mineral Resources
and Mineral Reserves, drilling takes place
on a predetermined grid to
 
review ourascertain the average grade
 
Ore Reserve(grade
model), moisture, expected
 
calculationsextraction factors and ultimate
 
for accuracy. Forfinancial viability before mining
 
FWGR, Mr. Vaughn Dukebegins. Sampling is thedone
 
designated
competent person
in terms of
thesubject quality control
SAMREC
Code responsible
for the compilation
and reporting
of ore reserves.assurance as prescribed.
 
Production
Estimation methods vary depending on data distribution and statistics.
 
A block model is generated and used to evaluate
 
For fiscalthe potential
for inclusion into a
 
year 2021,mine plan. The applied Mineral
 
productionResource classification is a
 
increased
to 46,940 ounces
from 46,136
ounces produced
in fiscal
year 2020.
This was
mainly duefunction of 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 confidence
 
of the Lockdown.entire process
 
The Disasterfrom surveying,
drilling, sampling, assaying, geological understanding and/or geostatistical relationships. Mineral Resources is reported
in situ
.
Both Mineral Resources and
 
Management
Act regulations
subsequently
issued by the Department
of Co-operative
governance
and traditional
affairs affirmed
that gold mining
and refining
Mineral Reserves are “essential services” and was therefore exempt from restrictions imposeddetermined
 
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 reconfigurationaverage grade
 
of the DP2
planta TSF which
 
and relevantmust be above or equal
 
infrastructure to a plant
feed cut-off
 
process tailingsgrade. A cut-off
 
fromis also determined
per complex or
cluster. A
TSF may report
an average gold
grade below a
cut-off, but
when
included in a
complex, the total complex
could be above the
 
Driefontein 5cut-off. The assumptions
 
slimes damon a Mineral Resource
 
and depositcut-off include
 
residuesworking costs,
the average plant recovery, the expected residue grade, the required yield based on working cost and gold price, and are presented below:
 
the Driefontein
Ergo
FWGR
Cut-off assumptions
Gold price (R)
914 294
914 294
Working cost (R/tonne)
90.86
85.23
Plant recovery (%)
 
4 Tailings
Storage
Facility.
During
this
construction
phase,
some
gold
was
produced
at
the
adjacent
Driefontein
3
plant
(“40.87
DP353.55
”).
Early-stage
commissioning of the
DP2 plant commenced on
December 6, 2018
with the pumping of
reclaimed tailings into
the carbon in
leach (“
CIL
”Mine call factor (%)
circuit. Testing of the reconfigured plant and ramp-up of production continued during the third quarter of the fiscal year ended June 30, 2019.100
Management considered,100
inter aliaCut-off grade (g/t)
, the design capacity of the plant, recoveries and the ability to sustain production in determining the
date of0.24
commercial production. The
date of commercial
production for Phase
1 (excluding the
milling section) was
determined to be
April 1, 2019.0.15
The millsMineral Resource estimates for all the TSFs and a sand dump are declared as follows:
●
The point of reference is in-situ. The TSFs or sand dumps themselves are the reference points;
●
No geological or other losses were subsequentlyapplied as all material is accessible and there are no geological structures;
●
commissioned
Mineral Resource Estimates are stated as both inclusive and exclusive of Mineral Reserves as defined 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.S-K 1300; and
 
 
 
40
●
Mineral Resources are 100% attributable to DRDGOLD.
Mineral Reserves
The following table details certain productionMineral Reserves were
prepared in accordance with
the requirements of
S-K 1300, and financial results of FWGRthe
economic viability thereof performed
at a minimum prefeasibility study
level. Modifying factors like dilution
or mining losses bare not
applied for the past two fiscal years.Mineral Reserve
estimation
2021because the
TSFs are re-mined
and re-processed in
their entirety.
All other
modifying factors are
reflected in the
mine design and
all of the
2020associated technical aspects that informed the capital and operating cost
estimates. Mineral Reserve is reported as delivered to the processing
Production (imperial)
Ore milled ('000 tons)plants.
 
6,159As material is
removed for
retreatment, the Mineral
Resources and Mineral
Reserves for each
operation are
adjusted accordingly.
6,052Continuous checks of modifying factors and
ongoing surveys are conducted to
monitor the rate of depletion and the
accuracy of factors used
Recovered grade (oz/ton)in conversion.
Mineral Reserves changed in
the past
two fiscal
years as follows:
●
Mineral Reserves increased from 5.35
million ounces at
June 30,
2021, to
6.04 million ounces at
June 30,
2022, mainly
because of
Ergo’s
Daggafontein TSF
being reclassified
to a
Mineral Reserve
which was
in part
offset through
ongoing
mining
activities. This
is despite
the
Grootvlei
dumps being
classified from
a Mineral
Reserve.
Ergo
also
classified a
number
of
its
dumps
from
a
Probable
Mineral
Reserve
to
a
Proven
Mineral
Reserve,
notably
the
Rooikraal
TSF,
0.47Moz(56.76Mt@0.26g/t). Grootvlei Complex
has been excluded from
the life of mine
and has been classified
from a
Mineral Reserve to a Mineral Resource due to land claims.
●
Mineral Reserves 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.
 
0.008
0.008
Gold produced (ounces)The life-of-mine
 
46,940
46,136
Results of Operations
for Ergo
 
Revenue (R million)
1,326.0
1,120.7
based on
 
Cost of sales (R million)
517.1
473.3
Proven and
 
Cash operating costs (R million)
406.2
352.0
Probable Mineral
 
Cash operating costs (R/kilogram)
1
276,174
243,542
Reserves S-K
 
All-in sustaining costs (R/kilogram)
1300 as
 
1
377,210
299,792
at June 30, 2022,
 
All-in cost (R/kilogram)
was 19
 
1years (June 30,
400,8292021:
13 years).
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 capacitiesThe life
 
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
expendituremine
 
for a discussionFWGR
 
based on capitalProven
 
expenditure.and Probable
Mineral Reserves
under S-K
1300 as
at June
30, 2022
was 20 years
(June 30,
ERPM2021: 18 years).
OverviewThe year on year Mineral Reserve reconciliation is shown below:
Tonnes
(Mt)
Grade Au
(g/t)
Au
Ounces
(Moz)
Mineral Reserves as at June 30, 2021
518.10
0.32
5.35
Depletion of Mineral Reserves – Ergo
(20.48)
0.33
(0.22)
Survey adjustments - Ergo
(2.94)
0.20
(0.01)
Addition of Daggafontein TSF - Ergo
192.79
0.24
1.49
Addition of Various dumps
- Ergo
6.72
0.24
0.06
Exclusion of Grootvlei Dumps – 6L16, 6L17 and 6L17A -Ergo
(66.04)
0.26
(0.55)
Depletion of Mineral Reserves – FWGR
(5.77)
0.45
(0.08)
Mineral Reserves at June 30, 2022
622.37
0.30
6.04
The figures contained in
the table are rounded,
which may result in minor
computational discrepancies which are
not deemed
to be significant. Depletion based on block model surveys
Gold Price
Assumptions
 
 
In DecemberThe estimation of Mineral Reserves
 
2018,and Mineral Resources requires the
 
ERPM concludedeconomic assessment to demonstrate reasonable
 
revised agreementsprospects
for economic
 
to disposeextraction. Assumptions
 
certain ofin the
 
its undergroundeconomic assessment
 
assets
to OroTree Limited
(“
OroTree
”).
The revised agreements
consisted ofincludes a
 
disposal ofgold price.
 
ERPM's underground miningThe Company
 
and prospecting rights andhas estimated
 
an optiongold price
 
agreement, at thebased on
consensus forecasts obtained
 
sole
discretionfrom various sources
 
of OroTree,which provided a
 
to purchase
the underground
mining infrastructure
exercisable
on or beforerange as of
 
June 30, 2019.2022.
 
The disposallowest range
 
of the undergroundthese forecasts
was selected
mining and prospecting rights were concludedto take into account the
volatility experienced in the secondcurrent
 
half of the financial yearglobal economic conditions. As
 
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 encumbrancesthe three-year average gold
 
exist on ERPM's
property.price
At June 30,
2021,was used in accordance with Industry Guide 7 for the net
book value
estimation 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.Mineral Reserves.
 
 
41
EnvironmentalYear ended
 
and ClosureJune 30, 2022
Gold price
Rand gold price per kilogram
 
Aspects
914,294
Dollar gold price per ounce
 
There is a regular ingress of
1,823
ZAR/USD rate
15.60
Year ended
 
water into the underground workings of ERPM, which was contained by continuous pumping from theJune 30, 2021
underground section.Three-year average
gold price
Rand gold price per kilogram
 
Studies on
756,355
Dollar gold price per ounce
 
the estimates
1,559
Ore Reserves (million ounces)
5.35
Qualified
 
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.
Persons:
 
 
The government information contained in Item 4D related
to Mineral Reserves and Mineral Resources is based
on information compiled by the
Qualified
Persons
as
defined
in
S-K
1300.
The
Qualified
Persons
are
not
employed
by
the
Company.
The
Company
has
 
appointed Trans-Caledonevaluated
 
Tunnel Authority (“the
TCTA
”) to construct a partialqualification and experience of the Qualified Persons
 
treatment plantand is satisfied that they meet the
 
(neutralisationrequirements in accordance with the SAMREC Code
and S-K
 
plant)1300. DRDGOLD
obtained written
to prevent
consents from
 
the groundQualified
 
waterPersons prior
 
being
contaminated.
TCTA completed
the constructionto publication
 
of thethis
 
neutralisationreport. The
 
plantQualified Person
responsible for the
 
Centralcompilation and reporting of
 
BasinErgo’s Mineral
Resources is Mr
Mpfariseni Mudau and for
FWGR is Ms
Diana van Buren.
The Qualified Person responsible for the compilation and reporting of Ergo’s Mineral Reserves is Professor Steven Rupprecht and for FWGR
is Mr Vaughn Duke
.
Qualified Persons
Title
Address
Qualifications
Relevant years
Experience
Mpfariseni Mudau
Pr.Sci.Nat
400305/12
Director of The RVN
Group Proprietary
Limited
Willowbrook
Villas 21, Van
Hoof St,
Roodepoort, 1724
BSc (Hons) –
Geology, MSc
(Mining
Engineering)
16
Professor Steven Rupprecht
FSAIMM 701013
Associate Principal
Mining Engineer of
the RVN Group
Willowbrook
Villas 21, Van
Hoof St,
Roodepoort, 1724
BSc. Mining
Engineering PhD.
Mechanical
Engineering
35
Diana van Buren
Pr.Sci.Nat. 400107/14
Partner of Sound
Mining Solution
Proprietary Limited
Sound Mining
House, 2A Fifth
Avenue, Rivonia,
2128
BSc (Hons) –
Geology
16
Vaughn
Duke
Pr.Eng 940314 FSAIMM 37179
Partner of Sound
Mining Solution
Proprietary Limited
Sound Mining
House, 2A Fifth
Avenue, Rivonia,
2128
BSc Mining
Engineering
(Hons), MBA
37
Mineral Reserves and Mineral Resources internal control disclosure
DRDGOLD has employed
an independent
consultant to
manage drilling
activities and
 
commenced
treatmentreport sampling
 
during Julyresults in
 
2014. Asaccordance with
partDRDGOLD’s prescribed internal control procedures. The control procedures include standard operating procedure, supervision of
 
the headsdrilling by
experienced
geologists,
technical
site
visits
by
Qualified
Persons,
chain
 
of agreement
 
signedcustody
and
management
approvals.
Reputable
commercial
laboratories perform the
assaying of samples
for gold.
These laboratories have
quality assurance and
quality control measures
 
in Decemberplace that
satisfy Qualified
 
2012 between
EMO, Ergo,
ERPMPersons and
 
TCTA, sludgealso meet
 
emanating
from this plant is co-disposedDRDGOLD’s
 
onto the Brakpan/Withokrequirements. The
 
TSF together withresults are
 
processed material
from the Ergo plant. Partially
treated water
is then
discharged
by TCTA into
the Elsburg
Spruit. This
agreement
includes
the granting
of accessalso submitted
 
to the
 
undergrounddirectors at
 
water basinErgo
 
through oneand FWGR
to
ensure that due process has been followed and to identify any anomalies. Verification
 
of ERPMestimates is a routine part of the plant feed sampling
shafts and the rental of a site onto which it constructed its neutralisationprogramme. Plant feed
 
plant. In exchange, Ergo and its associate companies
including ERPM
have a set-off
against any future
directivesgrades are compared
 
to make any contributionthe expected
 
towardgrades from the
Mineral Resource and
Mineral Reserves and
updated monthly.
Surveys are undertaken monthly, and a reconciliation is reported annually.
Any adjustments for shortfall or overruns are made in the Mineral
Resource and Mineral Reserve statement for the following year. Gains or losses are largely related to volume adjustments on survey although
adjustment may
be made for
other reasons such
as unexpected
deleterious materials in
the dump. The
estimation of
Mineral Reserves is
an
outcome of life
of mine and
budget planning which
runs annually, whereby capital
costs, operating costs
 
or capital ofand other assumptions
 
up to R250 million.are interrogated
and approved at an executive committee level.
 
Through this
 
agreement,
 
Ergo
also secured the right to purchase
 
up to
42
DRDGOLD's summary Mineral Resources (Including Mineral Reserves) as of June 30, ML of partially treated Acid2022 are set forth in the tables below.
Mineral Resources (including Mineral Reserves)
Measured Resources
Indicated Resources
Inferred Resources
Total
 
Mine Drainage (“
AMD
”), a day, from TCTA at cost, in order to reduce
Ergo’s reliance on
potable water
for mining and
processing
purposes.Tons
 
 
Grade
 
While theGold Content
 
ultimate
 
amount ofTons
 
rehabilitation
 
costs toGrade
 
Gold Content
Tons
Grade
Gold Content
Tons
Grade
Gold Content
(mill)
(g/tonne)
('m ozs)
(tonnes)
(mill)
(g/tonne)
('m ozs)
(tonnes)
(mill)
(g/tonne)
('m ozs)
(tonnes)
(mill)
(g/tonne)
('m ozs)
(tonnes)
Ergo
266.25
0.31
2.64
82.24
568.21
0.25
4.55
141.40
21.32
0.24
0.16
5.12
855.78
0.27
7.35
228.76
FWGR
229.37
0.33
2.46
76.39
-
-
-
-
-
-
-
-
229.37
0.33
2.46
76.39
Total
495.62
0.32
5.10
158.63
568.21
0.25
4.55
141.40
21.32
0.24
0.16
5.12
1,085.15
0.28
9.81
305.15
DRDGOLD's summary Mineral Resources (Exclusive of Mineral Reserves) as of June 30, 2022 are set forth in the tables below.
Mineral Resources (Exclusive of Mineral Reserves)
Measured Resources
Indicated Resources
Inferred Resources
Total
Tons
Grade
Gold Content
Tons
Grade
Gold Content
Tons
Grade
Gold Content
Tons
Grade
Gold Content
(mill)
(g/tonne)
('m ozs)
(tonnes)
(mill)
(g/tonne)
('m ozs)
(tonnes)
(mill)
(g/tonne)
('m ozs)
(tonnes)
(mill)
(g/tonne)
('m ozs)
(tonnes)
Ergo
66.04
0.26
0.55
17.17
375.41
0.25
3.02
93.85
21.32
0.24
0.16
5.12
462.77
0.25
3.73
116.14
FWGR
1
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Total
66.04
0.26
0.55
17.17
375.41
0.25
3.02
93.85
21.32
0.24
0.16
5.12
462.77
0.25
3.73
116.14
1
Mineral Resources when stated exclusive of Mineral Reserves amount to zero for FWGR,
because all of the Mineral Resources will be incurredexploited and converted to Mineral
Reserves
DRDGOLD's summary Mineral Reserves as of June 30, 2022 are set forth in the tables below.
Mineral Reserves
Proved Reserves
Probable Reserves
Total Reserves
Tons
Grade
Gold Content
Tons
Grade
Gold Content
Tons
Grade
Gold Content
(mill)
(g/tonne)
('m ozs)
(tonnes)
(mill)
(g/tonne)
('m ozs)
(tonnes)
(mill)
(g/tonne)
('m ozs)
(tonnes)
Ergo
200.21
0.33
2.09
65.02
192.79
0.24
1.49
46.27
393.00
0.28
3.58
111.29
FWGR
216.49
0.33
2.32
72.15
12.88
0.33
0.14
4.24
229.37
0.33
2.46
76.39
Total
416.70
0.33
4.41
137.17
205.67
0.25
1.63
50.51
622.37
0.30
6.04
187.68
The figures contained in the tables are rounded, which may result
 
in the future
minor computational discrepancies which are not deemed to be significant.
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”.43
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
 
results may differ
 
differ from
those indicated in such forward looking statements.
Comparison of financial performance for the fiscal year ended June 30, 20202021 with fiscal year ended June 30, 20192020
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,
2020.2021.
 
4244
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 increased2022 decreased
 
compared to
 
fiscal 2020,year
 
2021, mainly
due to,
 
inter alia
, the following:
●
gold production decreased by 3kg to 5,720kg together with a
 
increaseddecrease in gold sold by
 
by 6%20kg to 5,714kg. The decrease in production
reflected
 
to 5,723kg
together
with an
increase
in gold
sold
by 5%
to 5,734kg.
The increase
in production
reflected
an 11% increasea 3% decrease
 
in throughput
 
to 29,111t,28,189,000t,
 
offsetting the
 
4% decrease3% increase
 
in average
 
yield to 0.197g/0.203g/t;
 
and
●
the average
 
rand gold price
 
received increaseddecreased
 
by 19%.3%; and
●
above inflationary
increases
in the cost
of key consumables,
diesel, steel
and cyanide.
 
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.Africa;
and
●
government policies that could materially impact our operations.
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
 
of the U.S. dollar (the
 
(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
 
of speculative activities. In response
to the COVID19COVID-
19 pandemic
and measures
 
taken to deal
with the
outbreak,
investors
 
globally, as they
have in so
many previous
times of crisis,
 
crisis, turned
to gold and
gold stocks
 
as a safe
 
safe haven asset,
 
asset, leading
to a surge
 
surge in the
 
average gold
 
gold price during
 
during fiscal 2020
year 2021
 
and 2021.the
continued
economic
uncertainty
along
with the
slow economic
recovery,
consequences
of the
Ukraine
conflict
resulted
in sustained
high (although
marginally
lower)
gold prices
for fiscal
year 2022.
 
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
 
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 20212022 and 20202021 fiscal years:
2022 fiscal year
2021 fiscal year
2020 fiscal year
Change
$ per ounce
$ per ounce
%
Closing gold spot price on June 30,
1,807
1,770
1,781
(1)2
Lowest gold spot price during the fiscal year
 
1,684
1,676
1,382
21-
Highest gold spot price during the fiscal year
 
2,070
2,072
1,785
16-
Average gold spot price for the fiscal year
 
1,834
1,850
1,562
18(1)
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%16% from
R17,914 per ounce in 2019 to R24,466 per ounce in 2020 and increased by 16% to R28,490 per ounce in 2021.2021, and decreased by 2% to R27,896 per ounce in 2022.
An increase/(decrease) of 20% in the US dollar gold price throughout
 
fiscal year 20212022 would have increased/(decreased) revenue by
approximately R1,023.7 million (2021: R1,053.8 million (2020: R837.0 million).
45
 
An increase/(decrease) of 20% in
 
the Rand to US dollar exchange
 
rate throughout fiscal year 20212022
 
would have increased/(decreased)
revenue by approximately R1,023.7 million (2021: R1,053.8 million (2020: R837.0 million).
43
Gold production
 
 
In fiscal year 2022, gold production
decreased to 183,902 ounces (produced from
28.2 million tonnes milled at
an average yield of
0.203g/t) from 183,999 ounces in fiscal
year 2021 (produced from 29.1 million tonnes
milled at an average yield of
0.197g/t). This was mainly
due to
Ergo’s gold production which decreased
to 133,618.0 ounces
in fiscal year
2022 (produced from
22.1 million tonnes
milled at an
average
yield of 0.188g/t) from 137,059.0
ounces in fiscal year 2021
(produced from 23.0 million tonnes
milled at an average yield
of 0.186g/t). The
decrease was a result
of a decrease
in tonnes milled
due to increased
rainfall as
well as lower
grade material
being mined.
In fiscal year 2021,
 
gold production increased to
 
183,999 ounces (produced from 29.1
 
million tonnes milled at an
 
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 46,13646,940 ounces (produced from 6.16.2
 
million tonnes milled
 
at an
average yield of 0.237g/t), mitigating the impact of
 
Ergo’s gold production which increased to 137,059.0 ounces in fiscal year 2021
 
decreased to 128,249(produced
from 23.0 million tonnes milled at
an average yield of 0.186g/t) from
128,249.0 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
 
average yield of 0.194g/t).
 
This0.197g/t). The increase was
a consequence
 
of thestable 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
 
supply
from Eskom and
 
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, 20212022 with fiscal year ended June 30, 2020”2021”.
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 20212022
 
and 2020,2021, 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 20212022
 
the average
Rand gold
 
price received increased
decreased by
 
19%3% compared
to fiscal
 
year 2020, outperforming2021,
this was
a result
of the
combined impact
of the
 
combined impact
of the average Dollar gold
price which increased
 
decreased by 18%
1% and
the average
exchange rate of
 
the rand
against the dollar that strengthened
 
that
strengthened by 2%1%.
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
 
for a
substantial period
 
below our
 
cost of
 
production at
 
our operations,
 
we could
 
determine that
 
it is
 
not economically
 
feasible to continue
 
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).
 
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:
 
 
4446
Fiscal year ended
Year
 
ended June 30,
2022
2021
2020
2019
(%)
(%)
(%)
The average rand/dollar exchange rate (strengthened)/weakened by:
(2)(1)
10(2)
10
CPI (inflation rate)
 
7.4
4.9
2.2
4.5Government
policies that
could materially
impact operations
The mining
industry in
South Africa
is extensively
regulated
through legislation
and regulations
issued by government’s
administrative
bodies.
One of the key findings of the Frasers
Institute weighing
on South Africa’s investment appeal,
is lack of regulatory certainty.
Although
the industry’s
successfully
challenge
of Mining
Charter
III in the
High Court,
that set
aside certain
provisions
of the charter
on the basis
that it was
purported legislation (as opposed to policy) provided some certainty to the industry,
turnaround in obtaining permits and regulatory approvals
remains slow,
delaying the
execution of
key capital
projects.
The increasing
prominence
of ESG is
also resetting
the standard
on transparency
and
sustainability
and society
generally is
far more environmentally
and socially
aware, applying
increasing
pressure through
providers
of capital and
the regulator
to enforce
compliance.
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.production and during fiscal 2022 the national state of disaster implemented
 
(Referby the National
Government
came to Iteman
 
end. (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.
 
OperatingFinancial and operating data
Year ended
 
June 30,
20212022
20202021
Revenue (R'm)
5,269.05,118.5
4,185.05,269.0
Gold production (ounces)
 
183,999183,902
174,385183,999
Gold production (kilograms)
 
5,7235,720
5,4245,723
Gold sold (ounces)
 
184,352183,709
174,804184,352
Gold sold (kilograms)
 
5,7345,714
5,4375,734
Average spot gold price (R/kilogram)
 
915,972896,877
786,601915,972
Average gold price received (R/kilogram)
 
917,996894,409
768,675917,996
Cost of sales (R'm)
3,388.23,741.5
2,937.93,388.2
Operating costs (R'm)
3,122.53,506.5
2,692.13,122.5
Cash operating costs (R'm)
 
(1)
3,072.73,463.8
2,626.03,072.7
Cash operating costs (R/kilogram)
 
(1)
 
540,338600,875
482,417540,338
All-in sustaining costs (R/kilogram)
 
(1)
 
626,247721,684
541,475626,247
All-in costs (R/kilogram)
 
(1)
 
643,338746,255
551,646643,338
Additions to property, plant and equipment (R'm)
395.7598.4
182.7
Ore Reserves (million ounces)
5.35
5.73395.7
(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
 
per kilogram, all-in
sustaining costs per kilogram and all-in costs per kilogram.”
Revenue
Revenue increaseddecreased by 26%
3% to R5,118.5 million
in fiscal year
2022 from R5,269.0
 
million in fiscal
year 2021 from R4,185.0mainly
 
million in fiscal year 2020 mainly due to the
 
average
rand gold price
received that
decreased by
3% to R894,409 per
kilogram and
the 5%
increase20kg decrease
 
in gold sold from
 
from 5,437
5,734 kilograms
 
in fiscal 2021
2020 to 5,734
5,714 kilograms
 
in fiscal
2021 and the
average
rand gold
price received
that increased
by 19% to R917,996
per kilogram. 2022.
 
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
177.9647
Capital expenditure
 
During fiscal year 20212022 capital expenditure increased by R214.6R202.7 million to R395.7R598.4 million from R181.1R395.7 million in fiscal year 2020.
2021.
Ergo’s capital expenditure during fiscal year 20212022 increased by R136.5R173.3 million to R250.9R424.2 million from R114.4R250.9 million in fiscal year
2020.2021. This was mainly
due to infrastructure developmentupgrading of the 4A8 pump station
 
for reclamation of the
4L3 and 4L4 dumps
& power supply amounting to R47.5R45.0 million,
upgrading infrastructure development for
of
the
Brakpan
plant’s
carbon
in
leach
circuit
to
provide
more
capacity
Marievale and
achieve
better
efficiencies
Rooikraal dumps amounting
 
to R204.5 million, various
 
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
forexpenditure on the Brakpan/Withok TSF expansion
including decanting and slurry
lines amounting to R10.2R53.0 million and solar project plant related costs amounting to R59.1 million.
FWGR’s capital expenditure during fiscal
year 20212022 increased
by R83.2R16.5 million to
R159.8 million from R143.3 million from R60.1 million in
fiscal year
2020.2021. This was mainly due to
 
tothe completion of the construction of an
 
an additional thickener amounting to R40.3all full
 
million at reporting date (total
cost is expected
to be approximately
R88 million),
feasibility studies and
designs for Phase
2closed circuit milling amounting to
 
R32.5 R47.7
million, andfinal designs for
 
the installationCPP,
with the design work
also being applicable to
the potential expansion of
 
a copper elusion
circuitDP2 amounting to R12R64.1
million
and the ongoing improvement of Driefontein 4 Tailings Storage Facility amounting to R6.3 million.
During fiscal year
 
2020,2021, capital expenditure
 
was R181.1R395.7 million
 
primarily consisting of
 
expenditure incurred on
 
sustaining capital
expenditure on
the reclamation
site, the
Brakpan/Withok TSF,
 
upgradethe Brakpan
plant, the
commencement of CIL tanks
the construction
for the
additional
thickener and site establishment costs and authorisations for reclamation sites.the installation of the copper elution circuit.
 
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
 
requirerequires the exercise
 
exercise of significant judgement
 
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
48
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
 
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
 
future profitability, and
 
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
Ekurhuleni electricity dispute (refer Item 18. ‘‘Financial Statements -
Note 24 Payments made
 
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 is
determined using assumptions about
the future that
 
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:
49
Amounts in R million
Observable/unobservable
input
Unit
20212022
20202021
Rand Refinery operations
Average gold price
 
Observable input
R/kg
 
847,317880,207
 
852,098847,317
Average silver price
 
Observable input
R/kg
 
11,75111,209
 
9,45311,751
Average South African CPI
Observable input
%
4.4
4.84.4
South African long-term government bond rate
Observable input
%
9.510.26
9.5
Terminal growth rate
Unobservable input
%
4.4
5.04.4
Weighted average cost of capital
Unobservable input
%
15.115.9
15.1
Investment in Prestige Bullion
Discount period
Unobservable input
Year
12s
1311
12
Cost of equity
Unobservable input
%
16.514.2
13.216.5
 
Marketability and minority discounts (both
 
unobservable inputs) were also applied
 
of 16.5%
 
and 17.0%
 
(2020:2021: 16.5% and
 
17.0%)
respectively. The latest budgeted cash flow
 
forecasts provided by Rand Refinery as
 
at June
 
30, 20212022 was
 
used, and therefore classified as an
unobservable
 
input into
 
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, 20212022 with fiscal year ended June 30, 20202021
Gold revenue
The following table illustrates the year-on-year change in gold revenue for fiscal year 20212022 in comparison to fiscal year 2020:2021:
R million
Total
Impact of change in amount
of gold sold
Impact of
change in
gold price
Net change
Total
gold revenue
gold revenue
20202021
20212022
Ergo
 
3,060.53,939.9
221.3(135.1)
658.0(104.7)
879.3(239.8)
3,939.93,700.1
FWGR
1,118.71,323.9
6.2116.1
199.0(29.4)
205.286.7
1,323.91,410.6
Consolidated
4,179.25,263.8
227.5(19.0)
857.0(134.1)
1,084.5(153.1)
5,263.85,110.7
Gold revenue increaseddecreased by
R1,084.5 R153.10 million,
 
or 26%3%, to R5,263.8R5,110.7 million
during fiscal year 2021.
2022. This was
 
mainly due to
 
to the
average
rand gold price
 
received which
 
which increaseddecreased
 
by 19%3% to R917,996R894,409
 
per kilogram
 
as well asand a marginal
decrease in
 
gold sold havingfrom
 
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 compared184 350 ounces
 
to fiscal
2020 when183 709
production suffered
from the impact
of the Lockdown,
subsequent cautious
ramp-up and interruptions
in power supply
from Eskom and
the City
of Ekurhuleni.ounces.
Cost of sales
 
Cost of sales
 
amounted to R3,388.2R3,741.5
 
million in fiscal
 
year 2021,2022, consisting
 
mainly of operating
 
costs of R3,122.5R3,506.5
 
million, depreciation
of
R252.5
R267.6 million,
 
a positive movement
 
in
gold
in
 
process
of
R25.6 R30.4
 
million
and
a
 
positive
movement
in
 
the
change
in
 
estimate
of
environmental
rehabilitation of R12.4R2.2 million. These are discussed as follows:
 
Operating costs
 
Operating costs increased by 16.0%12.3% to R3,506.5 million for fiscal year
2022 compared to R3,122.5 million for fiscal year
2021 compared to R2,692.1 million for fiscal year 2020. 2021. The
increase is mainly due to general
 
to a 13% increase in
Ergo’s throughput
to 23.0Mt compared to 20.2Mt
higher inflation in fiscal year 20202022
 
as well as above inflation increase
in the costs of key consumables,
diesel,
steel and a 15% electricity tariff
increase by power utility Eskom which came into effect in April 2021.cyanide.
4850
Depreciation
Depreciation charges were
R267.6 million for
fiscal year
2022 compared to
 
R252.5 million for
 
fiscal year
 
2021 compared to
R270.8 million for
fiscal year
2020.2021. Depreciation charges
decreasedincreased as a result of an increase inincreased capital expenditure over the life of mine for both Ergo and FWGR.
last two fiscal years.
Change in estimate of environmental rehabilitation
As of June 30,
 
2021,2022, we estimate our total
 
environmental rehabilitation provision, being the
 
discounted estimate of future
 
costs, to
be R570.8R517.7 million as compared to R570.8 million
 
to R568.9 million at June
30, 2020.2021.
 
A change in estimate
of environmental rehabilitation of R12.4
 
of R2.2 million
was
recognized due
to changes
in the
estimated timing
 
of the vegetation of non-viable reclamation sites and
 
vegetation ofdormant infrastructure. In addition,
 
reclamation sites,a
R67.2 million decrease in the provision due to the increase in the Ergo life of mine.
 
as well
A
 
as an
increase in
contractor rates
for the
establishment of vegetation based on ongoing test work performed.
A total
 
of R564.7
R589.8 million
 
was (2021:
R87.5 million) is
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
guarantees provided to the DMRDMRE through an
 
through an insurance cell captive company, the Guardrisk Cell Captive. The
 
company,increase is attributable to the transfer
from
the environmental trust funds to the
 
Guardrisk Cell Captive. The increaseCaptive along with growth
 
is attributable to R3.7
of R10.4 million interest received on
these funds during fiscal year 2022.
 
year 2021. As at
June 30, 2021,2022, guarantees
 
amounting to R430.1R614.0
 
million were in issue
 
to
the
DMR DMRE
 
(2020:2021:
 
R427.3R430.1 million).
 
The
Any shortfall
between
the
 
invested
funds
and
the
estimated
provisions
 
is
expected
to
be
financed
 
by
contributions to the Guardrisk
 
Guardrisk Cell Captive from time
 
from time to
time as required over
the remaining production life
 
over the remaining
production life of
the respective mining operations
 
operations
and, at the time of
mine closure, the proceeds on
the disposal of remaining
assets and gold from plant clean-up. The transfer of the funds from the environmental trust fund to the Guardrisk Cell Captive was completed
after the required
approvals for the
change in method
and transfer of
the environmental trust
funds were obtained
from the DMR
and a thorough
consideration of tax and legal impacts was performed.
As
a
result,
a
total
of
R0.0 million
remained
in
our
various
environmental
trust
funds
as
at
the
end
of
fiscal
year
2022,
as
compared
to
R564.7 million at the end of
fiscal year 2021. Up
to the time of the
transfer, R 14.8 million of interest
was received on these funds
during fiscal
year 2022.
Movements in gold in process
Movement in
gold in
 
process in fiscal
 
fiscal year 2021 amounted to
 
R25.6 2022 amounted
to R30.4
million mainly
 
due to a decrease
an increase
 
in the
lock up
 
of gold in
 
processin
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 yearcosts increased
 
2021. Administrationby R97.2 million
 
expenses and
general costsfrom R64 million
 
in fiscal
 
year 2021
 
to R161.2 million
in
fiscal year 2022. Administration expenses and general costs
in fiscal year 2021 included a share-based
 
share-based payments
benefit of
R44.3 millionmillion. The
(2021: share-based payments expense of R218.1 million). The share-based payment
 
benefit in
2021 iswas mainly
due to the remeasurement
 
of the
cash-settled share-based
payment liability
at a seven-day
volume weighted
average price (VWAP)
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
 
R25.14 at
June 30, 2020 to R18.62 at
November 5, 2020. This liability
was fully settled
on November 5,
2020. In addition, transaction
and exploration costs
increased from R3.1
million in fiscal year 2021 to R15.2
million in
fiscal year
2022 as well
as an increase
in other administration
expenses
and other
costs of R13.1
million related
to short term
incentives
and information
technology.
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
R225.8 million (2020: nil) and an increase
in interest income earned of R46.7 millionfiscal year 2022,
 
mainly due to higheran increase
in interest income
 
earned of R3.9
from higher cash
and cash equivalents balances
 
balances during the year and an unrealized foreign exchange
 
the year.gain of
R7.0 million in fiscal year 2022 compared to an unrealized foreign exchange loss in 2021 which was recognized in finance expense.
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
 
2021year
 
compared2021
 
to
 
nilR74.8 million
 
in
 
fiscal
 
2020.year
 
The2022,
 
unwindingmainly
 
ofattributable
 
to
discount on the
 
provisioninitial payment made under
 
forprotest of R21.1
million compared to R7.4
million in fiscal year
2021. This increase was
in part
environmental rehabilitation decreasedoffset by R7.3the unrealized foreign exchange loss of nil in fiscal year 2022 compared to R8.4 million as a result of a lower provision estimated as at June 30, 2020.in fiscal year 2021.
Income tax
Income tax amounted to a
charge of R523.8R334.3 million for
fiscal year 2021 (2020:2022 (2021: charge
of R343.9R523.7 million) and consistedconsists of
a current
tax charge of
R261.5 million (2021: charge
of R423.7 million (2020: charge of R263.2 million) and
 
and deferred tax charge
of R100.0R72.7 million (2020: (2021:
deferred tax charge
of R80.7R100
million).
The current tax increased
decreased to R261.5 million in fiscal year 2022 from R423.7 million in
fiscal year 2021 from R263.2
million in fiscal 2020
mostly due to ana decrease in
the taxable
 
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 resulting
 
remained unchangedmainly from a
decrease in profits
as well as
increased capital
expenditure for
which full capital redemption under section 36 of the Income Tax Act was applied.
The forecast weighted average
deferred tax rate for
both Ergo and FWGR
decreased in fiscal year
2022 to 22% and
29% respectively
from 25%
and 30% respectively
 
in fiscal year
 
year 20212021.
 
at 25.0%The decrease is
 
due to a
change in the
gold mining tax
formula and the
updated life of
30.0% respectively.mine plan. Refer to Item 10E.: Taxation – “Income Tax and Withholding
Tax on Dividends” for a detailed explanation on changes in taxation
laws and regulations.
 
 
 
 
 
 
4951
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 year
 
2019. The Group
 
considers the presentation
 
presentation of Adjusted EBITDA
 
Adjusted EBITDA provides useful information
 
useful information to
investors
investors to enable investors to assess compliance with our historic covenants in the RCF agreement.
Year ended,
 
June 30
Reconciliation of adjusted EBITDA
20212022
20202021
Profit for the year
1,439.91,123.8
635.01,439.9
Income tax
523.7334.3
343.9523.7
Profit before tax
1,963.61,458.1
978.91,963.6
Finance expense
69.574.8
68.869.5
Finance income
(216.2)(225.8)
(109.8)(216.2)
Results from operating activities
1,816.91,307.1
937.91,816.9
Depreciation
 
252.5267.6
270.8252.5
Share based payment (benefit)/expense
(28.3)18.4
224.1(28.3)
Change in estimate of environmental rehabilitation recognised in profit or loss
(12.4)(2.2)
(21.9)(12.4)
Gain on disposal of property, plant and equipment
(0.1)(6.6)
(0.7)(0.1)
IFRS 16 Lease payments
1
(23.8)
(15.8)
-
TransactionExploration expenses and transaction costs
3.115.2
1.43.1
Adjusted earnings before interest, tax depreciation and amortisation ("Adjusted EBITDA")
 
2
2,015.91,575.7
1,411.62,015.9
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,
cash operating costs per
 
kilogram, all-in sustaining costs
per kilogram and all-in
 
costs per kilogram areand
 
non-IFRSall-in costs per kilogram
are non-
IFRS financial measures
that should not be
 
be considered by
investors in isolation
or as alternatives
 
to cost of
sales, net profit/(loss) attributable
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
 
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 cash
 
operatingper kilogram, all-in sustaining
costs and all-in costs
 
per kilogram, such measurements
 
kilogram,may vary significantly among
gold
 
all-inmining
 
sustaining
costscompanies,
 
and
 
all-inthese
 
costsdefinitions
 
perby
 
kilogram,themselves
 
suchdo
 
measurementsnot
 
maynecessarily
 
varyprovide
 
significantlya
 
amongbasis
for
comparison
with
other
 
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 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.
 
 
 
 
 
 
 
 
 
5152
For fiscal
 
year 2021,2022,
 
consolidated cash
 
operating costs
 
per kilogram
 
increased by
 
12% to11%
 
R540,338 perto R600,875
 
per kilogram from
 
R482,417 from R540,338
per
kilogram in fiscal year 2020.2021. Consolidated all-in sustaining costs
 
per kilogram increased by 16%15% to R626,247R721,684 per
 
kilogram in fiscal year 20212022
from R541,475R626,247 per kilogram
 
in fiscal year 2020.2021.
 
Consolidated all-in costs per
 
kilogram increased by 17%16%
 
to R643,338R746,255 per kilogram
 
of gold
in fiscal 20212022 from R551,646R643,338 per kilogram of gold in fiscal year 2020.2021.
 
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
 
increased in cash
operating costs, which is
 
is due to ahigher inflation of
 
13% increase7.4% in Ergo’s throughput tofiscal 2022 in comparison
 
23.0Mtto 4.9% fiscal 2021
and above inflationary increases in fiscal
year 2021 compared
to 20.2Mt in
fiscal year 2020
the costs of key consumables, diesel, steel 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.cyanide.
 
The
 
increase
 
in
 
sustaining
 
capital
 
expenditure
 
during
 
fiscal
 
year
 
20212022
 
contributed
 
to
 
the
 
increase
 
in
 
all-in
 
sustaining
 
costs
 
per
kilogram. The increase in
 
growth capital expenditure
 
incurred during fiscal year
 
20212022 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
20212022
20202021
Cost of sales
3,388.23,741.5
2,937.93,388.2
Depreciation
 
(252.5)(267.6)
(270.8)(252.5)
Change in estimate of environmental rehabilitation
 
12.42.2
21.912.4
Movement in gold in process
 
(25.6)30.4
3.1(25.6)
Operating costs
 
3,122.53,506.5
2,692.13,122.5
Ongoing rehabilitation expenditure
 
(48.3)(31.6)
(24.3)(48.3)
Care and maintenance costs
 
(3.9)(5.9)
(11.1)(3.9)
Other operating income/(costs)
1(5.2)
2.4
(30.7)
Cash operating costs
 
21
3,463.8
3,072.7
2,626.0
Movement in gold in process
 
25.6(30.4)
(3.1)25.6
Administration expenses and other costs excluding non-recurring items
 
21
146.0
109.7
96.1
Other operating income/(costs)
(2.4)5.1
30.7(2.4)
Change in estimate of environmental rehabilitation
 
(12.4)(2.2)
(21.9)(12.4)
Unwinding of rehabilitation provision
 
44.745.0
52.044.7
Sustaining capital expenditure
 
21
496.4
353.0
164.2
All-in sustaining costs
21
4,123.7
3,590.9
2,944.0
Care and maintenance costs
 
3.95.9
11.13.9
Ongoing rehabilitation expenditure
 
31.6
48.3
24.3
TransactionExploration expenses and transaction costs
3.115.2
1.43.1
Growth capital expenditure
 
21
87.7
42.7
18.5
All-in costs
 
21
4,264.1
3,688.9
2,999.3
Gold produced (kilograms)
 
5,7235,720
5,4245,723
Cash operating costs per kilogram (R per kilogram)
 
540,338600,875
482,417540,338
All-in sustaining costs per kilogram (R per kilogram)
 
626,247721,684
541,475626,247
All-in costs per kilogram (R per kilogram)
 
643,338746,255
551,646643,338
Reconciliation of sustaining capital expenditure and growth capital expenditure
 
Additions - property, plant and equipment owned
395.7584.1
182.7395.7
Less
Growth capital expenditure
 
21
87.7
42.7
18.5
Sustaining capital expenditure
 
21
496.4
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.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
5253
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
 
20212022 in comparison
 
comparison with fiscal
year
20202021
.
R million
Cash operating
costs
Impact of change in
throughput
Impact of change in
costs
Net change
Cash operating
costs
20202021
20212022
Ergo
 
2,274.02,666.5
306.2(97.7)
86.3441.0
392.5343.3
2,666.53,009.8
FWGR
352.0406.2
6.2(5.3)
48.053.1
54.247.8
406.2454.0
Total
2,626.0
312.4
134.3
446.7
3,072.7
(103.0)
494.1
391.1
3,463.8
Cash
operating
costs
 
in
fiscal
year
 
2021 increase 2022
increased
by
 
R446.7 R391.1
million
to
 
R3,072.7 R3,463.8
million
compared
 
to
cash
operating
 
costs
of R2,626.0
R3,072.70 million in fiscal
 
year 2020.The2021.The increase is
 
is mainly due to higher inflation
of 7.4% in fiscal
year 2022 in comparison to
 
a 13% increase
in Ergo’s throughput to 23.0Mt
in4.9% fiscal year
2021 compared to
20.2Mt
and above inflationary increases in fiscal year 2020the costs of key consumables, diesel, steel 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.
cyanide.
 
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
20212022
20202021
Costs
20212022
20202021
Consumables
 
28%29%
30%28%
Consumables
 
33%32%
31%33%
Labor
 
19%18%
22%19%
Labor
 
20%21%
22%20%
Electricity and water
 
18%
18%
Specialized service providers
 
9%
9%
Specialized service providers
 
16%
17%16%
Electricity and water
 
19%
12%
Machine hire
4%
4%
Machine hire
2%
2%
Security expenses
4%
3%4%
Security expenses
5%
4%5%
Other costs
 
11%
6%11%
Other costs
 
12%
20%19%
5B. LIQUIDITY AND CAPITAL
 
RESOURCES
Cash flows
 
from operating
 
activities
 
Cash generated
 
from operating
 
activities
 
amounted to
 
R1,573.4R1,497.8 million
 
for fiscal
 
year 20212022 (fiscal
 
year 2020:2021:
 
R1,128.9R1,573.40 million).
 
 
Cash generated
from operating
activities
 
increased
decreased during fiscal
year 20212022 mostly
due to a 5% increasean 11%
 
increase in gold soldcash operating costs to
600,875 per kilogram and aan 3% decrease
 
19% increase
in the average rand gold price
received to R917,996 perR894,409
 
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
Net movement
 
in working capital
(changes
 
that in trade
and other
receivables,
consumable
stores
and stockpiles
and trade
and other
payables)
amounted
 
to a cash
 
outflow cash inflow
of R194.9R78.1
 
million
in fiscal
 
fiscal year 2022.
 
2021.The decrease
in cash inflows
was partially
mitigated
by a R189.4 million
decrease
in current
tax paid to
R262.7 million.
 
Cash flows
 
from investing
 
activities
Net cash
 
utilized by
 
investing
 
activities
 
amounted to
 
R626.2 million
in fiscal
year 2022
compared
to R446.6 million
 
in fiscal
 
year 20212021.
compared
to R202.5 million
inIn fiscal
 
year 2020.2022,
net cash
utilized by
investing activities consisted mainly of
R584.1 million in
additions to
property, plant
and
equipment,
R28.9 million investment in
other funds and
R25.4 million spent on
environmental rehabilitation
payments. These outflows were
reduced by
R12.2 million
proceeds on
the disposal
of property, plant
and equipment.
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 R653.5R533.0 million
in fiscal year 20212022 compared
 
to net cash inflowsoutflows of R509.2 R653.5
million in
fiscal year
 
2020.2021.
 
54
During fiscal
year 2022,
the net cash
outflow consisted
mostly of dividends
paid on ordinary
shares amounting
to R513.3 million.
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, 20212022 amounted
 
amounted to R2,180.0R2,525.6 million compared
to R1,715.1R2,180.00 million at the end of fiscal year
2020.2021.
 
Substantially
 
all of our cash
 
and cash equivalentand
cash equivalents
 
balances were
 
denominated
 
in South African
 
rand. Cash and
 
and cash
equivalent
 
denominated
in foreign
 
currency amounted
 
to USD 3.4USD3.4 million
 
million at June 30,
 
June 30, 2021
2022 compared
 
to nil USD3.4 million
at the end of
 
end of fiscal year
 
year 2020.2021.
 
 
Cash and
 
cash equivalents
 
as at June
 
30, 20212022 includes
 
restricted
 
cash related
 
to guarantees
 
of R10.4R10.7 million
 
compared
 
to R19.3R10.4 million
at the end
 
of fiscal
 
year 2020.2021.
 
At September
 
30, 2021,2022,
 
our cash and cash equivalents were R1,898.9R2,245.1 million.
Borrowings
 
and funding
At June 30, 2022 our external
 
June
30,
2021
and
September
30,
2021,
our
external sources
of
 
capital included
 
our RCF. At September 30, 2022, we had
 
RCFno external
 
described insources of
 
Itemcapital.
 
10C.
Material
Contracts’’.
In September
2020,
the RCF was amended as described in Item
 
10C. “Material Contracts”.was amended. The amendments
 
The amendments include
a reduction in the
the size of the facility from
 
facility from R300millionR300 million to R200
R200 million as well as removing
 
removing any commitment towards the
 
the performance guarantee issued to
 
to
Ekurhuleni Metropolitan Municipality. No amounts
were drawn under this
facility as of June 30, 2021
2022 or up to
the expiry date of September 30, 2021.
14, 2022. The RCF has not been renewed
as funding
requirements
for capital
projects is
currently
being evaluated.
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
 
net cash
generated
 
from operations
 
operations and long
 
theterm finance
 
availability ofoptions for
 
negotiated fundinglong term
 
facilitiescapital
projects will
 
be sufficient
 
sufficient to
meet
 
the
anticipated
commitments of our existing operations
 
operations for fiscal
year 2022.2023. As a result of the significant increasesustained
 
in thehigh rand gold price, at September 30, 2021 the
Group has
 
30, 2022 the Group
has a cash
 
and cash equivalents
 
equivalents balance of R1,898.9
 
R2,245.1 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, 20212022
 
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 2022,2023,
 
we are planning Group gold production
 
of 160,000 (4 977kg) to 180,000
 
(5 599kg) ounces
 
at cash operating
unit cost of
 
approximately
 
R600,000R685,000 per
 
kilogram and
 
and expect
a capital
investment
 
of approximately
 
R600R1 400 million.
54
Reconciliation of budgeted cost of sales to budgeted cash operating costs (R’million)
Cost of sales
3,502.93 954.8
Reconciling items
1
(327.5)(318.1)
Cash operating costs
 
2
3,175.43 636.7
1
Includes expected
depreciation
 
of R270.6R274.4 million,
ongoing environmental expenses
of R49.7 million, care and maintenance expenses of R6.7 million and other
operating
 
expenses
 
of R0.5 R37.1
million and
care and maintenance
expenses
of R6.6
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,
including stoppages
 
in production
 
due to
outbreaks
 
of
infections
 
in ourif the COVID-19
 
virus mutates
and spreads in
our workforce
 
and interruptions
 
to our supply
 
supply chain.
 
It could also
 
also be impacted by
 
impactedlower
by lower
grades,
 
failure
to achieve
 
the throughput
targets
 
set at Ergo and FWGR, power
 
Ergo and
FWGR,
power interruptions
 
and other
risks (refer
 
Item 3D.
Risk Factors—Risks
Risks related to our
business and operations
and “–Forward
Looking Statements”).
 
We
are also subject to cost
pressures in the
event of above
 
aboveinflation
inflation increases
 
in labor, electricitykey
consumables,
diesel,
steel and
cyanide.
Unforeseen
changes in
ore grades
 
and water; crude
oil and steel costs.
Unforeseen changes
in ore grades and
recoveries,
 
unexpected
changes in
in the quality
55
or quantity
of reserves and
resource, technical
production issues,
environmental
and industrial accidents,
 
gold theft, environmental factors and
pollution could
 
theft, environmental
factors and pollution could adversely
 
impact the production,
sales and
cash operating
costs for
fiscal year 2023
 
and cash operating costs for fiscal yearcause
 
2022 and cause us to fail to
meet our
targets for
 
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.year
 
2023. This information
 
has not been
 
audited.
Operating results
 
for the quarter
 
ended September
 
30, 20212022
 
 
 
 
 
 
 
 
 
5556
Quarter ended
Quarter ended
Sep 30, 20212022
Jun 30, 20212022
% change
Production
Gold produced
kg
1,4491,453
1,3571,443
7%1%
oz
46,58746,715
43,62946,393
7%1%
Gold sold
kg
1,4281,442
1,3651,446
5%0%
oz
45,91246,362
43,88646,490
5%0%
Ore milled
Metric (000't)
 
7,4217,157
7,5067,064
-1%1%
Yield
Metric (g/t)
0.1950.203
0.1810.204
8%0%
Reconciliation of adjusted EBITDA
(R'million)
Profit for the period
217.3253.4
240.7399.3
Income tax
87.8116.5
67.671.2
Profit before tax
305.1369.9
308.3470.5
Finance expense
12.617.3
24.729.1
Finance income
(35.0)(54.8)
(78.8)(79.4)
Results from operating activities
282.7332.4
254.2420.2
Depreciation
 
68.855.0
62.964.1
Share based payment (benefit)/expense
4.23.9
4.74.6
Change in estimate of environmental
rehabilitation recognised in profit or loss
-
(12.4)(2.2)
Gain on disposal of property, plant and
equipment
-
-(6.6)
IFRS 16 Lease payments
1
(5.2)(5.9)
(7.9)(8.2)
TransactionExploration expenses and transaction costs
0.31.0
1.65.4
Adjusted EBITDA
1,2*
350.8386.4
303.1477.3
1
The amended RCF includes IFRS 16 lease
payments in the calculation of the adjusted
EBITDA
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
892.61,007.6
851.71,003.7
Depreciation
 
(68.8)(55.0)
(62.9)(64.1)
Change in estimate of environmental
rehabilitation
-
12.42.2
Movement in gold in process
 
37.94.4
(0.5)4.0
Operating costs
 
861.7957.0
800.7945.8
Ongoing rehabilitation expenditure
 
(9.6)(6.2)
(7.5)(4.4)
Care and maintenance costs
 
(2.2)(0.8)
1.6(0.9)
Other operating income/(costs)
 
(3.3)4.1
18.3(2.7)
Cash operating costs
 
1
846.6954.1
813.1937.8
Movement in gold in process
 
(37.9)(4.4)
0.5(4.0)
Administration expenses and other costs
excluding non-recurring items
 
1
27.526.8
16.38.4
Other operating costs
(income)/Costs
3.3(4.1)
(18.3)2.7
Change in estimate of environmental
rehabilitation
-
(12.4)(2.2)
Unwinding of rehabilitation provision
 
12.213.2
8.68.4
Sustaining capital expenditure
 
1
74.8101.2
106.7314.8
All-in sustaining costs
1
926.51,086.8
914.51,265.9
Care and maintenance costs
 
2.20.8
(1.6)0.9
Ongoing rehabilitation expenditure
 
9.66.2
7.54.4
TransactionExploration expenses and transaction costs
0.30.9
1.65.4
57
Growth capital expenditure
 
1
13.953.6
9.1(16.8)
All-in costs
 
1
952.51,148.3
931.3
561,259.8
Quarter ended
Quarter ended
September 30,
2021
June 30, 2021
% change
Price and costs
Average gold price received
R per kg
839,983945,983
821,647937,509
2%-
US$ per oz
1,7861,727
1,8101,871
-1%-8%
Cash operating costs
R/t
114133
108133
6%-
US$/t
8
89
--11%
Cash operating costs
R per kg
566,317658,530
595,824645,782
-5%2%
US$ per oz
1,2041,202
1,3121,289
-8%-7%
All-in sustaining costs **
R per kg
648,880755,201
669,744875,450
-3%-14%
US$ per oz
1,38011,378
1,4751,747
-6%551%
All-in cost **
R per kg
667,157796,255
681,905871,162
-2%-9%
US$ per oz
1,4191,453
1,5501,739
-8%-16%
Capital expenditure
Sustaining
Rm
74.8101.2
106.7314.8
-30%-68%
US$m
5.15.9
7.620.2
-33%-71%
Non-sustaining/growth
Rm
13.953.6
9.1(16.8)
53%-419%
US$m
13.1
0.6(1.1)
67%-382%
Average R/US$ exchange rate
14.6317.04
14.1215.58
4%9%
Reconciliation of sustaining capital
expenditure
Additions - property, plant and equipment
88.7owned
115.8154.8
298.0
Less
 
Growth capital expenditure
 
1
74.8101.2
106.7314.8
Sustaining capital expenditure
 
1
13.953.6
9.1(16.8)
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%1% from
 
the previous
 
quarter to
 
1,449kg1,453kg primarily
 
due to a 8%
1% increase
 
in yield.tonnage
throughput
despite yield
being 0.001g/t
lower at
0.203g/t. Gold
 
sold increaseddecreased
 
by
5% 4kg to 1,428kg.
1,442kg.
 
Although increasesAs a result
 
in electricityof the above,
 
and labour costs
with effect
from July 2021
resulted in
higherthe cash
 
operating costs
 
the increaseper kilogram
 
in the
number of gold sold
 
units producedincreased
 
and sold resultedmarginally from
 
in a 5% decreasethe previous
quarter to
 
in cash operating
costs per
kilogram to R566,317/R658,530/kg.
 
The cash
 
operating costcosts
per tontonne of
material
 
processed increasedremained stable
 
by 6% to R114/from the previous
quarter
at R133/t.
 
All-in sustaining
 
costs per
 
kilogram and
 
all-in costs
 
per kilogram
 
were R648,810/R755,201/kg
 
and R667,017/R796,255/kg,
respectively, decreasing
 
quarter
on quarter
 
quarter mainly due
 
due to a decrease
 
in sustaining
 
capital expenditure.expenditure
in
comparison
to the previous
quarter.
 
Adjusted EBITDA
 
increased bydecreased
 
16%by 19% from
 
from the previous
 
quarter to
 
R350.8R386.4 million
 
primarily
 
due to a 5%an insurance
claim of
 
increaseR84.7 million
 
in gold sold
and a
2% increaserecognised
 
in the averageprevious
 
Rand gold price
received of
R839,983/kg.quarter.
 
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
cashCash and cash
 
equivalents
 
decreased
by R276.8R280.5 million
 
to R1,903.2R2,245.1
 
million at
September
30, 2021 (June
30, 2021: R2,
180 million).
External
borrowings
remained
at Rnil as
 
at September
 
30, 20212022 (June
 
30, 2021: Rnil).
2022: R2,525.6
million) after
paying the final
cash dividend
of R342.5
million for
the year ended
June 30, 2022.
 
The cash
 
generated during
 
the current
 
quarter will,
inter alia,
, be applied
 
towards the
 
Company’s extended
 
capital expenditure
expenditure
programme
 
for the fiscalyear
 
year ending June
 
30, 2022. Despite2023.
 
Despite the capital
 
capital expenditure
 
planned for
 
the fiscalcurrent
financial
 
year, the Company
 
remains in
 
a favourable
favourable
position to,
 
in the absence
 
of unforeseen
 
events, consider
 
declaring an
 
an interim cash
 
cash dividend in
 
in or around
February
2022. 2023.
5758
5E. OFF-BALANCE SHEET ARRANGEMENTSCritical Accounting Estimates
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
 
112
 
-
 
“ProvisionUse
 
forof
 
environmentalaccounting
assumptions,
estimates
and
rehabilitation”judgements” 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, our2022,
 
our board consisted
 
of
tennine 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
 
for re-election.
 
 
Mr Geoffrey Campbell’s
tenure as a director
and chairman
of the board
of directors
of the Company will come
came to an end with effect
from December
1,
2021. Mr Timothy Cumming,
a non-executive director
 
of the Company, will replace replaced
Mr Campbell as chairman
of the Board
and the nominationsNominations
Committee
 
committee with effect
 
effect fromon December
 
1, 2021, subject
 
toafter shareholder
 
approval at
 
was obtained
at the
Annual General
 
Meeting to be held
 
on
November 29,
 
29, 2021.
In order
 
In order to ensure
 
good corporate
 
governance
 
in accordance
 
with the
recommendations
 
of the King IV
 
IV Report
on Corporate
Governance
 
for South
Africa 2016,
 
2016, Mr Edmund Jeneker
 
Jeneker will remain
 
remain as the lead
 
the lead independent
 
director of
 
the Company.
 
Mrs Toko Mnyango,
 
Mnyango, an independent
 
independent non-executive
director
of the
 
Company, haswas
 
been appointed as
 
as a
member
 
of the
 
nominations
committeeNominations
 
with effect fromCommittee
effective August
 
August 19, 20212021.
 
The address
of each of
our Executive
Directors
 
and non-executive
directors
 
is the address
of our principal executive offices.
 
executiveRefer to
Item 4A. Information
 
offices.on the Company
– Introduction
for the company’s
address.
Executive
 
Directors
Daniël (Niel)
 
Johannes Pretorius
 
(54)
(55) (BProc, LLB,
 
LLM)
Chief Executive
 
Officer. Officer;
•
Member: Risk
Committee
Niël Pretorius
 
has two
 
decades of
 
of experience
 
in the mining
 
mining industry.
He was
appointed
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,
 
1, 2003
as legal
advisor, he
 
was promoted
to Group Legal Counsel
on September 1, 2004 and General
 
and General Manager: Corporate
Corporate Services on April 1, 2005.
 
April 1,Niël was appointed
 
2005. NiëlChief Executive
was appointed Chief
Executive Officer of
Ergo Mining
Operations Proprietary Limited (formerly
(formerly DRDGOLD SA)
on July 1, 2006 and became Managing Director thereof on
April 1, 2008.
 
and becameNiël also
 
Managing Directorserves as
 
thereof on Aprilan elected
 
1, 2008.Council Member
with the Minerals
Council of
58South Africa.
 
Adriaan
(Riaan)
 
Jacobus
Davel
 
(45)
(46) (BCom
 
Chief(Hons), MCom,
 
CA (SA)
Chief Financial
Officer.
•
Member: Social
and Ethics
Committee
 
Riaan
 
Davel
 
joined
 
DRDGOLD
 
in
January
 
2015.
Before
 
joining
DRDGOLD,
DRDGOLD,
he gained
 
17 years’
experience
 
in the
professional
 
services
industry, the
 
majority
obtained
 
in the mining
 
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
 
across the
African continent.
 
He has
spent seven
 
years at
KPMG as
 
an audit partner,
partner, performing,
inter alia
, audits
of listed
 
companies in
 
in the mining industry,
 
industry,
including SEC
 
registrants.
 
Riaan has also
 
also gained
experience
 
as an IFRS
technical
 
partner and
 
represented
 
the South African
 
Institute of
 
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
 
of mineral reserves and
resources.
 
Riaan is
a member of
 
the Social
&
Ethics Committee
 
of DRDGOLD.
Non-Executive
 
Directors
 
Geoffrey CharlesTimothy (Tim) John Cumming
 
Campbell (60).
(64) BSc (Hons)
 
Geoffrey Campbell was(Civil Engineering),
 
appointed aMA (Philosophy,
 
Non-executive Director inPolitics and
 
2002, a
senior independent non-Economics)
executive
director
in December
2003 and Non-executive
 
Chairman
•
 
in OctoberChairman:
 
2005. A qualified
geologist,
he has worked
on gold mines
in Wales
Board 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)Member: Risk
Committee;
and Remuneration
Committee
. Edmund Jeneker
Tim 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. HisAugust 1, 2020 and Non-executive Chairman December
 
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 and1, 2021. Furthermore, he 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
 
RemunerationRisk 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
RiskRemuneration
 
Committee,
 
and appointed
 
is
a
member
Chairman of
 
the Nominations
 
Nominations
Committee and the Audit Committee of DRDGOLD.
Timothy John Cumming
on
 
(63) holds a B.Sc (Hons) in Civil EngineeringDecember 1,
 
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.2021.
 
He is
also
 
an
 
independent non-executive director
 
of
 
Sibanye-Stillwater Limited and
 
Nedgroup Investments
 
Limited and
 
serves
 
as
 
non-executive
Chairman of Riscura
 
Riscura Holdings Limited.
 
Limited. TimothyHis career spans mining,
 
started outfinancial 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. Tim started
out
59
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
 
Manager at
Allan Gray
Limited,
 
Head of
Investment
 
Research at
 
at HSBC
Securities
 
(SA), CEO
of Old Mutual
Asset Managers
and MD of
various divisions
within the
 
Old
Mutual Asset Managers and MD of various divisions within the Old Mutual Group. Other involvements
 
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).
Edmund Abel
Jeneker
(60) (Chartered
Director (SA),
B Hons, IEDP, M.Inst.D.,
SAIPA)
Lead Independent
Non-executive
Director
•
Chairman:
Social and
Ethics Committee
•
Member: Remuneration
Committee;
and Nominations
Committee
Edmund Jeneker was appointed
Non-executive Director in November
2007 and Lead Independent
Non-executive Director in August
2017. He has more than
31 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 MandelaWorld Bank Competitiveness Fund
Rhodes Foundation’s Investmentand Deloitte South
Africa. More recently,
he completed almost
15 years at
Absa Bank and
Barclays Africa Group,
where he was
Managing
Executive and
served as director
on the
boards of
several subsidiaries in
the Barclays
Africa 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 Advisory
Board of the
Institute of
Directors Southern
Africa, investment
committee of
BADISA and
The Cape
Philharmonic
Orchestra. He is
a Chartered
Director (South
Africa). Edmund chairs
the Social
& Ethics Committee
and is
a member of
the Remuneration
Committee and the Nominations Committee of DRDGOLD.
Johan Andries
Holtzhausen
(76) (BSc (Geology
and Chemistry),
BCompt (Hons),
CA(SA))
Independent
Non-executive
Director
•
Chairman:
Audit Committee
•
Member: Remuneration
Committee;
and Nominations
Committee
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 43 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
 
Woodside Endowment TrustUnited States. He
also chairs
the Audit
 
and membershipRisk
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 (50) (BAcc (Hons), CA (SA), CFA (AIMR))
Independent Non-executive Director
•
Chairman: Remuneration Committee
•
Member: Audit Committee; Remuneration Committee; and Risk Committee
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 Greenpop advisory boardGroup in November 2012, a position he held until Aquarius
Platinum was acquired
 
(a socialby Sibanye- Stillwater
in April 2016.
enterprise committed
From April 2016
 
to January 2017
 
restoring ecosystemshe 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
Tongaat Hulett
. Jean chairs the Remuneration Committee and is a member of the Audit Committee and the Risk Committee of DRDGOLD.
Toko Victoria
Buyiswa Nomalanga Mnyango (57) (Dip Juris, BJuris)
Independent Non-executive Director
•
Member: Social and Ethics Committee, Nominations Committee; and Remuneration Committee
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 (41) (BCom; Higher Diploma (Accounting), Certificate in Business Leadership, CA (SA))
Independent Non-executive Director
•
Chairman: Risk Committee
•
Member: Audit Committee; and Nominations Committee
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
60
Accountants,
with
extensive
experience
in
corporate
finance,
financial
management,
investor
relations
 
and
 
sustainable development).the
 
Timothymining
industry.
She
was
previously CEO of
GAIA Infrastructure
Capital Limited.
Prudence is
currently CEO of
TriAlpha Investment Management
Proprietary Limited,
a specialist fixed income investment house, and is also an independent non-executive director of Growthpoint Properties Limited and Telkom
SA
SOC
Limited.
Prudence
chairs
the
Risk
Committee
and
 
is
 
a
 
member
 
of
 
the
 
Risk
Committee, Remuneration
Commmittee,
and Nominations
 
Committee
 
and
the
Audit
Committee
of
DRDGOLD.
Charmel Diane
Flemming (38)(39)
(BAcc (Hons)
CA (SA))
Independent Non-executive Director
•
Member: Audit Committee; Risk Committee; and Social and Ethics Committee
Charmel Flemming
 
holds a B.Acc
(Hons) from
the University
of the Free
State and is
a qualified
Chartered Accountant
(South Africa)
with 11 years´
post articles
experience
primarily
within 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
 
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
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)(48)
(Dip Analytical
 
Chemistry, BTech Analytical
 
Chemistry).
Chief Operating
Officer
 
Jaco Schoeman
joined DRDGOLD
in 2011
as Executive
Officer: Business
Development
to focus
on expanding
the Group’s surface
surface retreatment
business
 
and extracting
maximum value
 
from
existing resources.
 
In July 2014,
he was appointed
Operations
 
Director: Ergo Mining
Mining Operations
 
Proprietary
 
Limited.
 
 
Henry Gouws (52)Shalin Naidoo
(45) (BTech, MBA)
Chief Information
and Technology Officer
 
(National Higher DiplomaShalin Naidoo
 
(Extraction Metallurgy),joined DRDGOLD
 
MDP)as Chief
 
Managing Director:Information
 
Ergo. Henry Gouwsand Technology Officer
on 2 November
2021. Ranked
amongst South
Africa’s
Top 8 Visionary CIOs by the
institute
of IT Professionals
in South Africa
(IITPSA) and
International
Data Corporation
CIO of the Year in 2019,
he has more than
3010
 
years’ experience
 
in leadership
 
the
mining industry.
and strategy. He
 
graduated fromhas worked
 
Technikonpreviously
 
Witwatersrandin the mining
sector for
Anglo American
Platinum and
 
obtained aTronox .
 
Henry Gouws
(53) (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
 
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
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)
(60) (BCom
 
(BComAccounting,
MDP)
Financial
Director:
Ergo
Mark Burrell
holds a B.Comm
 
Accounting MDP)
Financial Director:
Ergo.
Mark
Burrell holds
a
B.Comm Accounting
degree,
 
has
completed
 
a Management
Development
 
Programme (MDP)
 
and has more than
than 20 years’
experience
in the mining
sector. He joined DRDGOLD in 2004 on
 
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
 
of Ergo
in January
 
2012. Mark
serves
 
as a director
 
on the Board
 
Board
of Rand Refinery
 
Proprietary
 
Limited.
 
Kevin Kruger
 
(53)
(54) (BscEng
 
(BscEng (MechanicalMechanical
 
Engineering),
 
MDP, PMD, Government
Certificate
 
of Competency
 
(Mines)). Kevin
Managing Director:
 
FWGR
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.
year
engineering
student.
Kevin
graduated
from
the University
 
of the
Witwatersrand
at the
end of
1989 obtaining
his BSc (Mechanical
(Mechanical
 
Engineering)
and
his government
certificate
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
 
was appointed engineering manager 2003, general manager – technical services 2004 and
managing director
Chizimgold 2010.
 
2010. On 01
 
October 2013
 
he was appointed
 
appointed as technical
 
technical director at
 
Ergo where
he
 
was responsible for
 
for the
environmental,
 
health and
safety, mineral
resources and
engineering
 
portfolios.
On 1 August
2018, Kevin
was
appointed Managing
 
Director of
of FWGR.
 
Henriette
 
Hooijer (41)
(42)
 
(BCom (Hons),
 
CA(SA)). Henriette
 
Hooijer is
Financial
 
Director:
FWGR
Henriette Hooijer
is the Financial
 
Director of
 
of FWGR. She joined
 
joined DRDGOLD in May
 
in May
2016 and was
 
appointed as
Financial Director
of
FWGR in
August 2018. Before joining DRDGOLD, she spent
11 years’years in
 
the professional
services industry
at KPMG, performing,
inter alia
,
audits of listed
 
companies
 
in the mining
 
industry, including
 
SEC registrants.
61
 
Elise Beukes (44)
(45) (BProc)
Company Secretary
 
(BProc). Elise Beukes
 
Beukes was appointed
 
as Company Secretary
 
Secretary of DRDGOLD
with effect
 
from October
01, 2019.
 
She has
has broad governance
experience
in all aspects
of commercial
law, having spent
several
years in
both litigation
and commercial
practice
as an admitted
admitted attorney
 
and four
years as
 
as corporate
legal counsel.
 
She has dealt
 
dealt extensively with
 
with broad-based
black economic
 
empowerment structures, employee ownership
schemes, enterprise
 
structures,
employee ownership schemes, enterprise development and share
incentive schemes
involving complex
company restructuring
for both
multi-
nationals 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
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.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
6062
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
 
ended June 30, 2021
 
30, 2022 was R62.6
R42.0 million.
 
During fiscal
year
2021, an independent consultant compiled
a benchmarking analysis report against
an appropriate comparator group of companies
consisting of
JSE listed companies
on fees paid
non-executive
directors.
The report was
presented to
the Remuneration
Committee
on August 18, 2021.
These
changes were made to the base fee and committee fees and were approved by the shareholders
at the annual general meeting on November 30,
2022.
 
Non-Executive
 
Directors
 
received the
 
following fees
 
for fiscal
 
year 2021:2022:
●
Base fee
 
as Non-Executive
 
Chairman of
 
R1,388,518R1,457,944 per
 
annum up to
 
December
 
1, 2020 2021
and R1,457,944R1,500,000
 
thereafter;
●
Base fee
 
as Lead Independent
 
Non-Executive
 
Director of
 
R640,261R672,247 per
 
annum up to
 
December
 
1, 2020 and2021
 
R672,274 and R850,000
thereafter;
●
Base fee
 
as Non-Executive
 
Directors of
 
R617,119 R647,975
per annum
 
up to December
 
1, 2020 2021
and R647,975R430,000
 
thereafter;
●
Annual fee for the Audit Committee Chairman
of R32,399 (excluding fee received
as a committee member) up to December 1, 2021
and R180,000
(including
fee received
as a committee
member) thereafter;
●
Annual fee
for an Audit
Committee member
of R32,399 up
to December
1, 2021
and R120,000
thereafter;
●
Annual fee for the Risk Committee
 
Chairman of R30,856R140,000 (excluding
 
fee received as a committee
 
member) up tofrom December
1, 2020 and2021,
R32,399 thereafter;onwards.
●
Annual fee
 
for Audit Committeea Risk
 
Committee member of
 
R30,856 up toof R100,000
 
from December
 
1, 2020 and
R32,399 thereafter;2021, onwards.
●
Annual fee
 
for the
 
chairman ofChairman
 
of Remuneration Committee, Nominations Committee and
 
Social andCommittee
 
Ethics Committee of
R23,142
(excludingR24 299 (excluding
 
fee received
 
as a committee
 
member) up to
 
to December
1,
2021
and R100,000
thereafter;
●
Annual fee
for a member
of the Remuneration
Committee
of R24 299 each
up to December
 
1, 2020 2021
and R24,299R100,000
 
thereafter;
●
Annual fee for members
Chairman of the
Social and
Ethics Committee of
R100,000 (excluding fee received as
a committee member)
up to
December
1, 2021
and R140,000
thereafter;
●
Annual fee
for a member
 
of Remuneration Committeethe Social
 
and Social and Ethics
 
Committee of R23,142
 
each up to December
1, 2020 and
R24,299 thereafter;
●
Daily
fee of R23,142each
 
up to December
 
1, 2020 and2021
 
and R90,000
thereafter;
●
Daily fee of R24,299 thereafter;up to December 1, 2021
and thereafter the director
will be remunerated if determined
appropriate for additional
services provided;
 
●
Hourly rate of R3,240
 
of R3,086 up
to December
 
1, 2020 and R3,2402021
 
thereafter;and thereafter
the director will
be remunerated if
determined appropriate
for additional
services provided;
●
Half-day fee
 
fee for
participating
 
by telephone
 
in special
 
board meetings
 
of R11,571 R12,150
up to
 
December
 
1, 2020 and R12,1502021
 
thereafter;and thereafter
the director
will
be remunerated
if determined
appropriate
for additional
services provided;
 
and
●
The Chairman
of the board,
Lead Independent
Non-Executive
 
Director and
other Non-Executive
 
Directors do not receive committee
to receive
committee
fees.
The following table sets forth the compensation for our directors and prescribed officers for the year ended June 30, 2021.2022.
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-TermLong-term
Incentives
recognisedsettled during
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
7,2537,647
6,9277,273
1,7327,495
21,627
37,53922,415
A J Davel
4,0894,708
3,8914,460
9733,628
12,15012,796
21,10312,355
11,34211,733
10,81811,123
2,705
33,777
58,64235,211
Non-executive directors
T J Cumming
1,267
-
-
1,267
G C Campbell
1,545659
-
-
-
1,545659
E A Jeneker
794884
-
-
-
794884
J Holtzhausen
712808
-
-
-
712808
T B V N Mnyango
724772
-
-
-
724772
J J Nel
756844
-
-
-
756844
K P Lebina
769817
-
-
-
769
T J Cumming
681
-
-
-
681817
C D Flemming
674778
-
-
-778
674
6,6556,829
-
-
-
6,6556,829
Prescribed officers (2)(1)
W J Schoeman
3,8774,464
3,8914,460
9733,628
12,15012,552
20,891
63
E Beukes
1,3571,432
1,2921,274
-535
-3,241
2,6495,896
5,2345,734
5,1834,163
973
12,150
23,54015,793
Total
23,23125,080
16,00117,467
3,67815,286
45,927
88,83757,833
(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 19.219.3 –
 
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
adjusted 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.
 
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 FY2021FY2022 are as follows:
 
Strategic Initiatives Modifiers
Environmental:
 
4%
Safety:
 
4%
Social development:
 
4%
Labour development:
 
4%
Transformation:
 
4%
64
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.
 
65
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, 2021.2022.
On July 1, 20192022
 
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,
 
20222025 Mr.
 
D.J. Pretorius
 
receives from
 
us a
 
guaranteed remuneration
 
package of
 
R6.2R7.6 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-settledequity-settled long-term
 
incentive scheme (awarded 2,323,009
 
phantom332,497 conditional shares in
 
November 2015)in October 2020,
and the equity-settled
long-term incentive scheme
(awarded 1,069,321549,986 conditional
shares in December 2019
October 2021 and 332,497799,595 conditional
shares
in October 2020)2022).
 
63
Mr.
 
A.J.
 
Davel entered
 
into
 
a
 
new employment
 
agreement
 
effective
 
from
 
July 1,
 
20192022
 
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
 
R3.4R4.7 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
 
is eligible to
participate in the
cash-settled equity-settled long-
term
incentive
scheme
 
(awarded 1,305,033 phantom
160,919
conditional
 
shares in November
 
2015) and thein
 
equity-settled long-term incentiveOctober
 
scheme (awarded2020,
292,796
conditional
shares
in
October
2021
and
425,680
517,522 conditional shares in December 2019 and 160,919 conditional shares in October 2020)202)
 
Messrs. G.C. Campbell and Mr.
E.A. Jeneker each havehas
a service agreements
agreement which run for
a fixed periods
period until October 31, 2021.
2023. Mr.
 
J.A Holtzhausen has a
service
Holtzhausenagreement which runs
for a fixed period until April 25, 2024. Mrs. TVBN Mnyango 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 C
D Flemming
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
 
July
31, 2022. After
 
After expiration of
 
of the
initial
 
two-year
periods,
 
the agreements
 
continue
indefinitely
until terminated
 
by either party
 
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, 20212022 and as at September
 
30, 2021,2022,
 
the board of directors comprises two Executive Directors (Mr. D.J. Pretorius and
Mr. A.J.
Davel),
and eight
seven Non-Executive Directors
 
(Messrs. G.C. Campbell,
T.J. Cumming, 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,
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
 
Kingdom Combined
Code, the
 
responsibilities of Chairman
 
Chairman and
Chief Executive
 
Officer are
 
separate. Mr.
 
G.C.T.J.
CampbellCumming 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
 
the company and ensuring that decisions on
material matters are referred to the board. The board approves all the terms of reference for the
 
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
66
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
 
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
 
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
 
for employees to
 
to report violations
 
violations of Company
 
Company policy or
 
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,
 
2021:2022:
 
Director
Title
Year first
appointed
Term of
current office
Unexpired
term of
current office
D.J. Pretorius
Chief Executive Officer
2008
3 years
120 months
A.J. Davel
Chief Financial Officer
2015
3 years
120 months
G.C. CampbellT.J. Cumming
Non-Executive Director
20022020
2 years
4 months1 month
E.A. Jeneker
Non-Executive Director
2007
2 years
416 months
J. Holtzhausen
Non-Executive Director
2014
2 years
922 months
T.V.B.N.
 
Mnyango
Non-Executive Director
2016
2 years
197 months
J.J Nel
Non-Executive Director
 
2018
2 years
197 months
K.P Lebina
Non-Executive Director
2019
2 years
22 months
T.J. Cumming
Non-Executive Director
2020
2 years
1310 months
C.D. Flemming
Non-Executive Director
2020
2 years
13 months1 month
* Renewal of the term of office was deferred to the October 2022 board meeting at which the contracts of D.J. Pretorius and A.J. Davel were extended to June 30, 2025.
Executive
 
Committee
 
As at June
 
30, 2021,2022,
 
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 weeklybi-weekly
 
basis to review
 
current operations,
 
develop strategy
 
and policy proposals
 
proposals for consideration
consideration
by the board
 
of directors.
 
Members of
 
the Executive
 
Committee,
 
who are unable
 
to attend the
 
meetings in
 
in person, are
 
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
67
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.
The Board constituted an Investment Committee who had their first meeting on October 6, 2022 to consider prospective projects,
acquisitions and disposals in line with DRDGOLD's strategy and to ensure that adequate due diligence procedures are followed. The
Investment Committee also conducts other investment-related functions as delegated to it by the Board from time to time, as governance
oversight increases as the DRDGOLD Group continues to grow. Members of this committee include J J Nel (Chairman), J A Holtzhausen,
K
P Lebina, E A Jeneker and T J Cumming. The CEO, CFO and COO are invitees.
Committees
 
of the Board
 
of Directors
Nominations
 
Committee
As at June
 
30, 20212022 the
 
Nominations
 
Committee
 
consisted of
 
G C CampbellT J Cumming
 
(Chairman),
 
E A Jeneker,
 
J A Holtzhausen, T V B N
Mnyango Kand
 
K P Lebina,
and T J Cumming.
65Lebina.
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 independenta 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 committeeNominations 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, 20212022 the
 
Remuneration
 
Committee
 
consisted of
 
J JJ.J. Nel (Chairman),
 
E AE.A. Jeneker,
 
J AJ.A. Holtzhausen, T V B N MnyangoT.V.B.N.
Mnyango and T J
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 JT.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, 20212022 the
 
Audit Committee consisted
 
of J.A. Holtzhausen (Chairman), J.J. Nel, K PK.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.
68
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, 2020November 30, 2021 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 offrom the board following the Audit Committee.Committee recommendations. To
comply with section 10(1)(a) of the Auditing Profession Act, 26 of 2005, the Independent Regulatory Board for Auditors (“
IRBA
”)
published the rule on Mandatory Audit Firm Rotation (“
MAFR
”) for auditors of all public interest entities, as defined in section 290.25 to
290.26 of the amended IRBA Code of Professional Conduct for Registered Auditors. An audit firm, including a network firm as defined in
the IRBA Code of Professional Conduct for Registered Auditors, shall not serve as the appointed auditor of a public interest entity for more
than 10 consecutive financial years. Thereafter, the audit firm will only be eligible for reappointment as the auditor after the expiry of at least
five financial years. The requirement is effective for financial years commencing on or after 1 April 2023. KPMG Inc. has been the
appointed auditors since 2003 and the Company has decided to early adopt the MAFR rule and appoint new auditors – BDO South Africa
Inc. for the 30 June 2023 financial year, subject to the shareholder approval at the next AGM on November 29, 2022.
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, 20212022 the
 
Risk Committee consisted
 
of K.P. Lebina (Chairwoman), Mr D.J. Pretorius, J.J. Nel, C.D. Flemming and T.J.
T.J. Cumming.
Roles and responsibilities:
●
Oversee the
development
and annual
review of
a policy and
plan for risk
management
to recommend
for approval
to the Board
●
Ensure that
risk management
assessments
are performed
on a continuous
basis
●
Ensure that
reporting on
risk management
is complete,
timely, accurate
and accessible
●
Oversee that
the risk management
plan is widely
disseminated
throughout the
company and
integrated
in the day-to-day
activities
of the company
●
Ensure that
frameworks
and methodologies
are implemented
to increase
the possibility
of anticipating
unpredictable
risks
●
Ensure that
management
considers and
implements
appropriate
risk responses
●
Ensure co-ordination
with the audit
committee
who will be
responsible
for the risk
management
process as
far as internal
controls,
financial
reporting and
IT risks are
concerned.
All members of the Risk Committee are independent according to the definition set out in the NYSE Rules, except for T Cumming.T.J.
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, 2021,2022, the Social and Ethics Committee consisted of Mr. E.A. Jeneker (Chairman), Mr.
A.J. Davel, Mrs.
TVBN
Mnyango and
C.D. Flemming
69
 
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
 
matters relating to
 
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,
2022, of 2,959
comprises
2,016 specialized
service providers
and 943 employees
who are
directly employed
by us and our
subsidiary
companies.
Of the 943
employees
directly employed
by us and our
subsidiary
companies,
34
employees
are on a fixed
term employment
contract.
 
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, 2021,2022, of
 
2,7412,941 comprises
 
1,7882,018 specialized
 
service providers
 
and 953923 employees
who are directly
 
employed by us
 
and our subsidiary
 
companies.
 
Of the 953923 employees
 
directly employed
 
by us and our
 
subsidiary
 
companies,
 
4336
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, 2021,2022,
 
approximately
 
82%84% of our Ergo
 
employees
 
and 93%86% 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.
 
cordial. The organized
 
organized labor
coordinating
 
forum meets
 
regularly
 
to
discuss matters
 
pertinent to
 
both parties.
 
On February
28, 2021, ERGO
signed a one-yearA three-year
 
wage extensionagreement
 
agreementwas reached
 
with organized
 
labour for thelabor at FWGR
 
period Julyin November
 
1, 2021 toand a new
 
June
30, 2022 withthree-year
 
a 5.9% average
increase
per annum
across the
ERGO workforce
with individual
increases
ranging from
5.5% to 7% per
annum.wage agreement
The transitional
arrangement
regarding wage
increases
with the workforcewas concluded
 
at FWGR when
these employees
were incorporated
into DRDGOLD
have now comeErgo subsequent
 
to an end. Asfiscal
 
a consequence,
negotiations
are currently
underway with
organized labour
at FWGR with
the intention
of trying to
reach a 3-year
wage agreement.year 2022.
 
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.
70
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
 
20212022 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
20202022
2021
20202022
2021
20202022
2021
Lost time injury frequency rate (LTIFR)
1
2.14
0.78
1.25-
0.97
1.31.84
0.80
1.27
Reportable incidence frequency rate (RIFR)
1
0.76
0.47
0.9
-
1.3-
0.66
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, 2021,2022, 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’’
On
 
November
 
4,
 
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 individual performance and is based on phantom share allocations. The vesting of any shares allocated
is was 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
the
 
align participants’ interests withrevised
 
shareholders’ interest, toscheme
 
incentivise and motivate participants,
to
attract
and
retain
scarce
human
resources
andare
 
to
 
reward
superior
performance
bydrive
 
the
 
Companylonger-term
strategies
of
DRDGOLD,
to
align
participants’
interests
with
shareholders’
interest,
to
incentivise and motivate
participants, to attract
 
and retain scarce
 
participants.human resources and
 
to reward superior
performance by the
Company and
participants. The
 
Remunerationrevised cash settled
long-term incentive
scheme was fully
settled on November
5, 2020
and replaced by
the equity-settled
Committee has the authority to amend in part or in its entirety or withdraw the long-termlong 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).described below.
 
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
71
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.
 
 
 
 
 
 
 
7072
ITEM 7. MAJOR
 
SHAREHOLDERS
 
AND RELATED PARTY TRANSACTIONS
 
7A. MAJOR SHAREHOLDERS
As of September
 
30, 2021,2022,
 
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,
 
2021,2022, 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, 2021:2022:
●
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, 2021,2022,
 
by:
 
●
each of our
 
directors
 
and prescribed
 
officers; and
 
●
any person whom the
 
directors are
 
aware of as at September
 
30, 20212022 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.
During fiscal
year 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
Shares in
issue (including
treasury shares).
Sibanye-Stillwater
subscribed
for 168,158,944
ordinary
shares.
Shares Beneficially owned
Holder
Number
Percent of outstanding
ordinary shares
Directors/prescribed officers
D.J. Pretorius
 
475,255804,816
*
A.J. Davel
200,000338,438
*
Other
Sibanye-Stillwater
433,158,944
50.10%
The Bank of New York Mellon
 
227,674,416227,196,436
26.33%26.28%
Government Employees Pension Fund
31,135,43430,101,431
3.60%3.48%
GSI Equity Seperation AccountAllan Gray Proprietary Limited
14,739,43815,638,811
1.70%1.81%
BNYMSANV RE BNYMLBGC RE 586388
12,562,291
1.45%
CLEARSTREAM BANKING S.A LUXEMBOURG
11,078,44610,763,378
1.28%1.24%
Ergo Mining Operations Proprietary LimitedSTATE
STREET BANK AND TRUST
9,474,92010,052,483
1.10%1.16%
*
 
Indicates share ownership of less than 1% of our outstanding ordinary shares.
 
No ordinary
shareholder
 
has voting
rights which
differ from
the voting rights
 
which differof any other
 
from the voting
rights of
any otherordinary shareholder.
 
 
7173
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 5.25.1 –
 
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 ofand
 
Incorporation.articles
of association.
8B. SIGNIFICANT
 
CHANGES
Significant changes that have occurred since June 30, 2021,2022, 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.
7274
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
 
the JSE during the
 
the past three
 
years ended
 
June 30, 2021,2022,
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
 
AND ARTICLES
OF INCORPORATIONASSOCIATION
As
 
of
 
June 30,
 
2021,2022,
 
we
 
had
 
authorized for
 
issuance 1,500,000,000 ordinary
 
shares of
 
no
 
par
 
value (as
 
of
 
September 30,
 
2021:2022:
1,500,000,000),
 
and 5,000,000
 
cumulative
 
preference
 
shares of
 
R0.10 par
 
value (as
 
of September
 
30, 2021:2022:
 
5,000,000).
 
On this
 
date, we
 
had issued
864,588,711 ordinary shares (as of September 30, 2021:2022:
 
864,588,711)
 
and 5,000,000 cumulative preference
 
shares (as of September 30, 2021:2022:
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, 20212022
 
and September
 
30, 2021.2022.
 
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
75
 
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
 
director so authorized
 
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 20192021
 
AGM on DecemberNovember
 
2, 201930, 2021 to increasechange
 
the structure
of 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
 
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
 
capital which carries
 
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
 
such meeting shall be postponed
 
for one week. However the chairman has
 
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.
 
76
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, 20212022 and
 
September
 
30, 2021,2022, 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
 
payments in cash or in specie
 
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
 
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
77
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
AmendmentNot applicable.
 
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.
7678
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
 
(Ministry of Finance),
 
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
 
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
 
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
 
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
7779
●
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
 
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
 
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.
 
7880
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
2022 and 2021, and 2020,
the corporate tax
rates for taxable mining income for Ergo was 5% and 25% respectively and for FWGR 31%
for both fiscal periods. The gold mining tax
 
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 2022
 
years endedand
2021 and 2020 is:
Y = 34
– 170/X. Where
 
Y is the
percentage rate of
tax payable and
X is the
 
the ratio of taxable
income, net of
any qualifying capital
capital expenditure that bears to
mining income derived, expressed
as a percentage. The
tax rate for non-mining
taxable income is
28% for both
fiscal
years 2022 and 2021.
On February 23, 2022, the Minister of Finance announced that the corporate income tax (“
CIT
”) rate will be lowered from 28% to
27% for companies with years of
assessment commencing on or after April
1, 2022. The mining operations of
the Group accounts for income
tax using the
gold mining tax formula as
opposed to the CIT rate. The
gold mining tax formula was
changed to Y = 33
- 165/X for years of
assessment commencing on or after April 1, 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. Section 23M which limits the deduction
of interest
payable to
certain parties
who are
not subject
to tax
was significantly
widened. A
maximum of
R1 million
or 80%
of assessed
losses (whichever is greater) is permitted to be set-off against taxable income.
 
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.
 
81
U.S. Federal
 
Income
Tax Considerations
 
The following discussion
 
is a
summary of
the U.S.
 
federal income tax
 
tax considerations
generally applicable to U.S. holders of the ownership
and disposition
of ordinary shares or
ADRs. It
deals only with
 
U.S. holders whoHolder
 
hold ordinary shares orownership and
disposition
 
ADRsof ordinary
 
shares
or ADRs.
Unless
otherwise
indicated,
this discussion
addresses
only U.S.
Holders
who hold
ordinary
shares
or ADRs
as capital
assets (generally,
property held
for investment)
 
for U.S.
 
federal
income tax
purposes.
 
This discussion
 
is based upon
 
upon the
provisions
 
of the
U.S. Internal
 
Revenue Code
 
of 1986, as
 
as amended or
 
(the Code,
published rulings,
judicial
decisions and the“Code”),
 
Treasury regulations all as
 
currently in effectpromulgated
thereunder, judicial
decisions,
published
rulings
of the Internal Revenue
Service (the “IRS”),
administrative
pronouncements
 
and allother relevant
 
authorities,
all as in effect on the date
hereof and
all of which are
 
are subject to differing
 
interpretations
and change,
possibly on a retroactive
 
a retroactive basis. This
discussionThere can
 
hasbe no binding
effect or official
status of any
kind; we cannot
assure holdersassurance
 
that the conclusionsIRS would
 
reached belownot
assert, or
that a court
 
would be sustainednot sustain,
 
by
a court ifposition
 
challengedcontrary to
 
byany of the Internal
 
Revenue Service.considerations
 
discussed herein.
 
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 andsummary
 
does not
 
address specialU.S.
 
classes offederal estate, gift
 
U.S. holdersor
 
subject toother non-income tax
 
considerations, the alternative minimum tax,
the
Medicare tax on
certain net investment income, or
any state, local
or non-U.S. tax
considerations, relating to the ownership or
disposition of
ordinary shares or ADRs, nor does it
address all aspects of U.S. federal income taxation that may be
relevant to U.S. Holders in light
of their
particular circumstances
or that may be relevant to certain types of U.S. Holders subject
to special treatment (suchunder U.S. federal
 
income tax law
(such as dealers in securities
 
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
 
insurance
companies,
 
tax-exempt
organizations
 
(including
private
 
foundations),
 
certain
expatriates
 
or former
long-term
residents
of the
 
United States, persons holding
 
States,
persons
holding ordinary shares or
ADRs
 
as part
 
of a
 
“hedge,” “conversion transaction,” “synthetic
security,” “straddle,” “constructive
“constructive
sale” or other
integrated investment,
 
investment, persons
 
who
acquired
the
ordinary
 
shares
or
ADRs
upon
the
 
exercise of
employee
stock
 
options
or
 
otherwise as
compensation,
 
compensation, persons whose
 
functional currency is
 
is not
the U.S. dollar,
 
dollar, or
persons that
 
actually or
constructively
 
own ten percent
 
or more of
the
voting power
 
or value of
 
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.
 
7982
For purposes
of this
discussion, a “U.S. holder” is
 
a “U.S. Holder”
is a beneficial
owner of ordinary
shares or
 
ADRs that
 
who oris, for U.S.
 
that is, forfederal income
 
U.S. federal income tax
purposes:
●
a citizen or
 
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 politicalstate
 
subdivisionthereof or
 
thereof;the District
of Columbia;
 
●
an estate
 
the income
 
of which is
 
subject to U.S.
 
federal income
 
tax without regard
 
regard to
its source;
 
or
 
●
a trust (i)
if a court within
the United
States is able
to exercise primary
 
primary supervision
over the administration
 
of the trust
and one or more
U.S. persons have
 
have the authority to
 
to control all
substantial
 
decisions of the
 
the trust, or (ii)
if the
trust has made
a valid
election to
 
be treated
as a
U.S. person.
 
person.
 
If a partnership (or
 
an(or other entity treated
 
or arrangement
treated as a
partnership
 
for U.S. federal income
 
income tax purposes) holds
 
owns any ordinary shares
 
shares
or ADRs, the
U.S. federal
income tax treatment
treatment of a partner
in the partnership
will generally
 
depend on the
status of the
partner and on the activities
 
activities
of the partnership. Partners
 
in partnerships Partnerships
holding any
ordinary shares
or ADRs and their
partners should
consult their
tax advisors
regarding an investment
anyin ordinary
 
shares or
 
ADRsADRs.
 
are urged to
U.S.
Holders of
ordinary shares
or
ADRs should
 
consult their
 
tax advisors.
 
advisors regarding
 
Because
individual
circumstances
may differ,the
 
U.S. holders
federal income
tax
considerations
applicable to the
ownership and disposition
 
of ordinary
shares
 
or ADRs in light of their
 
are urged
to consult
their tax
advisors
concerning
the U.S. federal
income tax
considerations
applicable
to their particular
situations circumstances
 
as well as any
considerations
 
to
them arising
 
under the tax
 
laws
of any foreign,
 
foreign, state or
 
or local taxing
 
jurisdiction.
Ownership
of Ordinary
Shares or ADRsDistributions
 
For purposesU.S. federal income
 
tax purposes, a U.S. Holder of theADRs will
 
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.
 
by such
ADRs. Exchanges
of ordinary
 
shares for ADRs
 
ADRs and ADRs
 
for ordinary shares generally
 
shares will
generally not
be subject
to U.S. federal
income tax.
 
 
Subject to
the discussion below
under the
heading “Passive Foreign
 
Foreign Investment Company”, the gross
 
amount of
any distributions with
received by a
U.S. Holder on
ordinary shares or ADRs
(including any amounts withheld in
respect of South
African withholding taxes) will
generally be
subject to tax
 
to the ordinary
shares orextent paid
 
ADRs, otherout of our current
 
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
or accumulated
 
earnings and
 
profits. profits, as determined
under U.S. federal
income tax
principles,
and will be includible
in the gross
income of a
U.S. Holder
on the day actually
or constructively
received.
For U.S.
federal income
 
income tax
purposes,
the gross amount of any
distribution distributions
 
received by a
U.S. holderHolder will generally
 
equal the dollar
value of the sum
of the South African
rand payments
made (including the amount
any amounts
withheld in
respect
of South African income taxes, if any, withheld with respect to such
 
payments)withholding
taxes),
determined
at the
“spot rate” “spot
 
rate” on
the date
 
the
dividend
distribution
 
is includable
in such U.S. Holder's
 
holder's income,
regardless
of whether
 
the payment
is in fact converted
into dollars. Generally,
any gain or loss resulting from currency exchange
 
from currency
exchange fluctuations
during the period
from the date a U.S. holderHolder includes
 
includes the
dividend payment in
in income to
 
the date such
 
holder converts
 
the payment into
 
into dollars
will
 
be treated
as ordinary
 
income or
loss.
 
Distributions,
 
if
any, in excess
of our current and
or accumulated
 
earnings and profits
 
profits will
constitute
a non-taxable
 
return of capital
and will
be applied
 
be applied against and
reduce the
 
holder's basisU.S. Holder's
 
basis in the
ordinary shares
or ADRs. To the extent
that distributions
exceed the
U.S. Holder's
tax
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
 
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
 
or profits for U.S.
 
U.S. federal income
 
income tax purposes.
 
U.S. holders
Holders should
 
should therefore
 
assume that any
 
any distributions
 
with respect
to
on our ordinary
 
shares or
 
ADRs
will constitute
 
dividend income.
 
“Qualified dividend income” received byAn individual
 
individual U.S. holders (asor other
 
well asnon-corporate
 
certain trusts andU.S. Holder
 
estates) generally willmay be
 
taxed at
a
maximum U.S.
federal income
tax rate applicablesubject
 
to capital gains.tax
 
This reducedon any
 
rate generally
would apply tosuch dividends
paid by us if,
 
at the time
lower
capital
gain tax
rate applicable
such dividendsto “qualified dividend
income,” provided
that certain conditions
 
are paid,satisfied,
 
either (i)
we are
eligible
for benefits
under a
qualifying
income tax
treaty withincluding that (1)
 
the Unitedordinary shares
 
States or
(ii) our
ordinary shares
or ADRs
with respect to which such
dividends were paidADSs
 
are readily tradable
on an established securities
 
market in the United States.States,
 
However,
this reduced rate is subject to certain important requirementsor we are eligible for the benefits
 
and exceptions, including, withoutof a qualifying income
 
limitation, certain holdingtax treaty, (2) we are neither a
PFIC nor treated as such
 
period requirements
and anwith respect to a U.S. Holder
 
exception(as discussed below)
 
applicablefor the taxable year in which
 
if wethe dividend is paid and
the preceding
taxable year, and
(3) certain
holding period
requirements
 
are treatedmet. Dividend
 
asincome derived
with respect to
the ordinary shares
or ADRs will not
be eligible
for the dividends
received deduction
generally allowed
to a passiveU.S. corporation.
 
foreign investmentU.S. Holders
 
company
as discussed
under the
heading “Passive
Foreign Investment
Company”. U.S.
holders are
urged toshould consult
 
their tax advisors
 
advisors regarding
the U.S. federal
 
income tax
 
rate that will
 
will be applicable
��
to their receipt
 
of
any dividends
 
paid with respect
 
to the ordinary
 
shares and
 
ADRs.
 
 
For U.S.
foreign tax
credit purposes,
dividends
received
on ordinary
shares
or ADSs
common shares
will generally
be treated
as income
from foreign sources and will
generally constitute
passive category income.
Subject to certain conditions
and limitations, a U.S. Holder eligible
for the benefits
 
of this discussion,an applicable
 
the “spotincome tax treaty
 
rate” generallymay be eligible
 
meansto claim a rateforeign
 
that reflects
a fair market
rate of exchange
available to
the public
for currency
under a
“spot contract”tax credit
 
in a freerespect of any
 
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.
DividendSouth African
 
income taxes
 
derivedpaid
or withheld
 
with respect
 
to thedividends
 
on ordinary
 
shares or
 
ADRs willADSs to
 
not be eligiblethe extent
 
forsuch taxes
are nonrefundable
under the
 
dividends
received
deduction
generally
allowed totreaty. Alternatively,
 
a U.S. corporation
Holder may elect
 
under Sectionto deduct such taxes
 
243 of the Code.
Dividend income
will be treated
as foreign sourcein computing its taxable
 
income for U.S. federal
income tax purposes.
A U.S. Holder’s election
to deduct
foreign taxes
instead of
claiming foreign
 
tax credit and
other purposes.credits
 
In computingapplies to
all creditable
foreign income
taxes paid
or accrued
in the separaterelevant
taxable year. The
rules regarding
 
foreign tax credit
 
limitations,credits and
 
dividend incomethe deductibility
of foreign
taxes are
complex. All
U.S. Holders
 
should generallyconsult
 
constitute “passivetheir tax advisors
 
category income,”regarding
or in the caseavailability
 
of certainforeign
 
U.S. holders,tax credits
 
“general categoryand the deductibility
 
income.”of foreign
taxes in
light of their
particular
circumstances.
 
 
8083
Passive Foreign
 
Investment
 
Company
 
A specialnon-U.S. corporation, such as our company, will
 
and adverse
set of
U.S. federal
income
tax rules
apply
tobe classified as a
U.S. holder
that holds
stock
in a
passive
foreign
investment
company
or PFIC. We would be a PFIC
(“PFIC”) for U.S. federal
income tax purposes
if for any taxable
year if either (i)
75% or more of
our gross income
for such year, including
our pro
rata share
of the gross
gross income
of any
 
company
in which
 
we are
considered
 
to own 25% or more
 
25% orof the shares by
 
value, consists
of certain types
of “passive income”
or
(ii) 50% or more of
the shares
by value
 
were passiveof our assets
 
income
or (ii) 50%(determined on the
 
or morebasis of a quarterly
average) during
such year, including
 
our average
total assets
(by value),
including our
pro rata share
 
of the
assets of
 
of any company
 
in which we
 
are considered
 
to
own 25%
or more of
the shares
by value, wereis
 
attributable
to assets
that producedproduce
 
or wereare held
for
the production of
passive income. Passive income generally includes dividends, interest, royalties, rents, annuities, net
gains from the
sale or
exchange
 
of property
producing
such income
and net
foreign
currency
gains.
Passive
assets
are those
which give
rise to
passive income.income
and include
assets held
for investment,
as well as
cash, assets
readily convertible
into cash,
and (subject
to certain
exceptions)
working capital.
Our company’s
goodwill and other unbooked
intangibles are
taken into account and may be classified
as active or passive depending
on the income such assets
generate
or are held
to generate.
 
If we wereare a PFIC U.S.
holdersfor any
 
of thetaxable year
 
during which a U.S.
Holder holds ordinary
 
shares
or ADRs,
 
the U.S. Holder would be
 
be subject to
special rules
 
to special
rules with
respect
 
to any (i) anygain
 
gain recognized
 
upon the
disposition
 
of the ordinary
 
ordinary
shares
or ADRs
 
and (ii)
 
any receipt of
 
of an
excess
 
distribution
(generally, any
distributions
 
to a
U.S. holder
Holder during a
single
taxable
year that
 
is greater
than 125% of
the average
 
amount of distributions
received
 
by
such U.S.
holder Holder during the three preceding taxable years in respect of
 
the three
preceding taxable
years in respect
of the ordinary
shares or ADRs or,
 
ADRs
or, if shorter, such U.S. Holder's holding
period for
 
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 Holder's
 
holding
period
 
for the
 
ordinary
 
shares
 
or ADRs,
 
as applicable;
 
●
the amount
amounts allocated
to the taxable
 
year in
which a U.S.
holder realizes
of the gain or
excess distribution
 
or of the sale or other disposition and to any taxable years
in the U.S.
Holder’s holding period
prior to the first taxable
year in which we are classified
as a PFIC (each, a “pre-PFIC year”),
will be
taxed as
ordinary income;
 
●
the amount
amounts allocated
 
to each
 
prior year
 
(other than
 
the current
taxable year
or a pre-PFIC
 
year), will
 
with certainbe taxed
 
exceptions,
will be
taxed at
the highest
 
tax rate
 
in effect
applicable
to the U.S.
Holder for
that year;
 
and
 
●
such amounts will be increased by an additional tax equal to interest on the interestresulting tax deemed deferred with respect to such years
(other than
 
charge generallythe current
 
applicable
to underpayments
of tax
will be
imposed
in respect
of the
tax attributable
to each
suchtaxable year
 
(other
thanor a pre-PFIC
 
year).
 
Although
we generally
will be
treated
as a
PFIC as
to any
 
U.S. holder
Holder if we
are a
PFIC for
 
any year during a U.S. Holder's holding
period, if
 
during awe cease
 
U.S. holder's
holding period,
if we cease to satisfy
the requirements
forbe a PFIC, classification,
 
the U.S. holder Holder
may avoid PFIC
 
PFIC classification
 
for subsequent years
 
years if such
holder elects
elects to recognize
 
gain based
on the
unrealized
 
appreciation
 
in the ordinary shares
 
shares or
ADRs through the
 
the close
of the tax year
 
year in which
we cease
to be a PFIC.
 
 
A U.S. holder Holder
of a PFIC is required
 
required to file an annual
 
report with
the Internal
 
Revenue Service
 
containing such
 
information as
 
as the U.S.
Secretary
 
of Treasury may
 
require.
 
A U.S. holder ofHolder
 
theof ordinary
shares or ADRs
 
that are treated
as “marketable stock” under the PFIC
 
rulesstock” may be able
 
able to avoid
the imposition
imposition of the special
 
tax
and interest charge
described above
by making a mark-to-market election.
 
election. Pursuant
to this election,
the U.S. holder
Holder would include in ordinary
income or loss for each taxable
year an amount equal to the difference
 
between, as of the close of the taxable year,
between the fair market value of the
fair market
value of
the ordinary
shares
 
or ADRs and
 
and the
U.S. holder'sHolder's
 
adjusted tax
 
tax basis
in such
 
ordinary
shares
 
or ADRs.
Losses
 
would be allowed
 
allowed
only to the
 
extent of
net mark-to-market
 
gain previously
 
included
 
by the U.S.
 
holder underU.S. Holder
 
under the
election
 
for prior
 
taxable
years.
 
If a
U.S. Holder
makes a
mark-to-market
election, then, in any taxable year for which we are classified
as a PFIC, tax rules that apply to distributions by corporations
that are not PFICs
would apply to distributions
by us (except that the lower applicable capital
gains rate for qualified dividend income
would not apply). If a U.S.
Holder makes a valid
mark-to-market
election and we
subsequently
cease to be classified
as a PFIC, the U.S. Holder
will not be required
to take
into account
the mark-to-market
income or loss
described above
during any period
that we are
not classified
as a PFIC. In
addition, because,
as a
technical
matter, a mark-to-market
election cannot
be made for
any lower-tier
PFICs that we
may own, a U.S.
Holder may
continue to be
subject
to the PFIC rules
with respect
 
to ordinary sharessuch U.S. Holder’s
 
or ADRsindirect interest
 
is in effect on the date of a U.S. holder'sany investments
 
death, the tax basisheld by us that
 
of the ordinary sharesare treated
 
or ADRs in
the handsas an equity interest
 
ofin a PFIC
for U.S.
 
holder who
acquired them
from a decedent
will be the
lesser of
the decedent'sfederal income
 
tax basispurposes.
 
or the fairU.S. Holders
 
market valueshould consult
 
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 mark-
to-market
 
election for
 
thetheir ordinary
 
shares or
 
ADRs.
 
 
In the case of
 
of a U.S. holder whoHolder
 
who holds ordinary
 
shares or ADRs
 
ADRs and who
does not make
 
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
 
as a “qualified
 
electing fund”
 
in the first
 
taxable year
 
in
which such
 
holder owns
 
the ordinary
 
shares or
 
ADRs and
 
and if we comply
 
comply with certain
 
certain reporting
 
requirements.
 
However, we
 
do not intend
 
to supplyprovide
U.S. holders
with the
information
 
needednecessary
for U.S. Holders
 
to report
income
and gain
pursuant
to a
“make qualified
 
electing fund
 
fund”
election
in the
event
that we
are classified
as a PFIC.elections.
 
 
We believe that we
 
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 appliedended
June 30,
2022. There
can be
no assurance
regarding
our PFIC
status for
the current
taxable year or foreseeable
future taxable years,
however, because our PFIC status
is a factual determination
made annually that will
depend, in
part, upon
the composition
of our income
 
and it is
difficult toassets.
 
make accurate
predictionsThe value
 
of future
income and
our assets
 
which arefor purposes
 
relevant toof the asset
 
this determination.test, including
 
In addition,the value
 
certain factorsof our goodwill
and
unbooked intangibles,
may be determined
 
in the PFIC
determination, such aspart by reference
 
reductions into the market price
 
of our ordinary shares
or ADRs from time
to time (which may
be volatile). Because we
will generally take
into account our
current market capitalization in estimating the market
 
value of
 
our capitalgoodwill and
 
stock,other
unbooked
 
are notintangibles,
 
withinour PFIC
status
for the
current
taxable
year and
foreseeable
future
taxable
years may
be affected
by our
 
control andmarket
 
can cause
capitalization.
us
to
become a
PFIC.
Accordingly, there
can be no assurance
that we will
not become
a PFIC.
84
The rules relating
to PFICs are very complex.
U.S. holders
are urged toHolders should consult
their tax advisors regarding
 
regarding the application
of the PFIC
rules to
their
investments
 
in our ordinary
 
shares or ADRs.
Disposition
 
of Ordinary
 
Shares or ADRs
 
Subject to theA U.S. Holder
 
discussion above underwill generally
recognize
gain or loss
on the heading “Passive Foreign Investment Company”, upon asale,
 
sale, exchange, or
other taxable
disposition
 
of ordinary
 
shares
or ADRs,
a U.S.
holder will
recognize
gain or
 
lossADRs in an
amount equal
 
an amount
equal to
the difference
 
between the U.S.
 
U.S. dollar value
 
value
of the amount realized
 
on the sale or exchangedisposition
 
and such holder's adjusted
 
adjusted tax
basis in the
ordinary shares or
 
shares or ADRs. Subject to
 
to the applicationdiscussion above
 
of
under the “passive foreign investment company”heading
 
rules discussed above,“Passive Foreign Investment Company”, such gain
or loss
will
generally will be long-term capital gain or loss and will bea
 
long-termif the U.S. Holder’s holding period in
the ordinary shares or ADRs exceeds one year.
Long-term
capital gaingains
of individuals
and certain other
non-corporate
U.S. Holders
are generally
eligible for
a reduced rate
of taxation. The
deductibility
of
capital
losses
is subject
to limitations.
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 onU.S. Holder
 
on the
taxable
 
disposition
 
of ordinary
 
shares
 
or ADRs
 
will generally
be treated
 
will beas U.S. source
 
treated as
U.S.-source
gain or loss
 
for U.S. foreign
 
tax credit
 
purposes.
 
 
8185
 
In the case of a cash basis U.S. holderHolder who receives
rands in connection with the
 
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
 
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
 
be treated as
 
as ordinary income
 
income or
loss.
 
 
An accrual basis U.S. Holder
 
holder may elect the
 
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.IRS.
 
In the event
 
event that an
 
an accrual basis
 
basis holderU.S. Holder
 
does not
 
elect to
 
be treated
 
as a cash
 
basis taxpayer,
 
such U.S.
 
holderHolder may
have a foreign
currency gain or
 
currency gainloss for U.S.
 
or loss forfederal income tax purposes because of
 
the differences between the U.S. federal
 
income taxdollar value of
 
purposes because
of the differences
between the
U.S. dollar
value of the
currency received
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
 
to gain or loss,
 
loss, if
any, recognized
 
by such U.S.
 
holderHolder on the
 
disposition
 
of such ordinary
 
shares or
 
ADRs.
Information
 
with respect
 
to Foreign Financial
 
Assets
 
Certain U.S. holders Holders
may be required
to report on Internal
Revenue Service
 
Form 8938 information relating
 
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.
 
holdersU.S. Holders should consult
 
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. holdersHolders should
consult their
 
tax advisors
 
regarding application
 
of the information
 
reporting and
 
backup withholding
 
rules.
10F. DIVIDENDS AND PAYING AGENTS
Not applicableapplicable.
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 20212022
 
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.
86
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 Guardrisk Cell Captive (classified
as investments in
rehabilitation
and other funds
in the statement
of financial
position), 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.
The Group manages
 
its exposure
 
to credit risk
 
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), trade receivables
 
by investingselling gold
 
on a cash on delivery
 
and cash
equivalents
across several
major financial
institutions,
considering
the credit
ratings of
the respective
financial institutions,
funds and
underlying
instruments.
basis. 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
 
receivables by dealing with
 
a number
of counterparties, ensuring that these
 
counterparties
ensuring that
these counterparties
are of good
credit
credit standing
 
and transacting on
 
on a
 
secured or
 
or cash basis
 
basis where
considered
required.
 
Receivables
are regularly
 
monitored and
 
and assessed
for
recoverability.
Foreign currency
 
risk
 
Our reporting
and functional
 
currency
 
is South
 
African
 
rand. Although
 
gold is
 
sold in
 
US dollars,
 
the Company
 
is obliged
 
to convert
 
this
into rands. No
 
rands. No
hedges were entered into during fiscal 2022.
 
wereWe
 
enteredare thus exposed to
 
into during
fiscal
2021. We are
thus exposed
to fluctuations
in the
US dollar/rand exchange rate. Foreign
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
 
incurred
primarily in
rands.
Our results
 
are positively
 
affected when
 
the US dollar
 
strengthens
 
against the rand
 
rand and adversely
 
adversely affected
when the
 
US dollar
weakens against
 
the
rand. Our
cash and 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, 20212022 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%6.4% - 10.3%
R'm
Repayment period
2022
20.5
2023
18.322.4
2024
12.615.7
2025
5.98.4
2026
5.27.6
2027
1.33.4
2028
2.1
Total
 
63.859.6
Based on our fiscal year 20212022 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.
 
 
8387
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
 
The Bank of New
 
New York
 
Mellon, as
Depository under
 
the Amended
 
and Restated
 
Deposit Agreement
 
dated as of August
 
August 12, 1996, as
amended and restated
 
as amended andof October
 
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)
(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
 
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,
 
20212022 amounts
 
to approximately
$51,94411,721 (June 30, 2020:
$16,237,2021: $51,944, June 30, 2019:
$5,974)2020: $16,237). DRDGOLD is also entitled to a
 
a 25%
share of the
dividend fees which amounts to
approximately
 
$65,551 for93,565for the
 
the year ended
 
ended June 30, 2022
 
(June 30, 2021 (June
 
2021: $65,551,
June 30, 2020:
 
$nil, June
30, 2019: $20,195)nil).
8488
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,
 
2021,2022,
 
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, 2021.2022.
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
 
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, 2021.2022.
 
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, 20212022 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, 20212022 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,
 
2021,2022, 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.
89
ITEM 16.
[RESERVED]
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
 
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 Directors and Managing Directors at
 
Director at our
mining operation operations as well
as
 
well as all
 
other
employees.
The
Code
of
Conduct
can
be
accessed
on
the
Company’s
website
at
the
following
web
address:
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, 2021,2022,
 
20202021 and 2019,2020,
 
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 20212022 and
 
2020:2021:
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,
20212022
20202021
R m
R m
Audit fees
9.18.6
8.49.1
All other fees
0.70.4
0.40.7
Total
9.89.0
8.89.8
All Other
 
Fees
The all other fees during fiscal year 2022 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 2021; and
●
R0.2 million with
respect to limited assurance
provided by KPMG on
specified items contained in
our Integrated Report
for fiscal
year 2022;
 
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 20202021
 
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.
8690
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.To comply with section
10(1)(a) of
the Auditing
Profession
Act, 26 of
2005, the Independent
Regulatory
Board for Auditors
(“
IRBA
”)
published the
rule on Mandatory
Audit Firm
Rotation (“
MAFR
”) for auditors
of all public
interest
entities, as
defined in section
290.25 to 290.26
of the amended IRBA Code of Professional Conduct for Registered Auditors. An audit firm, including a network firm as defined in the IRBA
Code of
Professional Conduct for
Registered Auditors, shall
not
serve as
the appointed
auditor of
a
public interest
entity for
more than
10
consecutive
financial
years. Thereafter,
the audit
firm will
only be
eligible
for reappointment
as the
auditor after
the expiry
of at
least five
financial
years. The requirement
is effective for financial years
commencing on or after 1 April 2023. On October 20, 2022, BDO South
Africa Inc. was
appointed by DRDGOLD’s Board
of Directors as
the Company’s independent principal accountants for the
fiscal year ending June
30, 2023
(subject to
shareholder
approval), after
a formal tender
process to
appoint a new
independent
registered
public accounting
firm.
KPMG Inc.
(“
KPMG
”) will resign
as independent
principal accountants
of the group
upon completion
of their audit
of the Company’s
consolidated
financial
statements
as of and for
the year
ended June
30, 2022 and
the effectiveness
of internal
control over
financial
reporting as
of
June 30, 2022,
and the issuance
of their report
thereon.
The audit reports
of KPMG on the
Group’s consolidated
financial
statements as
of and for
the years ended
June 30, 2022
and 2021 did
not contain
any
adverse opinion or
disclaimer of opinion,
nor were
they qualified
or
modified as
to uncertainty,
audit scope,
or
accounting
principles.
The audit
reports
of KPMG
on the
effectiveness
of internal
control over
financial
reporting
as of
June 30,
2022 and
2021 did
not contain
any adverse opinion or
disclaimer of opinion, nor
were they qualified or
modified as to
uncertainty, audit scope, or
accounting principles. In
connection with
the
audits of
the
Company’s financial
statements for
each of
the
two
fiscal years
ended June
30,
2022,
there were
(i)
no
disagreements
with KPMG,
as that
term is
used in
Item 16F(a)(1)(iv)
of Form
20-F over
any matters
of accounting
principles
or practices,
financial
statement disclosure,
or auditing scope or procedures, which, if not resolved to the satisfaction of KPMG,
would have caused
KPMG to make
reference
to the matter
in their report
and (ii) there
were no “reportable
events” as
defined in Item
16F(a)(1)(v)
of Form 20-F.
DRDGOLD
has provided
KPMG with
a copy
of the foregoing
disclosure
and has
requested
KPMG to
provide it
with a
letter addressed
to the SEC stating
whether or
not KPMG agrees
with the above
statements.
A copy of such
letter, dated October
28, 2022 is filed
as an exhibit
to
this annual report
on Form 20-F, see “Item 19: Exhibits – 16.1"Letter
from KPMG Inc. to the Securities
and Exchange Commission
regarding a
change in registrant's
certifying accountant”.
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
 
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
 
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
 
sixfive non-executive
 
directors,
 
all of whom
 
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.
91
●
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.
 
ITEM 16I.
DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
87
 
 
 
88
92
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
 
-
KPMG
Firm ID
1025
F‑1
Consolidated statement of profit or loss and other comprehensive income for the years ended June 30, 2021,2022,
20202021 and 20192020
F-4
Consolidated statement of financial position at June 30, 20212022 and 20202021
F‑5
Consolidated statement of changes in equity for the years ended June 30, 2022, 2021 2020 and 20192020
F‑6
Consolidated statement of cash flows for the years ended June 30, 2022, 2021 2020 and 20192020
F‑57
Notes to the consolidated financial statements
 
F‑18 to F‑2944
Note
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 obligationand other 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-settledEquity 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, 2022 and 2021, and 2020,the
 
the related consolidated statements of profit
 
profit or loss and other comprehensive
 
comprehensive income, changes in equity,
 
and cash flows for each
of the
 
years in
 
the three-year
 
period ended
 
June 30,
 
2021,2022, 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, 2021,2022,
 
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,
 
20212022 and 2020,2021,
 
and the results of
 
its operations and its
 
cash flows for
 
each of the years
 
in the three-year
 
period ended June
 
30, 2021,2022, 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, 20212022 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
 
Oversight Board (United States)
 
States) (PCAOB) and are
 
are required to be
 
be independent with respect
 
respect to the Company
 
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
 
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
 
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 570.8517.7
million
 
as
 
of
 
June
 
30,
 
2021.2022.
 
The
 
Company’s
 
estimates
 
of
 
undiscounted
 
environmental
 
rehabilitation
 
costs
 
used
 
in
 
calculating
 
the
 
provision
 
are
F-2
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 and timing 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 estimated rand gold price, that impact 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
 
to the Company’s
process
to determine
 
the
environmental rehabilitation provision. This
 
rehabilitation provision.
This included
controls related
to the
 
assessment of
current regulatory
requirements,
determination of the Company’s
 
Company’s LOM
plan, specifically related to
to the estimated
quantities of economically
recoverable gold, and the estimated rand gold price which
 
impact the planned
method of rehabilitation;
●
We
 
involved
 
environmental
rehabilitation
 
professionals
 
with
 
specialisedspecialized skills
 
and knowledge,
 
who assisted
 
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 independent
 
expert by comparing their
professional qualifications, experience
experience and affiliations against industry norms and obtained andan understanding of their scope of work; and
 
-
evaluating the undiscounted estimated
environmental costs for a
 
selection of sites by
 
by performing site inspections and
 
inspections and challenging the planned
method of rehabilitation that was determined for each selected site. This
was performed by comparing the planned method of rehabilitation
to the
approved LOM
plan, confirming
that it
is compliant
with the
environmental management
plans as
approved by
 
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
quantitiesDepartment
 
of
economically recoverable gold as indicated in the approved LOM plan, confirming that it is compliantMineral Resources and Energy, where applicable, aligned with the environmental management
plans
as
approved
by
the
Department
of
Mineral
Resources
current industry practices 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.requirements.
●
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
periodperiod-to-period movements to
 
the current
 
period actual recovered
 
recovered gold and
 
and increments
or adjustments
 
to the
 
data in
 
the expert’smineral
report.resources expert’s report as well as assessing these movements considering our knowledge of the Company’s business and the industry; and
●
We
involved
valuation
professionals
with
specialized
skills
and
knowledge,
who
assisted
in
evaluating
the
estimated
rand
gold
price
by
comparing it to an independently developed range of rand gold prices based on analyst reports.
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 R377.1R452
 
million as
of June
30,
2021,2022, 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
 
and estimates, including
the Company’s life-of-mine (“
LOM
(“LOM”
”) plan (as discussed
 
discussed in note
9 to the
 
the consolidated financial
statements)
that is applied to calculate the expected future profitability.
We identified the valuation
 
valuation of deferred tax liabilities related to the Ergo
and FWGR
operations as a critical audit matter.
 
Subjective auditor judgment
and specialisedspecialized skills and knowledge were required to
 
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 forecastedestimated 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 assumptionsthe determination of the
about theCompany’s LOM
 
forecasted randplan, specifically related to
 
the estimated rand gold price
 
price and estimated quantities
 
quantities of
economically recoverable
 
gold that are
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
 
periodperiod-to-period movements to period
 
movements to the
current period
 
actual recovered gold
 
and increments or
 
adjustments to the
 
the data in the
 
the expert’s
report;report, as well as assessing these movements considering our knowledge of the Company’s business and the industry;
 
●
We evaluated
involved
valuation
professionals
with
specialized
skills
and
knowledge,
who
assisted
in
evaluating
the forecast
estimated
rand
gold
price
by
comparing it to independentan independently developed range of rand gold prices
based on analyst reports;
F-3
●
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 analysisanalyses to
assess the impact that
changes in the forecasted
estimated 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
 
in Note
25.1 to
the consolidated
financial statements,
 
the Company has an
 
Company hasunlisted equity investment in Rand
 
an unlistedRefinery Proprietary Limited
(“
RR
”) that
 
equityis valued
 
investment inat R 136.1
 
Rand Refinery
Proprietary
Limited (RR) that is valued at R119.3 million as
 
of 30 June 2021.30,
2022. The fair value
 
value of
the RR investment
includes the valuation
 
of the
refining operations
F-3
(excluding Prestige Bullion) using a
free cash flow (“
FCF
(“FCF”
”) model and the valuation of RR’s
 
RR’s investment in
Prestige Bullion (Prestige) using a
finite- finite
life dividend discount (“DD”
DD
”) model.
 
We identified the
valuation of the investment in RR as a critical audit
matter. Subjective auditor judgment and specialised specialized
skills and
knowledge were
required to
evaluate certain key
 
key inputs
used in
the FCF
 
and DD
models, specifically the
 
the forecasted
average gold
and silver
prices and
 
silver prices andthe discount rates,
rates, including the weighted
average cost of capital,
 
cost of capital of RR
and cost of equity and
for Prestige (“
CoE
”), as well as
 
the marketability and
minority discount rates, applied
to calculate the
overall totaldiscounts,
applied in the calculation of the 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, discount rates,
prices and discount rates;the marketability and minority discounts;
●
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 as well as the marketability and minority discounts
by comparing them
 
comparing them against the discount rate
ranges and marketability
and minority discounts
that werewe 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
 
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
 
used in the FCF
and DD
DD models.
 
/s/
KPMG Inc.
We have served as the Company’s
 
auditor since 2003.
 
Johannesburg,
Republic of South Africa
October 28, 20212022
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
CONSOLIDATED STATEMENT
 
OF PROFIT OR LOSS
AND OTHER COMPREHENSIVE INCOME
for the year ended June 30, 20212022
F-4
Amounts in R million
Note
2022
2021
2020
2019
Revenue
4
5,118.5
5,269.0
4,185.0
2,762.1
Cost of sales
5.1
(3,741.5)
(3,388.2)
(2,937.9)
(2,553.9)
Gross profit from operating activities
1,377.0
1,880.8
1,247.1
208.2
Other income
5.2
91.3
0.1
0.7
7.9
Administration expenses and other costs
5.3
(161.2)
(64.0)
(309.9)
(90.9)
Results from operating activities
1,307.1
1,816.9
937.9
125.2
Finance income
6
225.8
216.2
109.8
58.3
Finance expense
7
(74.8)
(69.5)
(68.8)
(78.4)
Profit before tax
1,458.1
1,963.6
978.9
105.1
Income tax
18.1
(334.3)
(523.7)
(343.9)
(26.6)
Profit for the year
1,123.8
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
(9.1)
(34.4)
190.6
(5.9)
Fair value adjustment on equity investments at fair value through other
comprehensive income
25
(15.7)
(28.2)
191.8
(5.9)
Deferred tax thereon
18.2
6.6
(6.2)
(1.2)
0
Total other comprehensive income for the year
(9.1)
(34.4)
190.6
(5.9)
Total comprehensive income for the year
1,114.7
1,405.5
825.6
72.6
Earnings per share
Basic earnings per share (SA cents per share)
8
131.2
168.4
82.5
11.8
Diluted basic earnings per share (SA cents per share)
8
130.6
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, 20212022
F-5
Amounts in R million
Note
20212022
20202021
ASSETS
Non-current assets
3,675.34,001.2
3,485.43,675.3
Property, plant and equipment
9
2,809.73,084.1
2,621.12,809.7
Investments in rehabilitation obligationand other funds
1
12
652.2710.8
626.0652.2
Payments made under protest
24
40.540.4
35.040.5
Other investments
25
167.1151.4
195.3167.1
Deferred tax asset
18.2
5.814.5
8.05.8
Current assets
2,672.73,077.0
2,189.82,672.7
Inventories
17
340.0389.3
323.4340.0
Current tax receivable
8.612.6
4.98.6
Trade and other receivables
15
144.1149.5
146.4144.1
Cash and cash equivalents
13
2,180.02,525.6
1,715.12,180.0
TOTAL ASSETS
6,348.07,078.2
5,675.26,348.0
EQUITY AND LIABILITIES
Equity
4,820.45,439.9
4,040.24,820.4
Stated share capital
21.1
6,157.96,173.3
6,157.9
Retained earnings
(1,337.5)(733.4)
(2,117.7)(1,337.5)
Non-current liabilities
996.11,012.8
889.1996.1
Provision for environmental rehabilitation
11
570.8517.7
568.9570.8
Deferred tax liability
18.2
377.1451.9
273.1377.1
Liability for post-retirement medical benefits (2020: Employee benefits)
10.4
10.3
10.1
Lease liabilities
10.2
37.932.8
37.037.9
Current liabilities
531.5625.5
745.9531.5
Trade and other payables
16
509.8598.4
478.8
Liability for cash-settled long-term incentive scheme (2020: Employee benefits)
19.1
0
227.6509.8
Current portion of lease liabilities
10.2
16.919.5
10.116.9
Current tax liability
4.87.6
29.44.8
TOTAL LIABILITIES
1,527.61,638.3
1,635.01,527.6
TOTAL EQUITY AND LIABILITIES
7,078.2
6,348.0
5,675.21
Description of
the financial
statement caption
has changed
as it
now includes
funds other
than rehabilitation.
See note
12 for
more
detail.
The accompanying notes are an integral part of these consolidated financial statements.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
CONSOLIDATED STATEMENT
 
OF CHANGES IN EQUITY
for the year ended June 30, 20212022
F-6
Stated
share
Other
Retained
Total
Amounts in R million
Note
capital
reserves
earnings
equity
Balance at June 30, 2018
4,177.7
0
(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
0
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-
StillwaterSibanye-Stillwater option
21.2
(453.6)
453.6
0-
Dividend on ordinary shares
21.2
(565.1)
(565.1)
Equity-settledEquity 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
0-
(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-settledEquity settled share-based payment
19.2
16.0
16.0
Total contributions and distributions
0-
0-
(625.3)
(625.3)
Balance at June 30, 2021
21.1
6,157.9
0-
(1,337.5)
4,820.4
Total comprehensive income
Profit for the year
1,123.8
1,123.8
Other comprehensive income
(9.1)
(9.1)
Total comprehensive income
-
-
1,114.7
1,114.7
Transactions with the owners of the parent
Contributions and distributions
Dividend on ordinary shares
21.2
(513.6)
(513.6)
Treasury shares disposed of for the vesting of the equity-settled
share-based payment
21.1, 19.2
15.4
(15.4)
-
Equity settled share-based payment
19.2
18.4
18.4
Total contributions and distributions
15.4
-
(510.6)
(495.2)
Balance at June 30, 2022
21.1
6,173.3
-
(733.4)
5,439.9
The accompanying notes are an integral part of these consolidated financial statements.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
CONSOLIDATED STATEMENT
 
OF CASH FLOWS
for the year ended June 30, 20212022
F-7
Amounts in R million
Note
2022
2021
2020
2019
CASH FLOWS FROM OPERATING ACTIVITIES
Cash generated from operations
14
1,585.6
1,851.0
1,309.6
282.0
Finance income received
111.1
105.9
63.8
16.8
Dividends received
71.5
76.1
4.3
0
Finance expenses paid
(7.7)
(7.5)
(8.7)
(9.3)
Income tax paid
(262.7)
(452.1)
(240.1)
(1.2)
Net cash inflow from operating activities
1,497.8
1,573.4
1,128.9
288.3
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of property, plant and equipment
(584.1)
(395.7)
(181.1)
(347.4)
Environmental rehabilitation payments to reduce decommissioning liabilities
11
(25.4)
(51.0)
(22.1)
(16.6)
Proceeds on disposal of property, plant and equipment
5.212.2
0.1
0.7
5.8
Funds received from environmental obligationInvestment in other funds
12
0(28.9)
0-
55.2-
Net cash outflow from investing activities
(626.2)
(446.6)
(202.5)
(303.0)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issue of ordinary shares
21.1
0-
-
1,085.6
0
Share issue expenses
0-
-
(0.5)
(0.3)
Acquisition of treasury shares
21.1
0
0
(0.3)
Dividends paid on ordinary shares
(513.3)
(640.9)
(564.5)
0
Borrowings raised
0
0
192.0
Borrowings paid
0
0
(192.0)
Initial fees incurred on facility
-
(1.0)
0
(3.6)-
Repayment of lease liabilities
10.2
(19.7)
(11.6)
(11.4)
(3.7)
Net cash (outflow)/inflow from financing activities
(533.0)
(653.5)
509.2
(7.9)
NET INCREASE/(DECREASE)INCREASE IN CASH AND CASH EQUIVALENTS
338.6
473.3
1,435.6
(22.6)
Impact of fluctuations in exchange rate on cash held in foreign currencies
7.0
(8.4)
0
0-
Cash and cash equivalents at the beginning of the year
2,180.0
1,715.1
279.5
302.1
CASH AND CASH EQUIVALENTS AT
 
THE END OF THE YEAR
13
2,525.6
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, 20212022
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, 2021.2022.
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
2022
2021
2020
2019
Spot rate at year end
16.27
14.27
17.32
14.07
Average prevailing rate for the financial year
15.21
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
rformer
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, 20212022
F-9
3
 
NEW STANDARDS,
 
AMENDMENTS TO STANDARDS
 
AND INTERPRETATIONS
New standards, amendments to standards and interpretations effective for the year ended June 30, 20212022
During the financial year,
 
the financial
period, the
following relevant
there were no new and
revised
 
accounting standards,
amendments to
standards and
 
new interpretation
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
Standards Board (“
IASB
”) has issued the
Annual Improvements to
IFRS Standards 2018–2020.
These are not
expected to have
a significant
impact on the Group.
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)(“
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
 
earliest period presented in
the financial statements
 
in which the amendments
are adopted.
 
Management hasThe amendment is
begun performing evaluation of whether the amendment willnot expected to have a significant impact on the
Group. More detail will be disclosed
in future financial statements.
Definition of Accounting Estimate
(Amendments (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
 
between accounting policies and
 
and accounting estimates by
 
by specifying that a
 
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
3The amendment
 
NEW STANDARDS,is not
 
AMENDMENTS TO STANDARDSexpected to
have a significant impact on the Group.
 
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. The amendment is not expected to have a significant impact on the Group.
Classification
of
liabilities
as
current
or
non-current (Amendments
(Amendments
to
IAS 1) (Effective
1
Presentation
of
Financial
Statements
)
(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. The amendment is not
expected to have a significant impact on the Group.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continued
for the year ended June 30, 2022
F-10
3
NEW STANDARDS,
AMENDMENTS TO STANDARDS
AND INTERPRETATIONS
continued
New standards, amendments to standards and interpretations not yet effective
(continued)
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 ofto
assess
 
the
impact
the
amendment
will
have
on
 
the Group.
Group
from
a
disclosure
perspective. 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 (produced as
a by-product).
 
Revenue
Up to April
11,
2022 revenue is
 
measured based on the
 
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
 
London Bullion Market fixing
price on the date
when
the Group transfers control over the goods to the customer.
 
customer. The Group
recognises revenue at a point in time when Rand Refinery Proprietary Limited (“
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.
Subsequent to April
11,
2022 revenue is
measured based on
the consideration specified
in a contract
with the customer,
being
South African
bullion banks.
The consideration
is based
on the
gold price
derived on
the gold
market on
the day
a contract
is
entered into with
the customer.
The Group recognises
revenue at a
point in time
when the Group
transfers the gold
bullion and
silver bullion to the bullion bank and the sale price is fixed, as evidenced by the certificate of sale. deal confirmations.
It is at this
point that the customer obtains control of the gold bullion or silver bullion, which is the settlement date specified in the
contract. At this point that the revenue can
be measured
reliably and
the recovery
 
of the consideration is probable. The customer
is contract
 
consideration is
probable. Rand
Refinery is
contractuallyually obliged
 
to make
payment
make payment
to the
Group on
the same
day that
 
the Group within
 
two business dayssettles
 
after the sale
of the goldcontract
 
and silver andtherefore
 
therefore no significant
financing
significant financing component exists.
Amounts in R million
2022
2021
2020
2019
Gold revenue
5,110.7
5,263.8
4,179.3
2,758.8
Silver revenue
7.8
5.2
5.7
3.3
Total
 
revenue
5,118.5
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
any 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
2022
2021
2020
2019
20
% increase in the US Dollar gold price
1,023.7
1,053.8
837.0
552.4
20
% decrease in the US Dollar gold price
(1,023.7)
(1,053.8)
(837.0)
(552.4)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continued
for the year ended June 30, 2022
F-11
4
REVENUE
continued
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 otherany hedging arrangements to establish an exchange rate in
advance forduring the sale of US Dollars to be received in the future.year.
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
2022
2021
2020
2019
20
% increase in the Rand to US Dollar exchange rate
1,023.7
1,053.8
837.0
552.4
20
% decrease in the Rand to US Dollar exchange rate
(1,023.7)
(1,053.8)
(837.0)
(552.4)
5
RESULTS FROM
OPERATING
ACTIVITIES
5.1
COST OF SALES
Amounts in R million
Note
2022
2021
2020
Cost of sales
(3,741.5)
(3,388.2)
(2,937.9)
Operating costs (a)
(3,506.5)
(3,122.5)
(2,692.1)
Movement in gold in process and finished inventories - Gold Bullion
30.4
(25.6)
3.1
Depreciation
9
(267.6)
(252.5)
(270.8)
Change in estimate of environmental rehabilitation
11
2.2
12.4
21.9
(a) The most significant components of operating costs include:
Consumable stores
(1,014.9)
(880.2)
(801.0)
Labour including short term incentives
(649.6)
(598.4)
(573.0)
Electricity
(547.3)
(488.2)
(420.9)
Specialist service providers
(610.2)
(510.7)
(447.5)
Machine hire
(139.0)
(127.4)
(95.2)
Security expenses
(133.0)
(122.8)
(87.8)
Water
(54.2)
(57.1)
(47.0)
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,
up to April 10,
2022, performed 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.
From
April 11, 2022, Rand Refinery only performs the final refinement and administration of the gold bars delivered. As a result of this,
the marketing fee was
no longer incurred by
the Group. Rand Refinery
is a related party
to the Group through
Sibanye-Stillwater’s
shareholding in Rand Refinery.
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
2022
2021
2020
Services rendered by related parties and included in operating costs:
Supply of water and electricity
1
79.2
68.1
50.0
Gold smelting and related charges
1
19.1
21.1
19.8
Other charges
1
0.3
0.7
1.6
Charges to Sibanye-Stillwater
2
-
-
(0.2)
Gold refining and related charges
3
6.9
6.8
4.9
105.5
96.7
76.1
1
Paid to Sibanye-Stillwater by FWGR
2
Miscellaneous charges to Sibanye-Stillwater
3
Paid to Rand Refinery
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continued
for the year ended June 30, 20212022
F-12
5
 
RESULTS FROM
 
OPERATING
 
ACTIVITIES
5.1
continued
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)
0
0
(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
0
0
93.7
Voluntary staff retrenchments
0
0
(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
0
Charges to Sibanye-Stillwater
2
0
(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
COVID-19 and other insurance payouts, gains on disposal of
property, plant and equipment and gains on financial instruments at
fair value through profit or lossloss.
.
Amounts in R million
2022
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
0
0
2.16.6
0.1
0.7
7.9Insurance claim (a)
84.7
-
-
91.3
0.1
0.7
(a) Insurance claim
During the 2020 financial year, a complex insurance claim process was
initiated for business interruption caused by the regulatory lockdowns
pursuant to the COVID-19 pandemic. Of the R
84.7
million included in other
income in profit and loss during the year, R
53.0
million was received before
June 30, 2022. R
31.7
million was received subsequent to year end.
84.7
-
-
5.3
ADMINISTRATION
EXPENSES AND OTHER COSTS
Amounts in R million
Note
2022
2021
2020
Included in administration expenses and other costs are the following:
Share based payment (expenses)/benefit
(18.4)
28.3
(224.1)
Cash settled Long-Term
Incentive ("
CLTI
") scheme
19.1
-
44.3
(218.1)
Equity settled Long-Term
Incentive ("
ELTI
") scheme
19.2
(18.4)
(16.0)
(6.0)
Exploration expenses and transaction costs
1
(15.2)
(3.1)
(1.4)
Other costs and administration expenses
2
(52.8)
(39.7)
(28.3)
1 Includes exploration expenses of R8.2 million paid to Sibanye-Stillwater for FY 2022.
2
Other costs and administration expenses are made
of short-term incentives and information technology
costs.
6
FINANCE INCOME
ACCOUNTING POLICY
Finance income includes interest received, growth in cash and cash equivalents in environmental rehabilitation trust funds,
growth
in investment in Guardrisk, growth in
the reimbursive right for environmental rehabilitation guarantees, dividends
received and the
unwinding of the Payments made under protest and foreign exchange gains.
Amounts in R million
Note
2022
2021
2020
Interest on financial assets measured at amortised cost
13
111.8
108.7
63.1
Growth in cash and cash equivalents in environmental rehabilitation trust
funds
12
14.8
22.5
33.3
Growth in reimbursive right for environmental rehabilitation guarantees
12
1.8
3.7
5.2
Growth in investment in Guardrisk
12
13.1
-
-
Dividends received
25
71.5
76.1
4.3
Unwinding of Payments made under protest
24
5.8
4.8
3.9
Unrealised foreign exchange gain
7.0
-
-
Other finance income
-
0.4
-
225.8
216.2
109.8
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continued
for the year ended June 30, 20212022
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)
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
0
Unwinding of Payments made under protest
24
4.8
3.9
3.0
Other finance income
0.4
0
0
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
2022
2021
2020
2019
Interest on financial liabilities measured at amortised cost
(2.6)
(2.3)
(2.0)
(10.2)
Interest on financial liabilities measured at amortised cost capitalised
0
0
9.4
Unwinding of provision for environmental rehabilitation
11
(45.0)
(44.7)
(52.0)
(66.3)
Discount recognised on Payments made under protest
24
(21.1)
(7.4)
(7.1)
(6.5)
Interest on lease liabilities
10.2
(4.2)
(4.5)
(5.1)
(2.0)
Unrealised foreign exchange loss
-
(8.4)
0
0-
Other finance expenses
(1.9)
(2.2)
(2.6)
(2.8)(74.8)
(69.5)
(68.8)
(78.4)
8
 
EARNINGS PER SHARE
Amounts in R million
2022
2021
2020
2019
The calculations of basic and diluted earnings per ordinary share
are based on the following:
Profit for the year
1,123.8
1,439.9
635.0
78.5
Reconciliation of weighted average number of ordinary shares to
diluted weighted average number of ordinary shares
Note2022
2021
2020
2019
Weighted average number of ordinary shares in issue adjusted for
treasury shares
856,760,797
855,113,791
769,941,874
664,553,283
Effect of Sibanye-Stillwater Option
21.1-
0-
9,464,684
15,387,695
Effect of equity-settled share-based payment
19.24,203,336
5,935,215
4,283,001
0
Diluted weighted average number of ordinary shares
860,964,133
861,049,006
783,689,559
679,940,978
SA cents per share
2022
2021
2020
2019
Basic earnings per share
131.2
168.4
82.5
11.8
Diluted basic earnings per share
130.6
167.2
81.0
11.5
 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continued
for the year ended June 30, 20212022
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
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
reserves and resources expert.experts.
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.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continued
for the year ended June 30, 2022
F-15
9
PROPERTY,
PLANT AND EQUIPMENT
continued
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
 
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
 
mineral reserve exists. Exploration assets also
 
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 assessed
 
for
impairment
 
and
then
reclassified to the appropriate
class of assets. Depreciation
commences when the assets
are available for use.
Exploration and
evaluation expenses prior to acquiring rights to explore is recognised in profit or loss.
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
and residual
values are
reassessed annually
and adjusted
if appropriate.
The
current estimated useful lives
are based on the life-of-
minelife-of-mine of each site,
 
site, currently between
threetwo
 
(2021:
three
; 2020:
four
; 2019:
three
) and 13
19
years(2020:
years (2021:
13
; 2019:2020:
1113
) years for Ergo mining
 
Ergo mining assets
and between
threetwo
 
(2021:
three
; 2020:
four
; 2019:
five
) and 18 years (2020:
20
years (2021:
18
; 2019:2020:
1520
) years for FWGR mining assets.
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 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.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continued
for the year ended June 30, 20212022
F-15F-16
ACCOUNTING POLICIES continued
Impairment
The carrying9
 
amounts ofPROPERTY,
 
property,
plant and
equipment are
reviewed at
each reporting
date to
determine whether
there is
anyPLANT AND EQUIPMENT
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.
continued
Amounts in R million
Note
Mine plant
facilities and
equipment
Mine
property and
development
Exploration
assets
Total
June 30, 2022
Cost
2,733.9
2,419.6
14.2
5,167.7
Balance at the beginning of the year
2,604.3
2,154.0
110.5
4,868.8
Additions - property, plant and equipment owned
291.4
301.2
5.8
598.4
Additions - right-of-use assets
10.1
6.0
9.9
-
15.9
Lease modifications
10.1
-
1.2
-
1.2
Lease derecognitions
10.1
(1.6)
-
-
(1.6)
Disposals and scrapping
(185.3)
(61.6)
(0.9)
(247.8)
Change in estimate of decommissioning asset
11
(46.3)
(20.9)
-
(67.2)
Transfers between classes of property,
plant and
equipment
65.4
35.8
(101.2)
-
Accumulated depreciation and impairment
(1,017.0)
(1,056.9)
(9.7)
(2,083.6)
Balance at the beginning of the year
(1,074.0)
(975.4)
(9.7)
(2,059.1)
Depreciation
5.1
(125.1)
(142.5)
-
(267.6)
Lease derecognitions
1.6
-
-
1.6
Disposals and scrapping
180.5
61.0
-
241.5
Carrying value at end of the year
1,716.9
1,362.7
4.5
3,084.1
Comprising:
Property, plant and equipment owned
1,698.7
1,333.2
4.5
3,036.4
Right-of-use assets
10.1
18.2
29.5
-
47.7
Carrying value at end of the year
1,716.9
1,362.7
4.5
3,084.1
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
0-
0-
16.7
Lease modifications
10.1
0-
2.3
0-
2.3
Lease derecognitions
10.1
(1.0)
0-
0-
(1.0)
Disposals and scrapping
(54.7)
(133.4)
0-
(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)
0-
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)
0-
(252.5)
Lease derecognitions
1.0
0-
0-
1.0
Disposals and scrapping
54.7
133.4
0-
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
0-
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
0
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
0
18.0
Lease modifications
0
7.5
0
7.5
Lease derecognitions
(26.7)
(0.1)
0
(26.8)
Disposals and scrapping
(1.6)
0
0
(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
0
0
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)
0
(270.8)
Lease derecognitions
17.9
0
0
17.9
Disposals and scrapping
1.6
0
0
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
0
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
 
the consolidated financial
statements at June
30, 20212022 amounted
to R
65.5235.9
 
million
(2020:2021: R
130.665.5
 
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.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continued
for the year ended June 30, 2022
F-17
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
 
use asset is
subsequently depreciated using the
 
the straightlinestraight-line 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.
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, 2022
Cost
31.2
58.4
89.6
Opening balance
26.8
47.3
74.1
Additions
6.0
9.9
15.9
Lease modifications
-
1.2
1.2
Lease derecognitions
(1.6)
-
(1.6)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continued
for the year ended June 30, 20212022
F-17
10.1
RIGHT OF USE ASSETS
Included in property, plant and equipment are the following leased assets:
F-18
Amounts in R millionAccumulated depreciation
Note(13.0)
Mine plant(28.9)
facilities and(41.9)
equipmentOpening balance
Mine property(6.2)
and(18.8)
development(25.0)
TotalDepreciation
(8.4)
(10.1)
(18.5)
Lease derecognitions
1.6
-
1.6
Carrying value
18.2
29.5
47.7
June 30, 2021
Cost
26.8
47.3
74.1
Opening balance
11.1
45.0
56.1
Additions
16.7
0-
16.7
Lease modifications
0-
2.3
2.3
Lease derecognitions
(1.0)
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
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
0
26.5
Additions
3.8
14.2
18.0
Lease modifications
0
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)
0
(15.9)
Depreciation
5.1
(4.9)
(8.3)
(13.2)
Lease derecognitions
17.9
0
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
20212022
20202021
Reconciliation of the lease liabilities balance:
Balance at the beginning of the year
47.154.8
11.0
Impact of adopting IFRS 16 on July 1, 2019
9
0
30.947.1
New leases
9
16.715.9
18.016.7
Lease modifications
2.39
7.51.2
Leases derecognised
0
(8.9)2.3
Interest charge on lease liabilities
7
4.54.2
5.14.5
Repayment of lease liabilities
(11.6)(19.7)
(11.4)(11.6)
Interest repaid
(4.2)(4.1)
(5.1)(4.2)
Balance at the end of the year
54.852.3
47.154.8
Current portion of lease liabilities
(16.9)(19.5)
(10.1)(16.9)
Non-current lease liabilities
37.932.8
37.037.9
Maturity analysis of undiscounted contractual cash flows:
Less than a year
(20.5)22.4
(13.0)20.5
One to five years
(42.0)35.1
(37.0)42.0
More than 5 years
(1.3)2.1
(9.0)1.3
Total
 
undiscounted lease liabilities at the end of the year
(63.8)59.6
(59.0)63.8
Lease payments not recognised as a liability but expensed during the year:
Short-term leases
(1.4)(2.5)
(2.4)(1.4)
Leases of low value assets
 
(7.7)(8.6)
(5.0)(7.7)
Cash flows included in cash generated from operating activities
(9.1)(11.1)
(7.4)(9.1)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continued
for the year ended June 30, 20212022
F-18F-19
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 nominal discount rate ranging
between
10.2
% and
10.3
% (2021: between
8.9
% and
9.0
% (2020: between
8.1
% and
9.5
%), average inflation rate of
5.25.5
% (2020:(2021:
5.15.2
%) and
the discount
 
periods as
per the
 
expected life-of-mine
were used
in the
calculation of
 
the calculation of theestimated
 
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 within cost
 
costs. of sales.
Cash costs incurred
 
incurred
to
rehabilitate
these
 
disturbances
are
presented
 
as
operating
activities
 
in
the
statement
 
of
cash
flows.
 
The
cost
of
ongoing
cost of ongoing rehabilitation is recognised in profit or loss as incurred.
Amounts in R million
Note
20212022
20202021
Opening balance
 
568.9570.8
682.6568.9
Unwinding of provision
7
44.745.0
52.044.7
Change in estimate of environmental rehabilitation recognised in profit or loss (a)
5.1
(12.4)(2.2)
(21.9)(12.4)
Change in estimate of environmental rehabilitation recognised to decommissioning asset (b)(a)
9
26.4(67.2)
(113.6)26.4
Environmental rehabilitation payments (c)(b)
(28.7)
(56.8)
(30.2)
To
 
reduce decommissioning liabilities
(51.0)(25.4)
(22.1)(51.0)
To
 
reduce restoration liabilities
14
(5.8)(3.3)
(8.1)(5.8)
Closing balance
570.8517.7
568.9570.8
Environmental rehabilitation payments to reduce the liability
(56.8)(28.7)
(30.2)(56.8)
Ongoing rehabilitation expenditure
 
1
23
(48.3)(31.6)
(24.3)(48.3)
Total
 
cash spent on environmental rehabilitation
(105.1)(60.3)
(54.5)(105.1)
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 lossto decommissioning asset
This is During the
current year,
updates were
made
to the
Ergo life
of mine,
resulting in
the inclusion
of the
Daggafontein TSF
as a result
Mineral Reserve on
a planned basis
increasing the life
of changes in mine. During
the estimatedcurrent year,
updates were also
made to the FWGR
life of mine, changing the expected timing of the vegetation of reclamation sites.
(b) Change in estimate of environmental rehabilitation recognised to decommissioning assetcash outflows.
Increase is as a(b)
 
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
69ha38ha of
the Brakpan/Withok
TSF,
 
20ha3ha of
the Daggafontein
TSF and
17ha of
the Driefontein
4 TSF
 
6ha of the Crown Complex TSF,were vegetated
 
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
the
life
of
mine
plan
and
current
environmental
and
regulatory
 
requirements,
the
total
undiscounted rehabilitation
cost
is approximately R
742.2815.1
 
million (2020:(2021: R
752.5742.2
 
million).
 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continued
for the year ended June 30, 20212022
F-19F-20
12
 
INVESTMENTS IN REHABILITATION
 
OBLIGATION
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 heldare 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
 
cell captive are Guardrisk Cell Captive is
for the sole
 
sole use of material future environmentalas determined in
 
rehabilitation paymentsthe insurance policies and are
 
are therefore included
included in non-current assetsassets.
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.
 
Guardrisk Insurance Company Limited ("
Guardrisk
")GICL has guarantees
in issue amounting
 
to R
430.1614.0
 
million (2020:(2021: R
427.3430.1
 
million)
to the Department of Mineral Resources and Energy ("DMRE
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 in
remained within 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
626.0future insurance applications.
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, 2022
F-21
12
INVESTMENTS IN REHABILITATION
AND OTHER FUNDS
continued
Amounts in R million
Note
2022
2021
F-20Cash 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
.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continued
for the year ended June 30, 2022
F-22
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
20212022
20202021
Cash on hand
100.5113.2
63.5100.5
Access deposits and income funds
 
1
2,069.22,401.7
1,632.32,069.2
Restricted cash
 
2
10.7
10.3
19.32,525.6
2,180.0
1,715.1
Interest earned on cash and cash equivalents
6
108.7111.8
63.1108.7
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
45.38
% and
5.66.38
%
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
20212022
20202021
100
bp increase
23.5
19.5
10.0100
100bpbp (decrease)
(19.5)(23.5)
(10.0)(19.5)
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
20212022
20202021
Foreign denominated cash at 30 June
3.4
03.4
A
10
% 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
20212022
20202021
Strengthening of the Rand against the US Dollar
(4.9)(5.5)
0(4.9)
Weakening of the Rand against the US Dollar
4.95.5
04.9
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, 20212022
F-21F-23
14
 
CASH GENERATED
 
FROM OPERATIONS
Amounts in R million
Note
2022
2021
2020
2019
Profit for the year
1,123.8
1,439.9
635.0
78.5
Adjusted for
Income tax
18.1
334.3
523.7
343.9
26.6
Depreciation
 
9
267.6
252.5
270.8
169.1
Movement in gold in process and finished inventories - Gold Bullion
5.1
(30.4)
25.6
(3.1)
(32.6)
Change in estimate of environmental rehabilitation
11
(2.2)
(12.4)
(21.9)
(60.0)
Environmental rehabilitation payments to reduce the restoration liabilities
11
(3.3)
(5.8)
(8.1)
(10.9)
Share-based payment expense/(benefit)/expense
5.3
18.4
(28.3)
224.1
21.4
Gain on disposal of property, plant and equipment
5.2
(6.6)
(0.1)
(0.7)
(5.8)Insurance claim receivable
5.2
(31.7)
-
-
Finance income
6
(225.8)
(216.2)
(109.8)
(58.3)
Finance expense
7
74.8
69.5
68.8
78.4
Other non-cash items
3.8
(2.5)
2.6
1.8
Operating cash flows before other changes
1,522.7
2,045.9
1,401.6
208.2
Changes in
62.9
(194.9)
(92.0)
73.8
Trade and other receivables
25.7
6.9
(79.0)
22.5
Consumable stores and stockpiles
(18.9)
(44.7)
(26.4)
(24.8)
Payments made under protest
24
(15.2)
(8.1)
(10.6)
(11.7)
Trade and other payables and employee benefits
71.3
(149.0)
 
1
24.0
 
1
87.8
1
Cash generated from operations
1,585.6
1,851.0
1,309.6
282.0
 
1
Includes settlement of cash-settled long-term incentives
 
offor 2021: R
183.3
 
million, (2020:2020: R
41.5
 
million, 2019: R
15.5
million)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
 
when the contractual rights to
 
rights to the cash flows from
 
flows from the
asset expire, or it
 
it transfers the
rights to receive the contractual cash flows in
 
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
 
transferred asset. Any interest in such derecognised
 
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”
(“
ECLs
”). The
The Group uses the simplified
ECL approach. When determining whether
the credit risk of a financial
asset has increased since initial
initial recognition
and when estimating
 
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
 
relevant and availablethe
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.
 
losses. Credit losses are measured as
 
measured as the present value of
 
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
 
to recovery the asset
 
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
 
receivables relate
to gold
 
sold on
to the bullion
 
market by
Rand Refinery
in its
capacity as
an agent.
banks. Settlement is
 
usually received on the
gold sold date. Previously
trade
receivables related to gold sold on the bullion market by Rand Refinery in its capacity as an agent for the Group. Settlement was
usually received
two working days
from gold sold date.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continued
for the year ended June 30, 20212022
F-22F-24
15
 
TRADE AND OTHER RECEIVABLES
 
continued
Amounts in R million
20212022
20202021
Trade receivables
56.5-
23.156.5
Value Added Tax
50.275.1
83.550.2
Other receivables
 
1
21.257.4
17.321.2
Prepayments
17.419.2
25.117.4
Allowance for impairment
(2.2)
(1.2)
(2.6)149.5
144.1
146.41 Other receivables includes the outstanding COVID-19
insurance claim amount of R
131.7
 
Other receivables consist of a number of individuallymillion (refer to note 5.2) which was received
insignificant amounts receivablesubsequent to year end.
CREDIT RISK
The Group
 
Group is exposed
 
exposed to credit
 
credit risk on
 
on the total
 
total carrying value
 
value of its
 
its trade
receivables and
other receivables
 
and other
receivables excluding
Value
Added Tax
 
and prepayments.
The
Group
manages
its
exposure
to
credit
risk
on
trade
receivables
by
selling
gold
on
a
cash
on
delivery
basis.
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
necessary. The majority of other
 
other receivables, comprisesexcluding the COVID-19
 
ofinsurance claim, comprises balances with
 
with counterparties who have
 
been
transacting
with
 
the
Group
for
 
over
5 years
5
years
 
and
 
in
 
some
 
of
 
these
 
cases,
 
the
 
counterparties
 
are
 
also
 
suppliers
 
of
 
the
 
Group.
Receivables
are
regularly
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:
20212022
20202021
Amounts in R million
Non-credit
impaired
Credit
impaired
Non-credit
impaired
Credit
impaired
Trade receivables
-
-
56.5
0
23.1
0-
Other receivables
55.2
2.2
20.0
1.2
14.755.2
2.62.2
76.5
1.2
37.8
2.6
Loss allowance
-
(1.2)(2.2)
-
(2.6)(1.2)
Movement in the allowance for impairment in respect of trade and other receivables during the year was as follows:
Amounts in R million
20212022
20202021
Balance at the beginning of the year
(2.6)(1.2)
(4.9)(2.6)
Credit loss allowance/impairments recognised included in operating costs
(0.2)(1.1)
(0.2)
Credit loss allowance/impairments reversed included in operating costs
1.30.1
0.41.3
Credit loss allowance written off against related receivable
0.3-
2.10.3
Balance at the end of the year
(1.2)(2.2)
(2.6)(1.2)
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
2022 were
 
at spot
rates and no foreign exchange rate hedges are entered into. From April 11, 2022, The USD to be received from bullion sales are
sold on the same date as the
respective bullion sale to settle in ZAR to
the Group. Prior to April 11,
2022, Rand Refinery,
acting
as an agent for the Group, sellssold the USD to be received from bullion
sales on
the same
date as the
respective bullion
sale since
November 2020.
sale. As a result,
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
0
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
0
(2.3)
Weakening of the Rand against the US Dollar
0
2.3
rate.
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, 20212022
F-23F-25
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
20212022
20202021
Trade payables and accruals
352.9429.1
348.0352.9
Value Added Tax
4.50.2
04.5
Accrued leave pay
55.7
53.2
46.9
ProvisionAccrual for short term performance based incentives
74.287.5
50.574.2
Payroll accruals
25.9
25.0
33.4598.4
509.8
478.8
Interest relating to trade payables and accruals included in profit or loss
(1.8)
(1.9)(1.8)
RELATED PARTY
 
BALANCES
Trade payables and accruals include the following amounts payable to related parties:
Sibanye-Stillwater
12.025.8
14.012.0
Rand Refinery
0.6-
0.20.6
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
20212022
20202021
Consumable stores
177.6197.5
165.6177.6
Ore stockpile
52.951.9
9.0
152.9
Gold in process (a)
75.1
59.6
86.6
1
Finished inventories - Gold Bullion
49.964.8
62.249.9
Total inventories
389.3
340.0
323.4Inventory carried at net realisable value includes:
1Gold in process
During 2021, the Group disaggregated “Gold8.5
-
Finished inventories - Gold Bullion
7.9
-
Write down to net realisable value included in process” into “Goldmovement in process”gold in process and “Ore
stockpile” respectively to present material itemsfinished
separatelystock
(2.7)
-
 
 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continued
for the year ended June 30, 20212022
F-24F-26
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
 
by applying a forecast weighted
average tax rate that is
based on a prescribed formula.
The
calculation of the 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
 
change materially
over time.
 
These assumptions and
 
and estimates
include expected
 
future profitability and
 
and timing
of the
reversal
of the
temporary differences.
Due to
 
the temporaryforecast
 
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 with ancan vary
 
increase in forecast
future profitability,
and vice versa,
the tax rate can
vary significantly year
year on year and can move contrary to current period financial performance.
A
100
 
basis points increase
 
increase in
the effective
 
tax rate will
 
will result
in an
 
increase in the
 
the net
deferred tax
 
liability at June
 
June 30, 2021
2022 of
approximately R
14.218.7
 
million (2020:(2021: R
10.314.2
 
million; 2019:2020: R
8.610.3
 
million).
The assessment of the
probability that future taxable profits
 
profits will be available against
which the tax losses and
 
and unredeemed capital
expenditure
can
be
 
utilised
requires
the
 
use
of
assumptions
 
and
estimates
and
 
are
inherently
uncertain
 
and could change
 
could
changematerially
materially over time.
Capital expenditure
 
is assessed
 
by the
 
South African
 
Revenue Service
 
(“SARS”(“
SARS
”) when
 
it is
 
redeemed against
 
taxable mining
income
income rather
than
when
 
it
is
incurred.
A
 
different
interpretation
by
 
SARS
regarding
the
deductibility
 
of
these
capital
allowances
may
may therefore become evident subsequent to the year of assessment when the capital expenditure is incurred.
ACCOUNTING POLICIES
Income tax expense comprises current and
 
expense comprisesdeferred tax. Each company is
 
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
 
on the taxable income or loss for the
 
for the year and any
adjustment on tax
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
 
or OCI. The current tax
charge is calculated on the
 
the basis of the tax laws
enacted or substantively
substantively enacted at the reporting date.
 
Deferred tax
Deferred tax
 
tax is recognised
 
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
 
assets relatingunutilised tax losses and unutilised capital
 
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
 
weighted average tax
rate that is
expected to be
applied to
temporary differences when they
reverse, using tax rates enacted or substantively enacted
 
substantially enacted at the reporting
date.
The calculation of
of the forecast weighted average
tax rate requires the
 
requires the use of assumptions and estimates, including
 
including the Group’s life-of-mine
plan (as
(as discussed in note 9 to the consolidated financial statements) that is applied to calculate the expected future profitability.
TaxCurrent tax on
 
on gold mining income is
for the periods
presented was determined
based on a
 
formula: Y =
34 - 170/X
where Y is the
 
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 allthe periods
presented.
All mining capital expenditure is deducted
in the year
it is incurred
to the extent that it does not
 
not result in an assessed loss. Capital
expenditure not deducted
from mining
income is
carried forward as unutilised
 
unutilised capital
allowances to be
deducted from future
mining
income.
Amendment in the corporate income tax rate and mining tax rate formula and broadening the tax base
On February 24, 2021 the Minister
 
23, 2022 the
Minister of
Finance announced in
his budget speech that
 
that the corporate
income tax (“
(“
CIT
”) rate will
be
lowered from
28
% to
27
% for companies
with years of assessment commencing on
 
commencing on or after
April 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
mining operations 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 tax formula
 
as opposed to
the CIT rate. The gold mining tax formula was
changed to Y
 
Only Group
companies that= 33 -
 
do not165/X for years
 
conduct miningof assessment commencing
 
operations accounton or after
 
for incomeApril 1, 2022.
 
taxIt was further
announced that the
lowering
of the CIT rate will
be implemented alongside additional amendments to
broaden the CIT base by
 
applying limiting interest deductions and
assessed
losses.
Section
23M
which
limits
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
statementsdeduction
 
of
 
theinterest
 
Group.payable
 
Ato
 
finalcertain
 
assessmentparties
 
willwho
 
beare
 
completednot
 
onsubject
to
tax
was
significantly widened. A maximum of R
1
million or
80
% of assessed losses (whichever is greater) is permitted to be set-off against
taxable income.
The
deferred
tax
assets
and
liabilities
for
 
the
 
promulgationGroup
 
ofhave
been
calculated
taking
into
account
 
the
 
additionalabove
changes
as
they
are
amendmentseffective for the financial year and year of assessment commencing July 1, 2022.
Deferred
tax is
recognised using
the gold
mining tax
formula to
calculate a
forecast
weighted average
tax rate
considering
the
expected timing of the
reversal of temporary differences.
The formula is calculated
as: Y = 33
– 165/X where Y
is the CIT laws.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.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continued
for the year ended June 30, 20212022
F-25F-27
18
 
INCOME TAX
continued
Amendment in the corporate income tax rate and mining tax rate formula and broadening the tax base
continued
Due to
the forecast
weighted average
tax rate
being based on
the expected
future profitability,
the tax
rate can
vary significantly
year-on-year and can move contrary to current year financial performance.
The forecast
weighted average
deferred tax
rate of
Ergo has
decreased from
25
% to
22
% as
a result
of the
change in
the gold
mining tax
formula and increase
in the life
of mine and
increases in operating
costs. The forecast
weighted average deferred
tax
rate of FWGR has decreased from
30
% to
29
% as a result of the change in the gold mining tax formula.
18.1
 
INCOME TAX EXPENSE
Amounts in R million
2022
2021
2020
2019
Current tax
(261.6)
(423.7)
(263.2)
1.6
Mining tax
(250.2)
(423.7)
(263.2)
0
Non-Mining, company and capital gains tax
0(11.4)
0-
1.6-
Deferred tax
(72.7)
(100.0)
(80.7)
(28.2)
Deferred tax charge - Mining tax
(119.9)
(104.0)
(59.1)
(14.8)
Deferred tax charge - Non-mining, company and capital gains tax
1.6
(19.1)
(2.1)
1.6
Deferred tax rate adjustment
045.6
-
(20.7)
(15.0)
Recognition of previously unrecognised tax losses
0.4
7.8
0-
0
(Derecognition)/recognition(Derecognition of previously recognised)/Recognition of previously unrecognised
tax losses of a capital nature
nature-
(1.2)
1.2
0
(Derecognition of previously recognised)/Recognition of previously unrecognised
deductible temporary differences
(0.4)
16.5
0-
0(334.3)
(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
%
(408.3)
(549.9)
(274.1)
(30.2)
Rate adjustment to reflect the actual realised company tax rates applying the
gold mining formula
36.4
3.7
(0.9)
7.4
Deferred tax rate adjustment (a)
045.6
-
(20.7)
(15.0)
Depreciation of property, plant and equipment exempt from deferred tax on
 
initial recognition (b)
(22.2)
(21.2)
(21.4)
1
(4.9)
1
Non-deductible expenditure (c)
 
(7.3)
(6.2)
(7.9)
1
(7.0)
1
Exempt income and other non-taxable income (d)
19.0
22.8
2.4
4.4
(Derecognition of previously recognised)/Recognition of previously unrecognised
deductible temporary differences
(0.4)
16.5
0-
0
(Derecognition)/recognition(Derecognition of previously recognised)Recognition of previously unrecognised
tax losses of a capital nature
nature-
(1.2)
1.2
0
Utilisation of tax losses for which deferred tax assets were previously
 
unrecognised
0.4
7.8
0
0-
Current year tax losses for which no deferred tax was recognised
(1.4)
(0.1)
(23.5)
(2.7)
Other items
3.6
3.3
0.4
16.8
Tax
 
incentives
0.3
0.8
0.6
1.7
Over provided in prior periods
0
0
2.9
Income tax
(334.3)
(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 decreased to
22
% (2021: remained unchanged at
25.025
% (2020:; 2020: increased from
22.022
% to
25.025
% due to
the an 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 decreased to
29
% (2021 and 2020: remained unchanged at
30.0
% (2020:
30.0
%; 2019:
30.030
%).
(b) Depreciation of property, plant and equipment exempt from deferred tax on initial recognition
Depreciation of R
68.772.1
 
million (2020:(2021: R
73.268.7
 
million; 2019:2020: R
16.673.2
 
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
7.421.1
 
million discount recognised on Payments made under protest (2020:(2021: R
7.17.4
 
million; 2019:2020: R
6.57.1
 
million);
●
 
R
17.8
million expenditure
not incurred
in generation
of taxable
income or
capital in
nature (2021:
R
17.0
 
million
expenditure
not
incurred
in
generation
of
taxable
income
or
capital
in
nature
(million; 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
1.05.8
 
million net operating
 
incomecost 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 that
 
incurred net
operating cost that is not deductible
as it is exempt from income tax – refer to (c) non-deductible expenditure)(2021: R
nil
; 2020: R
14.6
million).
 
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
0
Estimated tax losses - Capital nature
0
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
0
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
0
227.6
The total liability for long-term incentive scheme is expected to be settled as follows:
0
227.6
Within 12 months after reporting date
0
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
0
0
(637,168)
7.08
Closing balance
0
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
0
25.14
2.26
Annualised forward dividend yield
0
1.0%
4.3%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continued
for the year ended June 30, 2022
F-28
18
INCOME TAX
continued
18.1
INCOME TAX EXPENSE
continued
(d) Exempt income and other non-taxable income
The most significant exempt income earned by the Group during the year includes:
●
R
71.5
million dividends received (2021: R
76.1
million; 2020: R
4.3
million);
●
R
5.8
million unwinding recognised on Payments made under protest (2021: R
4.8
million; 2020: R
4.0
million); and
●
R
nil
net operating
income related
to Ergo
Business Development
Academy Not
for Profit Company
that is
not taxable
as it
is
exempt from income
tax (2021: R
1.0
million; 2020 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.
18.2
DEFERRED TAX
Amounts in R million
2022
2021
F-28Included in the statement of financial position as follows:
Deferred tax assets
14.5
5.8
Deferred tax liabilities
(451.9)
(377.1)
Net deferred tax liabilities
(437.4)
(371.3)
Reconciliation of the deferred tax balance:
Balance at the beginning of the year
(371.3)
(265.1)
Recognised in profit or loss
(72.7)
(100.0)
Recognised in other comprehensive income
6.6
(6.2)
Balance at the end of the year
(437.4)
(371.3)
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
2022
2021
Deferred tax liabilities
Property, plant and equipment (excluding unredeemed capital allowances)
(537.6)
(494.4)
Environmental rehabilitation obligation funds
(63.3)
(60.2)
Other investments
(0.9)
(7.4)
Gross deferred tax liabilities
(601.8)
(562.0)
Deferred tax assets
Environmental rehabilitation obligation
105.6
124.5
Other provisions
49.3
46.7
Other temporary differences
1
4.6
14.3
Estimated tax losses
4.1
4.1
Estimated unredeemed capital allowances
0.8
1.1
Gross deferred tax assets
164.4
190.7
Net deferred tax liabilities
(437.4)
(371.3)
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
2022
2021
Estimated tax losses
18.1
16.7
Estimated tax losses - Capital nature
313.6
325.2
Unredeemed capital expenditure
252.0
253.3
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.
A maximum of
R
1
million
or
80
% of assessed losses (whichever is greater) is permitted to be set-off per year against taxable income.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continued
for the year ended June 30, 2022
F-29
19
EMPLOYEE BENEFITS
ACCOUNTING POLICIES
Cash settled share-based payments (“outgoing long-term incentive” or “CLTI”)
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” or “ELTI”)
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
Rnil 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
2022
2021
Movements in the total liability for long-term incentive scheme is as follows:
Opening balance
-
227.6
Share-based payment (benefit)/expense - CLTI scheme
5.3
-
(44.3)
Vested and paid
-
(183.3)
Liability for CLTI scheme at the end of the year
-
-
Reconciliation of outstanding phantom shares
2022
2021
Weighted
Weighted
average
average
Shares
price
Shares
price
Number
R per share
Number
R per share
Opening balance
-
9,845,638
Vested and paid
-
-
(9,845,638)
18.62
Closing balance
-
-
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continued
for the year ended June 30, 2022
F-30
19
 
EMPLOYEE BENEFITS
continued
19.2
 
EQUITY SETTLED LONG-TERM INCENTIVE SCHEME
 
(“new LTI scheme”
 
or “ELTI scheme”)
Amounts in R million
2022
2021
2020
2019
Share-based payment expense - ELTI scheme
18.4
16.0
6.0
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”(“
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 Gold
Mining Company
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%25
%
50th to < 75th percentile
75%75
%
≥ 75th percentile
100
%
Reconciliation of the number of conditional shares
2022
2021
2020Shares
Number
Weighted
average price
R per share
Shares
Number
Weighted
average price
R per share
Opening balance
7,840,620
5,860,760
0
Granted
December 2, 2019
-
5,860,760
October 22, 2020
-
1,979,860
October 20, 2021
3,508,232
-
Vested
(2,862,654)
14.02
-
-
Forfeited
(892,528)
-
Closing balance
7,840,6207,593,670
5,860,7607,840,620
Vesting on
7,840,6207,593,670
5,860,7607,840,620
December 2, 2021
2,930,380-
2,930,380
December 2, 2022
2,930,3802,715,604
2,930,380
October 22, 2023
1,666,778
1,979,860
0October 20, 2024
3,211,288
-
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 20, 2021
October 22, 2020
December 2, 2019
Vesting date
October 20, 2024
October 22, 2023
December 2, 2022
December 2, 2021
Weighted average fair value of 80% performance shares
 
1
7.34
10.49
4.12
4.26
Weighted average fair value of 20% retention shares
12.32
18.67
5.49
5.69
Expected term (years)
3
3
23
Grant date share price of a DRDGOLD share
19.4313.55
6.1519.43
6.15
Expected dividend yield
1.33%3.15
3.81%%
3.86%1.33
%
3.81
%
Expected volatility
 
2
63.07%60.20
53.80%%
53.80%63.07
%
53.80
%
Expected risk free rate
3.82%5.78
6.80%%
6.68%3.82
%
6.80
%
1
 
The performance conditions are included in the
 
measurement of the grant date fair value as they
 
are classified as market-based performance
conditions
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continued
for the year ended June 30, 2022
F-31
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, 20212022
F-29F-32
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, 20212022 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
2022
2021
2020
2019
- Board fees paid
7.8
7.6
6.2
5.8
- Salaries paid
82.5
75.5
67.3
61.7
- Short term incentives relating to this cycle
84.1
73.8
63.6
31.5- Market value of long-term incentives vested and transferred
19.2
40.1
-
-
- Long term incentives paid during the cycle
19.1
-
183.3
41.5
15.5
- Retrenchments
0
0
1.6214.5
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, 20212022
 
and June
 
30, 20202021
 
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
(net
 
debt
to
adjusted
 
EBITDA (refer noteEBITDA)
 
23) of
no
 
more
than
2:1
 
and a
 
a
consolidated interest
coverage ratio
 
(net interest
to adjusted
 
EBITDA) of
no less
 
than
4:1
 
calculated on a twelve-month
 
a twelve-rolling
month rolling basis respectively. Management monitors
 
Management monitors the covenant ratio
 
ratio levels to ensure compliance
 
compliance with the
covenants, as well
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, 20212022 or June 30, 2020.2021.
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.
No amounts
were drawn
under this
facility as
at June
30, 2022.
Pursuant to
the Group
having started
to evaluate
its funding
structure for its expanded budgeted capital expenditure programme in future years, a decision was made to not renew the RCF.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continued
for the year ended June 30, 20212022
F-30F-33
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 atPreference shareholders participate only to the
 
the previous annual general meeting, the remaining unissued ordinary shares
in the
company are under the controlextent of the directors untilface value of the next general meeting.
shares. Holders of preference shares do not
have
the right to participate in any additional dividends declared for ordinary shareholders. These shares do not have voting rights.
Amounts in R million
2022
2021
2020
2019
Authorised share capital
1,500,000,000
, (2020(2021 and 2019:2020:
1,500,000,000
) ordinary shares of
0no
 
par value
5,000,000
 
(20202021 and 2019:2020:
5,000,000
) cumulative preference shares of
10
 
cents each
0.5
0.5
0.5
Issued share capital
864,588,711
 
(2021 and 2020:
864,588,711
, 2019:
696,429,767
) ordinary shares of
no
par value (a)
6,208.4
6,208.4
5,123.36,208.4
9,474,9206,612,266
 
(2021 and 2020:
9,474,920
, 2019:
9,361,071
) treasury shares held within the Group (b)(a)
(51.0)(35.6)
(51.0)
(51.0)
5,000,000
 
(20202021 and 2019:2020:
5,000,000
) cumulative preference shares of 10 cents each
0.5
0.5
0.5
6,157.96,173.3
6,157.9
5,072.86,157.9
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
").
NaNNo
 
shares were
acquired in the market during
 
duringthe year ended June 30,
2022, the year ended June
 
30, 2021 or the year
 
year ended June 30, 2020
 
(June 30, 2019.
113,849During
the
year
ended
June
30,
2022
2,862,654
 
shares
were
used
to
settle
the
equity settled
share-based
payment,
at
were acquired at an average price of nil
cashflow
to
the
Group.
R
2.6815.4
).
 
million,
 
representing
 
the
 
average
 
cost
 
of
 
the
 
treasury
 
shares
 
used
 
to
 
settle
 
the
 
share
 
based
payment, was transferred to retained earnings.
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
2022
2021
2020
2019
Dividends paid during the year net of treasury shares:
Final dividend declared relating to prior year:
3540
 
SA cents per share (2020:(2021:
2035
 
SA cents
per share; 2019: nil 2020:
20
SA cents per share)
342.0
299.3
137.5
0
First interim dividend:
20
SA cents per share (2021:
40
 
SA cents per share (2020:share; 2020:
25
 
SA cents per share; 2019: nil SA
cents per share)
171.6
342.0
213.8
0
Second interim dividend nil SA cents per share (2020:
25
(2021: nil SA cents per share; 2019: nil2020:
25
SA cents per share)
0-
-
213.8
0Total
Total513.6
641.3
565.1
0
After June 30, 2021,2022, 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, 2021.2022. The
 
The dividend has not been provided as at June 30, 2021
2022 and does not
have
any tax impact on the Group.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continued
for the year ended June 30, 2022
F-34
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
 
(“
Ergo
”) and Far
 
Far West
 
Gold Recoveries
 
Proprietary Limited
 
(“
FWGR
”) are the
only significant
subsidiaries of
 
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)(“
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
 
net of
these amounts
 
is the
 
segment operating
 
profit or
 
loss. Therefore,
 
segment operating
 
profit has
 
been disclosed
 
inas the
 
segmentprimary
report as the primary
measure of profit or
loss. The CODM also
considers other costs that, in
additionthe additions to the segment
operating
profit or loss, result in the segment working profit or loss (before and after property, plant and equipment additions).equipment.
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 theentailed
the reconfiguration of the Driefontein 2 plant and relevant infrastructure to process tailings from the Driefontein 5 slimes
 
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 April 1, April 2019.
Corporate
office
 
and
other
 
reconciling
items
 
(collectively
referred
 
to
as
"Other
reconciling
 
items"
)
are
taken
into
consideration in represent
 
the strategicitems
 
decision-making processto
reconcile
 
of theto
 
chief operatingconsolidated
 
decision makerfinancial
 
and arestatements.
 
therefore includedThis
 
in the
disclosure here, even though they do not earn revenue. This includesdoes
 
taking into considerationnot
represent
a
separate
segment
as
it
does
not
generate
mining
revenue.
Note condensed during the Group’s adjusted EBITDA forcurrent year. Changes also affected on comparatives.
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, 20212022
F-32F-35
23
OPERATING SEGMENTS
 
continued
Other
20212022
reconciling
Amounts in R million
Ergo
FWGR
items
 
Total
Financial performance
Revenue (External)
3,943.03,704.9
1,326.01,413.6
0-
5,269.05,118.5
Cash operating costs
(2,666.5)(3,009.8)
(406.2)(454.0)
0-
(3,072.7)(3,463.8)
Movement in gold in process and finished inventories - Gold Bullion
(31.9)35.2
6.3(4.8)
0-
(25.6)30.4
Segment operating profit
1,244.6730.3
926.1954.8
0-
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
0
69.0
76.1
Interest expense
2
(4.2)
(0.3)
(12.9)
(17.4)
Current tax
(196.1)
(227.6)
0
(423.7)
Working profit before additions to property, plant and equipment
1,067.7
700.1
83.0
1,850.81,685.1
Additions to property, plant and equipment
(250.9)(436.2)
(143.3)(162.2)
-
(598.4)
Reconciliation of segment operating profit to profit after tax
Segment operating profit
730.3
954.8
-
1,685.1
Depreciation
(134.5)
(131.6)
(1.5)
(395.7)(267.6)
Working profit after additions to property, plant and equipment
816.8
556.8
81.5
1,455.1
1
Interest income excludes the unwindingChange in estimate 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 recognised in
profit or loss
2.3
-
(0.1)
2.2
Ongoing rehabilitation expenditure
(30.1)
(1.5)
-
(31.6)
Care and maintenance
-
-
(5.9)
(5.9)
Other operating costs
(4.9)
(0.2)
(0.1)
(5.2)
Other income
70.1
21.2
-
91.3
Administration expenses and other costs
(7.7)
(13.8)
(139.7)
(161.2)
Finance income
22.4
19.0
184.4
225.8
Finance expense
(58.8)
(10.8)
(5.2)
(74.8)
Current tax
(12.9)
(237.3)
(11.4)
(261.6)
Deferred tax
(45.3)
(29.6)
2.2
(72.7)
Profit after tax
530.9
570.2
22.7
1,123.8
Reconciliation of cost of sales to cash operating costs
 
Cost of sales
 
(2,871.0)(3,141.8)
(517.2)(592.1)
0(7.6)
(3,388.2)(3,741.5)
- Depreciation
 
135.6134.5
115.6131.6
1.31.5
252.5267.6
- Change in estimate of environmental rehabilitation recognised in
profit or loss
(7.2)
0
(5.2)
(12.4)(2.3)
-
0.1
(2.2)
Movement in gold in process and finished inventories - goldGold Bullion
31.9(35.2)
(6.3)
0
25.64.8
-
(30.4)
Ongoing rehabilitation expenditure
46.630.1
1.7
0
48.31.5
-
31.6
Care and maintenance
0
0
3.9
3.9-
-
5.9
5.9
Other operating income/(costs)
costs
(2.4)4.9
00.2
00.1
(2.4)5.2
Cash operating costs
(2,666.5)(3,009.8)
(406.2)
0
(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(454.0)
- 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
0
48.3
- Discount recognised on Payments made under protest including
subsequent unwinding
2.6
0
0
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
0
(0.1)
- Change in estimate of environmental rehabilitation recognised in
profit or loss
(7.2)
0
(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.(3,463.8)
 
 
 
 
 
 
 
 
 
 
 
 
 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continued
for the year ended June 30, 20212022
F-33F-36
23
OPERATING SEGMENTS
 
continued
Other
20202021
reconciling
Amounts in R million
Ergo
FWGR
items
 
Total
Financial performance
Revenue (External)
3,064.33,943.0
1,120.71,326.0
0-
4,185.05,269.0
Cash operating costs
(2,274.0)(2,666.5)
(352.0)(406.2)
0-
(2,626.0)(3,072.7)
Movement in gold in process and finished inventories - Gold Bullion
1.8(31.9)
1.36.3
0-
3.1(25.6)
Segment operating profit
792.11,244.6
770.0926.1
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
0
0
4.3
3
4.3
3
Interest expense
2
(5.2)
0
(4.5)
(9.7)
Current tax
(145.8)
(117.4)
0
(263.2)
Working profit/(loss) before additions to property, plant and equipment
523.4
634.8
(111.5)
1,046.72,170.7
Additions to property, plant and equipment
(114.4)(250.9)
(68.0)(143.3)
(0.3)(1.5)
(182.7)(395.7)
Working profit/(loss)Reconciliation of segment operating profit to profit after additions to property, plant and equipmenttax
409.0Segment operating profit
566.81,244.6
(111.8)926.1
864.0-
12,170.7
Depreciation
 
Interest income excludes the unwinding
(135.6)
(115.6)
(1.3)
(252.5)
Change in estimate 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 recognised in
3profit or loss
7.2
-
During 2021, the Group disaggregated “Interest
5.2
income” into “Interest income”
12.4
Ongoing rehabilitation expenditure
(46.6)
(1.7)
-
(48.3)
Care and “Dividends
received” respectively to present materialmaintenance
dividends received-
-
(3.9)
(3.9)
Other operating expenses
2.4
-
-
2.4
Other income
0.1
-
-
0.1
Administration expenses and other costs
15.0
1.8
(80.8)
(64.0)
Finance income
21.0
17.2
178.0
216.2
Finance expense
(45.8)
(9.8)
(13.9)
(69.5)
Current tax
(196.1)
(227.6)
-
(423.7)
Deferred tax
(66.6)
(37.4)
4.0
(100.0)
Profit after tax
799.6
553.0
87.3
1,439.9
Reconciliation of cost of sales to cash operating costs
Cost of sales
(2,453.4)(2,871.0)
(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)
0
(3.1)
- Ongoing rehabilitation expenditure
22.3
2.0
0
24.3
- Care and maintenance
0
0
11.1
(11.1)
- Other operating income/(costs)
27.6
3.1
0
30.7
Cash operating costs
(2,274.0)
(352.0)(517.2)
-
-
(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
0
24.3
- Discount recognised on Payments made under protest including
subsequent unwinding
3.2
0
0
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
0
(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(3,388.2)
Depreciation
270.8135.6
Share-based payment expense115.6
224.11.3
252.5
Change in estimate of environmental rehabilitation recognised in
profit or loss
(21.9)(7.2)
Gain on disposal of property, plant-
(5.2)
(12.4)
Movement in gold in process and equipmentfinished inventories - Gold Bullion
(0.7)31.9
Transaction(6.3)
-
25.6
Ongoing rehabilitation expenditure
46.6
1.7
-
48.3
Care and maintenance
-
-
3.9
3.9
Other operating income
(2.4)
-
-
(2.4)
Cash operating costs
1.4(2,666.5)
Adjusted EBITDA(406.2)
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.(3,072.7)
 
 
 
 
 
 
 
 
 
 
 
 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continued
for the year ended June 30, 20212022
F-34F-37
23
OPERATING SEGMENTS
 
continued
Other
20192020
reconciling
Amounts in R million
Ergo
FWGR
items
 
Total
Financial performance
Revenue (External)
2,577.53,064.3
184.61,120.7
0-
2,762.14,185.0
Cash operating costs
(2,311.1)(2,274.0)
(111.8)(352.0)
0-
(2,422.9)(2,626.0)
Movement in gold in process and finished inventories - Gold Bullion
16.41.8
16.21.3
0-
32.63.1
Segment operating profit
282.8792.1
89.0770.0
0-
371.8
Retrenchment costs
(1.6)
(4.7)
0
(6.3)
Administration expenses and other costs
(12.0)
(2.3)
(76.6)
(90.9)
Interest income
1
6.5
0
10.4
16.9
1
Interest expense
2
(2.4)
0
(3.2)
(5.6)
2
Current tax
1.6
0
0
1.6
Working profit/(loss) before additions to property, plant and equipment
274.9
82.0
(69.4)
287.51,562.1
Additions to property, plant and equipment
(22.8)(114.4)
(330.7)(68.0)
(0.2)(0.3)
(353.7)(182.7)
Working profit/(loss)Reconciliation of segment operating profit to profit after additions to property, plant and equipmenttax
252.1Segment operating profit
(248.7)792.1
(69.6)770.0
(66.2)-
11,562.1
Interest income excludes the unwinding of the PaymentsDepreciation
 
made under protest
2(150.4)
Interest(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
Ongoing rehabilitation expenditure
(22.3)
(2.0)
-
(24.3)
Care and maintenance
-
-
(11.1)
(11.1)
Other operating expenses
(27.6)
(3.1)
-
(30.7)
Other income
0.7
-
-
0.7
Administration expenses and other costs
(131.6)
(20.7)
(157.6)
(309.9)
Finance income
28.9
28.1
52.8
109.8
Finance expense excludes the discount recognised on
(48.8)
the initial recognition of the Payments made under
(14.3)
protest
(5.7)
(68.8)
Current tax
(145.8)
(117.4)
-
(263.2)
Deferred tax
6.6
(86.5)
(0.8)
(80.7)
Profit after tax
320.9
436.6
(122.5)
635.0
Reconciliation of cost of sales to cash operating costs
Cost of sales
(2,414.7)(2,453.4)
(131.3)(473.3)
(7.9)(11.2)
(2,553.9)(2,937.9)
- Depreciation
142.8150.4
25.7119.6
0.60.8
169.1270.8
- Change in estimate of environmental rehabilitation recognised in
profit or loss
(58.6)(19.1)
0(2.1)
(1.4)(0.7)
(60.0)(21.9)
- Movement in gold in process and finished inventories - goldGold Bullion
(16.4)(1.8)
(16.2)
0
(32.6)(1.3)
-
(3.1)
Ongoing rehabilitation expenditure
16.622.3
1.7
0
18.32.0
-
24.3
Care and maintenance
0
0
8.8
8.8-
-
11.1
11.1
Other operating income/(costs)costs
19.227.6
8.33.1
(0.1)-
27.430.7
Cash operating costs
(2,311.1)(2,274.0)
(111.8)
0
(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(352.0)
- 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
0
18.3
- Discount recognised on Payments made under protest including
subsequent unwinding
3.5
0
0
3.5
- Unwinding of provision for environmental rehabilitation
45.4
19.6
1.3
66.3
- Other income
(2.2)
0
(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)
0
(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.(2,626.0)
 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continued
for the year ended June 30, 20212022
F-35F-38
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
 
The definition of an asset in
 
in the conceptual framework was applied as
 
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
 
and Contingent Assets)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;Application (as defined below);
•
 
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.finance income.
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.finance expense.
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, 20212022
F-36F-39
24
 
PAYMENTS
 
MADE UNDER PROTEST
continued
Amounts in R million
Note
20212022
20202021
Balance at the beginning of the year
35.040.5
27.635.0
Payments made under protest
8.115.2
10.68.1
Discount on initial payment made under protest and change in estimate
7
(7.4)(21.1)
(7.1)(7.4)
Unwinding
6
4.85.8
3.94.8
Balance at the end of the year
40.540.4
35.040.5
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
 
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
(refer note 26.3).
The balance at the end of the year was based on the following assumptions:
 
●
 
discount rate:
11.6811.80
% (2020:(2021:
11.68
%) representing the Municipality maximum cost of borrowing on bank loans as disclosed in
their June 30, 20202021 annual report; and
 
●
 
discount period:
June 30, 20242027
 
(2020:2021:
June 30, 20222024
) representing management’s
 
best estimate of
 
the date of
 
conclusion of
the Main Application and is supported by
external legal counsel. The discount period has
increased due to delays in obtaining
hearing dates due to back log cases at the court which began during the COVID-19 pandemic.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continued
for the year ended June 30, 20212022
F-37F-40
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.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
 
other
comprehensive
income
(“
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). OCI.
Amounts in R million
Shares
held
1
% held
 
1
20212022
20202021
Listed investments (Fair value hierarchy Level 1):
West Wits Mining Limited ("
WWM
")
47,812,500
3.5%2.4%
10.7
43.5
12.0
Total
 
listed investments
43.510.7
12.043.5
Unlisted investments (Fair value hierarchy Level 3):
Rand Refinery Proprietary Limited ("
Rand Refinery
")
44,438
11.3%
119.3136.1
178.4119.3
Rand Mutual Assurance Company Limited B Share Business Fund ("
RMA
")
 
2
12,659
2
1.3%
 
2
4.14.4
4.74.1
Guardrisk Insurance Company Limited (Cell Captive A170)
 
3
20
3
100.0%
3
0.1
0.1
Chamber of Mines Building Company Proprietary Limited
42,292
4.5%
0.1
0.1
Total
 
unlisted investments
123.6140.7
183.3123.6
Balance at the end of the year
 
167.1151.4
195.3167.1
Fair value adjustment on equity instruments at fair value through OCI
(15.7)
(28.2)
191.8WWM
(32.8)
31.5
Rand Refinery
16.8
(59.1)
RMA
0.3
(0.6)
Dividends received on equity instruments at fair value through OCI
(76.1)(71.5)
(4.3)(76.1)
Rand Refinery
(72.3)(70.1)
0(72.3)
RMA
(3.8)(1.4)
(4.3)(3.8)
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
5.13.5
% to
3.52.4
%
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, 20212022
F-38F-41
25
 
OTHER INVESTMENTS
continued
25.1
 
RAND REFINERY
Amounts in R million
20212022
20202021
Balance at the beginning of the year
178.4119.3
0178.4
Fair value adjustment on equity investments at fair value through other comprehensive income
(59.1)16.8
178.4(59.1)
Balance at the end of the year
119.3136.1
178.4119.3
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 fair
value of
Rand Refinery
increased as
a result
of an
increase in
cash on
hand. The
 
enterprise value
of the
refining operations
of
Rand
Refinery
decreased
because
of
an
increase
in
budgeted
operating
costs.
The
 
value
 
of
 
Randthe
 
Refinery’sforecasted
 
refiningdividends
 
operations
decreased
mainly
due
to
a
decrease
in
forecast
gold
prices,
afor
decrease in budgeted
production volumes, and
an increase in
budgeted operating costs.
The value of
the forecasted dividends
for Prestige Bullion
decreased mainly due
toas a
result of a decrease in the
demand in Krugerrands
and an increase
in the discount
rate applied
period due 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.model being finite.
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:(2021:
16.5
% and
17.0
%), respectively, were
applied. The
 
latest budgeted
 
cash flow
 
forecasts provided
 
by Rand
 
Refinery as
 
at June
 
30, 20212022
 
was used,
 
and therefore
 
classified
as an unobservable input into the models. KeyOther key observable/unobservable inputs into the model include:
Amounts in R million
Observable/unobservable input
Unit
20212022
20202021
Rand Refinery operations
Forecast average gold price
 
Observable input
R/kg
847,317880,207
852,098847,317
Forecast average silver price
 
Observable input
R/kg
11,75111,209
9,45311,751
Average South African CPI
Observable input
%
4.4
4.84.4
South African long-term government bond rate
Observable input
%
9.510.26
9.5
Terminal
 
growth rate
Unobservable input
%
4.4
5.04.4
Weighted average cost of capital
Unobservable input
%
15.115.9
15.1
Investment in Prestige Bullion
Discount period
Unobservable input
years
1211
1312
Cost of equity
Unobservable input
%
16.514.2
13.216.5
Sensitivity analysis
The fair value
measurement is most
 
sensitive to the
Rand denominated gold
 
price and volumes.
operating costs. The higher the
 
gold price, and
volumes, the higher the
fair value of
 
the Rand Refinery
investment. The higher
the operating costs,
the lower the
fair value of
Rand Refinery.
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)
3.83.3
(3.8)(3.3)
Commodity prices (Gold and silver)
Observable inputs
1
(1)
3.02.8
(3.0)(2.8)
Volumes
Operating costs
Unobservable inputs
1
(1)
2.6(2.6)
(2.6)2.6
Weighted average cost of capital
Unobservable inputs
1
(1)
(0.3)(0.1)
0.30.1
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)(1.0)
1.51.0
Prestige Bullion dividend forecast
Unobservable inputs
1
(1)
0.40.3
(0.4)(0.3)
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, 20212022
F-39F-42
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 fund managing the compensation for the Applicants has started disbursing funds to the claim beneficiaries.
The DRDGOLD Respondents, comprising DRDGOLD Limited and East Rand Proprietary Mines Limited, are not a party to the settlement
settlement between the Applicants and Settling Companies. TheCompanies and the settlement agreement is not binding on the DRDGOLD Respondents.
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.
In terms of the class action, the DRDGOLD respondents has lodged an appeal against certain aspects of the class action, inter
alia the extension of the remedy entertained in the class action, and the inclusion of tuberculosis as a basis for liability. The
Appeal record has been finalised and the allocation of a date for the hearing of the Appeal is November 11, 2022.
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.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continued
for the year ended June 30, 2022
F-43
26
CONTINGENCIES
continued
26.2
CONTINGENT LIABILITY FOR ENVIRONMENTAL
REHABILITATION
continued
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.
During the current
year, a
report was produced
regarding the extent
of ground water
seepage from the
Brakpan/Withok tailings
storage
facility
by
an
expert.
The
report
suggests
that
scavenger
boreholes
be
constructed
around
the
dam
to
deal
with
the
seepage. The majority of the scavenger boreholes have been
constructed and are currently operational and the results are being
monitored. Management is currently
investigating a sustainable solution
to deal with the
seepage post the closure
of the mine and
therefore no reliable estimate can be made for the post closure liability.
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
 
held in
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.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continued
for the year ended June 30, 2022
F-44
27
FINANCIAL INSTRUMENTS
continued
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 yearThe Risk Committee
 
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
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
 
OBLIGATIONAND OTHER 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
 
OBLIGATIONAND OTHER 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. business
The Group holds
cash denominated in
a foreign currency.
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
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continued
for the year ended June 30, 2022
F-45
27
FINANCIAL INSTRUMENTS
continued
 
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 5.3
ADMINISTRATION EXPENSES AND OTHER COSTS
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, 20212022 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 2021,24 2022, the
 
Board declared a
 
final dividend
 
for the year
 
ended June
 
30, 20212022 of
40
 
SA cents
 
per qualifying share
amounting to R
342.0
 
million, which was paid on September 27, 2021.26, 2022.
Receipt of COVID-19 insurance claim
During September and October, 2022, a total amount of R
31.7
 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continued
formillion was received on the year endedbalance receivable at June 30, 20212022.
F-42
29
SUBSEQUENT EVENTS continued
Conditional shares granted
On 2019 October
 
2021,2022,
3,508,2324,922,751
 
conditional shares were
 
granted to qualifying
 
employees under the
 
current equity settled
 
long-
term incentive scheme.
 
These are expected
 
to vest on
 
2019 October 2024.2025.
 
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
549,986799,595
A J Davel
292,796425,680
Prescribed officers
W J Schoeman
292,796425,680
E Beukes
39,37557,100
95
ITEM 19. EXHIBITS
The following
exhibits are
filed as a part
of this Annual
Report:
1.1
(1)
Memorandum of
Association
of DRDGOLD Limited.
1.2
(6)
Articles of
Association of
DRDGOLD Limited,
as amended on
November 8, 2002.
1.3
(1)
Excerpts of
relevant provisions
of the South
African Companies
Act.
1.5
(9)
Memorandum of
Incorporation,
as amended on
November 30,
2012.
2.1
(1)
Excerpts of
relevant provisions
of the Johannesburg
Stock Exchange
Listings Requirements.
2.2
(4)
Indenture between
DRDGOLD Limited,
as Issuer, and The
Bank of New
York Mellon, as Trustee, dated
November
12, 2002.
4.1
(2)
Deposit Agreement
among DRDGOLD
Limited, The
Bank of New York Mellon as
Depositary, and owners
and
holders of American
Depositary Receipts,
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.
4.2
(3)
Form of Non-Executive
Employment Agreement.
4.3
(3)
Form of Executive
Employment Agreement.
4.4
(4)
Agreement between
DRDGOLD Limited
and Rand Refinery
Limited, dated
October 12,
2001.
4.5
(12)
Local Mine Bullion
Refining Agreement
between DRDGOLD
Limited and Rand
Refinery Limited,
dated June 27,
2018.
4.9
(8)
Sale of Shares and Claims Agreement entered into by Village
Main Reef Limited (“Village”),
DRDGOLD Limited
(“DRDGOLD”) (“Seller”), Business Venture
Investments No 1557 Proprietary Limited (“Purchaser”) and
Blyvooruitzicht Gold Mining Company Limited (“Blyvoor”)
dated February 11, 2012.
4.10
(9)
Heads of Agreement entered into by Trans
-Caledon Tunnel Authority (“TCTA’),
Ergo Mining Operations
Proprietary Limited (“EMO”), East Rand Proprietary Mines Limited (“ERPM”)
and Crown Gold Recoveries
Proprietary Limited (“CGR”) (collectively CGR, EMO and ERPM are called “the
Ergo Group”) dated November
28, 2012.
4.13(11)
Settlement Agreement between DRDGOLD Limited ("DRDGOLD") and
VMR Gold Investments 02 Proprietary
Limited ("VMR Gold") dated May 28, 2015.
8.1(13)
10.1(12)
DRD Exchange Agreement entered into by DRDGOLD Limited (“DRDGOLD”) and
Sibanye Gold Limited
10.2(12)
Sibanye-Stillwater Exchange Agreement entered into by Sibanye
Gold Limited and K2017449061 (South Africa)
Proprietary Limited (to be renamed WRTRP
Proprietary Limited) and including DRDGOLD Limited
(“DRDGOLD”)
10.3(12)
DRD Guarantee issued by DRDGOLD Limited (“DRDGOLD”) to and
in favor of Sibanye Gold Limited.
95
ITEM 19. EXHIBITS
The following
exhibits are
filed as a part
of this Annual
Report:
10.5
(12)
Closing and
Amending Agreement,
dated 20 July
2018, among Sibanye
Gold Limited,
WRTRP Proprietary
Limited
and DRDGOLD
Limited; each
of the following
annexures are
incorporated
by reference
to Sibanye-Stillwater's
Schedule 13-D,
Exhibit 99.5
filed with the
Securities and
Exchange Commission
on July 31, 2018
Annexure A —
Approval of Financial
Surveillance
Department of
SARB;
Annexure B —
JSE Approval
of DRD Circular;
Annexure C —
TRP Approval of
DRD Circular;
Annexure D —
Approval in
Terms of Competition
Act;
Annexure E —
Press Announcement
Confirming Approval
of DRD Shareholders;
Annexure F —
Environmental
Authorisations
and Waste Management Licences;
Annexure G —
Confirmation
of VAT
Registration
of Issuing Party;
Annexure H —
Lender’s Consent
in Terms of the Rand
Revolving Credit
Facility; and
Annexure I —
Employees of
the Business
as at the Delivery
Date of the
Closing and
Amending Agreement.
10.6
(12)
Revolving Credit
Facility.
10.8
(13)
10.9
(14)
12.1
(15)
12.2
(15)
13.1
(15)
13.2
(15)
16.1
(15)
96.1
(15)
96.2
(15)
101.INS
(15)
XBRL Instance
Document
101.SCH
(15)
XBRL Taxonomy Extension
Schema Document
101.CAL
(15)
XBRL Taxonomy Extension
Calculation
Linkbase Document
101.DEF
(15)
XBRL Taxonomy Extension
Definition Linkbase
Document
101.LAB
(15)
XBRL Taxonomy Extension
Label Linkbase
Document
101.PRE
(15)
XBRL Taxonomy Extension
Presentation
Linkbase Document
___________
97
ITEM 19. EXHIBITS
The following
exhibits are
filed as a part
of this Annual
Report:
(1)
Incorporated
by reference
to our Registration
Statement (File
No. 0-28800) on
Form 20-F.
(2)
Incorporated
by reference
to Amendment
No. 1 to our
Registration
Statement (File
No.
333-140850
) on Form F-6.
(3)
Incorporated
by reference
to our Annual
Report on Form
20-F for the
fiscal year
ended June 30,
2000.
(4)
Incorporated
by reference
to our Annual
Report on Form
20-F for the
fiscal year
ended June 30,
2002.
(5)
Incorporated
by reference
to our Annual
Report on Form
20-F for the
fiscal year
ended June 30,
2005.
(6)
Incorporated
by reference
to our Annual
Report on Form
20-F for the
fiscal year ended
June 30, 2006.
(7)
Incorporated
by reference
to our Annual
Report on Form
20-F for the
fiscal year
ended June 30,
2010.
(8)
Incorporated
by reference
to our Annual
Report on Form
20-F for the
fiscal year
ended June 30,
2012.
(9)
Incorporated
by reference
to our Annual
Report on Form
20-F for the
fiscal year
ended June 30,
2013.
(10)
Incorporated
by reference
to our Annual
Report on Form
20-F for the
fiscal year
ended June 30,
2014.
(11)
Incorporated
by reference
to our Annual Report
on Form 20-F for
the fiscal
year ended June
30, 2015.
(12)
Incorporated
by reference
to our Annual
Report on Form
20-F for the
fiscal year
ended June 30,
2018.
(13)
Incorporated
by reference
to our Annual
Report on Form
20-F for the
fiscal year
ended June 30,
2019.
(14)
Incorporated
by reference
to our Annual
Report on Form
20-F for the
fiscal year
ended June 30,
2020.
(15)
Filed herewith.
 
 
8898
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, 20212022