such reports), and (2) has been subject to such filing requirements for the past 90 days.
during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes
Large accelerated filer
filings are prepared in accordance with International Financial Reporting Standards (IFRS), as issued by the International
Accounting Standards Board (IASB) for the financial years ended June 30, 2016, 2015 and 2014. All references to “dollars” or “$”
herein are to United States Dollars and references to “rand” or “R” are to South African Rands.
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 R13.72 per $1.00, the noon buying rate in New York City
on September 30, 2016.
guidelines promulgated by the World Gold Council, which we use to determine costs associated with producing gold, cash
generating capacities of the mines and to monitor performance of our mining operations. An investor should not consider these
items in isolation or as alternatives to cash and cash equivalents, operating costs, profit/(loss) attributable to equity owners of the
parent, profit/(loss) for the year or any other measure of financial performance presented in accordance with IFRS or as an
indicator of our performance. While the World Gold Council has provided definitions for the calculation of cash operating costs,
the calculation of cash operating costs per kilogram, all-in sustaining costs 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 per kilogram” and “Reconciliation of cash operating costs per kilogram, all-in sustaining costs per
kilogram, all-in costs per kilogram”. In this Annual Report we also present cash operating costs, which is also a non-IFRS
measure. For a reconciliation of this measure to the nearest IFRS measure see Item 5A.: Operating Results “Cash operating costs,
all-in sustaining costs and all-in costs per kilogram” and “Reconciliation of cash cost per kilogram, all-in sustaining costs per
kilogram and all-in costs per kilogram.”
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:
• 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 commitments;
• our anticipated labor, electricity, water, crude oil and steel costs;
• our ability to fund our operations in the next 12 months; and
• estimated production costs, cash operating costs per ounce, all-in sustaining costs per ounce and all-in costs per ounce.
results, performance or achievements that may be expressed or implied by such forward-looking statements, including, among others:
• regulatory developments adverse to us or difficulties in maintaining necessary licenses or other governmental approvals;
• changes in our competitive position;
• adverse changes in our gold production as well as the demand for and the price of gold;
• any major disruption in production at our key facilities;
• adverse changes in foreign exchange rates;
• adverse environmental 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 capital expenditure on property, plant and equipment; or
• various other factors, including those set forth in Item 3D. Risk Factors.
causing these results to differ materially from these 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.
events or circumstances after the date of this Annual Report or to reflect the occurrence of unanticipated events.
kilogram ..................................
include cash operating costs of production plus, on-site general and administrative costs, royalties
and production taxes, sustaining capital, sustaining exploration, the accretion of rehabilitation costs,
but excludes depreciation, retrenchment costs, finance costs, depletion and amortization,
reclamation and closure costs. 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.
retrenchment costs, capital recoupment relating to non-sustaining capital, ongoing rehabilitation
expenditure, and non-operating costs, but exclude taxation, minority interest, finance costs, profit or
loss from associates and the cumulative effect of accounting adjustments. 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.
$/oz .......................................... US dollar per ounce.
Capital expenditure ................. Additions to property, plant and equipment paid in cash.
Care and maintenance ............. Cease active mining activity at a shaft, but continue to incur costs to ensure that the Ore Reserves are
kilogram ..................................
costs, contractor and other related costs, inventory costs and electricity costs. Cash operating costs per
non-IFRS financial measure and should not be considered a substitute measure of costs and expenses
reported by us in accordance with IFRS.
Cut-off grade ........................... The minimum in-situ grade of ore blocks for which the cash operating costs per ounce, excluding
Deposition ............................... Deposition is the geological process by which material is added to a landform or land mass. Fluids
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.
Horizon.................................... A plane indicating a particular position in a stratigraphic sequence. This may be a theoretical surface
Mine call factor ....................... The gold content recovered expressed as a percentage of the gold content called.
Mt ............................................ Million tons.
Ore ........................................... A mixture of valuable and worthless materials from which the extraction of at least one mineral is
(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.
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.
Reef.......................................... A gold-bearing sedimentary horizon, normally a conglomerate band that may contain economic levels
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
raises a cage in the shaft, transporting equipment, personnel, materials, ore and waste. A shaft
generally has more than one compartment.
Tailings.................................... Finely ground rock from which valuable minerals have been extracted by milling, or any waste rock,
milled.
Yield ........................................ The amount of recovered gold from production generally expressed in ounces or grams per ton or
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, 2014, 2013 and 2012, and for the years ended June 30, 2013 and 2012 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.
continuing operations....................................
amounts represent actual Dollar amounts. All other translations in this Annual Report are based on exchanges rates quoted by local financial
service providers. This line item has been prepared in accordance with Item 3.A(3) of Form 20-F
² Ordinary share capital is stated after the deduction of R50.7 million (2015: R44.2 million and 2014: R44.4 million) share capital relating to
treasury shares held by the Group.
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 the gold mining industry;
• Risks related to doing business in South Africa; and
• Risks related to ownership in our ordinary shares or American Depositary Shares (ADSs).
marginal nature of our operations any sustained decline in the market price of gold 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, and
even total loss of, profits, or losses. Accordingly, any sustained decline in the price of gold would negatively and adversely affect
our business, operating results and financial condition.
dollar gold price should fall and/or the rand should strengthen against the dollar, this would adversely affect us and we may
experience losses, and if these changes result in revenue below our cost of production and remain at such levels for any sustained
period, we may be forced to curtail or suspend some or all of our operations. We might not be able to recover any losses we may
incur during that period or maintain adequate gold reserves for future exploitation.
30, 2016 the rand traded at R13.71 = $1.00 (based on closing rates), a 7% strengthening relative to the Dollar from June 30, 2016.
dollar 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.
or grow the current level and quality of our reserves will negatively affect our future cash flow, results of operations and financial
condition. In addition, if we are unable to identify Ore Reserves that have reasonable prospects for economic extraction while
maintaining sufficient controls on production and other costs, this will have a material influence on the future viability of our
operations.
from 1.5 million ounces at June 30, 2014, to 1.9 million ounces at June 30, 2015, mainly as a result of the acquisition of the non-
controlling interest in Ergo Mining Operations Proprietary Limited (“EMO”) and, to a lesser extent, the decrease in the cut-off
grade. These increases were offset by a decrease due to ongoing mining activities. Our Ore Reserves for fiscal 2014 decreased
by 10.0% due to ongoing mining activities.
we would need to fund our cash requirements from financing and we cannot guarantee that any such financing would be permitted
under the terms of our existing financing arrangements, or would be available on acceptable terms, or at all. In the absence of
sufficient cash flows or adequate financing, our ability to respond to changing business and economic conditions, make future
acquisitions, react to adverse operating results, meet our debt service obligations and fund required capital expenditures or meet our
working capital requirements may be adversely affected.
which would have a material adverse effect on our business, operating results and financial condition.
we have one deposition site.
destruction of infrastructure, spillages, higher than expected operating costs, or lower than expected production as a result of
decreases in extraction efficiencies due to imbalances in the metallurgical process as well as inconsistent volume throughput.
and frequency.
a result, Ergo may not have access to the required water from Rand Water or may have to pay much more for water in order to
continue operating its production facility.
acceptable levels, such monitoring may not provide adequate warning if the facility is exposed to significant rainfall. Such incidents
and other weather events may also damage the facility and therefore cause the interruption of deposition and gold production until the
facility is repaired.
increase in the dollar price of gold. Significantly higher and sustained inflation in the future, with a consequent increase in operational
costs could have a material adverse effect on our results of operations and our financial condition, and could result in operations being
discontinued or reduced or rationalized.
• increases in electricity and water prices;
• increases in crude oil and steel prices;
• unforeseen changes in ore grades and recoveries;
• unexpected changes in the quality or quantity of reserves;
• technical production issues;
• environmental and industrial accidents;
• gold theft;
• environmental factors; and
• pollution.
excess of our annual expected inflation rate and result in the restructuring of these operations at substantial cost.
(NUM) and the United Association of South Africa (UASA) for a wage increase averaging 8.2%. (10% for categories 4 – 5), (9% for
categories 6 – 9) and (7% for categories 10 – 15) per annum.
to represent their members in labor related matters at the company. As AMCU have demonstrated them-selves to be sufficiently
representative of the workforce (20%) negotiations are currently underway with the intent to sign off a recognition agreement with
the AMCU.
markets, offset by the weakening of the rand against the dollar. In the event that crude oil prices increase, this could have an adverse
impact on our production costs.
and could adversely affect our business, operating results and financial condition.
ultimately also rise to surface. Progressive flooding of these abandoned underground mining areas and surrounding underground
mining areas could eventually cause the discharge of polluted water to the surface and to local water sources.
result of pollution of ground water, streams and wetlands. These claims may have a material adverse effect on our business, operating
results and financial condition.
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.
included in our statement of financial position as at June 30, 2016 (Refer to Item 18. ‘‘Financial Statements - Note 16 – Provision for
environmental rehabilitation and Note 14 Assets and Liabilities classified as held for sale’’). However, the ultimate amount of
rehabilitation costs may in the future exceed the current estimates due to factors beyond our control, such as changing legislation,
higher than expected cost increases, or unidentified rehabilitation costs. We fund these environmental rehabilitation costs by making
contributions over the life of the mine to environmental trust funds or funds held in insurance instruments established for our
operations. If any of the operations are prematurely closed, the rehabilitation funds may be insufficient to meet all the rehabilitation
obligations of those operations. The closure of mining operations, without sufficient financial provision for the funding of
rehabilitation liabilities, or unacceptable damage to the environment, including pollution or environmental degradation, may expose
us and our directors to prosecution, litigation and potentially significant liabilities.
disasters such as excessive rainfall, any of which could force us to stop or limit operations. In addition, the dams could overflow and
the health and safety of our employees and communities living around these dams could be jeopardized. In the event of damage to
our tailings facilities, our operations will be adversely affected and this in turn could have a material adverse effect on our business,
operating results and financial condition.
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. These incidents could lead to mine operations being halted which will increase our unit
production costs, which could have a material adverse effect on our business, operating results and financial condition.
insurance contains certain exclusions and limitations on coverage. We have a total of R6.2 billion as the insured value for property
and loss of profits due to business interruption with a total loss limit of R500 million for the 2016 financial year. Business
interruption is only covered from the time the loss actually occurs and is subject to time and amount deductibles that vary between
categories.
insurance coverage, this could have a material adverse effect on our business, operating results and financial condition.
mining and other companies on a global basis to attract and retain key human resources at all levels with appropriate technical skills
and operating and managerial experience necessary to operate the business. Factors critical to retaining our present staff and
attracting additional highly qualified personnel include our ability to provide these individuals with competitive compensation
arrangements, and other benefits. If we are not successful in retaining or attracting highly qualified individuals in key management
positions, our business may be harmed. We do not maintain “key man” life insurance policies on any members of our executive team.
The loss of any of our key personnel could delay the execution of our business plans, which may result in decreased production,
increased costs and decreased profitability.
quarter of fiscal 2014. and became fully operational in February 2015, treating the remainder of the Ergo plant throughput through the
FFG from this date.
lower than expected production which could have a material adverse effect on our business, operating results and financial condition.
• 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.
production for an extended period.
markets, reduced liquidity and extreme volatility in fixed income, credit, currency and equity markets. These conditions may
adversely affect the Group’s business. For example, tightening credit conditions may make it more difficult for the Group to obtain
financing on commercially acceptable terms or make it more likely that one or more of our key suppliers may become insolvent and
lead to a supply chain breakdown. In addition, general economic indicators have still not shown signs of sustained recovery -
consumer sentiment remains bearish, unemployment remains high, economic growth is marginal and corporate earnings are uncertain
and volatile.
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.
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 or not the deposit contains economically recoverable
mineralization. Uncertainties as to the metallurgical recovery of any gold discovered may not warrant mining on the basis of
available technology.
gold from tailings, which is a volume driven exercise. Only significant deposits within close 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 growth prospect, especially in a declining gold price environment.
exploration activities that do not identify commercially exploitable reserves of gold are not likely to be recovered and therefore
likely to be impaired.
actual reserves or future production.
cause our reserve estimates to decline. Moreover, if the price of gold declines, or stabilizes at a price that is lower than recent levels,
or if our production costs, and in particular our labor, water, steel and electricity costs increase or recovery rates decrease, it may
become uneconomical to recover Ore Reserves, particularly those containing relatively lower grades of mineralization. Under these
circumstances, we would be required to re-evaluate our Ore Reserves. Short-term operating factors relating to the ability to reclaim
our Ore Reserves, at the required rate, such as an interruption or reduction in the supply of electricity or a shortage of water may have
the effect that we are unable to achieve critical mass, which may render the recovery of Ore Reserve, or parts of the Ore Reserve no
longer feasible, which could negatively affect production rate and costs and decrease our profitability during any given period. The
Ore Reserve estimates are based on drilling results and because unforeseen conditions may occur in these mine dumps that may not
have been identified by the drilling results, the actual results may vary from the initial estimates. These factors have and could result
in reductions in our Ore Reserve estimates, which could in turn adversely impact upon the total value of our mining asset base and
our business, operating results and financial condition.
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:
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 and gold recovery;
• failure of unproven or evolving technologies;
• mechanical failure or breakdowns and ageing infrastructure;
• energy and electrical power supply interruptions;
• availability of water;
• injuries to employees or fatalities resulting from falls from heights and accidents relating to mobile machinery or
electrocution;
• 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.
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 the majority of 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.
As a result, we may have difficulties retaining qualified employees.
was 6.1% as at September 30, 2016. Continuing high levels of inflation in South Africa for prolonged periods, without a concurrent
devaluation of the rand or increase in the price of gold, could result in an increase in our costs which could reduce our profitability.
See also “Risks related to our business and operations – Inflation may have a material adverse effect on our results of operations.”
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. So far such power supply did not have a material impact on our
production, the country’s current reserve capacity remains insufficient and the risk of electricity stoppages is expected to continue for
the foreseeable future. Supply interruptions may pose a significant risk to the operations.
installations associated with the disposal of tailings.
operations. This has enabled us to maintain continuous operations and very little reduction in volume since its inception.
effect on our production costs and similar or higher future increases could have a material adverse effect on our operating results and
financial condition.
training and protective gear and continue to improve preventive occupational hygiene initiatives. The costs associated with providing
such occupational health services could increase significantly. We assess all claims, if and when filed, on their merits. Liability
associated with such claims and expenses of dealing with them could have a material adverse effect on our business, operating results
and financial condition.
mineworkers. In the pending application the applicants allege that the Mining Companies and the DRDGOLD Respondents
conducted underground mining operations in a negligent manner that caused occupational lung diseases. The matter was heard in
October 2015.
tuberculosis class, both of which cover current and former underground mineworkers who have contracted the respective diseases
(or the dependants of mineworkers who died of those diseases). In terms of the judgment, the Court ordered the certification of a
single class action comprising two separate and distinct classes – a silicosis class and a tuberculosis class.
damages.
petition to the SCA in respect of the certification issue. The notice of appeal in respect of the transmissibility of damages was filed
and served on July 25, 2016. On September 13, 2016, the SCA granted the DRDGOLD Respondents leave to appeal on both the
certification and transmissibility of damages.
measures. In addition to the general risk to employees’ lives in an area where theft occurs we may suffer production losses and incur
additional costs as a result of power interruptions caused by cable theft and theft of bolts used for the pipeline.
African economy, including electricity generation and municipalities. This may result in rationing or increased water costs in the
future. Such changes would adversely impact our surface retreatment operations, which use water to transport the slimes or sand from
reclaimed areas to the processing plant and to the tailings facilities. In addition, as our gold plants and piping infrastructure were
designed to carry certain minimum throughputs, any reductions in the volumes of available water may require us to adjust production
at these operations.
fiscal 2016 and provides Ergo with 10 Ml a day from the Rondebult sewage treatment facility. 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.
to reduce Ergo’s reliance on potable water for mining and processing purposes. However, due to the high sulphate levels contained in
the treated water, Ergo will limit the use of this water to 10Ml per day.
and managing the impact of mining operations on the environment. A variety of permits and authorities are required to mine lawfully,
and the government enforces its regulations through the various government departments. The formulation or implementation of
government policies may be discretionary and unpredictable on certain issues, including changes in conditions for the issuance of
licenses insofar as social and labor plans are concerned, transformation of the workplace, laws relating to mineral rights,
ownership of mining assets and the rights to prospect and mine, additional taxes on the mining industry and in extreme cases,
nationalization. A change in regulatory or government policies could adversely affect our business.
our operations.
(Administration), No.29 of 2008, published on November 26, 2008, became effective from March 1, 2010. 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 the business, operating results and financial
condition of our operations.
operations.
climate change. The associated Kyoto Protocol is an international agreement that classifies countries by their level of industrialization
and commits certain countries to GHG emission reduction targets. Although South Africa is not one of these countries identified, it
ranked among the top 20 countries measured by absolute carbon dioxide emissions. During the 2009 Copenhagen climate change
negotiations, South Africa voluntarily announced that it would act to reduce domestic GHG emissions by 34% by 2020 and 42% by
2025, subject to the availability of adequate financial, technological and other support. The two main economic policy instruments
available for setting a price on carbon and curbing GHG emissions are carbon taxation and emissions trading schemes. In a
discussion paper on carbon taxation by the National Treasury of the South African Government released in June 2013 different
methods of carbon taxation were discussed. The implementation of these carbon taxes has been postponed. Should these taxes be
implemented, they might have a direct or indirect cost impact on our operations which could have an adverse effect on the business,
operating results and financial condition.
industry in South Africa. The goals set by the Mining Charter include that each mining company must achieve 15% ownership by
historically disadvantaged South Africans, or HDSA, of its South African mining assets within five years and 26% ownership within
ten years, in each case, from May 1, 2004. This is to be achieved by, among other methods, the sale of assets to historically
disadvantaged persons on a willing seller/willing buyer basis at market value.
Mining Charter and to provide more specific targets. However, there are a number of matters that still require clarification and
discussions in respect of interpretations of the requirements are in progress with the DMR. The goals set by the amendments to the
Mining Charter include: minimum 26% HDSA ownership by March 2015; procurement of a minimum 40% of capital goods, 50% of
consumer goods and 70% of services from Black Economic Empowerment, or BEE, entities by March 2015; minimum 40% HDSA
representation at each of executive management level, senior management level, middle management level, junior management level
and core and critical skills levels; minimum 3% investment of annual payroll in skills training; investment in community
development; and attain an occupancy rate of one person per room in on-site accommodation.
Failure on our part to comply with the requirements of the Mining Charter and the “scorecard” could subject us to negative
consequences. There is also no guarantee that any steps we might take to comply with the Mining Charter would ensure that we
could successfully acquire new order mining rights in place of our existing rights. In addition, the terms of such new order rights
may not be as favorable to us as the terms applicable to our existing rights. In addition, we may incur expenses in giving
additional effect to the Mining Charter and the “scorecard”, and we risk losing our mining rights if we do not comply with the
requirements stipulated in facilitating the financing of initiatives towards ownership by historically disadvantaged persons. Any of
the foregoing could have an adverse effect on our business, operating results and financial condition.
employees to our operations, of whom approximately 81.8% 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.
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.
strike that lasted for five months. Above inflation wage increases and changes to working conditions were agreed to in order to bring
the strike to an end. We are currently negotiating a recognition agreement with the AMCU which was involved in some of these
events. See “-Increased production costs could have an adverse effect on our results of operations.”
responsible for the administration of exchange control regulations. In particular, 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.
business, operating results and financial condition of our operations.
restructuring of the surface operations, effective July 1, 2012, Ergo is 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 Receiver of Revenue
have a different interpretation of section 36 of the ITA, it could have an adverse effect on the business, operating results and financial
condition of our operations.
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 market place will
increase trading volumes and may place our share price under pressure.
or other distributions received by our shareholders. Any further increases in such tax will further reduce dividends received by our
shareholders.
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.
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.
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:
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.
that does not mean that such awards are necessarily contrary to public policy. Whether a judgment was contrary to public policy
depends on the facts of each case. Exorbitant, unconscionable, or excessive awards will generally be contrary to public policy. South
African courts cannot enter into the merits of a foreign judgment and cannot act as a court of appeal or review over the foreign court.
South African courts will usually implement their own procedural laws and, where an action based on an international contract is
brought before a South African court, the capacity of the parties to the contract will usually be determined in accordance with South
African law.
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 the purpose of 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.
Roodepoort Deep Limited to DRDGOLD Limited. Our operations have focused on South Africa's West Witwatersrand Basin, which
has been a gold producing region for over 100 years.
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.
Limited's (ERPM) Cason operation and the ErgoGold business units which are now collectively referred to as Ergo. On July 1,
2012, Ergo acquired the mining assets and certain liabilities of Crown and all the surface assets and liabilities of ERPM as part of the
restructuring of our surface operations. Also as part of this restructuring, Ergo acquired DRDGOLD's 35% interest in ErgoGold for
R200 million.
material by subjecting the treated material to a flotation circuit, further regrinding and a leach circuit. This project was partially
financed through capital raised by the Domestic Medium Term Note Program, or DMTN Program.
volume capacity by approximately 0.3Mtpm to a total of 2.1Mtpm.
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.
certain of the underground mining and prospecting rights held by ERPM including the related liabilities. This agreement is subject to
a number of conditions, including a number of regulatory consents and permission, most notably consent to the sale by the Minister
of Mineral Resources.
mining operations. On July 1, 2012, Crown sold its mining assets, mining and prospecting rights and certain liabilities to Ergo in
exchange for shares in Ergo as part of the restructuring of our surface operations.
area of more than 21,000 hectares. On June 7, 2013 DRDGOLD reduced its holding to 49%. On June 30, 2013 the entity stopped
conducting feasibility studies on all exploration tenements in Zimbabwe. This company became dormant after DRDGOLD ceased
funding and support its activities during fiscal 2013.
recovery sites are based in the vicinity of Ergo, including our surface and pipeline infrastructure. This is the key focus of
DRDGOLD’s operations. We process approximately 1.8Mt of material through Ergo’s Brakpan plant every month. In order to extend
the life of our operation, it is necessary to increase residue tailings deposition capacity at our Brakpan/Withok TDF.
amended. This could increase the potential deposition capacity by approximately 800Mt, and thus, our life of mine from 10 years to
more than 20 years. For further information on other capital investments, divestures, capital expenditure and capital commitments,
see Item 4D. Property, Plant and Equipment, and Item 5B. Liquidity and Capital Resources.
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.
our operation and our financial, manufactured, natural, social and human capital.
alignment between them, and we pursue these criteria in the feasibility analysis of each investment. The board intends to explore the
opportunities made possible by technology, which means further investment in research and development (“R&D”) to improve gold
recoveries even further over the long term.
to west just to the south of Johannesburg’s central business district (CBD). 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. This material has become economically more viable to process owing to improved treatment methods. 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.
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.
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 (due to the tendency of
gold to retain its value in relative terms against basic goods and in times of inflation and monetary crises).
demand play some part in 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 gold is often seen as a safe haven, leading to increased purchases of gold and support for its
price.
gold price received by us for fiscal 2016 was R546,142 per kilogram which was 21% higher than the previous year at R451,297 per
kilogram mainly as a result of the weakening of the Rand.
shrunk and is likely to shrink even more due to the significantly reduced capital expenditure and development occurring in the sector.
This coupled with the volatile state of the global economy and generally weak economic policies, are likely to provide significant
support to the gold price in the long term.
and the balance comprises copper and other common elements. The gold bars are sent to Rand Refinery for assaying and final
refining where the gold is purified to 99.9% and cast into troy ounce bars of varying weights. Rand Refinery then usually sells the
gold on the same day as delivery, for the London afternoon fixed Dollar price, with the proceeds remitted to us in rand within two
days. In exchange for this service we pay Rand Refinery a variable refining fee plus fixed marketing, loan and administration fees.
We currently own 11% of Rand Refinery.
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 reporting, all 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.
SEC’s Industry Guide 7 does not recognize Mineral Resources. Accordingly, we do not include estimates of Mineral Resources in
this Annual Report.
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.
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.
• 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.
plan. The Ore Reserve estimates contained herein inherently include a degree of uncertainty and depend to some extent on statistical
inferences. 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, reserve estimates
may have to be adjusted and mining plans may have to be altered in a way that might adversely affect our operations. 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.
reserve determination, which is at the end of the fiscal year.
Industry Guide 7 of the SEC as at June 30, 2016, was 7 years and the life of mine as at June 30, 2015 was 7 years. The difference
between the life of mine as described above versus the life of mine contemplated on page F-7 of Item 18 Financial Statements and
elsewhere in this report is due to differences in prevailing mineral reporting regulation in the different jurisdictions within which we
report. An accelerated drilling program commenced during Q1 of fiscal 2017 with the intension of converting resources to ore
reserves and issuing an updated reserve statement during fiscal 2017.
30, 2016 and 2015 respectively, we would not have had significantly different reserves as of those dates. Using the same
methodology and assumptions as were used to estimate Ore Reserves but with different gold prices, our Ore Reserves as of June 30,
2016 and 2015 would be as follows:
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.
year from the effective date of the MPRDA the exclusive right to apply for an appropriate right in terms of item 8 of Schedule II.
Once an old order right is lodged for conversion at the Department of Mineral Resources (DMR), it remains in force until it is
converted.
obliged to convert the rights if the applicant complies with certain statutory criteria. These include the submission of a mining works
program, demonstrable technical and financial capability to give effect to the program, provision for environmental management and
rehabilitation, and compliance with certain black economic empowerment criteria and a social and labor plan. These applications had
to be submitted within five years after the promulgation of the MPRDA on May 1, 2004. Similar procedures apply where we hold
prospecting rights and a prospecting permit and conduct prospecting operations. Under the MPRDA mining rights are not perpetual,
but endure for a fixed period, namely a maximum period of thirty years, after which they may be renewed for a further period of
thirty years. Prospecting rights are limited to five years, with one further period of renewal of three years. Applications for conversion
of our old order rights were submitted to the DMR within the requisite time periods. As at September 30, 2016, all of our old order
mining rights have been converted into new order rights under the terms of the MPRDA.
Mining Right to also mine “associated minerals” not specifically included in the Mining Right; it addresses anti-competitive conduct
by requiring the Minister of Minerals to refuse an application for exploration rights if it will cause a “concentration of rights” as
defined in the Bill; historic and old mine dumps are to be included in the definition of “residue stockpiles” and certain rehabilitation
obligations are created in respect of the discarded mines to which they pertain; and liability for rehabilitation will extend beyond the
issuance of a closure certificate and financial provision for closed sites will be required to be maintained for a period of 20 years after
a site is closed. Should the amendment bill to the MPRDA be enacted in its currently proposed form, the latter three amendments
referred to above may have a fundamental impact on the Group's estimated environmental provisions.
initially published in August 2004 and was subsequently amended in September 2010. Its objectives include:
• 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.
methods, disposal of assets by mining companies to historically disadvantaged persons on a willing seller, willing buyer basis at fair
market value. The goals set by the Mining Charter require each mining company to achieve 15 percent ownership by historically
disadvantaged South Africans of its South African mining assets within five years and 26 percent ownership by May 1, 2014. It also
sets out guidelines and goals in respect of employment equity at management level with a view to achieving 40 percent participation
years from May 1, 2004. Compliance with these objectives is measured on the weighted average “scorecard” approach in accordance
with a scorecard which was first published around August 2010.
administrative action taken under the MPRDA.
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 existing black economic empowerment structure
with Khumo Gold and the DRDSA Empowerment Trust. Our black economic empowerment partners, Khumo Gold and the DRDSA
Empowerment Trust, hold 8% and 2%, respectively, in DRDGOLD Limited. (See Item 4C. Organizational Structure).
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 2009
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 a new 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”; a new section 86A(2) creating an offence of
vicarious liability for the employer where a Chief 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 have also been 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. The President assented to the amendment bill in April 2009. The amendment Act was proclaimed and came into
law in May 2009.
disability or death arising in the course of their work. Employees who are incapacitated in the course of their work have no claim for
compensation directly from the employer and must claim compensation from the COID Act fund. Employees are entitled to
compensation without having to prove that the injury or disease was caused by negligence on the part of the employer, although if
negligence is involved, increased compensation may be payable by this fund. The COID Act relieves employers of the prospect of
costly damages, but does not relieve employers from liability for negligent acts caused to third parties outside the scope of
employment. In fiscal 2016, we contributed approximately R3.4 million under the COID (2015: R4.6 million) Act to a multi-
employer industry fund administered by Rand Mutual Assurance Limited.
exposed to dust, gases, vapors, chemical substances or other working conditions which are potentially harmful, or if the employee
contracts a “compensatable disease,” which includes pneumoconiosis, tuberculosis, or a permanent obstruction of the airways. No
employee is entitled to benefits under the Occupational Diseases Act for any disease for which compensation has been received or is
still to be received under the COID Act. Currently the Group is compliant with these payment requirements, which are based on a
combination of the employee costs and claims made during the fiscal year.
uranium and radon emissions and believe that we are currently in compliance with all local laws and regulations pertaining to
uranium and radon management and that we are within 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.
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 beyond the corporate veil to impose personal
liability on managers and directors of mining corporations that are found to have violated applicable laws.
an EMP. This program is required to be submitted and approved by the DMR 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.
progress measured in terms of activity schedules and timescales determined for each activity.
stockpiles” which creates certain rehabilitation obligations for the discarded mines to which they pertain as well the extension of the
liability for rehabilitation beyond the issuance of a closure certificate and the requirement to maintain financial provision for closed
sites for a period of 20 years after a site is closed.
environmental trust funds that function under the authority of trustees that have been appointed by, and who owe a statutory duty of
trust to the Master of the High Court of South Africa. The funds held in these trusts are invested primarily in interest bearing debt
securities. As of June 30, 2016, we held a total of R103.0 million (2015: R96.5 million) in trust, the balance held in each fund being
R93.8 million (2015: R87.9 million) for Ergo and R9.2 million (2015: R8.6 million) for ERPM. Trustee meetings are held as required
and quarterly reports on the financial status of the funds, are submitted to our board of directors.If any of the operations are
prematurely closed, the rehabilitation funds may be insufficient to meet all the rehabilitation obligations of those operations.
shortfall in available cash funds subject to the DMR’s consent. The Company has subsequently made use of approved insurance
products for a portion of its rehabilitation liabilities. As of June 30, 2016, we held a total of R108.3 million (2015: R100.3 million) in
funds held in insurance instruments. As at June 30, 2016 guarantees amounting to R427.2 million (2015: R404.0 million) were issued
to the DMR.
amounting to R522.9 million (2015: R493.3 million) as well as in assets and liabilities classified as held for sale amounting to R15.6
million (2015: R17.6 million) in our financial statements as at June 30, 2016.
investments directly or indirectly as indicated below. Refer to Exhibit 8.1 for a list of our significant subsidiaries.
SEPTEMBER 30, 2016
South-Southeast. The sedimentary rocks generally dip at shallow angles towards the center of the basin, though locally this may vary.
The Witwatersrand Basin is Achaean in age and the sedimentary rocks are considered to be approximately 2.7 to 2.8 billion years old.
the East Rand Goldfield, the West Rand Goldfield, the Far West Rand Goldfield, the Central Rand Goldfield, the Klerksdorp
Goldfield and the Free State Goldfield. As a result of faulting and other primary controls of mineralization, the goldfields are not
continuous and are characterized by the presence or dominance of different reef units. The reefs are generally less than 6 feet (1.84
meters) thick but, in certain instances, these deposits form stacked clastic wedges which are hundreds of feet thick. The gold generally occurs in native form within the various reefs, often associated with pyrite and carbon.
now collectively referred to as Ergo. ERPM’s Cason Dump surface tailings retreatment operation was depleted in the fourth
quarter of calendar 2014. Ergo undertakes the retreatment of surface sources deposited as tailing from non-operating mining sites
across central and east Johannesburg. In order to improve synergies, effect cost savings and a simpler group structure, DRDGOLD
restructured the Group’s surface operations (Crown, ERPM’s Cason operation and ErgoGold) into Ergo with effect from July 1,
2012. At June 30, 2016, DRDGOLD employed 924 full-time employees. In addition, specialist service providers deployed a further
1,560 employees to our operations bringing the total number of inhouse and outsourced employees to 2,484.
motorway. As of June 30, 2016 and September 2016, no encumbrances exist on Ergo's property.
Mines (“3Cs”) and Knights. Crown’s mining rights have been converted to new order rights under the MPRDA and the mining rights
in respect of the 3Cs and Knights were registered at the Mineral and Petroleum Titles Registration Office in January 2014. In March
2013, applications for the transfer of the mining rights held by the 3Cs and Knights to ERGO were lodged with the DMR following
the restructure of the company into a single surface retreatment business unit. These applications were successful and were notarially
executed in March 2014.
Xavier Road on the M1 Johannesburg-Kimberley-Bloemfontein highway.
via the Heidelberg Road on the M2 Johannesburg-Germiston motorway.
2005
AngloGold Ashanti in 1998 and was closed by that company in 2005.
On August 6, 2007, the joint venture parties entered into an agreement with AngloGold Ashanti - pursuant to which it
acquired the remaining assets of the Ergo plant for consideration of R42.8 million.
Additional agreements were concluded with AngloGold Ashanti on November 14, 2007 for the acquisition by Ergo of
additional tailings properties and the Brakpan/Withok TDF for consideration of R45.0 million.
the retreatment of the Elsburg and Benoni tailings complexes.
DRDGOLD acquires Mintails SA’s stake in ErgoGold for R277.0 million.
operation.
Ergo Phase 2 exploration drilling for gold, uranium and acid completed.
Ergo Phase 1 production ramp-up nears completion with the installation of the second Elsburg tailings complex feeder
line to the Ergo plant. Construction of the Crown/Ergo pipeline commenced.
of the Crown/Ergo pipeline project.
surface operations into Ergo on July 1, 2012, which consisted of Crown, the surface operations of ERPM and ErgoGold.
Construction and commissioning of the Ergo flotation/fine-grind plant (FFG) was completed in late December 2013.
A prospecting right in respect of surface tailings dumps on various portions of the Farm Grootvlei and a portion of the
Farm Geduld was registered on May 12, 2014 for a period of 5 years ending on April 21, 2019.
Ergo were obtained.
TDF. The results indicated that most of the current authorisations are sufficient, however certain documentation will need
to be amended.
1979
to treat the surface gold tailings created from the underground section of the original Crown Mines, which had been in
operation since the start of gold mining on the Witwatersrand in the late 1800's.
establish a company that would acquire dump retreatment operations on the Witwatersrand. This resulted in the
formation of Crown Consolidated Gold Recoveries Limited, or CCGR, which was incorporated as a public company in
South Africa in May 1997. Crown was a wholly owned subsidiary of CCGR and consists of the surface retreatment
operations of Crown Mines, City Deep and Knights.
the operation with KBH.
15% stake in our then South African operations. On October 27, 2005, our board of directors approved the transaction
with Khumo Gold. The new structure resulted in Khumo Gold acquiring a 15% interest in a newly created vehicle,
EMO, which included 100% of ERPM, Crown and Blyvoor. As a result we owned an 85% interest in EMO.
pursuant to the option agreement concluded between us and Khumo Gold in October 2005 to acquire a further 11% in
EMO. On August 28, 2006, Crown concluded an agreement with AngloGold Ashanti to purchase the Top Star Dump.
volumes to 0.4Mtpm to implement the planned Crown Tailings Deposition Facility closure plan.
Board approval was obtained to construct a pipeline to the Ergo tailings deposition site to enable Crown to restore its
deposition capacity to 0.6Mtpm. Restored deposition capacity provides the operation with the opportunity to exploit
potential new ore reserves.
December 2011.
for shares in Ergo.
obtained and in August 2015 the converted mining rights were registered.
plant recovery over the period of time the material was deposited. Archive material is a secondary source of gold bearing material.
This material is generally made up of old gold metallurgical plant sites.
and are fully operational. All of the plants have undergone various modifications during recent years resulting in significant changes
to the processing circuits. Crown Mines serves as a milling and distribution station, as does City Deep.
tailings deposition facilities including the significant Brakpan TDF.
pulped slime is pumped to the plant and the reclaimed material is treated using screens, cyclones, ball mills as well as floatation
and fine grind, or FFG, and Carbon-in-Leach, or CIL, technology to extract the gold.
which it was acquired for consideration of R42.8 million in 2007. The remaining five CIL tanks were refurbished during
fiscal 2015 to increase capacity to treat up to 25.2Mt per year. The Ergo FFG project is designed to assist in liberating the
gold particles currently encapsulated in the sulphides and to achieve a targeted improvement in gold recovery efficiencies of
between 16% and 20%. This circuit commenced a three month test phase during August 2014 after it was temporarily
suspended in April 2014 following a decline in metallurgical efficiencies. By February 2015 the FFG was returned to full
operation.
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 Brakpan TDF. Due to the location of the Knights plant it is able to access the Brakpan TDF to
deposit waste. The Knights plant has an installed capacity to treat an estimated 3.6Mt per year.
primary cycloning, open circuit milling, thickening, oxygen preconditioning, CIP and CIL, elution, zinc precipitation
followed by calcining and smelting to doré. In June 2012, the gold extraction portion of the Crown plant was discontinued
and all material is now only screened, milled and thickened. This material is then pumped to the Ergo plant for the final
extraction of gold.
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.
following capital expenditure was incurred at Ergo in fiscal 2016, 2015 and 2014:
sustaining capital projects may be obtained through specific financing arrangements if required.
relocated process material on certain tailings dams. The impact of windblown dust on the surrounding environment and community is
addressed through a scientific monitoring and evaluation process, with active input from Professor H. Annagarn from the Cape
Peninsula University of Technology and appropriate community involvement. Environmental management programs, addressing a
wide range of environmental issues, have been prepared by specialist environmental consultants, which are audited annually. Water
pollution is controlled by means of a comprehensive system of return water dams which allow for used water to be recycled for use in
Ergo’s metallurgical plants. Overflows of return water dams may, depending on their location, pollute surrounding streams and
wetlands. Ergo has an ongoing monitoring program to ensure that its water balances (in its reticulation system, on its tailings and its
return water dams) are maintained at levels that are sensitive to the capacity of return water dams.
surface of dormant tailings dams. Additionally, environmentally friendly dust suppressants are applied. Dust fall-out is monitored
through an extensive dust monitoring network monthly, and is utilized as a management measure to ensure the effectiveness of
mitigation measures employed. In the long-term, dust suppression and water pollution is managed through a program of progressive
vegetation of the tailings followed by the application of lime, to reduce the natural acidic conditions, and fertilizer to assist in the
growth of vegetation planted on the tailings dam.
sources and opens up land for development.
Conversions, Performance Assessments and Social and Labor Plans (“SLPs”) associated with each mining right. The existing and
most recent studies are used to supplement the management components with regards to the mining right boundaries and its required
compliance parameters. The individual management items are integrated to provide a holistic overview of the state of each of the
mining right areas. Spatial data pertaining to the mining right boundaries is stored onto a central database and is utilized to create a
live map which illustrates the mining right area and various environmental monitoring systems. This map depicts the mining right
boundaries, roads, rails, mine dumps, plants, rivers, pipeline routes, servitudes, way leaves, municipal services and other spatial data
relevant to our mining operations.
contributed to the Crown Rehabilitation Trust Fund, while a total of R44.9 million has been contributed by Ergo to funds held in
insurance instruments to fund Ergo's environmental obligations. The Crown 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.
operation to review our Ore Reserve calculations for accuracy. For Ergo, Mr. Gary Viljoen is the designated competent person in
terms of the SAMREC Code responsible for the compilation and reporting of ore reserves. Ore reserves were independently reviewed
by Red Bush Geoservices Proprietary Limited (Red Bush) for compliance with the SAMREC Code, the National Instrument 43-101
and the United States Securities and Exchange Commission (SEC) Industry Guide 7.
to the Knights plant;
• lower grade slimes material from clean-up operations now reporting to Crown and from the 4A6 and 5A9 dumps now
reporting to Knights; and
• the decrease in grade of material from the Elsburg reclamation site, reporting to the Ergo plant.
financial results and 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.
ERPM including the related liabilities. All regulatory approvals required for this disposal have now been obtained, with the
exception of the approval required under Section 11 of the Mineral and Petroleum Resource Development Act, which has not yet
been obtained as a result of circumstances beyond our control. Management has taken timely action and remains confident that
this last outstanding regulatory approval will be obtained in due course.
timely conclusion of the disposal.
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. Surface reclamation
operations including the treatment of sand from the Cason Dump, was conducted through the Knights metallurgical plant, tailings
deposition facilities and associated facilities. 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 operates under mining license ML5/1997 in respect of statutory mining and mineral rights. As of June 30, 2016 and
September 2016, no encumbrances exist on ERPM's property.
Underground flooding continued during liquidation.
Enderbrooke, and employing an outside contractor, the mine re-commenced mining operations in February 2000.
and the loss of a secondary outlet at the FEV shaft in November 2003.
2005. The closure program was delayed due to a reduction in costs and improved productivity at the mine.
regarding the acquisition by Khumo Gold of a 15% stake in our South African operations. On October 27, 2005, our
board of directors approved the transaction with Khumo Gold. The new structure resulted in Khumo Gold acquiring a
15% interest in a newly created vehicle, EMO, which includes 100% of ERPM, Crown and Blyvoor. As a result we
owned an 85% interest in EMO.
pursuant to the option agreement concluded between us and Khumo Gold in October 2005 to acquire a further 11% in
EMO.
A prospecting right covering an area of 1,252 hectares (3,093 acres) of the neighboring Sallies lease area, referred to as
ERPM Extension 1 was granted by the DMR.
Sallies, was granted by the DMR. Known as ERPM Extension 2, the additional area is 5,500ha (13,590 acres).
employees were retrenched during June 2008. On October 23, 2008, ERPM announced the suspension of drilling and
blasting operations underground, following the cessation of pumping of underground water at the South West Vertical
shaft on October 6, 2008 for safety reasons following the deaths of two employees. On November 19, 2008, we
announced our intention to place on care and maintenance the underground operations of ERPM, and to proceed with a
consultation process in terms of Section 189A of the Labor Relations Act to determine the future of the mine’s 1,700
employees.
affected by the placing on care and maintenance of the underground operations were concluded and 1,335 employees
were retrenched.
ErgoGold to Ergo in exchange for shares in Ergo.
the nominee of Australian based Walcot Capital for the disposal of certain of the underground mining and prospecting
rights held by ERPM including the related environmental liabilities. This agreement is subject to a number of suspensive
conditions including regulatory consent and permission which had not been fulfilled at the date of this report.
ERPM Extension 2 prospecting right was renewed.
operations to Ergo was obtained and in August 2015 the converted mining rights were registered.
prospecting rights with Walcot Capital following the lapse in time awaiting Section 11 approval. Management is
engaging with the purchaser to consider the restructure of payment terms in support of the timely conclusion of the
disposal.
trending sinistral tear fault. In order to confirm the anticipated change in the geological structure and hence payshoot orientation, it is
envisaged that prospecting will take place through development situated 50m in the footwall. Owing to high induced stress
experienced at depth, there will be concurrent over-stoping (that is stoping taking place concurrently with development) on the reef
plane for safety reasons. Prior to this prospecting right in respect of ERPM Ext. 1 lapsing, an application for a mining right in respect
granted and the registration thereof took place in March 2012. The mining right expires in January 2042.
fiscal 2007. Known as ERPM Extension 2, the additional area is 5,500ha (13,590 acres). This prospecting right was initially granted
for a period of 4 years and expired in March 2011. An application for renewal thereof was made in terms of the provisions of the
MPRDA. The renewal of the prospecting right was initially refused by the DMR, but after an appeal was lodged with the Legal
Services Directorate of the DMR, the renewal of the prospecting right was granted in November 2014. These rights, ERPM Ext 1 and
ERPM Ext 2, both form part of the sale assets of the transaction with Walcot Capital.
theories suggesting that the underground water might reach a natural subterranean equilibrium, whilst other theories maintain that the
water could decant or surface. A program is in place to routinely monitor the rise in water level in the various underground
compartments and there has been a substantial increase in the subsurface water levels.
for the Central Basin and commenced treatment during July 2014. As part of the Heads of agreement signed in December 2012
between EMO, Ergo, ERPM and TCTA, sludge emanating from this plant is co-disposed onto the Brakpan/Withok TDF. Partially
treated water is then discharged by TCTA into the Elsburg Spruit. This agreement includes the granting of access to the underground
water basin through one of ERPM shafts and the rental of a site onto which it constructed its neutralisation plant. In exchange, Ergo
and its associate companies including ERPM have a set-off against any future directives to make any contribution toward costs or
capital of up to R250 million. Through this agreement, Ergo also secured the right to purchase up to 30 ML of partially treated AMD
from TCTA at cost, in order to reduce Ergo’s reliance on potable water for mining and processing purposes.
million in the ERPM Rehabilitation Trust Fund and R63.4 million in insurance instruments is available for the settlement of these
rehabilitation costs. This 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.
amongst other things, that the Municipality does not “supply” electricity to Ergo from a “supply main” as contemplated in the
Municipality’s Electricity By-Laws of 2002, for the following reasons:
Licence.
• The Municipality is not entitled to render tax invoices to Ergo for the supply and consumption of electricity from the
substation.
• The Municipality is furthermore not competent to add a surcharge or premium of approximately 40% (forty percent) of
the rate at which Eskom ordinarily charges Ergo on its Megaflex rate.
• Ergo is not indebted to the Municipality for the supply and consumption of electricity and is not obliged to tender
payment for any amounts claimed in the invoices rendered by the Municipality in excess of its actual consumption,
therefore, as determined by Eskom on a monthly basis.
• The Municipality is indebted to Ergo in the amount of approximately R43 million in respect of the surcharges and
premiums that were erroneously paid to the Municipality in the bona fide and reasonable belief that the Municipality was
competent to supply electricity to it.
June 30, 2016 pending the final determination of the dispute.
Rates Act. ERPM entered an appearance to defend the matter within the requisite time frames.
mineworkers. In the pending application the applicants allege that the Mining Companies and the DRDGOLD Respondents
conducted underground mining operations in a negligent manner that caused occupational lung diseases. The matter was heard in
October 2015.
tuberculosis class, both of which cover current and former underground mineworkers who have contracted the respective diseases (or
the dependants of mineworkers who died of those diseases). In terms of the judgment, the Court ordered the certification of a single
class action comprising two separate and distinct classes – a silicosis class and a tuberculosis class.
appeal in respect of the transmissibility of damages was filed and served on July 25, 2016. On September 13, 2016, the SCA granted
the DRDGOLD Respondents leave to appeal on both the certification and transmissibility of damages.
statements and management's assessment of factors and trends which are anticipated to have a material effect on the Company's
financial condition and results in future periods. This section is provided as a supplement to, and should be read in conjunction
with, our audited financial statements and the other financial information contained elsewhere in this Annual Report. Our financial
statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the
International Accounting Standards Board (IASB). Our discussion contains forward looking information based on current
expectations that involve risks and uncertainties, such as our plans, objectives and intentions. Our actual results may differ from
those indicated in such forward looking statements.
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.
our operation and our financial, manufactured, natural, social and human capital.
harmonious alignment between them, and we pursue these criteria in the feasibility analysis of each investment. The board intends
to explore the opportunities made possible by technology, which means further investment in R&D, to improve gold recoveries
even further over the long term.
disposal of property, plant and equipment of R10.5 million.
reclassified to profit or loss of R19.9 million and a profit on disposal of equity accounted investment of R5.9 million.
to R12.4 million against property, plant and equipment and R46.9 million against available-for-sale financial assets which was offset
by a reversal of an impairment of R2.7 million on equity accounted investments.
• 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.
factors beyond our control, including industrial and jewelry demand, expectations with respect to the rate of inflation, the strength
of the U.S. dollar (the currency in which the price of gold is generally quoted) and of other currencies, interest rates, actual or
expected gold sales by central banks, forward sales by producers, global or regional political or economic events, and production
and cost levels in major gold-producing regions such as South Africa. In addition, the price of gold is often subject to rapid short-
term changes because of speculative activities. The demand for and supply of gold affects gold prices, but not necessarily in the
same manner that supply and demand affect the prices of other commodities. The supply of gold consists of a combination of new
production from mining and existing stocks of bullion and fabricated gold held by governments, public and private financial
institutions, industrial organizations and private individuals. As a general rule we sell the gold produced at market prices to obtain
the maximum benefit from prevailing gold prices and we do not hedge against changes in gold prices.
R13,614 per ounce in 2014 to R13,989 per ounce in 2015, a 3% increase from fiscal 2014 and increased to R16,939 per ounce in
2016, a 21% increase from fiscal 2015.
decrease in total gold produced is mainly due the lower average yield achieved which was a consequence of various factors:
The increase was due to a sharp turnaround in the performance of the Ergo plant.
per kilogram.” and Item 18. ‘‘Financial Statements - Note 2 – Operating Segments”.
the largest components of cash operating costs, constituting 47%, 21%, 18% and 14%, respectively, of cash operating costs for
fiscal 2016, compared to 46%, 20%, 19% and 15%, respectively, of cash operating costs for fiscal 2015.
operations, we recognize the inherent risks and uncertainties of the industry, and the wasting nature of the assets.
denominated in dollars and we realize our revenues in dollars, the appreciation of the dollar against the rand increases our
profitability, whereas the depreciation of the dollar against the rand reduces our profitability.
resulted in an increase in the Rand gold price received of 21% in fiscal 2016, 3% in fiscal 2015 compared to a 6% decrease in
fiscal 2014.
below our cost of production at our operations, we could determine that it is not economically feasible to continue commercial
production at any or all of our plants or to continue the development of some or all of our projects.
and if such a cost increase is not offset by an increase in the price of gold, this will negatively affect our operating results.
table below:
exchange control regulations. Governmental officials have from time to time stated their intentions to lift South Africa’s exchange
control regulations when economic conditions permit such action. Over the last few years, certain aspects of exchange controls for
companies and individuals have been incrementally relaxed. It is, however, impossible to predict when, if ever, the South African
Government will remove exchange controls in their entirety. South African companies remain subject to restrictions on their
ability to export and deploy capital outside of the Southern African Common Monetary Area, unless dispensation has been
granted by the South African Reserve Bank. For a detailed discussion of exchange controls, see Item 10D. Exchange controls.
Brakpan/Withok TDF. The results indicated that most of the current authorizations are sufficient, however certain documentation
will need to be amended. This could increase the potential deposition capacity by approximately 800Mt, and thus, our life of mine
from 10 years to more than 20 years.
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 PP&E) and Ore Reserves.
cost per kilogram, all-in sustaining costs per kilogram and all-in costs per kilogram.”
operating costs by kilograms of gold produced. Cash operating costs per kilogram have been calculated on a consistent basis for
all periods presented.
the accretion of rehabilitation costs, but excludes depreciation, retrenchment costs, finance costs and environmental rehabilitation
costs. All-in sustaining costs per kilogram are calculated by dividing all-in sustaining costs by kilograms of gold produced. All-in
sustaining costs per kilogram have been calculated on a consistent basis for all periods presented.
recoupment relating to non-sustaining capital, ongoing rehabilitation expenditure, and non-operating costs, but exclude tax, non-
controlling interest, finance costs, profit or loss from equity accounted investments and the cumulative effect of accounting
adjustments. All-in costs per kilogram are calculated by dividing all-in costs by kilograms of gold produced. All-in costs per
kilogram have been calculated on a consistent basis for all periods presented.
attributable to equity owners of the parent, profit/(loss) before tax and other items or any other measure of financial performance
presented in accordance with IFRS or as an indicator of our performance. While the World Gold Council provided guidance for
the calculation of cash operating costs, the calculation of cash operating costs per kilogram, all-in sustaining costs 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. However, we believe that cash operating costs per kilogram,
all-in sustaining costs per kilogram and all-in costs per kilogram are useful indicators to investors and our management of an
individual mine's performance and of the performance of our operations as a whole as they provide:
• the trends in costs;
• a measure of a mine's margin per kilogram, by comparison of the cash operating costs per kilogram by mine to the price
of gold; and
• a benchmark of performance to allow for comparison against other mines and mining companies.
gold from R411,548 per kilogram of gold and all-in costs per kilogram increased to R512,353 per kilogram from R422,095 per
kilogram. The increase in all these measures of costs per kilogram of gold is mainly due to lower gold production, the increase in
throughput, general inflationary increases, relatively high costs associated with the Crown clean-up and increased trucking of sand
material from the Kleinfontein dump in Benoni to the City Deep plant.
gold from R401,691 per kilogram of gold and all-in costs per kilogram decreased to R422,095 per kilogram from R436,503 per
kilogram. The stable cash operating costs per kilogram was due to increased gold production that helped to offset the cost of running
all three streams of the float circuit and of general inflation increase averaging 7.4% year-on-year. All-in sustaining costs per
kilogram were higher, a consequence of a 65% increase in sustaining capital expenditure to R113.3 million, and a reduction in the
decrease in provision for environmental provision from R86.6 million to R20.4 million, both offset by higher gold production. The
total all-in costs per kilogram decreased mainly due to the decrease in non-sustaining capital expenditure relating to the completion of
the flotation and fine-grind project.
the amount of gold produced by each mine for each of those periods.
(in R'000, except as otherwise noted)
(in R'000, except as otherwise noted)
(in R'000, except as otherwise noted)
phase II of the refurbishment of the No 3 tailings thickener. R46.6 million was spent on various other items.
Ergo spent R16.1 million on the refurbishment of the remaining five carbon-in-leach tanks at Ergo and R7.3 million on bringing
the Van Dyk site on line, both for increased flexibility and volume capacity, R21.7 million on the Rondebult sewerage water
project, R7.4 million on expansion and rehabilitation of the Brakpan/Withok TDF, R6.1 million on the refurbishment of a
thickener, R5.7 million on the conversion of the high-grade CIP circuit to CIL to optimise the high-grade circuit, and R26.6
million on other items.
decrease in the cut-off grade due to the increase in the Rand gold price.
uncertainty and are based on our historical experience, terms of existing contracts, management's view on trends in the gold mining
industry and information from outside sources.
performance:
• Impairment of property, plant and equipment
• Deferred income and mining taxes
• Future environmental rehabilitation costs
• Financial instruments
analysis should be read in conjunction with the consolidated financial statements and related notes included in Item 18 “Financial
statements”.
using the units of production method which is based on the life of mine. The group’s life of mine is primarily based on proved and
probable ore reserves and may include some resources. It reflects the estimated quantities of economically recoverable gold that
can be recovered from reclamation sites based on the gold price prevailing at the end of the financial year. 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. Other assets are depreciated using the straight-line method over the expected life of these assets.
asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing 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. For the purpose of impairment testing, assets are grouped together into
the smallest group of assets which generates cash inflows from continuing use that is largely independent of the cash inflows of other
assets or groups of assets, or the cash-generating unit. An impairment loss is recognized directly against the carrying amount of the
asset whenever the carrying amount of an asset, or its cash generating unit, exceeds its recoverable amount. Impairment losses are
recognized in profit or loss.
recoverable amount.
differences: the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither
accounting nor taxable profit, and differences relating to investments in subsidiaries and equity accounted investments to the extent
that it is probable that they will not reverse in the foreseeable future. In addition, deferred tax is not recognized for taxable temporary
differences arising on the initial recognition of goodwill. Deferred tax is measured at the tax rates that are expected to be applied to
the temporary differences, based on the expected manner of realization or settlement of the carrying amount of assets and liabilities,
and based on the laws that have been enacted or substantively enacted by the reporting date.
utilized. These factors included profitability of the operations and an estimate of the gold price.
Estimated future costs of environmental rehabilitation are reviewed regularly and adjusted as appropriate for new circumstances or
changes in law or technology. Changes in estimates are capitalized or reversed against the related asset but taken to profit or loss if
there is no related asset left. Gains or losses from the expected disposal of assets are not taken into account when determining the
provision.
equipment to which it relates.
estimated at the present value of the expenditures expected to settle the obligation.
mine.
Financial instruments are initially recognized at fair value and include any directly attributable transaction costs, except those
financial instruments measured at fair value through profit or loss.
substantially the same, discounted cash flow analysis and option pricing models, refined to reflect the issuer’s specific
circumstances.
underlying investment.
a result of the 4% decrease in gold produced.
maintenance costs remained stable at R27,3 million and R10,6 million respectively, compared to R30,6 and R13,7 million
respectively in fiscal 2015. Other operating (costs)/income for fiscal 2016 includes a charge of R20,4 million in the Ergo
operating segment related to share based payments compared to a charge of R1,3 million in fiscal 2015 and a reversal of a
provision of R22,6 million in ERPM relating to surface right permits compared to nil in fiscal 2015 refer to Item 18. ‘‘Financial
Statements - Note 4 – Results from operating activities’’ of the consolidated financial statements for a discussion of these items in
fiscal 2016. The reversal of the accrual is also discussed in Item 4D “Information on the company: Property, plant and equipment”.
“Reconciliation of cash cost per kilogram, all-in sustaining costs per kilogram and all-in costs per kilogram.” and Item 18.
‘‘Financial Statements - Note 2 – Operating Segments”. The following table illustrates the year-on-year change in cash operating
costs for fiscal 2016 in comparison with fiscal 2015:
5% increase in throughput, as well as general inflationary increases, relatively high costs associated with the Crown clean-up and
increased trucking of sand material to the City Deep plant.
in the volume of gold in the plant as at June 30, 2015 compared to June 30, 2014.
environmental rehabilitation and Note 14 Assets and Liabilities classified as held for sale’’ of the consolidated financial statements
for a discussion of increase in the provision for environmental rehabilitation in fiscal 2016.
total of R108.3 million (2015: R100.3 million) is invested in funds held in insurance instruments to provide financial guarantees
provided to the DMR through an insurance cell captive company, the Guardrisk Cell Captive. The increase is attributable to R8
million interest received on these funds during fiscal 2016. As at June 30, 2016 guarantees amounting to R427.2 million were issued
to the DMR (2015: R404.0 million). The shortfall between the invested funds and the estimated provisions is expected to be
financed by ongoing contributions to the Guardrisk Cell Captive, over the remaining production life of the mining operations and,
at the time of mine closure, the proceeds on the disposal of remaining assets and gold from plant clean-up.
depreciation charge recognised.
(2015: R7.3 million), a gain on disposal of property amounting to R10.5 million (2015: R13.2 million) as well as legal costs
amounting to R6.1 million (2015: R2 million).
of equity accounted investment of R5.9 million that was recognized in fiscal 2015. Interest on loans and receivables and the growth
on the reimbursive right increased from R25.7 million in fiscal 2015 to R36.8 million in fiscal 2016 due to an increase in the cash
generated from operating activities during fiscal 2016 refer to Item 18. ‘‘Financial Statements - Note 10 – Non-current investments
and other assets’’.
Borrowings and Funding”) which decreased with the decrease in borrowings from R23.1 million as at June 30, 2015 to nil as at
June 30, 2016.
income. Refer to Item 18. ‘‘Financial Statements - Note 8 – Income tax’’ of the consolidated financial statements for a discussion of
increase in the deferred tax in fiscal 2016.
maintenance costs remained stable at R30,6 million and R13,7 million respectively, compared to R30,0 and R15,4 million
respectively in fiscal 2014. Other operating (costs)/income for fiscal 2015 includes a charge of R1,3 million in the Ergo operating
segment related to share based payments compared to a charge of R1,8 million in fiscal 2014.
of cash cost per kilogram, all-in sustaining costs per kilogram and all-in costs per kilogram.” and Item 18. ‘‘Financial Statements -
Note 2 – Operating Segments”. The following table illustrates the year-on-year change in cash operating costs for fiscal 2015 in
comparison with fiscal 2014.
throughput
running all three streams of the float circuit and of general inflationary increases averaging 7.4% year-on-year.
decrease in the volume of gold in the plant as at June 30, 2014 compared to June 30, 2013.
environmental rehabilitation and Note 14 – Assets and Liabilities classified as held for sale’’ of the consolidated financial statements
for a discussion of increase in the provision for environmental rehabilitation in fiscal 2015.
total of R100.3 million (2014: R93.7 million) is invested in funds held in insurance instruments to provide financial guarantees
provided to the DMR through an insurance cell captive company, the Guardrisk Cell Captive. As at June 30, 2015 guarantees
amounting to R404.0 million were issued to the DMR (2014: R305.7 million). The shortfall between the invested funds and the
estimated provisions is expected to be financed by ongoing contributions to the Guardrisk Cell Captive, over the remaining
production life of the respective mining operations and, at the time of mine closure, the proceeds on the disposal of remaining
assets and gold from plant clean-up.
during fiscal 2015.
costs.
VMR and West Wits Mining and R1.2 million against cash and cash equivalents.
property amounting to R13.2 million (2014: R0.9 million). These costs further decreased due to the implementation of various
cost cutting initiatives at the corporate office.
equity accounted investment of R5.9 million.
Borrowings and Funding”) which decreased with the decrease in borrowings from R148.7 million as at June 30, 2014 to R23.1
million as at June 30, 2015.
R28.9 million, mostly relating to mining income. The tax expense for fiscal 2015 also included an overprovision for current tax
amounting to R4.4 million and an under provision of deferred tax amounting to R3.1 million relating to the impact of new tax
legislation governing the tax treatment of interest on loan accounts between group entities.
deferred tax can be recognised.
million in fiscal 2015, compared to an outflow of R39.4 million in fiscal 2014.
proceeds on the disposal of property, plant and equipment.
investments and R17.4 million proceeds on the disposal of property, plant and equipment.
Dyk site on line for increased flexibility and volume capacity;
property, plant and equipment.
included:
rehabilitation of the Brakpan/Withok TDF and R26.7 million on other capital items.
South African rand, except for $2.3 million as at June 30, 2016, $0.1 million as at June 30, 2015 and $1.9 million as at June 30, 2014
held in foreign currency. Surplus cash is held in low-risk, high interest bearing products with various large financial institutions.
12, 24 and 36 months from the date of issue and bearing interest at the three month JIBAR rate plus a margin ranging from 4% to
5% per annum. The loan notes with a 12 and 24 month maturity, amounting to R20.0 million and R69.5 million respectively, were
repaid on October 3, 2013 and July 3, 2014 respectively. The remaining loan notes with a 36 month maturity, amounting to R75.5
million, were repayable on July 3, 2015.
interest.
• there is an adverse variation in the price of gold or foreign currency exchange rates in relation to the US dollar,
particularly with respect to the rand; or
• our operating results or financial condition are adversely affected by the uncertainties and variables facing our business
discussed under Item 5A. Operating Results or the risk factors described in Item 3D. Risk Factors.
We would need to reassess our operations, consider further restructuring and/or obtain additional debt or equity funding. There
can be no assurance that we will obtain this additional or any other funding on acceptable terms or at all.
focus on improving extraction efficiencies, the projects undertaken during the year ended June 30, 2016 were focused on optimizing
the existing facilities rather than implementing new technologies to improve extraction efficiencies.
among other factors, lower grades and failure to achieve the targets set at Ergo. We are also subject to cost pressures due to above
inflation increases in labor, electricity and water; crude oil and steel costs. Unforeseen changes in ore grades and recoveries,
unexpected changes in the quality or quantity of reserves and resource, technical production issues, environmental and industrial
accidents, gold theft, environmental factors and pollution could adversely impact the production, sales and cash operating costs for
fiscal 2017. The forgoing expected results for 2017 are subject to risks and uncertainties and actual results may be lower. See
“Special Note Regarding Forward-Looking Statements.”
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 16 “Provision for environmental rehabilitation” under Item 18. “Financial Statements”.
Additionally, all directors are subject to election at the first annual general meeting following their appointment. Retiring directors
normally make themselves available for re-election.
January 1, 2009. Having joined the company on May 1, 2003 as legal advisor, he was promoted to Group Legal Counsel on
September 1, 2004 and General Manager: Corporate Services on April 1, 2005. Niël was appointed Chief Executive Officer of Ergo
Mining Operations Proprietary Limited (formerly DRDGOLD SA) on July 1, 2006 and became Managing Director on April 1, 2008.
services, including support and training on International Financial Reporting Standards (IFRS), to clients and teams across Africa.
Riaan was audit partner at KPMG for seven years where he conducted audits for listed mining companies, including SEC registrants.
He also has experience as an IFRS technical partner, having represented the South African Institute of Chartered Accountants in the
International Accounting Standards Board’s project on Extractive Activities from 2003 to 2010. He has also served on committees
compiling or updating the South African codes for reporting and valuation of mineral reserves and resources.
and is a member of the SA Institute of Chartered Accountants and the Public Accountants and Auditors Board. Anthon has
approximately 10 years of experience in the mining industry and has served on the boards of listed and public companies for more
than 15 years.
mines in Wales and Canada. He spent 15 years as a stockbroker before becoming a fund manager, managing the Merrill Lynch
Investment Managers Gold and General Fund, one of the largest gold mining investment funds. He was also research director for
Merrill Lynch Investment Managers. Geoffrey is a director of Oxford Abstracts Limited.
online provider of physical gold, silver, platinum and palladium bullion to buyers worldwide and operator of a digital gold
currency payment system. Goldmoney Inc. is publicly traded on the Toronto Stock Exchange (symbol XAU). Since graduating in
1969, he has specialised in international banking, finance and investments. Having begun his career with JP Morgan Chase in
1980, James joined the private investment and trading company of a prominent precious metals trader. He moved to the United
Arab Emirates in 1983 as manager of the Commodity Department of the Abu Dhabi Investment Authority. Since resigning in
1987, he has written frequently on money and banking.
and executive management at Grant Thornton SA, SwissRe, World Bank Competiveness Fund and Deloitte SA over a period of more
than 20 years. He previously served as a member of the Provincial Development Council of the Western Cape Provincial
Government and is active in community development. He is the present Vice-Chairman of the Institute of Directors (Western Cape).
He is currently managing director ABSA AllPay Consolidated Investment Holdings.
the highest Generally Accepted Accounting Principles (United States), Generally Accepted Auditing Standards and Sarbanes-
Oxley Act accreditation required to service clients listed on stock exchanges in the United States. His clients included major
corporations listed in South Africa, Canada, the United Kingdom, Australia and the United States.
is a non-executive director of Caledonia Mining Corporation Plc, a Jersey corporation listed in the United States, Canada and the
United Kingdom, and he chairs its Audit Committee.
extracting maximum value from existing resources. In July 2014, he was appointed Operations Director: Ergo Mining Operations
Proprietary Limited.
2003 through Unisa School of Business Leadership. He was appointed Operations Manager of Crown in January 2006 and General
Manager in July 2006. He was appointed to this current position with effect from October 1, 2011. He has 29 years experience in the
mining industry.
operation. He was appointed as Financial Director of Ergo Mining in January 2012 and has 18 years experience in the mining sector.
Manager in 1995 and was appointed Executive Officer: Surface Operations on January 1, 2008 before he became Executive Officer:
Operations on May 11, 2010. On October 1, 2011, he was appointed Chief Operating Officer. Following the restructuring of senior
management in July 2014, Charles Symons assumed the role of Chairman of the Oversight Committee: Ergo Mining Operations
Proprietary Limited. Charles’ fixed term contract terminated on 31 July 2016, but he is still continuing in a non-executive oversight
role.
Legal Counsel in August 2014. From March 2016, she also serves as Company Secretary.
Magistrates Court. He was appointed Company Secretary in April 2005. On January 1, 2007 he assumed the position of Group Legal
Counsel and Compliance Officer. He served as Executive Officer: Legal, Compliance and Company Secretary from 2008 until
December 31, 2014. He continued to serve as Company Secretary from January 1, 2015 to December 31, 2015.
officers has been so elected or appointed.
R20.2 million.
• Base fee as Non-Executive Directors of R582,188 per annum;
• Annual fee for Audit and Risk Committee Chairman of R29,110 (excluding fee received as a committee member);
• Annual fee for Audit and Risk Committee member of R29,110;
• Annual fee for the chairman of Remuneration and Nominations Committee and Social and Ethics Committee of R21,832
(excluding fee received as a committee member);
• Annual fee for members of Remuneration Committee and Social and Ethics Committee of R21,832 each;
• Daily fee of R21,832 and hourly rate of R2,911;
• Half-day fee for participating by telephone in special board meetings; and
• The Chairman of the board to receive committee fees.
D.J. Pretorius ....................................
G.C. Campbell..................................
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.
than executive directors, non-executive directors and prescribed officers. However, the aggregate compensation paid to senior
management, excluding compensation paid to Executive Directors, in fiscal 2016 was R35.5 million (fiscal 2015: R31.4 million
and fiscal 2014: R31.4 million), representing eleven executive officers in fiscal 2016, 2015 and 2014.
term incentive of up to 100% of his remuneration package, depending on his particular agreement. Should an Executive Director
not meet all the targets set in terms of the predetermined key performance indicators, he will be entitled to a lesser bonus as
determined by the Remuneration Committee in its discretion.
relationship with Messrs. D.J. Pretorius and A.J. Davel during the year ended June 30, 2016.
agreement effective up to June 30, 2016 Mr. D.J. Pretorius received from us a remuneration package of R5.2 million per annum.
Mr. D.J. Pretorius was eligible under his employment agreement, for an incentive bonus of up to 100% of his annual remuneration
package in respect of one bonus cycle per annum over the duration of his appointment, on condition that DRDGOLD achieves
certain key performance indicators. In addition, he is eligible to participate in the long term incentive scheme and was awarded
2,323,009 phantom shares during November 2015.
Davel received from us a remuneration package of R2.9 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 condition that DRDGOLD achieves certain key performance indicators. He is eligible to
participate in the long term incentive scheme. He was issued 205,207 phantom shares under the long term incentive scheme on his
joining DRDGOLD and 1,305,033 phantom shares during November 2015.
until April 25, 2018. After expiration of the initial two year periods, the agreements continue indefinitely until terminated by either
party on not less than three months’ prior written notice.
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.
Executive Directors are independent under the New York Stock Exchange, or NYSE, requirements (as affirmatively determined
by the Board of Directors) and the South African King III Report.
separate. Mr. G.C. Campbell is the Non-Executive Chairman, Mr. D.J. Pretorius is the Chief Executive Officer and Mr. A.J Davel
is the Chief Financial Officer. The board has established a Remuneration and 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.
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.
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.
annually, both individually and as a board, as part of an evaluation process, which is driven by an independent consultant. In
addition, the Remuneration and Nominations Committees formally evaluate the executive directors on an annual basis, based on
objective criteria.
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.
advice concerning 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.
the presence of the Executive Directors. The board meetings include the meeting of the Audit and Risk Committee, Remuneration
and Nominations Committee and Social and Ethics Committee which act as subcommittees to the board. Each subcommittee is
chaired by one of the Independent Non-Executive Directors, each of which provides a formal report back to the board. Each
subcommittee meets for approximately half a day. Certain senior members of staff are invited to attend the subcommittee
meetings.
directors, officers and employees, including the principal executive, financial and accounting officers, in accordance with Section
406 of the US Sarbanes-Oxley Act of 2002, the related US securities laws and the NYSE rules. The Code contains provisions for
employees to report violations of Company policy or any applicable law, rule or regulation, including US securities laws.
appointed
able to participate via teleconference facilities, to allow participation in the discussion and conclusions reached.
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 regular evaluation by the board
with respect to their performance and effectiveness.
is chaired by the board chairman when matters relating to nominations are discussed and by an independent NED when matters
relating to remuneration are discussed.
• determine the criteria necessary to measure the performance of executive directors;
• incentivise executive directors and senior management;
• oversee the general operation of the share option scheme or any other similar incentive schemes; and
• apply the principles of good corporate governance and best practice in respect of remuneration matters.
committee in the formulation of remuneration policies that are market related.
• make recommendations on the composition of the board and the balance between executive and NEDs 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.
• oversight of annual audit and quarterly reviews;
• oversight of financial reporting process and internal controls;
• setting management policies for risk management and control;
• monitoring and oversight of risk management;
• monitoring external developments relating to risk management and the reporting of specifically associated risk, including
emerging risks and prospective impacts; and
• monitoring progress on action plans developed as part of the risk management process.
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.
and non-audit services provided by the external auditors. KPMG Inc. was reappointed by shareholders at the 2015 AGM to
perform DRDGOLD’s external audit function.
effectiveness of risk management, internal controls and corporate governance processes.
records of the internal audit team.
brought to the attention of the committee and, if necessary, to the board.
report that has to be filed with the SEC as part of the Form 20-F. Additionally, DRDGOLD’s external auditors are required to
express an opinion on the operating effectiveness of internal controls over financial reporting, which is also contained in the
Company’s Form 20-F.
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.
committed. Its terms of reference were approved by the board in October 2011 and its objectives are to:
particularly within the areas where the company conducts business;
• strive towards achieving equality at all levels of the company, as required by the South African constitution and other
legislation, taking into account the demographics of the country; and
• conduct business in a manner that is conducive to the attainment of internationally acceptable environmental and
sustainability standards.
• on the development, monitoring and implementation of the company’s procurement policy in terms, inter alia, of the
Preferential Procurement Policy Framework Act;
• on the development, monitoring and implementation of the company’s safety, health and environmental policies;
• on the monitoring and implementation of the social and labor plans;
• on ways and means of assisting with poverty alleviation and social upliftment;
• to promote the engagement of management, staff and stakeholders in activities related to social responsibility;
• to monitor the record of sponsorships, donations and charitable giving;
• to promote equality, prevent unfair discrimination and corruption;
• to monitor the Group’s activities with regard to the 10 principles of the United Nations Global Compact Principles, the
• Organisation for Economic Co-operation and Development’s recommendations regarding corruption and broad-based
BEE; and
• to monitor the Group’s consumer relationship activities.
contract employees).
social reform. The National Union of Mineworkers, or NUM, the main South African mining industry union, is influential in the
tripartite alliance between the ruling African National Congress, the Congress of South African Trade Unions, or COSATU, and the
South African Communist Party as it is the biggest affiliate of COSATU. The relationship between management and labor unions
remains cordial. The DRDGOLD and NUM coordinating forum meets regularly to discuss matters pertinent to both parties at a EMO
level, while operations level forums continue to deal with local matters.
– 5, 9% for categories 6 – 7 and 8% for categories 8 – 15.
9) and (7% for categories 10 – 15) per annum.
transformation and have put structures in place to address this at both management and board level.
with organized labor we undertook, as in the past, to pay packages equal to two weeks’ basic pay for every completed year of service
as part of a balancing compromise with the labor unions between the high additional costs of non-financial items and incentive
payments (which are deemed part of remuneration), and an additional one-week benefit based on basic pay. These employees were
provided with counseling services and the opportunity to undergo skills training to be able to find employment outside the mining
industry.
W.J. Schoeman .............
bi-annual results etc., which is not in the public domain. When these employees 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 quarterly results the closed-period is group-wide.
Item 7A. Major Shareholders.
Executive Directors (Messrs. G.C. Campbell and R.P. Hume) had share options under the Scheme which has all been bought out
by the Company through a general buy-out; no new share options have been issued to Non-Executive Directors since December
2004. In compliance with JSE Listing Requirements, options awarded to an individual employee are subject to a cumulative upper
limit of 2.0 million options, which is lower than the previous 2% of the Company’s issued share capital. In addition, a maximum of
40.0 million options are available for utilization under the share option scheme, which is lower than the previous 15% of the issued
ordinary shares. As at September 30, 2016, the number of issued and exercisable share options was less than 0.01% of our issued
ordinary share capital, representing 34,075 share options. In November 2012 the Remuneration Committee suspended the share
option scheme and approved a share buyback. A general offer was made to all participant of the Scheme to buy-back all then vested
share options as part of the transition to the new DRDGOLD Phantom Share Scheme. The participants in the Scheme are fully taxed
based on individual tax directives obtained from the South African Revenue Service on any gains realized on the exercise of share
options.
employee is granted the option. The allocation date will be the date when the directors approve allocation of share options. Each
option remains in force for five years after the date of grant (ten years if issued prior to 2009), subject to the terms of the option plan.
Options granted under a plan vest primarily according to the following schedule over a maximum of a three year period:
allocation.
including Executive Directors and other senior employees. The outstanding options are exercisable at a purchase price of R5.12 per
share and expire five years from the date of issue to the participants.
suspended the Scheme and approved the share option buy back. The advantages presented by the suspension of the Scheme and share
option buy back are inter alia:
operated as an incentive tool for our executive directors, excluding the CEO, and senior employees whose skills and experience
are recognized as being essential to the Company’s performance. The scheme is cash settled. In terms of the phantom share
scheme rules, 50% of the phantom shares granted will be valued based on the Group meeting certain pre-determined performance
criteria and the remaining 50% to defined retention periods. The maximum incentive pay-out per annum to any single employee
may not exceed 75% of that employee’s gross remuneration package. The participants in the scheme are fully taxed at their
marginal rate on any gains realized on the exercise of their phantom shares.
average price of a share on the JSE for the seven days on which the JSE is open for trading, preceding the day on which the
employee is granted a phantom share. The allocation date will be the date when the directors approve allocation of the phantom
shares. Each phantom share remains in force until the date of vesting, subject to the terms of the scheme rules. Phantom shares
granted under the phantom share scheme vest primarily according the following schedule over a maximum of a three year period:
of the option:
performance, and is based on phantom share allocations. The vesting of any shares allocated is staggered over a five-year period
commencing in the third year after the allocation is granted in line with King recommendations. The objectives of the revised
scheme are to drive the longer-term strategies of DRDGOLD, to align participants’ interests with shareholders’ interest, to
incentivise and motivate participants, to attract and retain scarce human resources and to reward superior performance by the
Company and participants. REMCO has the authority to amend in part or in its entirety or withdraw the long-term incentive
scheme at any time.
• 5,000,000 cumulative preference shares.
approximately 38.1% of our ordinary shares;
• there was one record holder of our cumulative preference shares in South Africa, who held 5,000,000 or 100% of our
cumulative preference shares;
• there were 26 US record holders of our ordinary shares, who held approximately 26,699,366 or approximately 6.2% of
our ordinary shares excluding those shares held as part of our ADR program; and
• there were 749 registered holders of our ADRs in the United States, who held approximately 193,107,960 (19,310,796
ADRs) or approximately 44.8% of our ordinary shares.
• any person whom the directors are aware of as at September 30, 2016 who is interested directly or indirectly in 5% or
more of our ordinary shares. There was significant change in the percentage ownership of the major shareholders over
the preceding three years.
partners in EMO into DRDGOLD.
convertible within 60 days of September 30, 2016, are treated as outstanding for computing the percentage of any other person. As of
September 30, 2016, we are not aware of anyone owning 5% or more of our ordinary shares other than described above. During fiscal
2016 Skagen AS reduced its shareholding from 8.6% held as at the end of fiscal 2015 to 4.84% as at September 30, 2016 in the
normal course of business. During fiscal 2016 Van Eck reduced its shareholding from 6.3% held as at the end of fiscal 2015 to nil as
at September 30, 2016 in the normal course of business. Unless otherwise noted, each person or group identified possesses sole
voting and investment power with respect to the shares, subject to community property laws where applicable. No shareholder has
voting rights which differ from the voting rights of any other shareholder. Unless indicated otherwise, the business address of the
beneficial owner is: DRDGOLD Limited, Off Crownwood Road, Crown Mines, 2092, South Africa.
2196.
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.
which included a contribution of nil (2015: R0.8 million).
it into troy ounce bars. Rand Refinery then sells the gold on the same day as delivery, for the London afternoon fixed price on the
day the gold is sold. In exchange for this service, the group pays Rand Refinery a variable refining fee plus fixed marketing, loan
and administration fees. Mr Gwebu, who held the position of executive officer: legal, compliance and company secretary of
DRDGOLD up to December 31, 2014, was a director of Rand Refinery, a member of its Remuneration Committee and chairman
of the Social and Ethics Committee until September 5, 2014 when he resigned as director. Mr Charles Symons has been appointed
to replace him as director of Rand Refinery effective September 5, 2014. Mr Mark Burrell who is the financial director of Ergo is
an alternate director of Rand Refinery and a member of Rand Refinery’s Audit Committee.
• Trade receivables to the amount of nil (2015: R43.0 million and 2014: R25.6 million) relate to metals sold;
• The group received a dividend of nil (2015: nil and 2014: nil) from Rand Refinery.
December 2016.
29, 2011, we transferred our listing from the Nasdaq Capital Market to the New York Stock Exchange.
listing on that market.
ordinary shares also trade on the over the counter markets in Berlin and Stuttgart and the Regulated Unofficial Market on the
Frankfurt Stock Exchange. 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. Prior to
December 29, 2011, our ADSs traded on the Nasdaq National Market.
had issued 431,429,767 ordinary shares (as of September 30, 2016: 431,429, 767) and 5,000,000 cumulative preference shares (as of
September 30, 2016: 5,000,000).
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.
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).
authorized.
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.
believes that our business should be conducted according to the highest legal and ethical standards. In accordance with the board
practice, all remuneration of executive directors is approved by the Remuneration and Nominations Committee, and the shareholders
approve remuneration of non-executive directors.
Companies Act.
of section 60 of the Companies Act shall be competent.
directors to re-election by rotation was approved by shareholders at the 2014 annual general meeting.
15 days from the date of the notice. Directors may convene general meetings at any time.
notice is required.
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.
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.
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.
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 September 30, 2016, 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.
back our shares.
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.
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.
recommendation of our directors, resolve that any surplus funds representing capital profits arising from the sale of any capital assets
and not required for the payment of any fixed preferential dividend, be distributed among our ordinary shareholders. However, no
such profit shall be distributed unless we have sufficient other assets to satisfy our liabilities and to cover our paid up share capital.
We also need to consider the solvency and liquidity requirements stated in the Companies Act of South Africa.
accordance with a special resolution approved by shareholders within the previous two years.
prescription.
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.
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.
Regulations form part of the general monetary policy of South Africa. The Regulations are issued under Section 9 of the Currency
and Exchanges Act, 1933 (as amended). In terms of the Regulations, the control over South African capital and revenue reserves, as
well as the accruals and spending thereof, is vested in the Treasury (Ministry of Finance), or the Treasury.
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.
subject to these exchange control regulations.
associated therewith. The South African Finance Minister has indicated that all remaining exchange controls are likely to be
dismantled as soon as circumstances permit. Since 1998, there has been a gradual relaxation of exchange controls. The gradual
approach to the abolition of exchange controls adopted by the Government of South Africa is designed to allow the economy to
adjust more smoothly to the removal of controls that have been in place for a considerable period of time. The stated objective of the
authorities is equality of treatment between residents and non-residents with respect to inflows and outflows of capital. The focus of
regulation, subsequent to the abolition of exchange controls, is expected to favor the positive aspects of prudential financial
supervision.
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 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 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 SARB.
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 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.
follows:
for permission to enter into corporate asset/share swap and share placement transactions to acquire foreign investments. The
latter mechanism entails the placement of the locally quoted corporation's shares with long-term overseas holders who, in
payment for the shares, provide the foreign currency abroad which the corporation then uses to acquire the target
investment;
• corporations wishing to establish new overseas ventures are permitted to transfer offshore up to R500 million to finance
approved investments abroad and up to R500 million to finance approved new investments in African countries on an
annual bases. Approval from SARB is required in advance for investments in excess of R500 million. On application to
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, 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,
SARB may instruct that the equity be disposed of. In our experience SARB has taken a commercial view on this, and has on
occasion extended the period of time for compliance; and
• remittance of directors' fees payable to persons permanently resident outside the Common Monetary Area may be approved
funds may only be invested in:
• 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 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.
predict when existing exchange controls will be abolished or whether they will be continued or modified by the South African
Government in the future.
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.
1996, and as amended and restated, between the Company and The Bank of New York, as the depository. Subject to exceptions
provided in the deposit agreement, cash dividends paid in rand will be converted by the depositary to dollars and paid by the
depositary to holders of ADSs, net of conversion expenses of the depositary, in accordance with the deposit agreement. The
depositary will charge holders of ADSs, to the extent applicable, taxes and other governmental charges and specified fees and other
expenses.
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.
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
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.
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 ADSs to a US resident (within the meaning of the
Tax Treaty) to 5% of the gross amount of the dividends if such US resident is a company which holds directly at least 10% of our
voting stock and 15% of the gross amount of the dividends in all other cases.
from a fixed base situated in South Africa, and the dividends are attributable to such permanent establishment or fixed base.
determining the South African gold mining tax rate for FY2016 and FY2015 is: Y = 34 – 170/X. Where Y is the percentage rate
of tax payable and X is the ratio of taxable income, net of any qualifying capital expenditure that bears to mining income derived,
expressed as a percentage.
recipient. The various subordination agreements entered into within the group as outlined in Item 7B. ‘‘Related party
transactions’’ resulted in the associated loans within the group being characterised as “hybrid debt instruments” and being taxed
accordingly. Section 8F of the Income Tax Act has subsequently been revised and amendments’ will become effective during fiscal
2017. These amendments may result in these loans as outlined above not being subject to Section 8F of the Income Tax Act.
property. A non-resident will have an interest in immovable property if it has a direct or indirect shareholding of at least
20% in a company, where 80% or more of the net assets of that company (determined on a market value basis) are
attributable directly or indirectly to immovable property; or
• any asset of a permanent establishment of a non-resident in South Africa through which a trade is carried on.
capital assets for US federal income tax purposes. This discussion is based upon the provisions of the Internal Revenue Code of 1986,
as amended, or the Code, published rulings, judicial decisions and the Treasury regulations, all as currently in effect and all of which
are subject to change, possibly on a retroactive basis. This discussion has no binding effect or official status of any kind; we cannot
assure holders that the conclusions reached below would be sustained by a court if challenged by the Internal Revenue Service.
or currencies, partnerships or other pass-through entities, banks and other financial institutions, insurance companies, tax-exempt
organizations, certain expatriates or former long-term residents of the United States, persons holding ordinary shares or ADSs as part
of a “hedge,” “conversion transaction,” “synthetic security,” “straddle,” “constructive sale” or other integrated investment, persons
who acquired the ordinary shares or ADSs upon the exercise of employee stock options or otherwise as compensation, persons whose
functional currency is not the US dollar, or persons that actually or constructively own ten percent or more of our voting stock). This
discussion addresses only US federal income tax consequences 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.
• a corporation (or any entity treated as a corporation for US federal income tax purposes) created or organized under the laws
of the US or any political subdivision thereof;
• an estate, the income of which is subject to US federal income tax without regard to its source; or
• a trust, if a court within the US is able to exercise primary supervision over the administration of the trust and one or more
US persons have the authority to control all substantial decisions of the trust or if the trust has made a valid election to be
treated as a US person.
partnerships holding any ordinary shares or ADSs are urged to consult their tax advisors.
arising under the tax laws of any foreign, state or local taxing jurisdiction.
be subject to US federal income tax.
will be taxed to US holders as ordinary dividend income to the extent that the distributions do not exceed our current and
accumulated earnings and profits. For US federal income tax purposes, the amount of any distribution received by a US holder will
equal the dollar value of the sum of the South African rand payments made (including the amount of South African income taxes, if
any, withheld with respect to such payments), determined at the “spot rate” on the date the dividend distribution is includable in such
US holder's income, regardless of whether the payment is in fact converted into dollars. Generally, any gain or loss resulting from
currency exchange fluctuations during the period from the date a US holder includes the dividend payment in income to the date such
holder converts the payment into dollars will be treated as ordinary income or loss. Distributions, if any, in excess of our current and
accumulated earnings and profits will constitute a non-taxable return of capital and will be applied against and reduce the holder's
basis in the ordinary shares or ADSs. To the extent that these distributions exceed the US holder's tax basis in the ordinary shares or
ADSs, as applicable, the excess generally will be treated as capital gain, subject to the discussion below under the heading “Passive
Foreign Investment Company”. We do not intend to calculate our earnings or profits for US federal income tax purposes. US holders
should therefore assume that any distributions with respect to our ordinary shares or ADSs will constitute dividend income.
if, at the time such dividends are paid, either (i) we are eligible for benefits under a qualifying income tax treaty with the US or
(ii) our ordinary shares or ADSs with respect to which such dividends were paid are readily tradable on an established securities
market in the US. However, this reduced rate is subject to certain important requirements and exceptions, including, without
limitation, certain holding period requirements and an exception applicable if we are treated as a passive foreign investment company
as discussed under the heading “Passive Foreign Investment Company”. US holders are urged to consult their tax advisors regarding
the US federal income tax rate that will be applicable to their receipt of any dividends paid with respect to the ordinary shares and
ADSs.
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 US Internal Revenue Service has the authority to determine the spot rate.
income for foreign tax credit and other purposes. In computing the separate foreign tax credit limitations, dividend income should
generally constitute “passive category income,” or in the case of certain US holders, “general category income.”
of our gross income, including our pro rata share of the gross income of any company in which we are considered to own 25% or
more of the shares by value, were passive income or (ii) 50% or more of our average total assets (by value), including our pro rata
share of the assets of any company in which we are considered to own 25% or more of the shares by value, were assets that produced
or were held for the production of passive income. If we were a PFIC, US holders of the ordinary shares or ADSs would be subject to
special rules with respect to (i) any gain recognized upon the disposition of the ordinary shares or ADSs and (ii) any receipt of an
excess distribution (generally, any distributions to a US holder during a single taxable year that is greater than 125% of the average
amount of distributions received by such US holder during the three preceding taxable years in respect of the ordinary shares or
ADSs or, if shorter, such US holder's holding period for the ordinary shares or ADSs). Under these rules:
applicable;
• the amount allocated to the taxable year in which a US holder realizes the gain or excess distribution will be taxed as
ordinary income;
• the amount allocated to each prior year (other than a pre-PFIC year), with certain exceptions, will be taxed at the highest tax
rate in effect for that year; and
• the interest charge generally applicable to underpayments of tax will be imposed in respect of the tax attributable to each
such year (other than a pre-PFIC year).
subsequent years if such holder elects to recognize gain based on the unrealized appreciation in the ordinary shares or ADSs through
the close of the tax year in which we cease to be a PFIC.
election, the US holder would include in ordinary income or loss for each taxable year an amount equal to the difference as of the
close of the taxable year between the fair market value of the ordinary shares or ADSs and the US holder's adjusted tax basis in such
ordinary shares or ADSs. Losses would be allowed only to the extent of net mark-to-market gain previously included by the US
holder under the election for prior taxable years. If a mark-to-market election with respect to ordinary shares or ADSs is in effect on
the date of a US holder's death, the tax basis of the ordinary shares or ADSs in the hands of a US holder who acquired them from a
decedent will be the lesser of the decedent's tax basis or the fair market value of the ordinary shares or ADSs. US holders desiring to
make the mark-to-market election are urged to consult their tax advisors with respect to the application and effect of making the
election for the ordinary shares or ADSs.
fund” in the first taxable year in which such holder owns the ordinary shares or ADSs and if we comply with certain reporting
requirements. However, we do not intend to supply US holders with the information needed to report income and gain pursuant to a
“qualified electing fund” election in the event that we are classified as a PFIC.
financial statements as prepared in accordance with IFRS, which may substantially differ from US federal income tax principles.
Therefore, no assurance can be given that we were not a PFIC for our 2015 fiscal year ended June 30, 2015. Furthermore, the tests for
determining whether we would be a PFIC for any taxable year are applied annually and it is difficult to make accurate predictions of
future income and assets, which are relevant to this determination. In addition, certain factors in the PFIC determination, such as
reductions in the market value of our capital stock, are not within our control and can cause us to become a PFIC. Accordingly, there
can be no assurance that we will not become a PFIC.
the PFIC rules to their investments in our ordinary shares or ADSs.
the US dollar value of the amount realized on the sale or exchange and such holder's adjusted tax basis in the ordinary shares or
ADSs. Subject to the application of the “passive foreign investment company” rules discussed above, such gain or loss generally will
be capital gain or loss and will be long-term capital gain or loss if the US holder has held the ordinary shares or ADSs for more than
one year. The deductibility of capital losses is subject to limitations. Gain or loss recognized by a US holder on the taxable disposition
of ordinary shares or ADSs generally will be treated as US-source gain or loss for US foreign tax credit purposes.
receives payment in rand and converts rand into US dollars at a conversion rate other than the rate in effect on the settlement date
may have a foreign currency exchange gain or loss that would be treated as ordinary income or loss.
changed without the consent of the Internal Revenue Service. In the event that an accrual basis holder does not elect to be treated as a
cash basis taxpayer, such US holder may have a foreign currency gain or loss for US federal income tax purposes because of the
differences between the US dollar value of the currency received prevailing on the trade date and the settlement date. Any such
currency gain or loss will be treated as ordinary income or loss and would be in addition to gain or loss, if any, recognized by such
US holder on the disposition of such ordinary shares or ADSs.
withholding if the recipient of such payment is not an “exempt recipient” and fails to supply certain identifying information, such as
an accurate taxpayer identification number, in the required manner. Generally, individuals are not exempt recipients, whereas
corporations and certain other entities generally are exempt recipients. The backup withholding tax rate is currently 28%. Payments
made with respect to our ordinary shares or ADSs to a US holder must be reported to the Internal Revenue Service, unless the US
holder is an exempt recipient or otherwise establishes an exemption. Any amount withheld from a payment to a US holder under the
backup withholding rules is refundable or allowable as a credit against the holder's US federal income tax, provided that the required
information is furnished to the Internal Revenue Service.
financial institutions, although the account itself may be reportable if held at a non-US financial institution). US holders should
consult their tax advisers regarding the effect, if any, of this reporting requirement on their acquisition, ownership and disposition of
ordinary shares or ADSs. US holders should consult their tax advisors regarding application of the information reporting and backup
withholding rules.
exemptions that apply. The dividend withholding tax will be withheld from the dividend payment. There are no dividend restrictions.
11-470-2600. A copy of each report submitted in accordance with applicable United States law is available for public review at our
principal executive offices at DRDGOLD Limited, Off Crownwood Road, Crown Mines, 2092, South Africa.
sales. Refer to Item 18. ‘‘Financial Statements - Note 25 - Financial instruments’’ of the consolidated financial statements for a
qualitative and quantitative discussion of our exposure to these market risks.
fluctuated widely and are affected by numerous industry factors over which we have no control. The aggregate effect of these factors
on the gold price is impossible for us to predict. The price of gold may not remain at a level allowing us to economically exploit our
reserves. It is our policy not to hedge this commodity price risk.
Furthermore, our trade receivables and loans are regularly monitored and assessed for recoverability. Where it is appropriate, an
impairment loss is raised. In addition, our South African operations deliver their gold to Rand Refinery Proprietary Limited (Rand
Refinery), which refines the gold to saleable purity levels and then sells the gold, on behalf of the South African operations, on the
bullion market. Any potential shortfall in inventory in Rand Refinery is secured by the loan arrangement and to the extent of this
facility, between it and its shareholders (refer Item 5A. “Financial instruments). The gold is sold by Rand Refinery usually on the
same day as it is delivered and settlement is made within two days.
cash flow that we will realize from our operations as gold is sold in US dollars, while production costs are incurred primarily in rands.
Our results are positively affected when the US dollar strengthens against the rand and adversely affected when the US dollar
weakens against the rand. Our cash and cash equivalent balances are held in US dollars and rands; holdings denominated in other
currencies are relatively insignificant. Refer to Item 18. ‘‘Financial Statements - Note 25 - Financial instruments’’ of the consolidated
financial statements for discussion of interest rate risks, currency risks and sensitivity analysis.
Fixed rate .............................................................................................................
2016 .....................................................................................................................
(increase)/decrease our interest expense by R0.2 million.
Capital Market under the symbol “DROOY”). The ADSs are evidenced by American Depository Receipts, or ADRs, issued by The
Bank of New York Mellon, as Depository under the Amended and Restated Deposit Agreement dated as of August 12, 1996, as
amended and restated as of October 2, 1996, as further amended and restated as of August 6, 1998, as further amended and restated
July 23, 2007, among DRDGOLD Limited, The Bank of New York Mellon and owners and beneficial owners of ADRs from time to
time. ADR holders may have to pay the following service fees to the Depositary:
ordinary shares or rights....................................................................................
Deposit Agreement terminates..........................................................................
which are distributed by the Depositary to ADS registered holders
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.
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.
conferences and fees of investor relations service vendors). After the deduction of other fees, the annual reimbursement for the year
ended June 30, 2016 amounts to $43,400. DRDGOLD is also entitled to a 25% share of the dividend fees which amounts to $84,610
for the years ended June 30, 2015 and June 30, 2016.
PROCEEDS
management, including the Chief Executive Officer and Chief Financial Officer, concluded that our disclosure controls and
procedures were effective as of June 30, 2016.
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 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.
system can only provide reasonable assurance of achieving the desired control objectives.
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 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.
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.
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.
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, 2016 our internal control over financial reporting was effective.
13a-15.
Exchange, or NYSE, and rules promulgated by the SEC and independent both under the New York Stock Exchange Rules and the
South African Johannesburg Stock Exchange Rules. The board is satisfied that the skills, experience and attributes of the members
of the audit and risk committee are sufficient to enable those members to discharge the responsibilities of the audit and risk
committee.
operation as well as all other employees. The Code of Ethics was last updated on February 9, 2012. The Code of Ethics and
Conduct can be accessed on the Company’s website at www.drdgold.com.
documents filed with the SEC.
South Africa Holding Proprietary Limited, the nominee of Australian based Walcot Capital for the disposal of certain of the
underground mining and prospecting rights held by ERPM including the related liabilities.
invoiced with respect to limited assurance provided by KPMG on specified items contained in our Integrated Report for fiscal
2014. Subsequent to June 30, 2016 KPMG was engaged to provide limited assurance on specified items contained in our
Integrated Report for fiscal 2016 that was billed during fiscal 2017.
approves, and has pre-approved, all non-audit services provided by the external auditors. The Audit and Risk Committee
considered all of the fees mentioned above and determined that such fees are compatible with maintaining KPMG Inc.’s
independence.
corporate governance practices in lieu of certain of the NYSE Listing Standards on corporate governance. The following paragraphs
summarize the significant differences between these various requirements and how it is implemented by DRDGOLD:
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 country rule.
June 30, 2016 and 2015, and the related consolidated statements of profit or loss and other comprehensive income, changes in equity,
and cash flows for each of the years in the three-year period ended June 30, 2016. We also have audited DRDGOLD Limited’s
internal control over financial reporting as of June 30, 2016, based on criteria established in Internal Control – Integrated Framework
(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). DRDGOLD Limited’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 these
consolidated financial statements and an opinion on DRDGOLD Limited’s internal control over financial reporting based on our
audits.
standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of
material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our
audits of the consolidated financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the
overall financial statement presentation. 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.
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.
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.
DRDGOLD Limited and its subsidiaries as of June 30, 2016 and 2015, and the results of their operations and their cash flows for each of
the years in the three-year period ended June 30, 2016, in conformity with International Financial Reporting Standards as issued by
the International Accounting Standards Board. Also in our opinion, DRDGOLD Limited maintained, in all material respects, effective
internal control over financial reporting as of June 30, 2016, based on criteria established in Internal Control – Integrated Framework
(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
KPMG Inc
Secunda, Republic of South Africa
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
for the year ended June 30, 2016
Equity owners of the parent
Items that are or may be reclassified to profit or loss, net of tax
Net fair value adjustment on available-for-sale investment
to profit or loss
sale investment
Actuarial loss
Non-controlling interest
Basic earnings/(loss) per share (cents)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
at June 30, 2016
Non-current assets
Equity
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended June 30, 2016
Loss for the year
Share issue expenses
Profit for the year
Share issue
Profit for the year
Issued shares for cash
² Refer to the consolidated statement of profit or loss and other comprehensive income for a detailed analysis of total comprehensive income for the year.
CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended June 30, 2016
Cash received from sales of precious metals
Acquisition of non-current investments and other assets
Share issue expenses
EQUIVALENTS
for the year ended June 30, 2016
the company is Off Crownwood Road, Crown Mines, Johannesburg, 2092. The group is primarily involved in the retreatment of
surface gold.
companies”) and interest in equity accounted investments.
and its interpretations adopted by the International Accounting Standards Board (IASB).
accounting policies are outlined in this note.
financial information presented in South African rands has been rounded to the nearest thousand, unless otherwise stated.
estimates and assumptions that affect the application of accounting policies and reported amounts of assets and liabilities, income
and expenses.
reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets
and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.
the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future
periods if the revision affects both current and future periods.
recognised in the consolidated financial statements is outlined below:
different 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.
for the year ended June 30, 2016
• changes in mineral reserves and resources (which could similarly affect the useful lives of assets depreciated on the
• 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.
been increased to 10 years effective as at July 1, 2015.
based on the group’s environmental management plans in compliance with current technological, environmental and
regulatory requirements.
6.0%) and the discount periods as per the expected life of mine were used in the calculation of the estimated net present
value of the rehabilitation liability (refer to note 16).
A 100 basis points increase in the effective tax rate will result in an increase in the deferred tax liability at June 30, 2016
of approximately R8.1 million (2015: R7.3 million and 2014: R6.3 million).
The financial statements are prepared on the historical cost basis, unless otherwise stated.
The group has consistently applied the accounting policies set out below to all periods presented in these consolidated financial
statements.
The group adopted all the new standards, amendments to standards and interpretations, which are applicable to the group, with a
date of initial application of July 1, 2015. The adoption of these standards did not have a significant impact on these financial
statements.
for the year ended June 30, 2016
NCI are measured at their proportionate share of the acquiree’s identifiable net assets at the acquisition date. Subsequently, the
carrying amount of non-controlling interest is the amount of the interest at initial recognition plus the non-controlling interest’s
subsequent share of changes in equity.
equity owners in their capacity as equity owners and no profit or loss is recognised.
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.
The group’s interest in equity accounted investments comprises interests in an associate and a joint venture.
operating policies. A joint venture is an arrangement in which the group has joint control, whereby the group has rights to the net
assets of the arrangement, rather than rights to its assets and obligations for its liabilities.
includes transaction costs. Subsequent to initial recognition, the group financial statements include the group’s share of profit or
loss and other comprehensive income (“OCI”) of equity accounted investees, until the date on which significant influence or joint
control ceases. Any losses from associates and joint ventures are brought to account in the consolidated financial statements until
the interest in such associates and joint ventures are written down to zero. Thereafter, losses are accounted for only insofar as the
group is committed to providing financial support to such associates and joint ventures.
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. Unrealised gains arising from transactions with
equity accounted investments are eliminated against the investment to the extent of the group’s interest in the investee. Unrealised
losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.
for the year ended June 30, 2016
ruling at the dates of these transactions. Monetary assets and liabilities denominated in foreign currencies are translated to the
functional currency at the exchange rate at the reporting date. Non-monetary assets and liabilities that are measured at historical
cost are translated using the exchange rate at the date of the transaction. Non-monetary assets and liabilities denominated in
foreign currencies, measured at fair value, are translated at foreign exchange rates ruling at the date that the fair value was
determined. Foreign exchange differences arising on translation are recognised in profit or loss.
case the foreign currency differences that have been recognised in OCI are reclassified to profit or loss) are recognised in OCI.
into South African rands at the exchange rates at the reporting date. The income and expenses of foreign operations are translated
to South African rands at exchange rates at the dates of the transactions. Foreign exchange differences arising on retranslation are
recognised in OCI and accumulated within equity in the foreign currency translation reserve. When a foreign operation is
disposed of, the relevant amount in the foreign currency translation reserve is transferred to profit or loss as part of the profit or
loss on disposal. On partial disposal of a subsidiary that includes a foreign operation, the relevant portion of such cumulative
amount is reattributed to NCI.
of which is neither planned nor likely in the foreseeable future, are considered to form part of a net investment in a foreign
operation and are recognised in OCI and presented within equity in the foreign currency translation reserve in the consolidated
financial statements.
loss, held-to-maturity financial assets, loans and receivables and available-for-sale financial assets.
liabilities are initially recognised on the trade date.
the group or company transfers substantially all the risks and rewards of ownership of the financial asset. Any interest in such
derecognised financial assets that is created or retained by the entity is recognised as a separate asset or liability.
gain or loss on derecognition is taken to profit or loss.
only when, the entity has a legal right to offset the amounts and intends either to settle them on a net basis or to realise the asset
and settle the liability simultaneously.
they are measured at amortised cost using the effective interest method less any impairment losses.
for the year ended June 30, 2016
to known amounts of cash and subject to insignificant risk of changes in value. 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. Bank overdrafts that are repayable on demand and form an integral part of the group’s cash management are
included as a component of cash and cash equivalents for the purpose of the statement of cash flows. Cash and cash equivalents
include restricted cash and are short-term in nature. Restricted cash which is long-term in nature is classified as non-current and is
similar in nature to rehabilitation trust funds. Restricted cash would typically be long-term in nature when it is expected not to be
able to be utilised for at least 12 months after the reporting date.
they are measured at fair value and changes therein, other than impairment losses are recognised in OCI and accumulated in the
fair value reserve. When these assets are derecognised, the gain or loss accumulated in equity is reclassified to profit or loss. The
group applies settlement date accounting to the regular way purchase or sale of financial assets.
to initial recognition, these liabilities are measured at amortised cost using the effective interest method.
(including mineral rights), mine plant facilities, exploration assets and equipment and vehicles.
Where funds have been borrowed specifically to finance a project, the amount of interest capitalised represents the actual
borrowing costs incurred. Mine development costs capitalised, include acquired, proved and probable mineral reserves at the
acquisition date.
capitalised as exploration assets on a project-by-project basis, pending determination of the technical feasibility and commercial
viability of the project. The capitalised costs are presented as tangible assets according to the nature of the assets acquired. When
a license is relinquished or a project is abandoned, the related costs are recognised in profit or loss immediately.
the cost of materials and direct labor, any other costs directly attributable to bringing an asset to a working condition for its
intended use, as well as the costs of dismantling and removing an asset and restoring the site on which it is located.
have different useful lives, they are accounted for as separate items of property, plant and equipment.
disposal with the carrying amount of property, plant and equipment and are recognised in profit or loss. When assets are sold
which have been revalued on acquisition for consolidation purposes, the amounts included in the asset revaluation reserve are
transferred to retained earnings (refer to note 15.1).
for the year ended June 30, 2016
when that cost is incurred, if it is probable that the future economic benefits embodied within the part will flow to the group and
the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other costs are
recognised in profit or loss as an expense incurred.
of production method which is based on the life of mine.
the estimated quantities of economically recoverable gold that can be recovered from reclamation sites based on the gold price
prevailing at the end of the financial year. 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.
and equipment. Leased assets are depreciated over the shorter of the lease term and their estimated useful lives, unless it is
reasonably certain that the group will obtain ownership by the end of the lease term. Land is not depreciated.
• mine properties – life-of-mine, currently between seven (2015: six) and 10 (2015: 10) years;
• mine development – life-of-mine, currently between seven (2015: six) and 10 (2015: 10) years;
• mine plant facilities – life-of-mine, currently between seven (2015: six) and 10 (2015: 10) years; and
• equipment and vehicles – two to five years.
Upon initial recognition, the leased asset and liability are measured at amounts equal to the lower of the fair value of the leased
asset and the present value of the minimum lease payments. Subsequent to initial recognition, the asset is accounted for in the
same manner as owned property, plant and equipment.
any objective evidence (e.g. delinquency of a debtor and indications that a debtor will enter bankruptcy) that it is impaired. A
financial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative effect on
the estimated future cash flows of that asset.
amount and the present value of the estimated future cash flows discounted at the original effective interest rate, that is, the
effective interest rate computed at initial recognition of these financial assets.
for the year ended June 30, 2016
the fair value of an available-for-sale financial asset has been recognised directly in OCI, and there is objective evidence (e.g.
significant or prolonged decline in the fair value below the cost of the investment) that the asset is impaired, the cumulative loss
that had been recognised in OCI is recognised in profit or loss even though the financial asset has not been derecognised. The
amount of the cumulative loss that is recognised in profit or loss is the difference between the acquisition cost and current fair
value, less any impairment loss on that financial asset previously recognised in profit or loss. Financial assets that are individually
significant are tested for impairment on an individual basis. The remaining financial assets are assessed collectively in groups that
share similar credit risk characteristics. All impairment losses are recognised in profit or loss.
recognised. For financial assets measured at amortised cost, the reversal is recognised in profit or loss. For available-for-sale
financial assets that are equity securities, the reversal is recognised in OCI.
determine whether there is any indication of impairment. If any such indication exists, the asset’s recoverable amount is
estimated.
assessing 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. For purposes of impairment
testing, assets are grouped together into the smallest group of assets which generates cash flows from continuing use that is
largely independent of the cash inflows of other assets or groups of assets (cash-generating units).
its cash generating unit, exceeds its recoverable amount. Impairment losses are recognised in profit or loss.
(group of units) on a pro rata basis. Impairment losses recognised in prior periods are assessed at each reporting date for any
indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the
estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying
amount does not exceed the carrying amount that would have been determined, net of depreciation, if no impairment loss had
been recognised.
recoverable amount. For purposes of impairment testing, exploration assets are allocated to cash-generating units consistent with
the determination of reportable segments.
and probable reserves are determined to exist. Upon determination of proven and probable reserves exploration assets attributable
to those reserves are first tested for impairment and then reclassified from exploration assets to a separate category within tangible
assets.
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.
inventory valuation.
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 <br>selling expenses.
for the year ended June 30, 2016
relates to business combinations, or to items recognised directly in equity or OCI.
reporting date, and any adjustment to tax payable in respect of previous years.
reporting purposes and the amounts recognised for tax purposes. Deferred tax is not recognised for the following temporary
differences: the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither
accounting nor taxable profit; and differences relating to investments in subsidiaries and joint ventures to the extent that it is
probable that they will not reverse in the foreseeable future. In addition, deferred tax is not recognised for taxable temporary
differences arising on the initial recognition of goodwill. Deferred tax is measured at the tax rates that are expected to be applied
to the temporary differences, based on the expected manner of realisation or settlement of the carrying amount of assets and
liabilities, and based on the laws that have been enacted or substantively enacted at the reporting date.
relate to income taxes levied by the same tax authority on the same taxable entity or on different tax entities if the company
intends to settle current tax liabilities and assets on a net basis, or if their tax assets and liabilities will be realised simultaneously.
the temporary difference can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that
it is no longer probable that the related tax benefit will be realised.
after April, 1 2012.
withheld are not recognised as part of the company’s tax charge but rather as part of the dividend paid recognised directly in
equity. Where withholding tax is withheld on dividends received, the dividend is recognised at the gross amount with the related
withholdings tax recognised as part of tax expense unless it is otherwise reimbursable in which case, it is recognised as an asset.
deduction from equity, net of any tax effect.
dividends are discretionary. Dividends on preference share capital classified as equity are recognised as distributions within
equity. Preference share capital is classified as a liability if it is redeemable on a specified date or at the option of the
shareholders, or if dividend payments are not discretionary. Dividends thereon are recognised as interest expense in profit or loss
as accrued.
is recognised as a deduction from equity. Repurchased shares are classified as treasury shares and are presented in the treasury
share reserve. When treasury shares are sold or reissued subsequently, the amount received is recognised as an increase in equity
and the resulting surplus or deficit on the transaction is presented within share premium.
for the year ended June 30, 2016
dividends accrue.
entity and has no legal or constructive obligation to pay further amounts. Pension plans, which are multi-employer plans in the
nature of defined contribution plans, are funded through monthly contributions to these defined contribution plans. Obligations
for contributions are recognised as an employee benefit expense in profit or loss as the service is rendered.
of South Africa Long Service Award Scheme. The amount of the award is based on both the employee’s skill level and years of
service with gold mining companies that qualify for the scheme. The obligation is accrued over the service life of the employees
and is calculated using a projected unit credit method. Any actuarial gains or losses are recognised in OCI in the period in which
they arise.
relevant employees and the remaining life expectancies of retirees. The group has an obligation to provide medical benefits to
certain of its pensioners and dependants of ex-employees. These liabilities are provided in full, calculated on an actuarial basis
and discounted using the projected unit credit method. The discount rate is the yield at the reporting date on corporate bonds that
have maturity dates approximating the terms of the group’s obligations and that are denominated in the same currency in which
the benefits are expected to be paid. Periodic valuation of these obligations is carried out by independent actuaries using
appropriate mortality tables, long-term estimates of increases in medical costs and appropriate discount rates. The fair value of
any plan assets is deducted. Actuarial gains and losses are recognised immediately in OCI. When the calculation results in a
benefit to the group, the recognised asset is limited to the net total of any unrecognised past service costs and the present value of
any future refunds from the plan or reductions in future contributions to the plan.
profit or loss immediately.
withdrawal, to a formal detailed plan to either terminate employment before the normal retirement date, or to provide termination
benefits as a result of an offer made to encourage voluntary redundancy.
redundancy, it is probable that the offer will be accepted, and the number of acceptances can be estimated reliably. If benefits are
payable more than 12 months after the reporting period, they are discounted to their present value.
The group grants share options to certain employees under an employee share plan to acquire shares of the company. The fair
value of options granted is recognised as an employee expense with a corresponding increase in equity. The fair value is
measured at grant date and spread over the period during which the employees become unconditionally entitled to the options.
conditions upon which the options were granted. The amount recognised as an expense is adjusted to reflect the actual number of
share options that vest, except where forfeiture is only due to market conditions such as share prices not achieving the threshold
for vesting.
for the year ended June 30, 2016
The group operates a cash-settled long term incentive scheme in which certain employees of the group participate.
share price, taking into account the terms and conditions upon which the awards were granted. The fair value of the award is
estimated using appropriate valuation models and appropriate assumptions at the grant date.
estimate of the number of instruments that will eventually vest, with a corresponding increase in the share-based payment
obligation. At each reporting date the obligation is remeasured to the fair value of the instrument, to reflect the potential outflow
of cash resources to settle the liability, with a corresponding adjustment to profit or loss. Vesting assumptions for non-market
conditions are reviewed at each reporting date to ensure they reflect current expectations.
resulting from past events that can be estimated reliably and it is probable that an outflow of economic benefits will be required to
settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current
market assessments of the time value of money and, where appropriate, the risks specific to the liability.
Provision for environmental rehabilitation includes decommissioning and restoration liabilities.
the obligation, using estimated cash flows based on current prices. The unwinding of the decommissioning and restoration
obligation is included in profit or loss. Estimated future costs of decommissioning and restoration liabilities are reviewed
regularly and adjusted as appropriate for new circumstances or changes in law or technology.
The provision for decommissioning represents the cost that will arise from rectifying damage caused before production
commenced. Accordingly, an asset is recognised and included within mining properties. Changes in estimates are capitalised or
reversed against the relevant asset. Expenditures actually incurred to settle such liabilities are recognised as cash outflows from
investing activities.
The provision for restoration represents the cost of restoring site damage after the start of production. Increases in the provision
are recognised in profit or loss as a cost of production. Expenditures actually incurred to settle such liabilities are recognised as
cash outflows from operating activities.
These contributions are recognised as a right to receive a reimbursement from the fund and measured at the lower of the amount
of the environmental rehabilitation liability recognised and the fair value of the fund assets. Changes in the carrying value of the
fund assets, other than contributions to and payments from the fund, are recognised in profit or loss.
receivable. Revenue is recognised in profit or loss when the significant risks and rewards of ownership have been transferred to
the buyer, recovery of the consideration is probable, the associated costs can be estimated reliably, there is no continuing
management involvement with the goods, and the amount of revenue can be measured reliably. These criteria are usually met
when Rand Refinery sells the refined gold.
for the year ended June 30, 2016
to them and the grant will be received. Grants that compensate the group for expenses incurred are recognised in profit or loss as a
deduction against the related expense.
gains on financial instruments measured at amortised cost, net foreign exchange gains, and other profits and losses arising on
disposal of investments.
basis, taking account of the principal outstanding and the effective rate to maturity on the accrual basis.
charge is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining
balance of the liability.
provision for environmental rehabilitation, net foreign exchange losses, net losses on financial instruments measured at amortised
cost, and interest on finance leases.
construction phase as part of the cost of the project. Such borrowing costs are capitalised over the period during which the asset is
being acquired or constructed and borrowings have been incurred. Capitalisation ceases when construction is interrupted for an
extended period or when the asset is substantially complete. Other borrowing costs are expensed as incurred.
reviews regularly in allocating resources to segments and in assessing their performance. The CODM for the group has been
identified as the group’s Executive Committee. Reportable segments are identified based on quantitative thresholds of revenue,
profit or loss, and assets. The amounts disclosed for each reportable segment are the measures reported to the CODM, which are
not necessarily based on the same accounting policies as the amounts recognised in the financial statements. Aggregation of
operating segments is implemented where disclosure of information enables users of the group’s financial statements to evaluate
the nature and effects of the business activities in which it engages and the economic environment in which it operates, where the
operating segments have characteristics so similar that they can be expected to have essentially the same future prospects and
where they are similar in the following respects:
• the nature of the production process;
• the type or class of customer for their products;
• the methods used to distribute their products; and
• if applicable, the nature of the regulatory environment.
for the year ended June 30, 2016
they will be recovered primarily through sale rather than continuing use.
impairment loss on the disposal group is allocated first to goodwill, and then to the remaining assets and liabilities on a pro rata
basis, except that no loss is allocated to inventories, financial assets, deferred tax assets, employee benefit assets and investment
property, which continue to be measured in accordance with the group’s other accounting policies. Impairment losses on initial
application as held for sale and subsequent gains and losses on remeasurement are recognised in profit or loss.
any equity accounted investee is no longer equity accounted.
based on the net profit or loss after tax for the year attributable to ordinary shareholders of the company, divided by the weighted
average number of ordinary shares in issue during the year. Diluted earnings or loss per share is presented when the inclusion of
ordinary shares that may be issued in the future, which comprise share options granted to employees, has a dilutive effect on
earnings or loss per share.
ADOPTED
interpretations that may be applicable to the business of the entity were in issue but not yet effective and may therefore have an
impact on future financial statements. These new standards, amendments to standards and interpretations have not been early
adopted by the group and an estimate of the impact of the adoption thereof for the group is in the process of being finalised. These
Standards and Interpretations will be adopted at their effective date.
Key clarifications included in this amendment includes the following:
if they are a minimum requirement of a standard.
• The order of notes to the financial statements is not prescribed. Instead, companies can choose their own order, and can
also combine, for example, accounting policies with notes on related subjects.
• It has been made explicit that companies:
-
this provides helpful information to users; and
or loss and OCI, with additional reconciliation requirements for the statement of profit or loss and OCI.
• The presentation in the statement of OCI of items of OCI arising from joint ventures and associates accounted for using
the equity method follows IAS 1’s approach of splitting items that may be reclassified and that will never be reclassified
to profit or loss.
for the year ended June 30, 2016
ADOPTED (continued)
The amendments provide additional guidance on the existence of deductible temporary differences, which depend solely on a
comparison of the carrying amount of an asset and its tax base at the end of the reporting period, and is not affected by possible
future changes in the carrying amount or expected manner of recovery of the asset.
deferred tax asset can be recognised.
there is sufficient evidence that it is probable that the entity will achieve this.
on a combined basis, unless a tax law restricts the use of losses to deductions against income of a specific type.
Measurement of cash-settled share-based payments – There is currently no guidance in IFRS 2 on how to measure the fair value
of the liability in a cash-settled share based payment. The amendments clarify that a cash-settled share-based payment is
measured using the same approach as for equity-settled share-based payments – i.e. the modified grant date method. Therefore, in
measuring the liability market and non-vesting conditions are taken into account in measuring its fair value and the number of
awards to receive cash is adjusted to reflect the best estimate of those expected to vest as a result of satisfying service and any
non-market performance conditions.
related to a share-based payment, even though the tax obligation is often a liability of the employee and not the company.
Currently, it is unclear whether the portion of the share-based payment that is withheld in these instances should be accounted for
as equity-settled or cash-settled. The amendments introduce an exception stating that, for classification purposes, a share-based
payment transaction with employees is accounted for as equity-settled if certain criteria are met.
The standard contains a single model that applies to contracts with customers and two approaches to recognising revenue: at a
point in time or over time. The model features a contract-based five-step analysis of transactions to determine whether, how much
and when revenue is recognised.
This standard will include changes in the measurement bases of the group’s financial assets to amortised cost, fair value through
other comprehensive income or fair value through profit or loss. Even though these measurement categories are similar to IAS 39,
the criteria for classification into these categories are different. In addition, the IFRS 9 impairment model has been changed from
an “incurred loss” model from IAS 39 to an “expected credit loss” model.
It sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract, ie
the customer (‘lessee’) and the supplier (‘lessor’). IFRS 16 replaces the previous leases Standard, IAS 17 Leases, and related
Interpretations. IFRS 16 has one model for lessees which will result in almost all leases being included on the Statement of
Financial position. No significant changes have been included for lessors.
for the year ended June 30, 2016
business district as well as the East and Central Rand goldfields. The operation comprises four plants. Ergo and Knights
continue to operate as metallurgical plants and Crown and City Deep continue as pump/milling stations feeding the
metallurgical plants.
and are therefore included in the disclosure here, even though they do not earn revenue. They do not represent a separate segment.
Working profit/(loss) before additions to property, plant and equipment
for the year ended June 30, 2016
Revenue
Working profit/(loss) before additions to property, plant and equipment
for the year ended June 30, 2016
Revenue
Working profit/(loss) before additions to property, plant and equipment
for the year ended June 30, 2016
Included in staff costs are:
recover costs incurred by Ergo Business Development Academy (“EBDA”).
The Share-based payments expense relates mainly to the grant made during November 2015 under the amended cash-settled
long term incentive scheme (“LTI”) and has been driven by the increase in the DRDGOLD share price to R8.53 at reporting
date.
In 2010 the Ekurhuleni Metropolitan Municipality (“Municipality”) brought an action against East Rand Proprietary Mines
Limited (“ERPM”) claiming an amount of R43 million in respect of outstanding rates and taxes which were allegedly owing.
ERPM employed experts to investigate the allegations and concluded that this claim was without merit and therefore that an
outflow of resources was remote. ERPM deferred payment of rates and taxes for which it recognised an accrual of R22.7
million.
been written off and the balance owing by ERPM was reduced to zero. As a result the accrual was reversed.
for the year ended June 30, 2016
2015: R3.1 million in the Ergo operating segment related to the Soweto cluster included under mine development costs which
was assessed to be uneconomical to mine.
2014: R12.4 million in the Ergo operating segment related to the exploration assets associated with phase 2 of the Uranium
plant that was not considered to be economically viable at the prevailing uranium prices.
Listed shares:
2015: R3.6 million (2014: R6.7 million) due to the fair value of these shares having remained significantly lower than its
original cost price for a pro-longed period. These include:
– Village Main Reef Limited (“VMR”): R2.3 million (2014: R5.3 million); and
– West Wits Mining Limited (“WWM”): R1.3 million (2014: R1.4 million).
During the year ended June 30, 2014, the accumulated revaluations recognised in Other Comprehensive Income related to the
investment in Rand Refinery Proprietary Limited (“Rand Refinery”) was derecognised and the initial cost of the investment
amounting to R46.9 million was impaired in profit or loss (refer to note 10).
During the year ended June 30, 2014, the group recorded a reversal of an impairment of R2.7 million against the investment in
West Wits SA Proprietary Limited due to the disposal of the shares for an interest in West Wits Mining Limited, at an amount
in excess of the original acquisition cost.
loss
US$1. The foreign exchange translation reserve amounting to R5.9 million was reclassified to profit or loss on the disposal.
for the year ended June 30, 2016
Current tax - current year
revenue from a gold mining company during the year. The formula for determining the South African gold mining tax rate for
the years ended June 30, 2016, June 30, 2015 and June 30, 2014 is: Y = 34 - 170/X where Y is the percentage rate of tax
payable and X is the ratio of taxable income, net of any qualifying capital expenditure that bears to mining income derived,
expressed as a percentage. Non-mining income, which consists primarily of interest, is taxed at a standard rate of 28% (2015:
28% and 2014: 28%).
for the respective companies are based on the current estimate when temporary differences will reverse. Depending on the
profitability of the companies, the tax rate can consequently be significantly different from year to year.
when calculating the mining income. Capital expenditure not deducted from mining income is carried forward as unredeemed
capital expenditure to be deducted from future mining income. The Ergo operation is treated as one tax paying operation
pursuant to the relevant ring-fencing legislation.
for the year ended June 30, 2016
Major items causing the group's income tax provision to differ from the
statutory rate were:
unrecognized (d)
deduction against future mining income)
gains)
income)
20.07% and 2014: 17.64% to 18.46%) due to the impact of the higher forecasted gold price.
on non-redeemable assets (2015: R6.6 million related to depreciation on non-redeemable assets, R4.8 million related to
impairments of available-for-sale investments and other assets (2014: R6.6 million related to depreciation on non-
redeemable assets, R46.9 million relating to the impairment of available-for-sale financial assets (refer to note 4) and
share of losses of equity accounted investments of R0.3 million).
and
and
Proprietary Limited which is excluded for capital gains tax. The remaining portion has been included for capital
gains tax and utilised capital losses that were previously unrecognised.
generated taxable income during the year ended June 30, 2016 resulting from the following non-recurring, taxable items:
for the year ended June 30, 2016
The calculation of earnings per ordinary share is based on the following:
weighted average number of ordinary shares
Weighted average number of ordinary shares in issue
shares calculation as their effect would have been anti-dilutive.
Cost
Cost
for the year ended June 30, 2016
Cost
Cost
Cost
net decrease in the depreciation charge recognised (refer note 1 use of estimates and judgements).
that was acquired during the year ended June 30, 2015 by way of a finance lease (refer note 20).
for the year ended June 30, 2016
West Wits Mining Limited (“WWM”)
Rand Mutual Assurance Company Limited
A170)*
Limited
* Class A shares are held in Guardrisk Insurance Company Limited that entitles the holder to 100% of the residual net equity
for the year ended June 30, 2016
Capital Management Group Company Limited as part of their offer to acquire the entire issued share capital of VMR for
a cash consideration of R12.25 per VMR share. Fair value adjustments amounting to R19.9 million were reclassified to
profit or loss on the disposal.
Limited (“Rand Refinery”) identified an imbalance between physical gold and silver on hand and what Rand Refinery
owed its depositors and bullion bankers per the metallurgical trial balance. Rand Refinery’s investigations have to date
not determined the root cause of the imbalance. Various corrective measures have subsequently been implemented to
improve Rand Refinery’s operational performance.
Refinery’s major shareholders have extended Rand Refinery an irrevocable, subordinated loan facility of up to R1.2
billion. The facility is convertible to equity after a period of two years. DRDGOLD declined the option to provide
funding on a pro-rate basis with other major shareholders which may result in its shareholding being diluted, if the
funding provided by the other shareholders are converted into equity. During late calendar year 2015, Rand Refinery
drew down R1.02 billion on the shareholders’ loan.
of the investment in Rand Refinery shares is zero as at June 30, 2016.
Ergo Mining Operations Proprietary Limited to the trust up to the completion of the flip-up (refer note 15.2) and
thereafter the payment of dividends from DRDGOLD to the trust. The loan was settled in full during the year ended June
30, 2016.
be applied towards the settlement of DRDGOLD group’s environmental rehabilitation obligations under financial
guarantees issued by Guardrisk Insurance Company Limited to the DMR (refer note 16).
primarily in low-risk interest-bearing debt securities and may only be used for environmental rehabilitation purposes
(refer note 16).
for the year ended June 30, 2016
Indirect: 100% of Ergo Mining Proprietary Limited (“Ergo”).
EMO and its subsidiaries (“the EMO group”) does not hold any ownership interest in the Crown Rehabilitation Trust or the Ergo Business Development
Academy NPC (“EBDA”), but controls these entities by way of the terms of the constituting documents that grant the EMO group the ability to direct its
relevant activities, as well as the group receiving substantially all of the benefits that are generated through their operation.
for payment of the loan at any time; and
– the subordination of the loan by DRDGOLD was cancelled. Prior to the amendment, the loan was subordinated on terms as described in 5 below.
(a) During November 2015 these loan agreements were amended resulting in DRDGOLD subordinating its claim against these subsidiaries in favour of all
other creditors and in terms of this subordination agreements, DRDGOLD will not call for repayment of the loans until:
– the total assets of the lender, fairly valued, exceeds its total liabilities; or
– all other liabilities are paid.
(b) Prior to the amendment described in (a), the company subordinated its claim against these subsidiaries in favour of all other creditors and in terms of
those subordination agreements, DRDGOLD would not call for repayment of the loans:
– within 367 days from 1 October 2014; or
– until all other liabilities are paid; or
– the total assets of the lender, fairly valued, exceeds its total liabilities.
and has undertaken not to call for payment of such loans within 367 days commencing on the date of signature of the borrower’s most recently issued
financial statements.
bullion amounting to nil (2015: R15 million) after a nil (2015: R1.8 million) write down to net realisable value.
receivable of R10.9 million (2015: R0.9 million).
for the year ended June 30, 2016
the underground mining and prospecting rights held by ERPM including the related liabilities during the last quarter of the
financial year ended June 30, 2014. These assets and liabilities have been presented as a disposal group held for sale from
that date due to a sale being expected within 12 months.
Rand Proprietary Mines Limited (ERPM) collectively had entered into an agreement to dispose of certain underground
mining and prospecting rights held by ERPM, and certain other assets on the related mining areas, for an agreed
consideration of approximately R220 million.
under Section 11 of the Mineral and Petroleum Resource Development Act as a result of circumstances beyond the entity’s
control. Management has taken timely action and remains confident that this last outstanding regulatory approval will be
obtained in due course.
Section 11 approval.
during June 2016. The property has been classified as held for sale due to the disposal being expected to be completed within
the next 12 months.
15.1 EQUITY OF THE OWNERS OF THE PARENT
600,000,000 (2015 and 2014: 600,000,000) ordinary shares of no par value
5,000,000 (2015 and 2014: 5,000,000) cumulative preference shares
of 10 cents each
431,429,767 (2015: 430,883,767 and 2014: 385,383,767) ordinary shares of no par
value (a)
of 10 cents each (c)
Foreign exchange translation reserve (d)
The following dividends were declared and paid:
60 cents per qualifying ordinary share (2015: 2 cents and 2014: 14 cents)
for the year ended June 30, 2016
15.1 EQUITY OF THE OWNERS OF THE PARENT (continued)
in the company are under the control of the directors until the next annual general meeting.
DRDGOLD (1996) share scheme (2015 and 2014: nil).
2014: nil).
ordinary shares, to receive a dividend equal to 3% of the gross future revenue generated by the exploitation or the
disposal of Argonaut’s mineral rights acquired from Randgold and Exploration Company Limited in September 1997.
The Department of Mineral Resources (“DMR”) granted DRDGOLD a prospecting right over an area which was too
small to mine. When an application for a greater area was lodged, the DMR stated that as the additional area was in an
urban location, the application for a prospecting right could not be granted. The development of the resource is not
expected to materialise and therefore no dividend is expected to be paid.
foreign operations and was derecognised on the disposal of the foreign operations during the year ended June 30, 2015.
the acquisition of ErgoGold in the year ended June 30, 2009. This amount represented the increase in the fair value of
ErgoGold’s net assets after the acquisition of the group’s initial interest, which was attributable to that initial interest.
year ended June 30, 2013. The buy-out amounted to R2.7 million. The share option reserve was transferred to retained
earnings upon the last of the outstanding options vested during FY2015.
dividend for 2016. The dividend has not been provided for and does not have any tax impact on the company. Dividend
withholding tax is levied at 15% (2015 and 2014: 15%) (certain exemptions apply) and will be withheld from the
dividend depending on the classification of the beneficial owner of the relevant share.
ended June 30, 2015, making it a wholly-owned subsidiary of DRDGOLD with no remaining NCI in the group subsequent to
this date (refer to note 11). The following table summarises the information relating to the group’s NCI up to the date of EMO
becoming a wholly owned subsidiary:
for the year ended June 30, 2016
attributable to the decrease in the expected costs to rehabilitate the Ergo plant and the Elsburg tailings complex (2015:
The R29.7 million increase in the decommissioning liability was mostly due to the costs expected to be incurred to
rehabilitate the additional capacity of the Brakpan deposition site that was constructed during the year (refer note 9)).
estimated costs to rehabilitate historical spills and dumps that are not considered to be economically viable to mine
(2015: The R15.8 million benefit recognised to profit or loss was mostly attributable to a decrease in the oversized
material that management expects to rehabilitate).
the Guardrisk Cell Captive and, at the time of mine closure, the proceeds on sale of remaining assets and gold from plant
clean-up.
the Guardrisk Cell Captive amounting to R108.3 million (2015: R100.3 million). In addition, Guardrisk Insurance Company
Limited issued environmental guarantees to the DMR amounting to R427.2 million (2014: R404 million). These guarantees
are funded by the funds held in the Guardrisk Cell Captive.
for the year ended June 30, 2016
Liability for post-retirement medical benefits (a)
Liability for long term employee incentive scheme (b)
The group participates in a number of multi-employer, industry-based retirement plans. All plans are governed by the
Pension Funds Act, 1956. The group pays fixed contributions to external institutions and will have no legal or constructive
obligation to pay further amounts.
Contribution payments
method, of independent actuaries performed as at June 30, 2015. Post-retirement medical benefits are actuarially valued
every three years. The obligation is unfunded.
Amounts recognized in the statement of financial position are as follows:
Health care cost inflation
for the year ended June 30, 2016
experience are recognised as being essential to the group’s performance. The Phantom Share Scheme was introduced during the
year ended June 30, 2013 and is classified as cash settled. In terms of the Phantom Share Scheme rules, 50% of the phantom
shares granted will be valued based on the group meeting certain pre-determined performance criteria and the remaining 50% to
defined retention periods of which the maximum incentive pay-out per annum to any single employee may not exceed 75% of that
employee’s gross remuneration package. The participants in the scheme are fully taxed at their marginal tax rate on any gains
realised on the exercise of their options.
– Shares granted during November 2015 will vest after 3 years (20%), 4 years (30%) and 5 years (50%);
– The scheme has a finite term of 5 years and thus no top-up awards are made when the shares vest;
– The vesting of the shares in years 3, 4 and 5 is subject to:
• Individual “service” conditions being met.
for the year ended June 30, 2016
The fair value of the cash-settled share based payment provision has been measured using the Black Scholes option pricing
model. Service and non-market performance conditions attached to the arrangements have not been taken into account in
measuring the fair value.
Expected term (years)
Expected term (months)
the November 2015 amendments to the scheme determined against the group
performance are as follows:
expressed as a percentage of revenue
The expected term of the instruments has been based on historical experience and general option holder behaviour.
for the year ended June 30, 2016
DRDGOLD (1996) Share Scheme and no new share options will be granted under the replaced scheme.
in cash or equity instruments.
vested, have a strike price of R5.12 and will expire on October 31, 2016.
Property, plant and equipment
Property, plant and equipment
Opening balance
expected average effective tax rates, resulting from the mining tax formula for mining income based on forecasts per individual
entity.
expenditure of R272.9 million (2015: R275.6 million) and capital losses of R271.1 million (2015: R271.1 million).
for the year ended June 30, 2016
June 30, 2016
Capital, a division of ABSA Bank Limited, under which DRDGOLD may from time to time issue notes and R165 million was
raised in total during July 2012 and September 2012. The different notes issued matured 12 (R20.0 million), 24 (R69.5 million)
and 36 (R75.5 million) months from the date of issue and bear interest at the three-month Johannesburg Inter-bank Acceptance
Rate (JIBAR) plus a margin ranging from 4% to 5% a year. The effective interest rates were 10.8% – 11.1%.
significant disposal of assets and in the form of a guarantor coverage threshold. On July 3, 2015, DRDGOLD repaid R23.1 million
including capital and interest.
supply of temporary power generation through the provision of specified temporary power generation equipment and services.
million). The finance lease has an effective interest rate of 17.9% and Ergo has the option to acquire the temporary power
generation equipment at the end of the 5 year lease for approximately R9.9 million. Contingent rentals are payable for usage of the
equipment in excess of the usage inclusive in the minimum lease payments.
for the year ended June 30, 2016
Depreciation
• R15.2 million (2015: R14.3 million) set aside for guarantees;
• R47.7 million (2015: R11.4 million) relating to cash held in escrow relating to the electricity dispute with Ekurhuleni
Metropolitan Municipality discussed under Note 24 including interest thereon; and
•R4.8 million (2015: R1.9 million) held on behalf of the DRDSA Empowerment Trust.
Contracted for but not provided for in the financial statements
Ergo leases its vehicles under various operating leases. There is an average escalation of 2.5% per annum imposed by these lease
agreements.
Within one year
for the year ended June 30, 2016
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.
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 TDF. Partially treated water has been discharged by TCTA into the Elsburg Spruit.
right to either challenge future directives or to implement our own initiatives should it become necessary, it is an encouraging
development. Through this agreement Ergo also secured the right to purchase up to 30 ML of partially treated AMD from TCTA
at cost, in order to reduce Ergo’s reliance on potable water for mining and processing purposes.
sustainable long term solution to AMD. This solution would have been at no cost to the mines and government. 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.
In January 2013, DRDGOLD, ERPM (“the DRDGOLD Respondents”) and 23 other mining companies (“the Mining
Companies”) were served with a court application for a class action by alleged former mineworkers and dependants of deceased
mineworkers. In the pending application the applicants allege that the Mining Companies and the DRDGOLD Respondents
conducted underground mining operations in a negligent manner that caused occupational lung diseases. The matter was heard in
October 2015.
certification in terms of which the applicants sought certification of two industry-wide classes: a silicosis class and a tuberculosis
class, both of which cover current and former underground mineworkers who have contracted the respective diseases (or the
dependants of mineworkers who died of those diseases). In terms of the judgment, the Court ordered the certification of a single
class action comprising two separate and distinct classes – a silicosis class and a tuberculosis class.
Respondents (as well as the Mining Companies) on June 3, 2016 in respect of inter alia the transmissibility of damages.
paragraph 8 of the order dated May 13, 2016. On July 15, 2016, the DRDGOLD Respondents filed and served its petition to the
SCA in respect of the certification issue. The notice of appeal in respect of the transmissibility of damages was filed and served on
July 25, 2016. On September 13, 2016, the SCA granted the DRDGOLD Respondents leave to appeal on both the certification and
transmissibility of damages.
In December 2014, an application (in the South Gauteng High Court) was filed and served on inter alia the Ekurhuleni
Metropolitan Municipality (“Municipality”) and Eskom Holdings SOC Limited (“Eskom”) in terms of which Ergo contends,
amongst other things, that the Municipality does not “supply” electricity to Ergo from a “supply main” as contemplated in the
Municipality’s Electricity By-Laws of 2002. The Municipality is not licensed to supply electricity to Ergo in terms of the
Municipality’s Temporary Distribution Licence. The Municipality is not entitled to render tax invoices to Ergo for the supply and
consumption of electricity from the substation. The Municipality is furthermore not competent to add a surcharge or premium of
approximately 40% (forty percent) of the rate at which Eskom ordinarily charges Ergo on its Megaflex rate. Ergo is not indebted
to the Municipality for the supply and consumption of electricity and is not obliged to tender payment for any amounts claimed in
the invoices rendered by the Municipality in excess of its actual consumption thereof as determined by Eskom on a monthly basis.
The Municipality is indebted to Ergo in the amount of approximately R43 million in respect of the surcharges and premiums that
were erroneously paid to the Municipality in the bona fide and reasonable belief that the Municipality was competent to supply
electricity to it.
surcharges of which R45.7 million has been paid into an attorney’s trust account at June 30, 2016 pending the final determination
of the dispute.
for the year ended June 30, 2016
The group has exposure to credit risk, liquidity risk, 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 as well as the group’s objectives and policies and
processes for measuring and managing risk. The group’s management of capital is disclosed in note 27. Further quantitative
disclosures are 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. The Board has established the Audit and Risk Committee, which is responsible for developing and monitoring the
group’s risk management policies. The committee reports regularly to the Board on its activities.
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.
procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the group. The Audit
and Risk Committee 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 Audit and Risk
Committee.
contractual obligations, and arises principally from the group’s receivables from customers and investment securities.
banks and financial institutions located in South Africa after evaluating the credit ratings of the representative financial
institutions. Furthermore, its trade receivables and loans are regularly monitored and assessed for recoverability. Where it is
appropriate an impairment loss is raised.
sells the gold, on behalf of the South African operations, on the bullion market. The gold is usually sold by Rand Refinery on the
same day as it is delivered and settlement is made within two days.
for the year ended June 30, 2016
2016
10)
historical payment behaviour.
for the year ended June 30, 2016
group’s income or the value of its holding of financial instruments. The objective of market risk management is to manage and
control market risk exposures within acceptable parameters while optimising returns.
price of gold which is predominantly sold in US Dollars and then converted to Rand. DRDGOLD does not enter into forward
sales, derivatives or other hedging arrangements to establish a price in advance for the sale of future gold production.
amounts shown below. This analysis assumes that all other variables, in particular foreign currency rates, remain constant. The
analysis is performed on the same basis for 2015 and excludes income tax.
risks. 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 minimizing 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 at then current rates. Conversely, higher interest rates result in higher interest
payments on loans and overdrafts.
Financial assets
by the amounts shown below. This analysis assumes that all other variables, in particular foreign currency rates, remain constant.
The analysis is performed on the same basis as the prior year and excludes income tax.
for the year ended June 30, 2016
this into South African Rand. The group is thus exposed to fluctuations in the US Dollar/South African Rand exchange rate. The
group conducted its operations in South Africa during the current year. Foreign exchange fluctuations affect the cash flow that it
will realise from its operations as gold is sold in US Dollars, while production costs are incurred primarily in South African
Rands. The group’s results are positively affected when the US Dollar strengthens against the Rand and adversely affected when
the US Dollar weakens against the Rand. The group does not hedge against foreign currency fluctuations and considers the risk to
be low due to foreign currency normally being disposed of on the same day.
by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant. The
analysis is performed on the same basis for 2015. A 10% weakening of the rand against the US dollar at June 30, would have had
the equal but opposite effect, on the basis that all other variables remain constant.
for the year ended June 30, 2016
income. Investments within the portfolio are managed on an individual basis.
profit or loss and/or equity as well as other comprehensive income per category of financial instruments at June 30:
Financial assets
Available-for-sale financial assets
Financial liabilities measured at amortized cost
Financial assets
Available-for-sale financial assets
Financial liabilities measured at amortized cost
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.
financial obligations; this excludes the potential impact of extreme circumstances that cannot reasonably be predicted such as
natural disasters.
and excluding the impact of netting agreements:
Finance lease obligation
Loans and borrowings
for the year ended June 30, 2016
funds (refer note 10)
– non-current
between market participants at the measurement date.
The financial instruments measured at fair value are measured using the following valuation methodologies.
The fair value of listed investments are determined by reference to published price quotations from recognised securities
exchanges.
The valuations are based on the net asset values of these investments and constitute the investments’ fair value as most of the
assets in these investment companies are carried at fair value. The valuations have been compared to information available in the
market regarding other market participants’ view on the value of the underlying investment.
The group applied the discounted cash flow valuation technique in the measurement of loans and receivables as well as financial
liabilities measured at amortised cost. No significant unobservable inputs are used in this measurement.
The fair value of the loan is not readily determinable and are therefore carried at cost.
The carrying value of cash and cash equivalents approximates their fair value due to the short-term maturity of these deposits. The
carrying value of the environmental trust funds approximate their fair value due to these investments being cash in nature.
The fair value approximates the carrying value due to their short-term maturities.
The loan bears interest at the three month Johannesburg Inter-bank Acceptance Rate plus a margin ranging from 4% to 5% per
annum. Fair value is calculated by reference to quoted prices for floating interest instruments.
Trade and other payables
The fair value approximates the carrying value due to their short-term maturities.
NOTES TO THE FINANCIAL STATEMENTS (continued)
for the year ended June 30, 2016
as follows:
as prices) or indirectly (i.e. derived from prices); and
Available-for-sale financial assets
Available-for-sale financial assets
Balance at beginning of year
comprehensive income
measure for fair value is available. Therefore no sensitivity analysis has been prepared.
for the year ended June 30, 2016
Short-term benefits
management personnel are those persons having authority and responsibility for planning, directing and controlling the activities
of the company, directly or indirectly, including any director (whether executive or otherwise) of the company.
the pricing, quality and the reliability of that party. The contract terms are compared to similar suppliers of goods and services to
ensure that the contract is on market related terms.
key management personnel as at June 30, 2016 are disclosed in note 17.
million) were received by EMO on these shares.
consolidation purposes) to D J Pretorius as a mining right conversion bonus as required by his employment contract.
• corporate services fees from EMO amounting to nil (2015: R10.6 million and 2014: R21.9 million);
• corporate services fees from Ergo amounting to R20.1 million (2015: nil);
• interest from EMO amounting to R26.5 million (2015: R30.7 million and 2014: R30.3 million) and from Ergo amounting to
R35.4 million (2015: R31.3 million and 2014: R28.5 million).
• Subsidiaries – refer to note 11;
• Loans to DRDSA Empowerment Trust – refer to note 10;
• Receivables from other related parties – refer to note 13;
• Cash held on behalf of DRDSA Empowerment Trust – refer to note 22.
for the year ended June 30, 2016
by Guardrisk to the DMR as outlined in note 16 amounting to R7.8 million (2015: R9.9 million and 2014: nil), which included a
contribution of nil (2015: R0.8 million) (refer note 10).
The group has entered into an agreement with Rand Refinery Limited (“Rand Refinery“), for the refining and sale of all of its gold
produced in South Africa. Under the agreement, Rand Refinery performs the final refining of the group’s gold and casts it into
troy ounce bars. Rand Refinery then sells the gold on the same day as delivery, for the London afternoon fixed price on the day
the gold is sold. In exchange for this service, the group pays Rand Refinery a variable refining fee plus fixed marketing, loan and
administration fees. Mr Gwebu, who held the position of executive: legal, compliance and company secretary of DRDGOLD up
to December 31, 2014, was a director of Rand Refinery, a member of its Remuneration Committee and chairman of the Social and
Ethics Committee until September 5, 2014 when he resigned as director. Mr Charles Symons has been appointed to replace him as
director of Rand Refinery effective September 5, 2014. Mr Mark Burrell who is the financial director of Ergo is an alternate
director of Rand Refinery and a member of Rand Refinery’s Audit Committee.
• Trade receivables to the amount of nil (2015: R43.0 million and 2014: R25.6 million) relate to metals sold;
• The group received a dividend of nil (2015: nil and 2014: nil) from Rand Refinery.
On June 23, 2008, EMO approved a consultancy agreement with Khumo Gold, which owned 20% of EMO at that date. The
agreement provides for a monthly retainer of R0.3 million (2015: R0.3 million, 2014: R0.3 million) and will conclude on 31
December 2016.
During the year ended June 30, 2015, DRDGOLD acquired the 20% and 6% interest in the issued share capital of EMO held by
Khumo and the Empowerment Trust respectively (refer note 15.2).
the funding requirements of the group, including capital expenditure, in a way that optimizes the cost of capital, maximizes
shareholders' returns, and ensures that the group remains in a sound financial position. There were no changes to the group's
overall capital management approach during the current year. The group manages and makes adjustments to the capital structure
as opportunities arise in the market place, as and when borrowings mature or as and when funding is required. This may take the
form of raising equity, market or bank debt or hybrids thereof.
excluding non-redeemable preference shares and non-controlling interest from continuing operations, and seeks to maintain a
balance between the higher returns that might be possible with higher levels of borrowings and the advantages and security
afforded by a sound capital position. The board decides the level of dividends to ordinary shareholders.
financial statements.
12, 2002.
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.
July 6, 2005.
dated July 21, 2005.
Limited, dated November 9, 2005.
Operations Proprietary Limited, dated November 14, 2005.
Proprietary Limited, dated November 18, 2005.
November 18, 2005.
Holdings Proprietary Limited, dated November 18, 2005.
African Operations Proprietary Limited, dated November 18, 2005.
Limited, dated November 18, 2005.
Mining Company Limited, dated November 18, 2005.
Proprietary Limited, dated November 18, 2005.
DRDGOLD South African Operations Proprietary Limited, dated November 24, 2005.
for the time being of the DRDSA Empowerment Trust dated October 10, 2006.
Limited dated October 24, 2006.
Blyvooruitzicht Gold Mining Company Limited, Crown Gold Recoveries Proprietary Limited and East Rand
Proprietary Mines Limited, dated October 24, 2006.
Empowerment Trust and Blyvooruitzicht Gold Mining Company Limited, Crown Gold Recoveries Proprietary
Limited and East Rand Proprietary Mines Limited, dated October 24, 2006.
Proprietary Limited (formerly called Friedshelf 849 Proprietary Limited) (“Ergo”), DRDGOLD South African
Operations Proprietary (“DRDGOLD SA”) Mintails South Africa Proprietary Limited dated November 14, 2007.
Proprietary Limited (formerly called Friedshelf 849 Proprietary Limited (“Ergo”), DRDGOLD South African
Operations Proprietary (“DRDGOLD SA”) Mintails South Africa Proprietary Limited dated May 22, 2008.
Mines Limited (“ERPM”), Elsburg Gold Mining Joint Venture (“Elsburg JV”), Ergo Mining Proprietary Limited
(“Ergo”), Ergo Uranium Proprietary Limited (“Ergo Uranium”) and Mogale Gold Proprietary Limited (“Mogale
Gold”) dated August 15, 2008
(“Ergo Uranium”) and Ergo Mining Proprietary Limited (“Ergo”) dated August 15, 2008.
Uranium Proprietary Limited (“Ergo Uranium”) dated August 15, 2008.
(“ERPM”) and Mogale Gold Proprietary Limited (“Mogale Gold”) dated August 15, 2008.
Proprietary Mines Limited (“ERPM”) and Mogale Gold Proprietary Limited (“Mogale Gold”) dated September 29,
2008.
Mining Proprietary Limited (“Ergo Joint Venture”), DRDGOLD Limited (“DRDGOLD”) and East Rand
Proprietary Mines Limited (“ERPM”), dated December 8, 2008.
(“Lender”), Mintails Limited (“Borrower’s Guarantor”), Mogale Gold Proprietary Limited (Mogale Gold”) Ergo
Uranium Proprietary Limited (“Ergo Uranium”) dated December 8, 2008.
Witfontein Mining Proprietary Limited (“Witfontein”) and Argonaut Financial Services Proprietary Limited
(“Argonaut”) dated December 9, 2008.
March 31, 2009.
Final Heads of Agreement between Chizim Investments (Pvt) Limited (“Chizim”) and DRDGOLD Limited
(“DRDGOLD”) dated December 9, 2009.
Memorandum of Agreement between Ergo Uranium Proprietary Limited (“Ergo Uranium”) and East Rand
Proprietary Mines Limited (“ERPM”) dated January 21, 2010.
Heads of Agreement between East Rand Proprietary Mines Limited (“ERPM”) and Aurora Empowerment System
Proprietary Limited (“Aurora”) dated January 22, 2010.
Proprietary Limited (“Issuer”) and DRDGOLD Limited (“guarantor’) dated September 30 2010.
DRDGOLD Limited (“Issuer”) Crown Gold Recoveries Proprietary Limited (“Crown Gold”), East Rand
Proprietary Mines Limited (“ERPM”), Ergo Mining Operations Proprietary Limited (“EMO”) )and ABSA Bank
Limited (“ABSA”) ) dated June 30, 2012.
(“DRDGOLD”) (“Seller”), Business Venture Investments No 1557 Proprietary Limited (“Purchaser”) and
Blyvooruitzicht Gold Mining Company Limited (“Blyvoor”) dated February 11, 2012.
(“Ergo”) dated June 29, 2012.
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.
Proprietary Limited ("Khumo") dated March 17, 2014.
Trust (the Trust) dated March 17, 2014.
D.J. Pretorius
Chief Executive Officer
A.J. Davel
Chief Financial Officer