DRDGOLD - 20-F annual report 2021

 

 

 

UNITED STATESSECURITIESAND EXCHANGECOMMISSION

WASHINGTON, D.C. 20549

FORM

REGISTRATION STATEMENT PURSUANTTO SECTION 12(b)OR (g) OFTHE SECURITIESEXCHANGE ACTOF 1934

OR

TRANSITIONREPORT PURSUANTTO SECTION 13OR 15(d) OFTHE SECURITIESEXCHANGE ACTOF 1934

OR

SHELL COMPANY REPORTPURSUANT TOSECTION 13 OR15(d) OF THESECURITIES EXCHANGEACT 1934

Commissionfile number

(Exact nameof Registrantas specifiedin its charterand translationof Registrant'sname into English)

REPUBLIC OF SOUTH AFRICA

(Jurisdictionof incorporationor organization)

, Chief FinancialOfficer, Tel. no. +

, Email

Mpho Mashatola,Group FinancialController,Tel. no. +27 11 470 2600,Email mpho

.

mashatola@drdgold.com

(Name, Telephone,Email and/orFacsimilenumber and Addressof Company ContactPerson)

The

, Inc.

Securitiesregistered orto be registeredpursuant to Section12(g) of theAct

None

Securitiesfor which thereis a reportingobligation pursuantto Section 15(d)of the Act

None

Indicate the number of outstandingshares of each of the issuer'sclasses of capital or common stockas of the close of the period

☑

If this reportis an annualreport or transitionreport, indicateby check mark ifthe registrantis not requiredto file reportspursuant

to Section 13or 15(d) of theSecuritiesExchange Actof 1934Yes

☐

☑

Indicate by checkmark whether theregistrant(1) has filed allreports requiredto be filed by Section13 or 15(d) of theSecurities

Exchange Actof 1934 duringthe preceding12 months (orfor such shorterperiod that theregistrant wasrequired to filesuch reports),and

pursuant to Rule 405of Regulation S-T (§232.405 of this chapter) duringthe preceding 12 months (orfor such shorter period thatthe

registrant was required to submit such files).

☑

No

☐

Indicateby checkmark whetherthe registrantis alarge acceleratedfiler, anacceleratedfiler, anon-acceleratedfiler, oran emerging

growth company.See definition of“large accelerated filer,” “accelerated filer,”and “emerging growthcompany” in Rule12b-2 ofthe

Exchange Act.

Large acceleratedfiler

Emerging growthcompany

If any emerginggrowth companythat preparesits financialstatements inaccordance withU.S. GAAP, indicate by checkmark if

the registrant has elected not to use the extended transition period for complying with any new or revised financial accountingstandards

provided pursuantto Section 13(a)of the ExchangeAct

☐

The term“new orrevisedfinancialaccountingstandard”refers toany updateissued bythe FinancialAccountingStandardsBoard

to its AccountingStandards Codificationafter April5, 2012.

Indicate bycheckmarkwhethertheregistrant hasfiledareportonandattestation toitsmanagement’sassessment ofthe

effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) bythe

InternationalFinancial ReportingStandards asissued by the

International Accounting Standards Board

☑

Other

☐

If “Other”has beenchecked inresponse tothe previous question,indicate by checkmark whichfinancial statement itemthe

registranthas elected tofollow.Item 17

☐

Item 18

Indicate by checkmark whether theregistranthas filed alldocuments and reportsrequired to befiled by Sections12, 13 or 15(d)

of the SecuritiesExchange Act of1934 subsequentto the distributionof securitiesunder a plan confirmedby a court.Yes

☐

No

☐

 

TABLE OF CONTENTS

Page

PART I

ITEM 1.

6

3A.

Selected Financial Data

6

3B.

Capitalization And Indebtedness

8

3C.

Reasons For The Offer And Use Of Proceeds

8

4A.

ITEM 5.

5A.

5B.

6E.

8B.

ITEM 10.

81

10G.

Statement By Experts

81

10H.

Documents On Display

81

Subsidiary Information

81

ITEM 11.

82

12A.

Debt Securities

82

12B.

Warrants and Rights

82

Other Securities

82

12D

MATERIALMODIFICATIONS TOTHE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

84

ITEM 15.

CONTROLS AND PROCEDURES

84

ITEM 16A.

AUDIT COMMITTEE FINANCIAL EXPERT

85

ITEM 16B.

CODE OF ETHICS

86

ITEM 16F

CHANGE IN REGISTRANT'S CERTIFYING ACCOUNTANT

86

ITEM 16G.

CORPORATEGOVERNANCE

86

ITEM 16H.

MINE SAFETY DISCLOSURES

86

PART III

ITEM 19.

EXHIBITS

85

SIGNATURES

88

1

maintainedin South AfricanRand. Our financial statements included in our corporate filings are prepared in accordance with International

Our consolidated financial statements included in this Annual Report are prepared in accordance with IFRS as issued by the IASB.

We present our financial information in rand, which is our presentation and reporting currency.All referencesto “dollars”or “$”

could they necessarily have been converted into dollars at the rates indicated. Unless otherwise indicated, rand amounts have been translated

into dollars at the rate of R14.27 per $1.00, the year end exchange rate on June 30, 2021.

operating costs, profit/(loss) for the year or any other measure of financial performance presented in accordance with IFRS or as an indicator

of our performance. While the World Gold Council has provided definitions for the calculation of cash operating costs, the calculation of

mining companies, and these definitions by themselves do not necessarily provide a basis for comparison with other gold mining companies.

DRDGOLD Limited

When used inthis AnnualReport, theterm the “Company”refers to DRDGOLDLimited andthe terms “we,”“our,” “us” or“the

Group” referto the Companyand its subsidiariesas appropriatein the context.

Acquisitionof gold assetsfrom Sibanye-Stillwaterand subsequentexercise ofoption to purchaseshares

On July 31, 2018, we completed the acquisition of the gold assets associated with Sibanye Gold Limited, trading as Sibanye-

Stillwater’s (“

Sibanye-Stillwater

”) West Rand TailingsRetreatment Project (“

WRTRP

Proprietary Limited (“

Reserves.In connection with the acquisition, we issued to Sibanye-Stillwater new shares in the Company equal to 38.05% of outstanding

shares, and granted Sibanye-Stillwater an option to acquire up to a total of 50.1% of our shares within a period of 2 years from the effective

date of the acquisition at a 10% discount to the prevailing market value (the “

Option. On January 22, 2020 Sibanye-Stillwater subscribed for 168,158,944 DRDGOLD shares at an aggregate subscription price of R1,086

Act of 1934,regarding expectedfuture events,circumstances,trends and expectedfuture financialperformanceand informationrelating tous

that arebased on thebeliefs ofour management,as well asassumptionsmade by andinformationcurrently availableto our management.Some

discussionsof strategy, plansor intentions,including statements in connection with, or relatingto, among other things:

●

our reserve calculations and underlying assumptions;

●

●

life of mine and potential increase in life of mine;

●

estimated future throughput capacity and production;

●

●

our anticipated labor, electricity, water,crude oil and steel costs;

●

our expectation that existing cash will be sufficient to fund our operations in the next 12 months including our anticipated

commitments;

●

statements with respect to agreements with unions;

●

our prospects in litigation and disputes;

2

●

statements with respect to the legal review for increasing the deposition capacity of the Brakpan/Withok Tailings Storage Facility

(“

TSF

”), and expected potential increase in capacity and life of mine and statements with respect to our flotation fine-grind

FFG

”) program;

●

expected effective gold mining tax rate.

regulatorydevelopmentsadverse tous or difficultiesin maintainingnecessarylicenses orother governmentalapprovals;

●

future performancerelating tothe FWGRPhase 2 assets;

●

challengesin replenishingmineral orereserves;

●

changes inour competitiveposition;

●

changes in,or that affectour businessstrategy;

●

any majordisruption inproductionat our keyfacilities;

●

adverse changesin foreignexchange rates;

●

adverse environmentalor environmentalregulatory changes;

●

●

unforeseentechnicalproduction issues,industrialaccidentsand theft;

●

anticipatedor unanticipatedcapital expenditureon property, plantand equipment;

●

after thedate of thisAnnual Reportor to reflectthe occurrenceof unanticipatedevents.

Special NoteRegarding Linksto External,or Third-partyWebsites

Links to external,or third-partywebsites,are providedsolely forconvenience.We take no responsibilitywhatsoeverfor any third-

into this report.

 

 

 

 

3

Metric

0 degree Celsius

4

Costs to ensure that the Ore Reserves are open, serviceableand legally compliant after active mining activity at

tonne of ore.

Growth capital expenditure

Capital additions thatare not sustaining capitalexpenditure. This is anon‑IFRS financial measure andshould

not be considered a substitute measure of costs and expenses reported by us in accordance with IFRS.

g/t

Grams per tonne.

Metallurgical plant

A processing plant (mill) erected to treat ore and extract the contained gold.

Mine call factor

The gold content recovered expressed as a percentage of the called gold content.

Expenses incurred, andincome generated inthe course ofoperating activities, whichare not directlyattributable

to production activities.

Pay-limit

The minimum in-situ grade ofore blocks or sites forwhich cash operating costs, includingall overhead costs,

are equal to a projected gold price per ounce.

Operating costs

Operating costs are cost of sales less depreciation, change inestimate of rehabilitation provision, movement in

gold in process and finished inventory – gold bullion, and retrenchment costs.

5

Ore Reserves

That part of a mineral deposit which could be economically and legally extractedor produced at the time of the

Probable Ore Reserves

Ore reserves for which quantityand grade and/or quality arecomputed from information similar tothat used for

Proven Ore Reserves, but the sites for inspection, sampling, andmeasurement are farther apart or are otherwise

less adequatelyspaced. Thedegree ofassurance, althoughlower thanthat forProven OreReserves, ishigh

enough to assume continuity between points of observation.

oz/t

Ounces per ton.

Refining

The final purification process of a metal or mineral.

Rehabilitation

a source to a site of deposition.

Slimes

The tailings discharged from a processing plant after the valuable minerals have been recovered.

Sustaining capital expenditure

Sustaining capital expenditure arethose capital additions thatare necessary to maintaincurrent gold production.

This is a non‑IFRS financial measure and shouldnot be considered a substitute measure ofcosts and expenses

reported by us in accordance with IFRS.

t’000

Tonnes in thousands.

Tailings

gold‑bearing material in‑situ or quantities of ore and waste material mined, transported or milled.

Tpm

Tonne per month.

Yield

The amount of recovered gold from production generally expressed in ounces or grams per ton or tonne ofore.

6

PART I

ITEM 1. IDENTITYOF DIRECTORS, SENIORMANAGEMENT ANDADVISERS

Not applicable.

ITEM 2. OFFERSTATISTICS AND EXPECTED TIMETABLE

Not applicable.

ITEM 3. KEYINFORMATION

is derived from our consolidated financial statements set forth elsewhere in this Annual Report, which have been prepared in accordance with

IFRS, as issued by the IASB. Theseconsolidatedfinancialstatementshave beenaudited by KPMGInc.The selectedconsolidatedfinancial data

7

Selected Consolidated Financial Data

(in millions, except share, per share and ounce data)

Year endedJune 30,

2021

1

2021

2020

2019

2018

2017

Revenue

369.2

5,269.0

4,185.0

2,762.1

2,490.4

2,339.9

Results from operating activities

127.3

1,816.9

635.0

78.5

6.5

13.7

Adjusted EBITDA

2

141.3

2,015.9

2

1,411.6

2

Per Share Data

Basic earnings/(loss) per share (cents)

11.8

168.4

82.5

11.8

1.5

3.2

Diluted earnings/(loss) per share (cents)

Dividends proposed per share for the

year (ZAR cents)

80.0

85.0

20.0

5.0

5.0

Dividends proposed per American

(USD cents)

56.1

Intraday high (USD1:ZAR)

Stated share capital

8

●

Risks relatedto the goldmining industry;

●

Risks relatedto doing businessin South Africa;

●

Risks related to ownership in our ordinary shares or American Depositary Shares (ADSs); and

●

Risks related to climate change

Risks relatedto our businessand operations

Changes in the market price for gold and exchange rate fluctuations,both of which have fluctuated widely in the past, affect the

have been and could be in the future materially affected byan appreciation in the value of the rand. Accordingly,any sustained decline in the

dollar price of gold and/orthe strengthening of the South Africanrand against the dollar would negativelyand adversely affect our business,

operating results and financial condition.

to goldand goldstocks asa safehaven asset,as hasbeen thecase inprevioustimes ofglobal economiccrisis.This hasled toa surgein theaverage

gold priceduring fiscal2020 andfiscal2021.Changesin theseconditionsin thefuture (e.g.global recoveryfrom theCOVID-19 pandemic)could

lead toa decreaseof the goldprice topre-pandemiclevels orlower.In addition,we wereimpacted bymovementsin the exchangerate of therand

Exchange rates are influenced by global economic trends. The closing exchange rate ofthe rand against the dollarat June 30,2021

June 30, 2019.At September30, 2021, therand tradedat R14.51 =$1.00 (basedon closing rates),a 2% weakeningof the randagainst theDollar

from June30, 2021.The rand/dollarexchangerate remainedvolatilethroughoutthe fiscalyear 2021mainly asa resultof global,emergingmarket

and South Africa economic uncertaintyincluding uncertaintiesresulting from the COVID-19 pandemic,global economic slowdown sentiment,

cash flowand profitability,and this would adversely affect our business, operating results and financial condition.

We typically do not enter into forwardcontracts to reduceour exposure to marketfluctuationsin the dollar gold priceor the exchange

rate movementsof therand. We sellgold atspot pricesbased onthe afternoonLondon BullionMarketfixing priceon theday whenRand Refinery,

acting as an agent for thesale of all gold produced by theGroup, deliversthe Gold to the buyer. Our foreign currencyis usually sold at the spot

price inthe marketon thedate oftrade.If thedollar goldprice shouldfall and/orthe randshould strengthenagainstthe dollar,this wouldadversely

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

sustainedperiod, wemay be forcedto curtailor suspendsome or allour operations.

A failure to acquirenew Ore Reservescould negatively affect our futurecash flows, results ofoperations and financial condition.

9

New orongoing explorationprograms may bedelayed ormay not resultin new mineralproducing operationsthat willsustain or

identify OreReservesthat havereasonableprospectsfor economicextractionwhile maintainingsufficient controlson productionand othercosts,

If we are notsuccessful in increasing reservesin future years, ourreserves could decrease, andsuch reduction would adverselyaffect

We may be unable tomake desirableacquisitionsor to integratesuccessfullyany businesseswe acquire,including thedevelopment

of Phase 2of the FWGRassets acquiredfrom Sibanye-Stillwater

Our futuresuccess maydepend inpart on theacquisitionof businessesor technologiesintended tocomplement,enhance orexpand our

current businessor products or thatmight otherwiseoffer us growth opportunities.The ability to completesuch transactionsmay be hinderedby

a number offactors, including identifying acquisition targets, obtainingnecessary financing and potential difficulties in obtaining government

organization.We cannot be certainthat we willbe able toachieve thebenefits weexpect froma particularacquisitionor investment.Acquisitions

may also strainour managerialand operationalresources,as the challengeof managingnew operationsmay divertour managementfrom day-to-

controls, processesand proceduresof acquiredbusinessesmay also not adequatelyensure compliancewith laws andregulationsand we may fail

Moreover, ourresourcesare limitedand ourdecisionto pursuea transactionhas opportunitycosts;accordingly, ifwe pursuea particular

transaction,we may needto forgo theprospect ofentering intoother transactionsthat couldhelp us achieveour financialor strategicobjectives.

most profound impacts on the goldoutput of our metallurgical plants.The large volumes ofmaterial that are processed at our operations are

deposited on tailings facilitieswhich have a finite capacity. Alternative facilitieswill be required to ensure adequate depositioncapacity for the

future.Key projectsincludethe developmentof theregionaltailingsstoragefacilityas partof Phase2 FWGRprojectas wellas obtainingregulatory

approvals foralternativedepositioningat Ergo

Our large projects, most notablythe development of FWGR, aresubject to schedule delays andcost overruns, and wemay face

Projects likethe developmentof Phase 2 of theFWGR assets acquiredfrom Sibanye-Stillwateris subject tothe risk of delaysand cost

overruns whichare inherentin any largeconstructionproject including,

•changes inconstructionplans thatmay requirenew or amendedplanning permissions;

•unforeseenconstructionproblems;

•unforeseendelayscommissioningsectionsof the project;

•labor disputes;

•inadequateworkforceplanning orproductivityof workforce;

•inadequatemanagementpractices;

•natural disastersand adverseweather conditions;

•national workstoppagesas a resultof infectiousdeceases andpandemicssuch as COVID-19;

•failure ordelay of third-partyservice providers;and

•changes toregulations,such as environmentalregulations.

The Phase 2 definitivefeasibilitystudy was completedin the 3

rd

quarter of fiscalyear 2021, howeverregulatory approvalstill needsto

be obtainedon the regulatoryapprovalsfor the submittedamended design.It is thereforeanticipatedthat the constructionof the RegionalStorage

10

the projecteconomicsand increasesthe risk thatthe assumptionsunderlyingour assessmentof the viabilityof the projectmay prove incorrect.

As thedevelopment of FWGR isparticularly material to DRDGOLD, significant cost overrunsor adverse changesin assumptions

affecting theviability ofthe projectcould havea materialadverse effecton our business,cash flows,financial conditionand prospects.

Our operating cash flow and available banking facilities may be insufficient to meet our capital expenditure plans and requirements,

depending on the timing and cost of development of our existing projects and any further projects we may pursue. As a result, new sources of

inter alia

, macroeconomicconditions,our creditrating, ourgearing andother riskmetrics,

the conditionof the financialmarkets, futuregold prices,the prospectsfor our industry, ouroperationalperformanceand operatingcash flow and

debt position.

recovered grades and costs. If we are unable to meet our cash requirementsout of cash flows generated from our operations,we would need to

obligationsand fund requiredcapital expendituresor meet ourworking capitalrequirementsmay be adverselyaffected.

Any interruptionin gold production at any of our two miningoperations generatingcash flows, will have an adverseeffect on the

We have two miningoperationsgeneratingcash flows,namely Ergo andFWGR.Ergo’sreclamationsites,processingplants,pump

stations andthe Brakpan/WithokTSF are linkedthrough pipelineinfrastructure.The Ergo plantis currentlyour majorprocessingplant. FWGR’s

reclamationsite, DP2 processingplant, pumpstations andthe Driefontein4 Tailings StorageFacility arelinked throughpipeline infrastructure.

Our reclamation sites, plants,pipelinesinfrastructure and thedeposition/storage facilities are exposed tonumerous risks, including

operationaldown time dueto planned orunplanned maintenance,destruction ofinfrastructure,spillages, higherthan expectedoperating costs,or

lower thanexpected production asaresult ofdecreases inextraction efficiencies duetoimbalances inthe metallurgical processaswell as

inconsistentvolume throughputor other factors.

Lockdown

smelting and recovery of goldfrom gold loaded carbon produced atFWGR as wellas theuse of variousrights, permits and licenses held by

Sibanye Goldpursuant towhich FWGRoperates,pending thetransferto FWGR ofthose thatare transferable.Any disruptionin the supplyof, or

our ability touse and accessthe Sibanye-Stillwatermining infrastructure,related servicesand rights, permitsand licenses,could have anadverse

Each of these conditions or other weatherconditions or other interruptionscould adversely impactour operations which could havea

materialadverse effecton our business,operating resultsand financialcondition.

Flooding atour discontinuedundergroundoperationsmay causeus to incurliabilitiesfor environmentaldamage.

If the rate of rise of water is not controlled,water from our abandonedunderground miningareas could potentiallyrise and come into

contactwith naturallyoccurringundergroundwater ordecant intosurroundingundergroundmining areasand couldultimatelyalso riseto surface.

 

 

 

 

 

11

An increasein productioncosts couldhave an adverseeffect on our resultsof operations.

An increasein our productioncosts willimpact ourresults ofoperations.Productioncosts areaffected by,

inter alia

:

•increasesin electricityand water prices;

•increasesin crude oiland steelprices;

•unexpectedchanges inthe qualityor quantityof reserves;

•technicalproduction issues;

•availabilityand cost ofsmelting andrefining arrangements;

Our production costs consist mainly of materials including reagents and steel, labor, electricity, specialized service providers,water,

of our annualinflation rateand impactour resultsof operationand can resultin the restructuringof these operationsat substantialcost.

The transitionalarrangementsregarding wageincreaseswith the workforceat FWGR whenthese employeeswere incorporatedinto DRDGOLD

have now cometo an end. Asa consequence,negotiationsare currentlyunderway withorganized labourat FWGR withthe intentionof trying to

reach a 3 yearwage agreement.

reduce costs,such as reducingour labor force, a reductionof the corporateoverhead, negotiatinglower price increasesfor consumablesand cost

controlsmay notbe successfulor sufficientto offsetthe increasesaffectingour operationsand couldadverselyaffect ourbusiness,operatingresults

and financialcondition.

Uncertaintiesregarding theimpact of theCOVID-19 pandemicon currentand futureoperations

We face risks relatingto the COVID-19pandemic andmeasures takento addressthe outbreak.

The Group temporarily haltedits operations at Ergo and FWGR on March 26, 2020 pursuant to the announcementof the Lockdown.

fatalitiessuffered by ourworkforce:

COVID statistics

Ergo

FWGR

Corporate office

Consolidated

142

34

3

179

Fatalities

2

1

0

3

Whilewe haveimplementedprogramsto addressthe riskof COVID-19infectionsat ouroperations,the COVID-19pandemicmay havenumerous

impact ofthe COVID-19pandemic.Dollar goldprices maydecrease andthe rand/dollarexchange ratemay strengthenas the globalimpact ofthe

COVID-19 pandemicis alleviated.

Our operationsare subjectto extensiveenvironmentalregulationswhich couldimpose significantcosts and liabilities.

12

near the mining sites. Failure to comply with environmentallaws or delays in obtaining,or failures to obtaingovernment permitsand approvals

increasecosts of compliance,resulting ina materialadverse effecton our profitability.

estimated our aggregategroup Provision forEnvironmental Rehabilitation at anet presentvalue ofR570.8 million which isincluded inour

statement offinancial positionasatJune30,2021(RefertoItem18.‘‘FinancialStatements -Note11–Provisionforenvironmental

rehabilitationcostsby makingcontributionsover thelifeof themine toenvironmentaltrust fundsor fundsheld ininsuranceinstrumentsestablished

for ouroperations. If anyof ouroperations are prematurely closed, therehabilitation funds may beinsufficient to meetall therehabilitation

obligationsof thoseoperations.The closureof miningoperations,without sufficientfinancialprovision forthe fundingof rehabilitationliabilities,

such a facility. These may include sabotage, failure by our employeesto adhere to the codes of practice and natural disasters such as excessive

results andfinancialcondition.

employees.According tosection 54of the Mine,Health andSafety Actof 1996, ifan inspectorbelievesthat anyoccurrence,practice orcondition

at a mineendangersor may endangerthe healthor safetyof any personat the mine,the inspectormay giveany instructionnecessaryto protectthe

health or safetyof persons atthe mine. Theseinstructionscould includethe suspensionof operationsat the wholeor part of themine. Healthand

safety incidentscould lead to mine operationsbeing halted and that willincrease our unit productioncosts, which couldhave a material adverse

effect on ourbusiness,operating resultsand financialcondition.

Events mayoccur for whichwe are notinsured whichcould affectour cash flowsand profitability.

Because ofthe nature ofour business,we may becomesubject to liabilityfor pollutionor other hazardsagainst whichwe are unableto

Insurance coveragemay not cover the extent of claims brought against us, includingclaims for environmental,industrial or pollution

including the positionsof Chief Executive Officerand Chief Financial Officer. In addition, we compete with mining and other companies on a

global basis toattract and retain keyhuman resources atall levels withappropriate technical skills and operatingand managerial experience

necessary to operate thebusiness. Factors critical to retaining our present staff and attracting additional highly qualifiedpersonnel include our

ability toprovide these individuals withcompetitive compensation arrangements, and other benefits. Ifwe arenot successful inretaining or

attracting highlyqualified individualsin key management positions,our business may be harmed.We do not maintain “key man” life insurance

policies onany membersof our executiveteam. The lossof any of ourkey personnelcould delaythe executionof our businessplans, whichmay

result indecreasedproduction,increasedcosts and decreasedprofitability.

13

some of thesehalted componentswill only operatein subsequentyears once therelated reclamationsites havebeen broughtonline in accordance

described.Thesuccess oftheFFG isdirectly dependentonthematerial typeandmaterial mixprocessed throughit.Therefore, thehalted

components willremain idlepending the continuationand conclusionof various testwork regardingthe materialtype and materialmix of future

remain subjectto operationsrisks relatingto the FFGproject.

businessoperations.

Werelyontheaccuracy,availability andsecurityofourinformation technologysystems. Despitethemeasuresthatwehave

implemented,includingthoserelatedto cybersecurity, oursystemscould bebreachedor damagedby computervirusesand systemsattacks,natural

systems,reputationaldamageor litigation.We may alsobe requiredto incursignificantcost toprotectagainstor repairthe damagecausedby these

disruptions orsecurity breaches inthe future,including, forexample, rebuilding internalsystems, implementing additional threatprotection

to third parties.

magnitude and effects. Wemay besusceptible to new and emergingrisks,including cyber-attacks and phishing, in the evolving landscape of

cybersecuritythreats. Giventhe increasingsophisticationand evolvingnature ofthese threats,DRDGOLD cannotrule out thepossibilityof them

occurring in the future. An extendedfailure of critical systemcomponents, caused by accidental,or malicious actions, includingthose resulting

from a cybersecurity attack,could resultin a significantenvironmentalincident, commercialloss or interruptionto operations.

In addition,fromtimeto time,we implementupdatesto ourinformationtechnologysystemsand software,whichcan disruptor shutdown

our informationtechnologysystems.Informationtechnologysystem disruptions,if notappropriatelyaddressedor mitigated,could havea material

adverse effecton our operations.

Risks relatedto the goldmining industry

A change inthe dollarprice of gold,which in thepast has fluctuatedwidely, is beyondour control.

Historically,the goldprice hasfluctuatedwidely andis affectedby numerousindustry factorsover whichwe haveno controlincluding:

•the overalllevel of forwardsales by othergold producers;

•the overalllevel and costof productionof other goldproducers;

•financialmarket expectationsregarding therate of inflation;

•interest rates;

•gold hedging and de-hedging by gold producers; and

During fiscal year 2021 thegold price reached ahigh ofU$2,072 per ounce anda lowof U$1,676.Webenefited from a sustained

upswing ingold pricein thefirst quarter,and inthe fourthquarter, followingthe globalresponseto theCOVID-19pandemic,the goldprice surged

further toall-time highs.

Investors globally, as they have in so many previous timesof crisis, turned to gold and gold stocks as a safe haven asset,leading to a

surge in theaverage goldprice duringfiscal 2020and fiscal2021. The rand/dollarexchange rateremained volatilethroughout fiscal2021 mainly

as a result of economicuncertainty and perceivedpolitical instability,global marketslowdown sentiment,tensions betweenthe USA and China,

low economic growth,and a seemingly terminallydistressed Eskom.Further volatilityin the Rand was fueled by Moody’s downgradeof South

Africa’s sovereign creditrating tosub-investment grade asa resultof “continuing deterioration infiscal strength andstructurally very weak

14

Theexplorationofmineralpropertiesishighlyspeculativeinnature,involvessubstantialexpenditures,andisfrequently

quantify the extent of the gold reserve. Many goldexplorationprograms,including someof ours, donot resultin the discoveryof mineralization

and any mineralizationdiscovered may not be of sufficientquantity or quality to be mined profitably. If we discovera viable deposit, it usually

Moreover, we rely onthe evaluations of professional geologists, geophysicists, andengineers for estimates in determining whether

to commence or continue mining. These estimatesgenerally rely on scientific and economic assumptions, whichin some instances may not be

Our futuregrowth and profitabilitywill depend,in part, onour abilityto identifyand acquireadditionalmineral rights,and on the costs

and resultsof our continuedexplorationand developmentprograms. Our business focusesmainly on the extraction of gold from tailings, which

justify the significant capital investment associated with plant,reclamation and deposition infrastructure are suitable for exploitationin terms

Because of these uncertainties, we may not successfully acquire additional mineral rights, or identify new Proven and Probable Ore

Reserves in sufficient quantities to justify commercial operations in any of our operations. The costs incurred on exploration activities that do

not identify commercially exploitable reserves of gold are not likely to be recovered and therefore are likely to be impaired.

There is inherent uncertainty in Ore Reserve estimates.

Our Ore Reserve figures described in this documentare the best estimates of our current management asof the dates stated and are

reportedinaccordancewiththerequirementsofIndustryGuide7oftheSEC.Theseestimatesmaynotreflectactualreservesorfuture

production.

Should we encounter mineralizationor formations different from thosepredicted by past drilling,sampling and similar examinations,

reserve estimatesmay have to be adjustedand mining plansmay have to be alteredin a way that might ultimatelycause our reserveestimates to

decline. Moreover,if the rand priceof gold declines,or stabilizesat a pricethat is lowerthan recentlevels,or those assumedin our miningplans,

or if ourlabor, water, steel,electricityand otherproductioncosts increaseor recoveryrates decrease,it may becomeuneconomicalto recoverOre

minedumps thatmay nothave beenidentifiedby the drillingresults,the actualresults mayvary fromthe initialestimates.These factors have and

could result in reductions in our Ore Reserve estimates and as a result, our production, which could in turn adversely impact the total value of

Gold mining is susceptible to numerous events that could have an adverse impact on a gold mining business.

The business of goldmining is exposed to numerousrisks and events, theoccurrence of whichmay result in thedeath of or personal

monetary losses,delays inproduction, environmentaldamage, lossof thelicense tomine andpotential legalclaims. Therisks andevents

associated with the business of gold mining include:

●

environmentalhazards and pollution,including dust generation,toxic chemicals,discharge of metals, pollutants,radioactive materials

and other hazardousmaterialinto the airand water;

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metallurgicalconditions orlower thanexpected goldrecovery;

●

failure ofunproven or evolvingtechnologies;

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mechanicalfailure or breakdownsand ageinginfrastructure;

●

energy and electricalpower supplyinterruptions;

●

availabilityof water;

●

injuries toemployeesor fatalitiesdue to fallsfrom heightsand accidentsrelating tomobile machineryor electrocutionor other causes;

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●

activitiesof illegalor artisanalminers;

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materialand equipmentavailability;

●

legal andregulatoryrestrictionsand changesto such restrictions;

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safety-relatedstoppages;and

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corruption, fraud and theft includinggold bulliontheft.

The occurrence of any of thesehazards could delay production,result in losses, or increaseproduction costs or decreaseearnings and

may resultin significantlegal claimsand adverselyimpact ourbusiness resultsof operationsand financialcondition.

Risks relatedto doing businessin South Africa

Political oreconomicinstabilityin South Africamay reduceour productionand profitability.

We are incorporatedin SouthAfricaand allour operationsare currentlyin SouthAfrica.As aresult,politicaland economicrisks relating

to South Africa could have a significanteffect on our production and profitability. Largeparts of the South African populationare unemployed

committing crimes, vandalising property,and damaginginfrastructure around ouroperations during July2021. Thereis noassurance thata

prolonged economicdownturn willnot result inan extendedperiod of highunemployment,further exacerbatinganti-mining sentimentsin South

Inflation canadverselyaffect us.

The inflation rate in South Africa is relatively high compared to developed,industrializedcountries. As of June 30, 2021, the annual

CPI

”),stood at 4.9%compared to 2.2%in June 2020and 4.5%in June 2019.Annual CPI was 5.0%as at

by a concurrent devaluation of the rand againstthe dollar or an increase in the dollar price of gold. Higher and sustainedinflation in the future,

with a consequent increasein operational costs could havea material adverse effecton our results of operationsand our financial conditionand

could resultin operationsbeing discontinuedor reducedor rationalized,which couldreduce ourprofitability.

The treatment ofoccupational health diseases andthe potential liabilities relatedto occupational healthdiseases may havean

adverse effecton the resultsof our operationsand our financialcondition.

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the incidentsemployeesof companieswere also heldhostage untilthe targetedmaterial wasobtained. Inthe 2019 incident,a securityofficer was

Any such incidents haveand maystill result in lossesof goldor other damage whichcould have amaterial adverse impact on our

cable. Our operationsexperience high incidentsof copper cable theftdespite the implementationof security measures.In addition to the general

risk toemployees’lives inan areawhere theftoccurs, wemay sufferproductionlosses andincur additionalcosts asa resultof powerinterruptions

caused bycable theftand theftof bolts usedfor the pipeline.

of insufficient generatingcapacity, owing to poor maintenance and lagging capitalinfrastructureinvestment, South Africa has faced significant

disruptionsin electricitysupply inthe pastand Eskomhas warnedthat thecountry couldcontinue toface disruptionsin electricalpower supplyin

The securityof futurepower supplyas wellas thecost thereofremains arisk andmay havemajor implicationsfor ouroperations,which

may pose asignificantrisk to theoperations.

The group has a load-curtailment agreement in place with Eskom in terms of which wereduce power consumption by between 10%

and 20% when the grid is under pressure, but Eskom maintains uninterrupted power supply to the operations.

The NationalEnergy Regulatorof SouthAfrica(“

1, 2021.In July 2020,the HighCourt ofSouth Africaordered thatthe averagetariff forApril 1,2021 be increasedby a further9.8%. NERSAhas

applied for leave to appealthis ruling. These increaseshave had an adverse effect on our productioncosts and similar or higherfuture increases

could havea materialadverse effecton our operatingresults andfinancial condition.

Subsequently, severalnotable developmentshave occurred:

Eskom subsequentlychallenged themulti-year pricedetermination (MYPD), RegulatoryClearing Account(RCA) andNERSA’s