Company Quick10K Filing
DRDGOLD
20-F 2020-10-29 Filed 2020-10-29
20-F 2019-10-31 Filed 2019-10-31
20-F 2018-06-30 Filed 2018-10-31
20-F 2017-10-31 Filed 2017-10-31
20-F 2016-10-31 Filed 2016-10-31
20-F 2015-10-30 Filed 2015-10-30
20-F 2014-10-31 Filed 2014-10-31
20-F 2013-10-25 Filed 2013-10-25
20-F 2012-10-26 Filed 2012-10-26
20-F 2011-10-28 Filed 2011-10-28
20-F 2009-10-29 Filed 2010-10-29

DRD 20F Annual Report

Part I
Item 1.
Item 2.
Item 3.
Item 4.
Item 4A.
Item 5.
Item 6.
Item 7.
Item 8.
Item 9.
Item 10.
Item 11.
Item 12.
Part II
Item 13.
Item 14.
Item 15.
Item 16A.
Item 16B.
Item 16C.
Item 16D.
Item 16E.
Item 16F
Item 16G.
Part III
Item 17.
Item 18.
Item 19.
Part I
Item 1. Identity of Directors, Senior Management and Advisers
Item 2. Offer Statistics and Expected Timetable
Item 3. Key Information
Item 4. Information on The Company
Item 4A. Unresolved Staff Comments
Item 5. Operating and Financial Review and Prospects
Item 6. Directors, Senior Management and Employees
Item 7. Major Shareholders and Related Party Transactions
Item 8. Financial Information
Item 9. The Offer and Listing
Item 10. Additional Information
Item 11. Quantitative and Qualitative Disclosures About Market Risk
Item 12. Description of Securities Other Than Equity Securities
Part II
Item 13. Defaults, Dividend Arrearages and Delinquencies
Item 14. Material Modifications To The Rights of Security Holders and Use of Proceeds
Item 15. Controls and Procedures
Item 16A. Audit Committee Financial Expert
Item 16B. Code of Ethics
Item 16C. Principal Accountant Fees and Services
Item 16D. Exemptions From The Listing Standards for Audit Committees
Item 16E. Purchases of Equity Securities By The Issuer and Affiliated Purchasers
Item 16F. Change in Registrant's Certifying Accountant
Item 16G. Corporate Governance
Part III
Item 17. Financial Statements
Item 18. Financial Statements
Item 19. Exhibits
EX-99 ex4_139.htm
EX-99 ex4_140.htm
EX-99 ex4_141.htm
EX-99 ex8_1.htm
EX-99 ex12.htm
EX-99 ex13.htm

DRDGOLD Earnings 2012-10-26

Balance SheetIncome StatementCash Flow

20-F 1 drd_main.htm Page 1
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As filed with the Securities and Exchange Commission on October 26, 2012
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 20-F
    REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE
           ACT OF 1934
OR
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
           1934
OR
    SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
           1934
For the fiscal year ended June 30, 2012
Commission file number 0-28800
DRDGOLD LIMITED
(Exact name of Registrant as specified in its charter and translation of Registrant's name into English)
REPUBLIC OF SOUTH AFRICA
(Jurisdiction of incorporation or organization)
50 CONSTANTIA BOULEVARD, CONSTANTIA KLOOF EXT 28, ROODEPOORT, 1709, SOUTH AFRICA
(Address of principal executive offices)
Securities registered or to be registered pursuant to Section 12(b) of the Act
Title of each class:
Name of each exchange on which registered:
Ordinary shares (traded in the form of American Depositary
Shares, each American Depositary Share representing ten
underlying ordinary shares.)
The New York Stock Exchange, Inc.
Securities registered or to be registered pursuant to Section 12(g) of the Act
None
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act
None
Indicate the number of outstanding shares of each of the issuer's classes of capital or common stock as of the close of the
period covered by the annual report.
As of June 30, 2012 the Registrant had outstanding 385,383,767 ordinary shares, of no par value.
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes   No
If this report is an annual report or transition report, indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. Yes   No
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes   No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any,
every Interactive Date File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232-405 of this chapter)
during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes

No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer.
Large accelerated filer Accelerated filer Non-accelerated filer
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this
filing. U.S. GAAP
International Financial Reporting Standards as issued by the IASB
Other
If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the
registrant has elected to follow. Item 17 Item 18
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act). Yes No
Contact details: Mr. T.J. Gwebu – Executive Officer: Legal, Compliance and Company Secretary
DRDGOLD Limited, Quadrum Office Park, First Floor, Building 1, 50 Constantia Boulevard, Constantia Kloof Ext. 28, Roodepoort,
1709, South Africa; Telephone: +27 11 470 2600
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TABLE OF CONTENTS
Page
PART I
ITEM 1.
IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS .......................................................
4
ITEM 2.
OFFER STATISTICS AND EXPECTED TIMETABLE .........................................................................................
4
ITEM 3.
KEY INFORMATION................................................................................................................................................
4
3A.
Selected Financial Data ................................................................................................................................................
4
3B.
Capitalization
And
Indebtedness.................................................................................................................................
6
3C.
Reasons For The Offer And Use Of Proceeds ............................................................................................................
6
3D.
Risk
Factors .................................................................................................................................................................
6
ITEM 4.
INFORMATION ON THE COMPANY....................................................................................................................
18
4A.
History And Development Of The Company .............................................................................................................
18
4B.
Business
Overview ......................................................................................................................................................
22
4C.
Organizational
Structure..............................................................................................................................................
32
4D.
Property, Plant And Equipment ................................................................................................................................
33
ITEM 4A.
UNRESOLVED STAFF COMMENTS......................................................................................................................
49
ITEM 5.
OPERATING AND FINANCIAL REVIEW AND PROSPECTS ............................................................................
49
5A.
Operating
Results
.......................................................................................................................................................
50
5B.
Liquidity And Capital Resources ................................................................................................................................
72
5C.
Research And Development, Patents And Licenses Etc...............................................................................................
74
5D.
Trend
Information........................................................................................................................................................
74
5E.
Off-Balance Sheet Arrangements..................................................................................................................................
74
5F.
Tabular Disclosure Of Contractual Obligations............................................................................................................
74
5G.
Safe
Harbor ..................................................................................................................................................................
74
ITEM 6.
DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES..............................................................................
75
6A.
Directors And Senior Management...............................................................................................................................
75
6B.
Compensation ..............................................................................................................................................................
76
6C.
Board
Practices ............................................................................................................................................................
78
6D.
Employees....................................................................................................................................................................
82
6E.         Share Ownership..........................................................................................................................................................
85
ITEM 7.
MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS ...........................................................
87
7A.
Major
Shareholders.......................................................................................................................................................
87
7B.
Related Party Transactions ..........................................................................................................................................
88
7C.
Interests Of Experts And Counsel ...............................................................................................................................
89
ITEM 8.
FINANCIAL INFORMATION .................................................................................................................................
89
8A.
Consolidated Statements And Other Financial Information.........................................................................................
89
8B.
Significant
Changes .....................................................................................................................................................
89
ITEM 9.
THE OFFER AND LISTING .....................................................................................................................................
90
9A.
Offer And Listing Details ............................................................................................................................................
90
9B.
Plan Of Distribution.....................................................................................................................................................
91
9C.
Markets.........................................................................................................................................................................
91
9D.
Selling
Shareholders ....................................................................................................................................................
91
9E.         Dilution ........................................................................................................................................................................
91
9F.
Expenses Of The Issue.................................................................................................................................................
91
ITEM 10.
ADDITIONAL INFORMATION..............................................................................................................................
92
10A.
Share
Capital................................................................................................................................................................
92
10B.
Memorandum And Articles Of Association ...............................................................................................................
92
10C.
Material
Contracts........................................................................................................................................................
95
10D.
Exchange
Controls.......................................................................................................................................................
95
10E.
Taxation .......................................................................................................................................................................
97
10F.
Dividends And Paying Agents ....................................................................................................................................
101
10G.
Statement
By
Experts ..................................................................................................................................................
101
10H.
Documents On Display................................................................................................................................................
101
10I.
Subsidiary
Information ...............................................................................................................................................
101
ITEM 11.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.........................................
102
ITEM 12.
DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES ...........................................................
103
12A.
Debt Securities..............................................................................................................................................................
103
12B.
Warrants and Rights ....................................................................................................................................................
103
12C.
Other Securities............................................................................................................................................................
103
12D
American Depositary Shares .......................................................................................................................................
103
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TABLE OF CONTENTS
PART II
ITEM 13.
DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES .....................................................................
104
ITEM 14.
MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS ...
104
ITEM 15.
CONTROLS AND PROCEDURES............................................................................................................................
104
ITEM 16A.
AUDIT COMMITTEE FINANCIAL EXPERT .......................................................................................................
105
ITEM 16B.
CODE OF ETHICS .....................................................................................................................................................
105
ITEM 16C.
PRINCIPAL ACCOUNTANT FEES AND SERVICES.............................................................................................
105
ITEM 16D.
EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES ........................................
106
ITEM 16E.
PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS.......................
106
ITEM 16F
CHANGE IN REGISTRANT'S CERTIFYING ACCOUNTANT ...........................................................................
106
ITEM 16G.
CORPORATE GOVERNANCE ................................................................................................................................
106
PART III
ITEM 17.
FINANCIAL STATEMENTS ....................................................................................................................................
107
ITEM 18.
FINANCIAL STATEMENTS ....................................................................................................................................
F-pages
ITEM 19.
EXHIBITS ...................................................................................................................................................................
108
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1
Preparation of Financial Information
We are a South African company and currently all of our operations, as measured in production ounces, are located there.
Accordingly, our books of account are maintained in South African Rand. Our financial statements included in our corporate filings
in South Africa were prepared in accordance with International Financial Reporting Standards (IFRS), as approved by the
International Accounting Standards Board (IASB) for the financial years ended June 30, 2010, 2011 and 2012. All references to
“dollars” or “$” herein are to United States Dollars, references to “rand” or “R” are to South African Rands.
Our consolidated financial statements are prepared in accordance with IFRS as issued by the IASB. All financial
information, except as otherwise noted, are stated in accordance with IFRS as issued by the IASB.
We present our financial information in rand, which is our presentation currency. Solely for your convenience, this
Form 20-F contains translations of certain rand amounts into dollars at specified rates. These rand amounts do not represent actual
dollar amounts, nor could they necessarily have been converted into dollars at the rates indicated. Unless otherwise indicated, rand
amounts have been translated into dollars at the rate of R8.30 per $1.00, which was the noon buying rate in New York City on
September 30, 2012.
In this Annual Report on Form 20-F, we present certain non-IFRS financial measures such as the financial items “cash
costs per kilogram” and “total costs per kilogram” which have been determined using industry guidelines promulgated by the
Gold Institute and “capital expenditure (cash)”, which we use to determine 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) before taxation and other items or
any other measure of financial performance presented in accordance with IFRS or as an indicator of our performance. While the
Gold Institute has provided definitions for the calculation of cash costs, the calculation of cash costs per kilogram, total costs and
total 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 costs and total costs per kilogram- Reconciliation of cash costs per kilogram, total costs, total
costs per kilogram and capital expenditure (cash).”
DRDGOLD Limited
When used in this Annual Report, the term the “Company” refers to DRDGOLD Limited and the terms “we,” “our,” “us” or
“the Group” refer to the Company and its subsidiaries, associates and joint ventures, as appropriate in the context.
Special Note Regarding Forward-Looking Statements
This Annual Report contains certain “forward-looking” statements within the meaning of Section 21E of the Exchange Act,
regarding future events or other future financial performance and information relating to us that are based on the beliefs of our
management, as well as assumptions made by and information currently available to our management. Some of these forward-
looking statements include phrases such as “anticipates,” “believes,” “could,” “estimates,” “expects,” “intends,” “may,” “should,” or
“will continue,” or similar expressions or the negatives thereof or other variations on these expressions, or similar terminology, or
discussions of strategy, plans or intentions. These statements also include descriptions in connection with, among other things:
·   estimates regarding future production and throughput capacity;
· 
  our anticipated commitments;
· 
  our ability to fund our operations in the next 12 months; and
· 
  estimated production costs, cash costs per ounce and total costs per ounce.
Such statements reflect our current views with respect to future events and are subject to risks, uncertainties and
assumptions. Many factors could cause our actual results, performance or achievements to be materially different from any future
results, performance or achievements that may be expressed or implied by such forward-looking statements, including, among others:
·   adverse changes or uncertainties in general economic conditions in the markets we serve;
· 
  regulatory developments adverse to us or difficulties in maintaining necessary licenses or other governmental approvals;
· 
  changes in our competitive position;
· 
  changes in business strategy;
· 
  any major disruption in production at our key facilities; or
· 
  adverse changes in foreign exchange rates and various other factors.
For a discussion of such risks, see Item 3D.: “Risk Factors.” The risk factors described in Item 3D. could affect our future
results, 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.
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2
Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date
hereof. We do not undertake any obligation to update publicly or release any revisions to these forward-looking statements to reflect
events or circumstances after the date of this Annual Report or to reflect the occurrence of unanticipated events.
Imperial units of measure and metric equivalents
Units stated in this Annual Report are measured in Imperial and Metric.
Metric                                              Imperial                                          Imperial                                          Metric
1 metric tonne
1.10229 short tons
1 short ton
0.9072 metric tonnes
1 kilogram
2.20458 pounds
1 pound
0.4536 kilograms
1 gram
0.03215 troy ounces
1 troy ounce
31.10353 grams
1 kilometer
0.62150 miles
1 mile
1.609 kilometres
1 meter
3.28084 feet
1 foot
0.3048 metres
1 liter
0.26420 gallons
1 gallon
3.785 liters
1 hectare
2.47097 acres
1 acre
0.4047 hectares
1 centimeter
0.39370 inches
1 inch
2.54 centimetres
1 gram/tonne
0.0292 ounces/ton
1 ounce/ton
34.28 grams/tonnes
0 degree Celsius
32 degrees Fahrenheit
0 degrees Fahrenheit
- 18 degrees Celsius
Glossary of Terms and Explanations
Assaying .................................. The chemical testing process of rock samples to determine mineral content.
$/oz .......................................... US dollar per ounce
Care and maintenance ............. 
  Cease active mining activity at a shaft, but continue to incur costs to ensure that the Ore Reserves are
open, serviceable and legally compliant.
Cash costs per kilogram..........   Cash costs are operating costs incurred directly in the production of gold and include labor costs,
contractor and other related costs, inventory costs and electricity costs. Cash costs per kilogram are
calculated by dividing cash costs by kilograms of gold produced. Cash costs per kilogram have been
calculated on a consistent basis for all periods presented. 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.
Caving .....................................   A type of mining in which the ore is blasted and drawn in a manner causing the overhead rock to cave
in.
Conglomerate ..........................   A coarse-grained sedimentary rock consisting of rounded or sub-rounded pebbles.
Cut-and-fill .............................. 
  A mining method in which a slice of rock is removed after blasting and replaced with a slice of fill
material to provide workers with a platform to mine the next slice of rock.
Cut-off grade ...........................   The minimum in-situ grade of ore blocks for which the cash costs per ounce, excluding overhead
costs, are equal to a projected gold price per ounce.
Depletion .................................   The decrease in the quantity of ore in a deposit or property resulting from extraction or production.
Deposition ............................... 
  Deposition is the geological process by which material is added to a landform or land mass. Fluids
such as wind and water, as well as sediment flowing via gravity, transport previously eroded
sediment, which, at the loss of enough kinetic energy in the fluid, is deposited, building up layers of
sediment. Deposition occurs when the forces responsible for sediment transportation are no longer
sufficient to overcome the forces of particle weight and friction, creating a resistance to motion.
Dilution....................................   Broken rock entering the ore flow at zero or minimal grade and therefore diluting the gold content per
ton.
Diorite......................................   An igneous rock formed by the solidification of molten material.
Doré .........................................
  Unrefined gold and silver bullion bars consisting of approximately 90% precious metals which will be
further refined to almost pure metal.
Electrowinning ........................  The process of recovering metal from ore by means of electro-chemical processes.
Grade ....................................... The amount of gold contained within auriferous material generally expressed in ounces per ton or
grams per ton of ore.
g/t.............................................  Grams per ton.
Horizon.................................... 
A plane indicating a particular position in a stratigraphic sequence. This may be a theoretical surface
with no thickness or a distinctive bed.
Igneous rock ............................  Rock which is magmatic in origin.
Intrusive................................... 
Rock which while molten, penetrated into or between other rocks, but solidified before reaching the
surface.
Life of mine.............................   Projected life of a mining operation based on the Proven and Probable Ore Reserves.
Metallurgical plant .................. 
A processing plant (mill) erected to treat ore and extract the contained gold.
Mine call factor ....................... 
This is the gold content recovered expressed as a percentage of the gold content called.
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3
Mill .......................................... Material passed through the metallurgical plant for processing.
Mt ............................................ Million tons.
Opening up .............................. The potential that previously abandoned shafts and mining or developed areas, have to be reopened
and mined.
Ore ...........................................  A mixture of valuable and worthless minerals from which the extraction of at least one mineral is
technically and economically viable.
Ore Reserves ...........................  Attributable total ore reserves of subsidiaries.
Pay-limit .................................. 
The minimum in-situ grade of ore blocks for which cash costs, including all overhead costs, are equal
to a projected gold price per ounce.
Payshoot ..................................  Is a zone in which the average value of the ore is well in excess of that of the surrounding area, and
which has a more or less consistent direction or trend, or orientation.
Proven Ore Reserves...............   Reserves for which (a) the quantity is computed from dimensions revealed in outcrops, trenches,
workings or drill holes; grade and/or quality are computed from the results of detailed sampling and
(b) the sites for inspection, sampling and measurement are spaced so closely and the geologic
character is so well defined that size, shape, depth, and mineral content of Ore Reserves are
well-established.
Probable Ore Reserves............   Reserves for which quantity and grade and/or quality are computed from information similar to that
used for Proven Ore Reserves, but the sites for inspection, sampling, and measurement are farther
apart or are otherwise less adequately spaced. The degree of assurance, although lower than that for
Proven Ore Reserves, is high enough to assume continuity between points of observation.
oz/t ........................................... Ounces per ton.
Reef.......................................... 
A gold-bearing sedimentary horizon, normally a conglomerate band that may contain economic levels
of gold.
Refining...................................   The final purification process of a metal or mineral.
Rehabilitation .......................... 
The process of restoring mined land to a condition approximating its original state.
Reserves................................... 
That part of a mineral deposit which could be economically and legally extracted or produced at the
time of the reserve determination.
Sedimentary.............................  Formed by the deposition of solid fragmental material that originated from weathering of rocks and
was transported from a source to a site of deposition.
Shaft.........................................  An opening cut downwards for transporting personnel, equipment, supplies, ore and waste. A shaft is
also used for ventilation and as an auxiliary exit. It is equipped with a hoist system that lowers and
raises a cage in the shaft, transporting equipment, personnel, materials, ore and waste. A shaft
generally has more than one compartment.
Slimes ......................................  The fraction of tailings discharged from a processing plant after the valuable minerals have been
recovered.
Sloughing ................................   The localized failure of part of the slimes dam wall caused by a build up of water within the dam.
Stope........................................ 
Underground production working area on the Ore Horizon.
Stoping..................................... 
Is the removal of the wanted ore from an underground mine leaving behind an open space known as a
stope. Stoping is used when the country rock is sufficiently strong not to cave into the stope, although
in most cases artificial support is also provided.
Sub-level stoping.....................   A method of mining in which the ore is blasted, on multiple levels in one stope, and drawn off as it is
blasted, leaving an open stope.
t’000......................................... Tons in thousands.
Tailings.................................... 
  Finely ground rock from which valuable minerals have been extracted by milling, or any waste rock,
slimes or residue derived from any mining operation or processing of any minerals.
Tailings dam............................   A dam created from waste material of processed ore after the economically recoverable gold has been
extracted.
Tonnage/Tonne .......................   Quantities where the metric tonne is an appropriate unit of measure. Typically used to measure
reserves of gold-bearing material in-situ or quantities of ore and waste material mined, transported or
milled.
Total costs per kilogram .........   Total costs per kilogram represent the full amount of costs incurred and represents the difference
between revenues from gold bullion and profits or losses before taxation. Total costs per kilogram are
calculated by dividing total costs by kilograms of gold produced. Total costs per kilogram have been
calculated on a consistent basis for all periods presented. 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.
Tpm .........................................  Tonne per month.
Waste rock...............................
   Non-auriferous rock.
Yield ........................................ 
The amount of recovered gold from production generally expressed in ounces or grams per tonne of
                                                   ore.
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4
PART I
ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
Not applicable.
ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE
Not applicable.
ITEM 3. KEY INFORMATION
3A. SELECTED FINANCIAL DATA
The following selected consolidated financial data as at June 30, 2012, 2011 and 2010 and for the years ended June 30,
2012, 2011 and 2010 are derived from our consolidated financial statements set forth elsewhere in this Annual Report, which have
been prepared in accordance with IFRS, as issued by the IASB. These consolidated financial statements have been audited by
KPMG Inc. as at June 30, 2012, 2011 and 2010 and for the years ended June 30, 2012, 2011 and 2010. Prior to fiscal year ended
June 30, 2008, our annual financial statements (translated into dollars) were prepared and filed with the SEC in accordance with U.S.
GAAP. On December 21, 2007, the SEC, adopted rules allowing foreign private issuers that file Annual Reports on Form 20-F to
file with the SEC financial statements in accordance with IFRS as issued by the IASB without reconciliation to U.S. GAAP. As per
these new rules, we changed our basis of presentation to IFRS as issued by the IASB. The selected consolidated financial data as at
June 30, 2009 and 2008, for the year ended June 30, 2009 and 2008 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.
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5
Selected Consolidated Financial Data
(in thousands, except share, per share and ounce data)
Year ended June 30,
2012
1
³
2012³
2011³
2010³                              2009³
2008
2
³
$’000
R’000
R’000
R’000                              R’000
R’000
Profit or loss Data
Revenue...........................................................
361,960
3,004,264
2,565,319
1,990,522
1,910,738
1,933,147
Results from operating activities ....................
45,755
379,765
(413,971)
35,485
(82,008)
(15,175)
Results from operating activities from
continuing operations...................................
30,386
252,204
112,634
61,270            (218,195)
(32,980)
Profit/(loss) for the year attributable to
equity owners of the parent..........................
37,190
308,675
(287,915)
207,815               129,124
996,041
Profit for the year attributable to equity
owners of the parent from continuing
operations .....................................................
26,181
217,301
67,070
186,553
58,222
73,719
Per Share Data
Basic earnings/(loss) per share (cents) ...........
10
80
(75)
55
34
265
Basic earnings per share - continuing
operations (cents) ........................................
7
57
17
49
15
20
Diluted earnings/(loss) per share (cents) ........
10
80
(75)
55
34
265
Diluted earnings per share - continuing
operations (cents) ........................................
7
56
17
49                       15
20
Dividends proposed per share (ZAR cents) ...
10.0
7.5
5.0
5.0
10.0
Dividends proposed per ADS (USD cents)....
12.1
9.5
7.3
6.7
10.6
Average exchange rate (USD1:ZAR).............
7.7523
6.9865
7.6117
9.0484
7. 3123
Number of shares issued as at June 30 ...........        385,383,767
385,383,767
384,884,379
384,884,379
378,001,303
376,571,588
Statement of financial position data
Total assets ......................................................
300,276
2,492,289
2,288,661
2,580,292
2,625,772
2,262,495
Equity (Net assets) ..........................................
196,858
1,633,921
1,219,166
1,649,961
1,583,979
1,305,461
Ordinary share capital.....................................
492,665
4,089,117
4
4,132,604
4,133,318
4,104,480
4,098,206
Month
2012
2012
2012
2012                              2012
2012
September
August
July
June                                May
April
Exchange Rate Data
Average (USD1:ZAR)......................................
8.2715
8.2465
8.2299
8.3840
8.1087
7.8074
High (USD1:ZAR)............................................
8.4359
8.4333
8.4720
8.5604
8.4098
7.9841
Low (USD1:ZAR) ............................................
8.1654
8.0755
8.1019
8.1955
7.7253
7.6208
1
Translations into Dollars in this table are for convenience only and are computed at the noon buying rate in New York City at September 30,
2012 of R8.30 per $1.00. You should not view such translations as a representation that such amounts represent actual Dollar amounts.
² Comparatives have been restated for the reclassification of the Australasian operations as discontinued operations. The discontinued operations
relate to the Porgera Joint Venture (disposed on August 17, 2007), Emperor (disposed on October 22, 2007) and Netgold (disposed on March 13,
2008).
³ Comparatives have been restated for the reclassification of Blyvooruitzicht Gold Mining Company Limited (Blyvoor) as a discontinued
operation (disposed June 1, 2012).
4
Ordinary share capital is stated after the deduction of R44.8 million treasury shares held within the group.
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6
3B. CAPITALIZATION AND INDEBTEDNESS
Not applicable.
3C. REASONS FOR THE OFFER AND USE OF PROCEEDS
Not applicable.
3D. RISK FACTORS
In conducting our business, we face many risks that may interfere with our business objectives. Some of these risks relate to
our operational processes, while others relate to our business environment. It is important to understand the nature of these risks and
the impact they may have on our business, financial condition and operating results.
Some of the most relevant risks are summarized below and have been organized into the following categories:
·   Risks related to our business and operations;
· 
  Risks related to the gold mining industry;
· 
  Risks related to doing business in South Africa; and
· 
  Risks related to ownership in our ordinary shares or American Depositary Shares, or ADSs.
Risks related to our business and operations
Changes in the market price for gold, which in the past has fluctuated widely, and exchange rate fluctuations affect the
profitability of our operations and the cash flows generated by those operations.
As the majority of our production costs are in rands, while gold is generally sold in dollars, our financial condition has
been and could be materially harmed in the future by an appreciation in the value of the rand. Due to the marginal nature of our
operations any sustained decline in the market price of gold, below the cost of production, could result in the closure of our
operations which would result in significant costs and expenditure, for example, incurring retrenchment costs earlier than
expected, that would negatively and adversely affect our business, operating results and financial condition.
We do not enter into forward contracts to reduce our exposure to market fluctuations in the dollar gold price or the exchange
rate movements of the rand. We sell our gold and trade our foreign currency at the spot price in the market on the date of trade. If the
dollar gold price should fall and the regional functional currencies should strengthen against the dollar, resulting in revenue below our
cost of production and remain at such levels for any sustained period, we may experience losses and may be forced to curtail or
suspend some or all of our operations. In addition, we might not be able to recover any losses we may incur during that period or
maintain adequate gold reserves for future exploitation.
Exchange rates are influenced by global economic trends which are beyond our control. In fiscal 2012, the rand weakened
against the dollar by 21.1%, however in fiscal 2011 and fiscal 2010, the rand strengthened against the dollar by 10.8% and 2.9%
respectively (based on exchange rates at June 30 of each year). From December 2001, when it reached R13.44 = $1.00, the rand has
appreciated by 38.5% against the dollar to R8.27= $1.00 at June 30, 2012 (based on closing rates). At September 30, 2012 the rand
traded at R8.30 = $1.00, a 0.4% weakening relative to the Dollar from June 30, 2012.
A decrease in the dollar gold price and a strengthening of the foreign exchange rate of the rand could result in a decrease in
our profitability. In fiscal 2012, 2011 and 2010 all of our production was from our South African operations providing significant
exposure to the strengthening of the rand and a decrease in profitability. If the rand were to continue to appreciate against the dollar,
our operations could experience a reduction in cash flow and profitability and this would adversely affect our business, operating
results and financial condition.
Inflation may have a material adverse effect on our results of operations.
South Africa has experienced high rates of inflation in the past. Because we are unable to control the market price at
which we sell the gold we produce, it is possible that significantly higher future inflation in South Africa may result in an increase
in our future operational costs in rand, without a concurrent devaluation of the rand against the dollar or an increase in the dollar
price of gold. This could have a material adverse effect upon our results of operations and our financial condition. Significantly
higher and sustained inflation in the future, with a consequent increase in operational costs, could result in operations being
discontinued or reduced or rationalized.
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We have incurred losses in the past and may incur losses in the future.
We achieved a net profit of R377.0 million for fiscal 2012, incurred a net loss of R415.4 million for fiscal 2011, and
achieved a net profit of R203.4 million for fiscal 2010. The profit in fiscal 2012 was largely due to a 36% increase in the average rand
gold price received amounting to R418,538 per kilogram. The loss in fiscal 2011 was mainly as a result of an impairment of
R546.6 million ($80.0 million) against the property, plant and equipment of Blyvooruitzicht Gold Mining Company Limited, or
Blyvoor, due to the uncertainties surrounding the business rescue proceedings Blyvoor underwent at the end of fiscal 2011.
Our profits and cash flows of our operations are directly exposed to the gold price, strength of the rand and higher input
costs as we do not hedge.
We may not be able to meet our cash requirements because of a number of factors, many of which are beyond our
control.
Management’s estimates on future cash flows are subject to risks and uncertainties, such as the gold price, production
volumes, recovered grades and costs. If we are unable to meet our cash requirements out of cash flows generated from our operations,
we would need to fund our cash requirements from alternative financing and we cannot guarantee that any such financing would be
on acceptable terms, or would be permitted under the terms of our existing financing arrangements, or would be available at any
terms. 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 increased working capital requirements may be adversely affected.
The failure to discover or acquire new Ore Reserves could negatively affect our cash flow, results of operations and
financial condition.
Our future cash flow, results of operations and financial condition are directly related to the success of our exploration
and acquisition efforts in the regions in which we operate and any new regions that we identify for future growth opportunities.
Our Ore Reserves (metric) for fiscal 2012 decreased by 75%, mainly due to the disposal of Blyvoor which represented 73% of our
Ore Reserves on June 30, 2011. Our Ore Reserves for fiscal 2011 increased by 5% due to the higher rand gold price used in the
Ore Reserve calculation. Our Ore Reserves for fiscal 2010 increased by 15% as a result of the higher rand gold price used in the
Ore Reserve calculation together with the expected increase in Crown’s deposition capacity as a consequence of the construction
of the Crown/Ergo pipeline linking Crown Gold Recoveries Proprietary Limited, or Crown, to the Brakpan deposition site. We are
currently also conducting exploration activities in Zimbabwe. We can make no assurances that any new or ongoing exploration
programs will result in new mineral producing operations that will sustain or increase our Ore Reserves. A failure to discover or
acquire new Ore Reserves in sufficient quantities to maintain or grow the current level of our reserves will negatively affect our
future cash flow, results of operations and financial condition. In addition, our ability to identify Ore Reserves that have reasonable
prospects for economic extraction while maintaining sufficient controls on production and other costs, will have a material influence
on the future viability of our operations.
We may need to improve our internal controls over financial reporting and our independent auditors may not be able to
attest to their effectiveness because of inherent limitations.
We have evaluated our internal controls over financial reporting for the current fiscal period so that management can attest
to the effectiveness of these controls, as required by Section 404 of the United States Sarbanes-Oxley Act of 2002. Management has
determined that these controls were effective for the 2012, 2011 and 2010 fiscal years respectively and did not identify any material
weaknesses within our internal controls surrounding the financial reporting process. These internal controls over financial reporting
may not be sufficient to prevent significant deficiencies or material weaknesses in the future, and we may also identify other
conditions that could result in significant deficiencies or material weaknesses. In this event, we could experience a negative reaction
in the financial markets and incur additional costs in improving the condition of our internal controls. For a detailed discussion of
controls and procedures, see Item 15.: “Controls and Procedures.”
Single point of failure due to one operating segment
With the disposal of Blyvoor on June 1, 2012, we only have one operating segment remaining. The various processing
plants, pump stations and deposition site is linked to each other with a pipeline infrastructure after completion of the Crown/Ergo
pipeline project. The Brakpan plant is now our major processing plant and we have only one deposition site. The pipeline
infrastructure relating to the Brakpan plant and Brakpan tailings facility are exposed to numerous risks, including operational down
time due to unplanned maintenance, destruction of infrastructure, spillages, higher than expected operating costs, or lower than
expected production which could have a material adverse effect on our business, operating results and financial condition.
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Increased production costs could have an adverse effect on our results of operations.
Our historical production costs have increased significantly and we may not be able to accurately predict and adequately
provide for further increases in our production costs. Production costs are affected by, among other things:
·   labor stability, lack of productivity and increases in labor costs;
· 
  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.
The majority of our production costs consist of reagents, labor, steel, electricity, water, fuels, lubricants and other oil and
petroleum based products. The production costs incurred at our operations have, and could in the future, increase at rates in excess of
our annual expected inflation rate and result in the restructuring of these operations at substantial cost. The majority of our South
African labor force is unionized and their wage increase demands are usually above the then prevailing rates of inflation. Crown,
ERPM and Ergo signed a two year wage settlement agreement with the NUM and UASA on November 7, 2011, which provides
for annual compensation increases of 8.5% for Categories 4 – 8 employees and 7.5% for Categories 9 – 15 employees. The
average increase was therefore 8%. In addition, in the past, we have been impacted by large price increases imposed by our South
African steel suppliers and parastatal entities which supply us with electricity and water. These, combined with the increases in labor
costs, could result in our costs of production increasing above the gold price received. Discussions with steel suppliers and parastatal
entities to moderate price increases have been unsuccessful in the past.
Labor unrest in South Africa during August and September 2012, resulted in some mining companies agreeing to above
inflation wage increases prior to expiry of the then outstanding wage agreements. As at September 30, 2012, no such demands have
been made by our employees but we cannot guarantee that no such demands will be made in the future.
The costs of fuels, lubricants and other oil and petroleum based products have increased in fiscal 2012 as a result of the
general increase in the cost of crude oil in global markets. During fiscal 2011, the average brent crude oil price was approximately
$97 per barrel and in fiscal 2012, the average brent crude oil price was approximately $112 per barrel. In the event that crude oil
prices continue increasing, this could have a significant impact on our production costs.
Our initiatives to reduce costs, such as reducing our labor force, negotiating lower price increases for consumables and
stringent cost controls such as comparing whether actual costs stay within budget parameters, may not be sufficient to offset the
increases imposed on our operations and could negatively affect our business, operating results and financial condition.
Our operations are subject to extensive environmental regulations which could impose significant costs and liabilities.
Our operations are subject to increasingly extensive laws and regulations governing the protection of the environment, under
various state, provincial and local laws, which regulate air and water quality, hazardous waste management and environmental
rehabilitation and reclamation. Our mining and related activities impact the environment, including land, habitat, streams and
environment near the mining sites. 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 to achieve compliance, therefore having a material adverse effect on our profitability.
We have incurred, and expect to incur in the future, expenditures to comply with these environmental laws and regulations.
We have estimated our aggregate Group Rehabilitation, Reclamation and Closure cost provision at R504.3 million ($60.9 million)
included on our statement of financial position as at June 30, 2012. However, the ultimate amount of rehabilitation costs may in the
future exceed the current estimates due to influences beyond our control, such as changing legislation, higher than expected cost
increases, or unidentified rehabilitation costs. We have funded 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
litigation and potentially significant liabilities.
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Flooding at our operations may cause us to incur liabilities for environmental damage.
If the rate of rise of water is not controlled, water from old abandoned underground mining areas could potentially rise to the
surface or decant into surrounding underground mining areas or natural underground water sources. Progressive flooding of these old
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.
Estimates of the probable rate of rise of water in those old abandoned mines are contradictory and lack scientific support,
however, should underground water levels not reach a natural subterranean equilibrium, and in the event that underground water rises
to the surface, we may face, together with all other mining companies in those areas, claims relating to environmental damage as a
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.
Damage to tailings dams and excessive maintenance and rehabilitation costs exposes us to greater risk of financial loss
due to lower production and health, safety and environmental liabilities.
Our tailings facilities are exposed to numerous risks and events, the occurrence of which may result in the failure or breach
of such a facility. These may include sabotage, failure by our employees to adhere to the codes of practice and natural disasters such
as excessive rainfall and seismicity. We could be forced to stop or limit operations, the dams could overflow and the health and safety
of our employees and communities living around these dams could be jeopardized. In the event that this occurs our operations will be
adversely affected and this in turn could have a material adverse effect on our business, operating results and financial condition.
Due to the nature of our business, our operations face extensive health and safety risks.
Regrettably one person died in a work-related incident during fiscal 2012. The employee died after he lit a fire in a closed
shelter while on duty. We also had one fatal work-related incident in fiscal 2011 – the employee succumbed to suspected heat stroke
during a reconnaissance exercise at Blyvoor’s No. 5 shaft and died in hospital the next day. According to section 54 of the Mine,
Health and Safety Act of 1996, if an inspector believes that any occurrence, practice or condition at a mine endangers or may
endanger the health or safety of any person at the mine, the inspector may give any instruction necessary to protect the health or
safety of persons at the mine. These instructions could include the suspension of operations at the whole or part of the mine. These
incidents could lead to mine operations being halted and that will increase our unit production costs, due to loss of production. This
could have a material adverse effect on our business, operating results and financial condition.
Events may occur for which we are not insured which could affect our cash flows and profitability.
Because of the nature of our business, we may become subject to liability for pollution or other hazards against which we
are unable to insure, including those in respect of past mining activities. Our existing property, business interruption and other
insurance contains certain exclusions and limitations on coverage. We have insured property, including loss of profits due to business
interruption in the amount of about R5.2 billion. Claims for each and every event are limited by the insurers to R500 million.
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 may not cover the extent of claims brought against us, including claims for environmental, industrial or
pollution related accidents, for which coverage is not available. If we are required to meet the costs of claims which exceed our
insurance coverage, our costs may increase which could have a material adverse effect on our business, operating results and financial
condition.
If we are unable to attract and retain key personnel our business may be harmed.
The success of our business will depend, in large part, upon the skills and efforts of a small group of management and
technical personnel including our Chief Executive Officer and our Chief Financial Officer. In addition, we compete with mining and
other companies on a global basis to attract and retain key human resources at all levels with appropriate technical skills and
operating and managerial experience necessary to operate the business. Factors critical to retaining our present staff and attracting
additional highly qualified personnel include our ability to provide these individuals with competitive compensation arrangements,
equity participation 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.
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The Crown/Ergo pipeline faces the risk of a start-up project.
The Crown/Ergo pipeline project was completed in February 2012. The pipeline allows gold-bearing material to be
transported to the Ergo plant from Crown's remaining reclamation sites surrounding Johannesburg. The pipeline is exposed to
numerous risks associated with similar start-up projects, including operational down time due to unplanned maintenance, destruction
of infrastructure, spillages, higher than expected operating costs, or lower than expected production which could have a material
adverse effect on our business, operating results and financial condition.
Conditions precedent for completion of the Blyvoor sale have not been satisfied and if they are not satisfied or waived
prior to the relevant end dates our business may be harmed.
The sale agreement entered into in connection with the disposal of Blyvoor consists of two parts, being Part A and Part B.
The conditions precedent for Part A were satisfied and Part A was completed on June 1, 2012. However, the Part B conditions for the
mining right conversion and Ministerial approval of the transfer of the mining rights owned by Blyvoor may be refused by the
Department of Mineral Resources, or DMR, which may result in specified restitution steps taken by each party. The sale agreement
provides for the possibility that mining right conversion, or Ministerial approval is not obtained. Should either circumstance occur,
the sale agreement envisages a number of outcomes which are primarily determined by reference to the reasons for the failure of
mining right conversion, or Ministerial approval. If the conditions precedent for Part B of the transaction are not satisfied, or waived
by both parties, then restitution could have an adverse effect on our business, operating results and financial condition.
Risks related to the gold mining industry
A change in the price of gold, which in the past has fluctuated widely, is beyond our control.
Historically, the gold price has fluctuated widely and is affected by numerous industry factors, over which we have no
control, including:
·   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.
Our profitability may be negatively impacted if revenue from gold sales drops below the cost of production for an extended
period.
Current economic conditions may adversely affect the profitability of the Group’s operations.
The global economy is currently undergoing a period of prolonged recession and, despite recent signs of stabilization, the
future economic environment is likely to be less favorable than that of recent years. Since September 2008, the global financial
system has experienced difficult credit and liquidity conditions and disruptions resulting in major financial institutions consolidating
or going out of business, tightened credit 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 deteriorated,
including declining consumer sentiment, increased unemployment, declining economic growth and uncertainty regarding corporate
earnings. To the extent the current economic downturn worsens or the economic environment in which the Group operates does not
recover, the Group could experience a material adverse effect on its business, results of operations and financial condition.
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The exploration of mineral properties is highly speculative in nature, involves substantial expenditures, and is frequently
unproductive.
We must continually replace Ore Reserves that are depleted by production. Our future growth and profitability will
depend, in part, on our ability to identify and acquire additional mineral rights, and on the costs and results of our continued
exploration and development programs. Gold mining companies may undertake exploration activities to discover gold
mineralization, which in turn may give rise to new gold bearing ore bodies. Exploration is highly speculative in nature and
requires substantial expenditure for drilling, sampling and analysis of ore bodies in order to quantify the extent of the gold reserve.
Many exploration programs, including some of ours, do not result in the discovery of mineralization and any mineralization
discovered may not be of sufficient quantity or quality to be mined profitably. If we discover a viable deposit, it usually takes several
years from the initial phases of exploration until production is possible.
During this time, the economic feasibility of production may change. Moreover, we rely on the evaluations of
professional geologists, geophysicists, and engineers for estimates in determining whether to commence or continue mining.
These estimates generally rely on scientific and economic assumptions, which in some instances may not be correct, and could
result in the expenditure of substantial amounts of money on a deposit before it can be determined with any degree of accuracy
whether 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. As a result 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 mines. Our mineral exploration rights may also not contain commercially exploitable
reserves of gold. The costs incurred on unsuccessful exploration activities are, as a result, not likely to be recovered and we could
incur a write-down on our investment in that interest or the irrecoverable loss of funds spent.
There is uncertainty with our Ore Reserve estimates.
Our Ore Reserve figures described in this document are the best estimates of our current management as of the dates
stated and are reported in accordance with the requirements of Industry Guide 7 of the SEC. These estimates may be imprecise
and may not reflect actual reserves or future production.
Should we encounter mineralization or formations different from those predicted by past drilling, sampling and similar
examinations, reserve estimates may have to be adjusted and mining plans may have to be altered in a way that might ultimately
cause our results of operations and financial condition 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 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 Ore Reserves,
such as the need for sequential development of ore bodies and the processing of new or different grades, may increase our production
costs and decrease our profitability during any given period. 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.
Gold mining is susceptible to numerous events that could have an adverse impact on a gold mining business.
The business of gold mining is exposed to numerous risks and events, the occurrence of which may result in the death of, or
personal injury to, employees, the loss of mining equipment, damage to or destruction of mineral properties or production
facilities, monetary losses, delays in production, environmental damage, loss of the license to mine and potential legal claims. The
risks and events associated with the business of gold mining include, but are not limited to:
·   environmental hazards and pollution, including dust generation, toxic chemicals, discharge of metals, pollutants, radioactive
    materials and other hazardous material into the air and water;
· 
  flooding, landslides, sinkhole formation, ground subsidence, ground and surface water pollution, and waterway
    contamination;
· 
  a decrease in labor productivity due to labor disruptions, work stoppages, disease, slowdowns or labor strikes;
· 
  unexpected decline of ore grade;
· 
  metallurgical conditions and gold recovery;
· 
  failure of unproven or evolving technologies;
· 
  mechanical failure or breakdowns and ageing infrastructure;
· 
  energy and electrical power supply interruptions;
· 
  falls from heights and accidents relating to mobile machinery;
· 
  electrocution;
· 
  activities of illegal or artisanal miners;
· 
  material and equipment availability;
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·  legal and regulatory restrictions and changes to such restrictions;
·
  social or community disputes or interventions;
· 
accidents caused from the collapse of tailings dams;
· 
pipeline failures and spillages;
· 
safety-related stoppages; and
· 
corruption, fraud and theft including gold bullion theft.
The occurrence of any of these hazards could delay production, increase production costs and may result in significant legal
claims.
Risks related to doing business in South Africa
Political or economic instability in South Africa may reduce our production and profitability.
We are incorporated and own operations in South Africa. As a result, political and economic risks relating to South Africa
could reduce our production and profitability. Large parts of the South African population are unemployed and do not have access to
adequate education, health care, housing and other services, including water and electricity. Government policies aimed at alleviating
and redressing the disadvantages suffered by 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 have impeded fixed inward
investment into South Africa and have prompted emigration of skilled workers. As a result, we may have difficulties attracting and
retaining qualified employees.
Recently, the South African economy has been growing at a relatively slow rate, inflation and unemployment have been
high by comparison with developed countries, and foreign currency reserves have been low relative to other emerging market
countries. In the late 1980s and early 1990s, inflation in South Africa reached highs of 20.6%. This increase in inflation resulted in
considerable year on year increases in operational costs. The inflation rate in South Africa still remains relatively high compared to
developed, industrialized countries. As of June 2012, the Consumer Price Inflation Index, or CPI, stood at 5.5%, up from 5.3% in
June 2011, and up from 4.2% in June 2010. The relatively high inflation rate continued at 5.5% as at September 30, 2012. 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.
Power stoppages or increases in the cost of power could negatively affect our results and financial condition.
Our mining operations are dependent on electrical power supplied by Eskom, South Africa’s state owned utility company.
As a result of a substantial increasing demand and insufficient generating capacity, Eskom has warned that the country could continue
to face significant disruptions in electrical power supply in the foreseeable future. The available generating capacity of electricity was
constrained mainly as a result of unplanned maintenance at some of Eskom’s power stations, insufficient supply of coal to the coal
fired plants and skills shortages. On January 25, 2008, Eskom announced that they could no longer guarantee the supply of electricity
to the South African mining industry. Eskom subsequently cut off power supply to the mining industry for five days in fiscal 2008
and a number of power outages followed over several months thereafter. Eskom did manage to contain electricity stoppages but the
fact remains that the country’s current reserve capacity is insufficient and the risk of electricity stoppages is expected to continue
through 2013. Apart from the five-day closure, our production has not been affected, however further power supply stoppages or
power cost increases could have an adverse effect on our operating results and financial condition. Eskom have indicated that they do
not have sufficient funding required for planned infrastructure development, and have imposed the following average tariff increases:
from July 1, 2009 an average tariff increase of 31.3%, from April 1, 2010 an average tariff increase of 24.8%, from April 1, 2011 an
average tariff increase of 25.8% and from April 1, 2012 an average tariff increase of 16.7%. These increases have had an adverse
affect on our production costs and could have a material adverse effect on our business, operating results and financial condition.
AIDS poses risks to us in terms of productivity and costs.
Acquired Immune Deficiency Syndrome, or AIDS, and tuberculosis which is closely associated with the onset of the disease
and is exacerbated in the presence of HIV/AIDS, represents a very serious health care challenge in the mining industry. Human
Immunodeficiency Virus, or HIV, is the virus that causes AIDS and South Africa has one of the highest HIV infection rates in the
world. It is estimated that approximately 30% - 35% of the mining industry workforce in South Africa are HIV positive. The exact
extent to which our mining workforce within South Africa is infected with HIV/AIDS is unknown at this stage. The existence of the
disease poses a risk to us in terms of the potential reduction in productivity and increase in health and safety costs brought about by
the Company’s social responsibility.
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The treatment of occupational health diseases and the potential liabilities related to occupational health diseases may
have an adverse effect on the results of our operations and our financial condition.
The primary area of focus in respect of occupational health within our operations is noise-induced hearing loss (NIHL),
occupational lung diseases (OLD) and tuberculosis (TB). We provide occupational health services to our employees at our
occupational health centers and continue to improve preventive occupational hygiene initiatives. If the costs associated with
providing such occupational health services increase significantly, such increase could have an adverse effect on the results of our
operations and our financial condition.
As a result of the South African Constitutional Court decision permitting individuals employed as miners with OLD to sue
their current or former employers for damages outside the statutory compensation scheme, we could be subject to claims against us
from previous or current employees, including a potential class action or similar group claim. We will assess all such 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.
Increased theft at our work sites, particularly of copper, may result in greater risks to employees or interruptions in
production.
Crime statistics available in South Africa indicate an increase in theft. This together with price increases for copper as a
commodity has resulted in the increased theft of copper cable. Our operations experience high incidents of copper cable theft despite
the implementation of security measures. In addition to the general risk to employees’ lives in an area where theft occurs, we may
suffer production losses and incur additional costs as a result of power interruptions caused by cable theft and theft of bolts used for
the pipeline.
Possible scarcity of water may negatively affect our results and financial condition.
National studies conducted by the Water Research Commission, released during September 2009, found that water resources
were 4% lower than estimated in 1995 which may lead to the revision of water usage strategies by several sectors in the South
African economy, including electricity generation and municipalities. This may result in rationing or increased water costs in the
future. Such changes would adversely impact our surface retreatment operations, which use water to transport the slimes or sand from
reclaimed areas to the processing plant and to the tailings facilities. In addition, as our gold plants and piping infrastructure were
designed to carry certain minimum throughputs, any reductions in the volumes of available water may require us to adjust production
at these operations. We are currently considering a project which envisages the pumping of underground water at ERPM and effluent
water for use by our surface retreatment operations.
Government Regulation
Government policies in South Africa may adversely impact our operations and profits.
The mining industry in South Africa is extensively regulated through legislation and regulations issued through the
government’s administrative bodies. These involve directives in respect of health and safety, the mining and exploration of minerals,
and managing the impact of mining operations on the environment. A variety of permits and authorities are required to mine lawfully,
and the government enforces its regulations through the various government departments. The formulation or implementation of
government policies may be unpredictable on certain issues, including changes in 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.
The Mineral and Petroleum Resources Development Act, 2002
On May 1, 2004, the new Minerals and Petroleum Resources Development Act, or the MPRD Act, came into effect, which
places all mineral and petroleum resources under the custodianship of the state. Private title and ownership in minerals, or the “old
order rights,” are to be converted to “new order rights,” essentially the right to mine.
Where new order rights are obtained under the MPRD Act, these rights will not be equivalent to our existing property rights.
The area covered by the new order rights may be reduced by the DMR, if it finds that the prospecting or mining work program
submitted by an applicant does not substantiate the need to retain the area covered by the old order rights. The duration of the new
order rights will no longer be perpetual but rather, in the case of new order mining rights, for a maximum of 30 years with renewals
of up to 30 years each and, in the case of prospecting rights, up to five years with one renewal of up to three years. In addition, the
new order rights will only be transferable subject to the approval of the Minister of Mineral Resources. Mining or prospecting must
commence within one year or 120 days, respectively, of the mining right or prospecting right becoming effective, and must be
conducted continuously and actively thereafter. The new rights can be suspended or cancelled by the Minister of Mineral Resources
in the event of a breach or, in the case of mining rights, non-optimal mining in accordance with the mining work program.
 
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We have lodged applications to convert all of our old order rights, however, to the extent that we are unable to convert some of our
old order rights to new order rights, and that the exclusive rights to minerals we enjoyed under the previous statutory regime are
diminished, the operations of the MPRD Act may result in significant adjustments to our property ownership structure, which in turn
could have a material adverse effect on the underlying value of our operations. In addition, to the extent that we are unable to convert
some of our old order rights, we may have a claim for compensation based on expropriation. It is not possible to forecast with any
degree of certainty whether a claim will be enforceable against the DMR, and if enforceable, the level of compensation we will
receive, if any. As at September 30, 2012, a substantial portion of our old order mining rights’ conversion to new order mining rights
have been approved, but is yet to be issued by the DMR. The MPRD Act states that the conversions must be granted by the minister
if all requirements are completed but it does not stipulate any time frame. The MPRD Act also provides for holders of old order rights
to continue to operate under the terms and conditions of such rights until conversions under the MPRD Act have been completed. See
Item 4B. “Business Overview”.
Mining royalties and other taxation reform
The implementation of the MPRD Act have resulted result in significant adjustments to our property ownership structure
The Mineral and Petroleum Resources Royalty Act, No.28 of 2008 was enacted on November 21, 2008 and was published
in the South African Government Gazette on November 24, 2008. The Mineral and Petroleum Resources Royalty Act
(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 group. 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 MPRD Act falls outside the ambit of this royalty and consequently the Company does not pay any royalty
on any dumps created prior to the MPRD Act. Introduction of further revenue based royalties or any adverse future tax reforms
would have an adverse effect on the business, operating results and financial condition of our operations.
On April 1, 2012, the South African Government replaced Secondary Tax on Companies (then 10%) with a 15%
withholding tax on dividends and other distributions payable to shareholders. Although this may reduce the tax payable by the
company or our subsidiaries, the withholding tax will reduce the amount of dividends or other distributions received by our
shareholders.
In December 2010, the National Treasury of the South African Government released a discussion paper on carbon taxes.
The implementation of these carbon taxes have been postponed until the 2013 national budget proposal. Should these taxes be
implemented, they might have a direct or indirect negative cost impact on our operations which could have an adverse effect on the
business, operating results and financial condition.
Climate change
Climate change is a global problem that requires both a concentrated international response and national efforts to reduce
greenhouse gas, or GHG, emissions. The United Nations Framework Convention on Climate Change is the main global response to
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 the developing 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 South African Government released in December 2010 different methods of
carbon taxation were discussed. Should these methods be implemented, they might have a direct or indirect negative cost impact on
our operations which could have an adverse effect on the business, operating results and financial condition of our operations.
The Broad Based Socio-Economic Empowerment Charter
The Broad Based Socio-Economic Empowerment Charter for the South African Mining Industry, or Mining Charter
(effective from May 1, 2004), established certain numerical goals and timeframes to transform equity participation in the mining
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 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.
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In September 2010, the DMR released amendments to the Mining Charter. The intention behind the amendments to the
Mining Charter was to clarify certain ambiguities and uncertainties which existed under the 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.
When considering applications for the conversion of existing rights, the State will take a “scorecard” approach,
evaluating the commitments of each company to the different facets of promoting the objectives of the Mining Charter. Failure on
our part to comply with the requirements of the Mining Charter and the “scorecard” could subject us to negative consequences.
We may incur expenses in giving additional effect to the Mining Charter and the “scorecard”, including costs which we may incur
in facilitating the financing of initiatives towards ownership by historically disadvantaged persons. 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. We run the risk of losing our mining rights if we do not comply with the requirements stipulated
in the Mining Charter. This could have an adverse affect on our business, operating results and financial condition.
Land claims
Our privately held land and mineral rights in South Africa could be subject to land restitution claims under the Restitution of
Land Rights Act, 1994 (as amended), or Land Rights Act. Under the Land Rights Act, any person who was dispossessed of rights to
land in South Africa as a result of past racially discriminatory laws or practices is granted certain remedies, including the restoration
of the land. The initial deadline for such claims was December 31, 1998. We have not been notified of any land claims, but it is
possible that administrative delays in the processing of claims could have delayed such notification. Any claims of which we are
notified in the future could have a material adverse effect on our right to the properties to which the claims relate and prevent us using
that land and exploiting any Ore Reserves located there. This could have an adverse affect on our business, operating results and
financial condition.
Since our South African labor force has substantial trade union participation, we face the risk of disruption from labor
disputes and new South African labor laws.
Labor costs constitute 32% of our production costs for fiscal 2012, 35% for fiscal 2011 and 34% for fiscal 2010. As of
June 30, 2012, we employ and contract 2,222 people, of whom approximately 71% 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. In addition, we are subject to strikes by workers from time to time, which result in disruptions to our
mining operations. For example, from September 15, 2009 until October 11, 2009, a strike by members of the NUM union in
connection with a dispute over new wage agreements resulted in an average daily gold production loss of 320 ounces, almost entirely
from Blyvoor’s deep-level underground mining operations.
In recent years, labor laws in South Africa have changed in ways that significantly affect our operations. In particular, laws
that provide for mandatory compensation in the event of termination of employment for operational reasons and that impose large
monetary penalties for non-compliance with the administrative and reporting requirements of affirmative action policies could result
in significant costs to us. In addition, future South African legislation and regulations relating to labor may further increase our costs
or alter our relationship with our employees. Labor cost increases could have an adverse effect on our business, operating results and
financial condition.
Labor unrest and xenophobia could affect production.
We may experience labor unrest at our operations. In particular, during October and November 2002, ERPM experienced
some labor unrest during which several striking contract workers were wounded and two workers were killed by employees of a
private security company. Furthermore, during fiscal 2008, South Africa fell victim to a slew of xenophobic attacks when a series of
riots started in the township of Alexandra. This violence of locals attacking migrants from other African countries had a direct impact
on our operations at ERPM. Three employees died and attendance was down at the operation for several days. Although these attacks
have been contained, the challenge for the South African Government is to come up with a long-term and judicious immigration
policy.
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During August and September 2012, there have been a number of illegal strikes at several mining companies in South Africa
which resulted in 45 people being killed. These strikes were unprotected (not legal according to current labor legislation) and called
for above inflation wage increases and better working conditions.
Such events at our operations or elsewhere could have an adverse effect on our business, operating results and financial
condition.
Our financial flexibility could be materially constrained by South African currency restrictions.
South African law provides for exchange control regulations, which restrict the export of capital from the Common
Monetary Area, including South Africa. The Exchange Control Department of the South African Reserve Bank, or SARB, is
responsible for the administration of exchange control regulations. In particular, South African companies:
·  are generally not permitted to export capital from South Africa or to hold foreign currency without the approval of SARB;
· 
are generally required to repatriate, to South Africa, profits of foreign operations; and
· 
are limited in their ability to utilize profits of one foreign business to finance operations of a different foreign business.
While the South African Government has relaxed exchange controls in recent years, it is difficult to predict whether or
how it will further relax or abolish exchange control measures in the future. For further information see Item 10D.: “Exchange
Controls.”
Risks related to ownership of our ordinary shares or ADSs
Sales of large volumes of our ordinary shares or ADSs or the perception that these sales may occur, could adversely
affect the prevailing market price of such securities.
The market price of our ordinary shares or ADSs could fall if substantial amounts of ordinary shares or ADSs are sold by
our stockholders, or there is the perception in the marketplace that such sales could occur. Current holders of our ordinary shares
or ADSs may decide to sell them at any time. Sales of our ordinary shares or ADSs, if substantial, or the perception that these
sales may occur to be substantial, 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.
Your rights as a shareholder are governed by South African law, which differs in material respects from the rights of
shareholders under the laws of other jurisdictions.
Our Company is a public limited liability company incorporated under the laws of the Republic of South Africa. The
rights of holders of our ordinary shares, and therefore many of the rights of our ADS holders, are governed by our memorandum
of incorporation (previously known as memorandum and articles of association) 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.
We may be subject to an increase in compliance costs with our continued efforts to increase the transparency of our
reporting requirements and changing corporate governance initiatives.
As a result of our listings on NYSE and JSE, we are required to comply with new and changing reporting requirements
that have over recent years emphasized an increase in the transparency of public disclosure. The associated regulatory standards
set forth by the exchanges’ governing bodies may change over time and may be subject to interpretation. As a result we may not
execute the application of these standards properly and will congruently experience an increase in the cost of our compliance
efforts. For example, management’s required assessment of our internal controls over the financial reporting process stipulated by
Section 404 of the Sarbanes-Oxley Act of 2002 commands the need for resources from management in addition to our external
auditors who are required to attest to our internal control over financial reporting. Maintaining high standards of corporate
governance and public disclosure is highly prioritized in our organization and with our continued efforts to comply with these
laws currently effective and any future legislative introductions or changes, we will continue to incur the related costs.
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It may not be possible for you to effect service of legal process, enforce judgments of courts outside of South Africa or
bring actions based on securities laws of jurisdictions other than South Africa against us or against members of our board.
Our Company, certain members of our board of directors and executive officers are residents of South Africa. In
addition, our cash producing assets are located outside the United States and a major portion of the assets of members of our board
of directors and executive officers are either wholly or substantially located outside the United States. As a result, it may not be
possible for you to effect service of legal process, within the United States or elsewhere outside South Africa, upon most of our
directors or officers, including matters arising under United States federal securities laws or applicable United States state
securities laws.
Moreover, it may not be possible for you to enforce against us or the members of our board of directors and executive
officers judgments obtained in courts outside South Africa, including the United States, based on the civil liability provisions of
the securities laws of those countries, including those of the United States. A foreign judgment is not directly enforceable in South
Africa, but constitutes a cause of action which will be enforced by South African courts provided that:
·  the court which pronounced the judgment had jurisdiction to entertain the case according to the principles recognized by
    South African law with reference to the jurisdiction of foreign courts;
· 
the judgment is final and conclusive (that is, it cannot be altered by the court which pronounced it);
· 
the judgment has not lapsed;
· 
the recognition and enforcement of the judgment by South African courts would not be contrary to public policy, including
    observance of the rules of natural justice which require that no award is enforceable unless the defendant was duly served
    with documents initiating proceedings, that he was given a fair opportunity to be heard and that he enjoyed the right to be
    legally represented in a free and fair trial before an impartial tribunal;
· 
the judgment was not obtained by fraudulent means;
· 
the judgment does not involve the enforcement of a penal or revenue law; and
· 
the enforcement of the judgment is not otherwise precluded by the provisions of the Protection of Business Act, 1978 (as
    amended), of South Africa.
It is the policy of South African courts to award compensation for the loss or damage actually sustained by the person to
whom the compensation is awarded. Although the award of punitive damages is generally unknown to the South African legal system
that does not mean that such awards are necessarily contrary to public policy. Whether a judgment was contrary to public policy
depends on the facts of each case. Exorbitant, unconscionable, or excessive awards will generally be contrary to public policy. South
African courts cannot enter into the merits of a foreign judgment and cannot act as a court of appeal or review over the foreign court.
South African courts will usually implement their own procedural laws and, where an action based on an international contract is
brought before a South African court, the capacity of the parties to the contract will usually be determined in accordance with South
African law. It is doubtful whether an original action based on United States federal securities laws may be brought before South
African courts. A plaintiff who is not resident in South Africa may be required to provide security for costs in the event of
proceedings being initiated in South Africa. Furthermore, the Rules of the High Court of South Africa require that documents
executed outside South Africa must be authenticated for the purpose of use in South African courts. It is not possible therefore for an
investor to seek to impose criminal liability on us in a South African court arising from a violation of United States federal
securities laws.
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ITEM 4. INFORMATION ON THE COMPANY
4A. HISTORY AND DEVELOPMENT OF THE COMPANY
Introduction
DRDGOLD Limited or DRDGOLD is a South African gold mining company engaged in surface gold tailings retreatment
including exploration, extraction, processing and smelting. Our black economic empowerment partners are Khumo Gold SPV
Proprietary Limited, or Khumo Gold and an employee trust (known as the DRDSA Empowerment Trust), which hold 20% and 6%
respectively in our subsidiaries, Ergo Mining Operations Proprietary Limited, or EMO and Blyvooruitzicht Gold Mining Company
Limited, or Blyvoor. We have a 74% interest in EMO and, up to June 1, 2012, in Blyvoor. On June 1, 2012, we sold our entire
interest and claims against Blyvoor to Business Venture Investment No 1557 Proprietary Limited, a wholly owned subsidiary of
Village Main Reef Limited, or Village.
As at June 30, 2012, EMO wholly owned and operated Crown Gold Recoveries Proprietary Limited, or Crown, Ergo
Mining Proprietary Limited, and East Rand Proprietary Mines Limited, or ERPM. EMO also owned 65% of ErgoGold
(unincorporated entity), with DRDGOLD holding the remaining 35%. Ergo Mining Proprietary Limited, Crown, ErgoGold and
ERPM’s Cason operation are collectively referred to as Ergo. On July 2, 2012, all the group’s surface operations, including Crown
and ErgoGold, were restructured into Ergo Mining Proprietary Limited.
DRDGOLD is also a 50% partner in Chizim Gold (Pvt) Limited, or Chizim Gold, an early-stage gold exploration project on
Zimbabwe’s Greenstone Belt.
We are a public limited liability company, incorporated on February 16, 1895, as Durban Roodepoort Deep Limited, and our
shares were listed on the JSE in that same year. In 1898, our milling operations commenced with 30 stamp mills and in that year we
treated 38,728 tons of ore and produced 22,958 ounces of gold. On December 3, 2004, the company changed its name from Durban
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.
To facilitate access to global capital markets our shares and/or related instruments trade on the JSE, New York Stock
Exchange, the Marche Libre on the Paris Bourse, the Brussels Bourse in the form of International Depository Receipts, the Over The
Counter, or OTC, market in Berlin and Stuttgart and the Regulated Unofficial Market on the Frankfurt Stock Exchange.
Our registered office and business address is 1
st
Floor, Building 1, Quadrum Office Park, 50 Constantia Boulevard,
Constantia Kloof Ext. 28, Roodepoort, South Africa. The postal address is P.O. Box 390, Maraisburg 1700, South Africa. Our
telephone number is (+27 11) 470-2600 and our facsimile number is (+27 11) 470-2618. We are registered under the South African
Companies Act, 1973 (as amended) under registration number 1895/000926/06. The South African Companies Act, 1973 has been
superseded by the South African Companies Act 71, 2008 which had been promulgated as from May 1, 2011. For our ADSs, the
Bank of New York, at 101 Barclay Street, New York, NY 10286, United States, has been appointed as agent.
South African operations
Ergo (continuing operations)
Ergo was formed in June 2007, primarily to recover and treat – over a period of 12 years – some 186 million tones (Mt) of
surface tailings contained in the Elsburg Tailings Complex for gold. As a second-phase development, in conjunction with a new
pipeline linking Ergo with Crown, the Ergo plant’s second carbon-in-leach (CIL) circuit was refurbished to increase capacity from
1.2 million tones per month (Mtpm) to 1.8Mtpm. Ergo is licensed to produce uranium and sulphuric acid, and a feasibility study to
assess the potential of these by-products from the Ergo resource will be completed in fiscal 2013. 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 assets. Also as part of the restructuring, Ergo acquired DRDGOLD's 35% interest in ErgoGold for R200 million.
Crown was acquired on September 14, 1998, in exchange for 5,925,139 of our ordinary shares. Also located within the
Witwatersrand Basin, Crown exploits various surface sources, including sand and slime tailings deposited as part of previous 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.
ERPM, which consists of the original underground mine, the Cason Dump surface retreatment operation and ERPM
Extension 1 and 2 exploration tenements, was acquired on October 10, 2002. Underground mining at ERPM was halted in October
2008. On July 1, 2012, ERPM sold its surface mining assets, and its 65% interest in ErgoGold to Ergo in exchange for shares in Ergo
as part of the restructuring of our surface operations.
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Blyvoor (discontinued operation)
Blyvoor was acquired on September 15, 1997, in exchange for 12,693,279 of our ordinary shares, is a predominantly
underground operating mine located within the Witwatersrand Basin, exploiting gently to moderately dipping gold bearing quartz
pebble conglomerates in addition to certain surface sources. On June 1, 2012, our entire interest in Blyvoor was sold to Village.
Zimbabwe exploration
Chizim Gold
Chizim Gold was established, on December 9, 2009 as a 50:50 joint venture with Chizim Investments (Pvt) Limited, or
Chizim Investments, to conduct feasibility studies on certain gold exploration tenements in Zimbabwe’s Greenstone Belt extending
over an area of more than 21,000 hectares.
Important Events in Our Development Generally and in the Current Year
Blyvoor provisional judicial management and business rescue proceedings
On November 9, 2009, we announced that, in a bid to save our Blyvoor mine from liquidation, we intended applying to the
High Court of South Africa for a provisional judicial management order over the operation. A provisional judicial management order
was granted by the High Court of South Africa on November 10, 2009.
The application, in terms of the provisions of Section 427 of the South African Companies Act, 1973, was prompted by
Blyvoor’s inability to continue to sustain losses incurred since April 2009, which were brought about by the following circumstances:
·  a drop in the rand gold price received between April 1, 2009 and September 30, 2009, due to the strengthening of the
   Rand against the US dollar;
·
  extensive damage caused during May 2009 to higher-grade underground production areas at Blyvoor’s No. 5 Shaft by
   seismic activity, restoration of which was expected to take until March 2010 to complete;
·
  power utility Eskom’s higher winter tariffs, compounded by a 32% price increase effective from July 1, 2009, and the
   likelihood of further increases in coming months; and
·
  the wage strike by the National Union of Mineworkers, which lasted for almost a month and resulted in the loss of
   approximately 8,000 ounces of production.
In terms of a provisional judicial management order, the court appointed a judicial manager who had a wide range of powers
at his disposal to take such actions he deemed necessary to save the business. These could include giving certain creditors temporary
preference over others and agreeing compromises with creditors without the risk of committing an act of insolvency and thereby
exposing the mine to liquidation.
On April 13, 2010, DRDGOLD announced that the High Court of South Africa had agreed to lift, with
immediate effect, the provisional judicial management order in place since November 10, 2009. The Company’s application to the
court for the lifting of the provisional judicial management order, pointed out that for the period from November 2009 to February
2010, Blyvoor had traded at an unaudited profit of R33.6 million, the amount owed to trade creditors at the time when the
provisional judicial management order was granted had been reduced from R39.0 million to R2.2 million, monthly production of
gold had increased from 8,745 ounces to 10,127 ounces and the gold price had increased from R240,000/kg to R265,000/kg.
On December 2, 2009, DRDGOLD announced a proposed transaction to sell 60% of Blyvoor to Aurora Empowerment
Systems Proprietary Limited, or Aurora, for R295 million. On April 1, 2010, the proposed transaction was cancelled by mutual
agreement between DRDGOLD and Aurora.
On June 23, 2011, DRDGOLD announced that it had suspended financial assistance to Blyvoor. The decision followed
the promulgation of the new South African Companies Act, 2008, which requires directors of parent companies to seek the
consent of the parent company shareholders and then to consider the effects on the solvency and liquidity of the parent company
as conditions precedent to the provision of financial assistance to subsidiaries. Blyvoor’s production had been trending down as a
result of a drop in grade, public holiday interruptions and seismicity-related work stoppages, while costs had increased due mainly
to higher electricity charges, and particularly power utility Eskom’s winter tariff which added R11 million a month to overhead
costs.
The Board of Directors of Blyvoor had, in response to DRDGOLD’s decision, resolved to begin business rescue
proceedings for Blyvoor in terms of Chapter 6 of the Companies Act, 2008. The business rescue process provided for in Chapter 6
replaces the judicial management process in the previous Companies Act, 1973. DRDGOLD supported the decision of the
Blyvoor Board of Directors.
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On September 27, 2011, DRDGOLD announced that the Business Rescue Practitioner overseeing business rescue
proceedings at Blyvoor had given notice of Blyvoor’s intention to enter a 60-day consensus-seeking process in terms of Section
189 (3) of the Labour Relations Act with the National Union of Mineworkers, or NUM and the United Association of South
Africa, or UASA – the Union, to consider reducing employee numbers by approximately 500 employees. The reason for the need
to consider the reduction was that Blyvoor – under business rescue proceedings in terms of Chapter 6 of the Companies Act, 2008,
since June 2011 – had been unable to meet production and financial targets, a situation exacerbated by higher utility costs.
Blyvoor proposed voluntary separation and application of the principle of “last in, first out” as among the mechanisms to be
applied to effect the required reduction in employee numbers. Measures that were under consideration to achieve a targeted 30%
improvement in the cost of production in R/kg terms, and thus to avoid employee reduction, included:
·   a reduction in overtime expenditure;
· 
  an increase in available work time and subsequent re-organization of shifts;
· 
  a re-evaluation of the profitability of 6 Shaft, 4 Shaft and the Reef Picking Project;
· 
  a reduction of departmental costs by 10%; and
· 
  revised mining plans.
The Business Rescue Practitioner terminated the business rescue proceedings with effect from November 10, 2011,
following his conclusion that there were no longer grounds to believe that Blyvoor was financially distressed. In November 2011
the gold price had increased significantly to approximately R460,000/kg, which was the major contributor to this conclusion.
Disposal of Blyvoor
DRDGOLD, Village Main Reef Limited (Village), Blyvoor and Business Venture Investments No 1557 Proprietary
Limited (a wholly owned subsidiary of Village) (Purchaser) entered into a sale of shares and claims agreement (Agreement) on
February 11, 2012.
Pursuant to the terms of the Agreement, DRDGOLD agreed to sell its entire shareholding in Blyvoor (which amounts to
74% of the total issued ordinary share capital of Blyvoor) (Sale Shares) and its working capital and shareholder loan claims
against Blyvoor (Sale Claims) to the Purchaser (Transaction).
The Transaction is divided into the Part A Sale and the Part B Sale. In terms of the Part A Sale, the Sale Claims are sold
to the Purchaser and in terms of the Part B Sale, the Sale Shares are sold to the Purchaser.
The purchase consideration payable in respect of the Sale Claims and the Sale Shares was discharged by Village through
the issue of 85,714,286 new ordinary shares in Village (Village Shares) and an amount of R1 payable in cash by Village,
respectively.
The Part A Sale completed on June 1, 2012, at which time 65,714,286 of the Village Shares were issued directly to
DRDGOLD and 20,000,000 were transferred into escrow (Escrow Shares) pending completion of the Part B Sale.
The Part B Sale is subject to the fulfillment, or waiver (if applicable), of the following conditions precedent:
·  by not later than 17h00 on the second anniversary of the signature date of the Agreement, the Department of Mineral
   Resources (DMR) has granted the conversion of Blyvoor’s old order mining right and the new order mining right has
   been notarially executed and registered in the Mining Titles Office (Conversion); and
· 
by not later than 17h00 on the third anniversary of the signature date of the Agreement, the DMR has unconditionally
   approved the transfer of DRDGOLD’s interest in Blyvoor to the Purchaser in terms of section 11 of the Mineral and
   Petroleum Resources Development Act, No 28 of 2002 (MPRDA) or conditionally approved it on terms and conditions
   which both DRDGOLD and the Purchaser confirms to be acceptable (Section 11 Approval).
Upon fulfillment of the Part B conditions precedent, the Escrow Shares together with any accrued dividends thereon will
be released to DRDGOLD and the Sale Shares will be transferred to the Purchaser.
If the Conversion does not occur in accordance with the terms of the Agreement, or the Conversion occurs but Section 11
Approval is not obtained, any one, or more, of the following may occur:
·   the sale of the Sale Shares is implemented and the Sale Shares are transferred to the Purchaser;
· 
  a portion of the Sale Claims revert to DRDGOLD;
· 
  the Escrow Shares together with any accrued dividends thereon are released to DRDGOLD or to the Purchaser;
· 
  the appointment of the Purchaser as DRDGOLD’s agent to render corporate services on behalf of DRDGOLD to
    Blyvoor continues or is terminated; and/or
· 
  the DRDGOLD’s right to receive dividends in respect of the Sale Shares is reinstated.
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Funding raised for the Ergo flotation/fine-grind plant
DRDGOLD established a Domestic Medium Term Note Programme (DMTN Programme) under which it may from time
to time issue notes. DRDGOLD successfully issued R111 million under the DMTN Programme on July 2, 2012 and R54 million
on September 14, 2012 which will be applied towards the capital requirements of the Ergo flotation/fine-grind plant.
Restructuring of the surface operations
In order to improve synergies, effect cost savings and a simpler group structure, DRDGOLD announced, on July 3, 2012,
the restructuring of the group’s surface operations into Ergo (effective July 1, 2012). Ergo is a wholly-owned subsidiary of EMO.
EMO is 74% held by DRDGOLD, 20% by its black economic empowerment (BEE) partner, Khumo Gold and 6% by the DRDSA
Empowerment Trust.
The restructuring was effected by a number of transactions, including the following:
·  DRDGOLD sold its 35% direct interest in the ErgoGold unincorporated partnership to Ergo for R200 million on loan
   account;
· 
Crown sold its mining assets (excluding its 50% interest in Ergo), mining and prospecting rights and certain liabilities
   to Ergo in exchange for shares in Ergo;
·
  ERPM sold all of its surface mining assets (excluding its 50% interest in Ergo) and its 65% interest in ErgoGold to Ergo
    in exchange for shares in Ergo; and
·
  Crown and ERPM will distribute their entire holdings in Ergo to their sole shareholder, EMO.
Consequently, EMO will hold 100% of Ergo.
All conditions for DRDGOLD’s disposal of its 35% direct ErgoGold interest have been met. The ERPM and Crown
disposals are subject to the consent of the Minister of Mineral Resources in terms of section 11 of the MPRDA.
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.”
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4B. BUSINESS OVERVIEW
Description of Our Mining Business
Surface tailings retreatment
Surface tailings retreatment involves the extraction of gold from old mine dumps, comprising the waste material from earlier
underground gold mining activities. This is done by reprocessing sand dumps and slimes dams along the reefs that stretch from east
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 are also the result of the old treatment methods but do not
require milling. This material has become economically more viable to process owing to improved treatment methods and a higher
gold price. 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.
Underground mining
Our underground mining operations, which have now either been sold or closed down, comprised relatively mature assets
and the principal mining method used was the extraction of previously abandoned Ore Reserves, which required a high degree of
opening up, development and retreatment of these previously abandoned Ore Reserves.
Exploration
Exploration activities are focused on the extension of existing ore bodies and identification of new ore bodies both at
existing sites and at undeveloped sites. Once a potential ore body has been discovered, exploration is extended and intensified in
order to enable clearer definition of the ore body and the portions with the potential to be mined. Geological techniques are constantly
refined to improve the economic viability of exploration and exploitation.
Our Metallurgical Plants and Processes
A detailed review of the metallurgical plants and processes for each of the mining operations is provided under Item 4D.:
“Property, Plant and Equipment.”
Market
The gold market is relatively liquid compared to other commodity markets, with the price of gold generally quoted in
dollars. Physical demand for gold is primarily for manufacturing purposes, and gold is traded on a world-wide basis. Refined gold has
a variety of uses, including jewelry, electronics, dentistry, decorations, medals and official coins. In addition, central banks, financial
institutions and private individuals buy, sell and hold gold bullion as an investment and as a store of value (due to the tendency of
gold to retain its value in relative terms against basic goods and in times of inflation and monetary crises).
The use of gold as a store of value and the large quantities of gold held for this purpose in relation to annual mine production
have meant that historically the potential total supply of gold has been far greater than demand. Thus, while current supply and
demand play some part in 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.
The gold market was strong but remained volatile in fiscal 2012, trading between a low of $1,483 per ounce and a high of
$1,895 per ounce. The average spot price was 22% higher than in the previous fiscal year, at $1,679 per ounce. Amid continuing
global economic uncertainty, investors turned once more to gold (notably to safe-haven products such as Exchange Traded Funds)
and this, together with more de-hedging activity and a slowdown in new mine supply, particularly from South Africa, saw demand
exceed supply. The average gold price received by us for the year was R418,538 per kilogram which was 36% higher than the
previous year at R308,221 per kilogram.
Looking ahead, we believe that the global economic environment, including economic uncertainty and other factors, will
continue to make gold attractive to investors. The supply side shortfall is likely to continue because of circumstances including
operational challenges and delays in opening new mines and the challenge, particularly to South African producers such as ourselves,
of maintaining profitable production in the face of rising costs.
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Our total revenue by geographic market was as follows:
Year ended June 30,
2012
2011                         2010
R’000
R’000                        R’000
South Africa...............................................................................................
3,004,264
2,565,319                  1,990,522
3,004,264
2,565,319                  1,990,522
All gold produced by our South African Operations is sold on our behalf by Rand Refinery Proprietary Limited, or RRL, in
accordance with a refining agreement entered into in October 2001. At our various operations the gold bars which are produced
consist of approximately 85% gold, 7-8% silver and the balance comprises copper and other common elements. The gold bars are
sent to RRL for assaying and final refining where the gold is purified to 99.9% and cast into troy ounce bars of varying weights. RRL
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 RRL a variable refining fee plus fixed marketing, loan and
administration fees. We currently own 4% (Fiscal 2011: 4%) of RRL (which is jointly owned by South African mining companies),
which is disclosed in our financial statements, however the Company believes it has the right to a further 6.22% in RRL which is
currently being brought to RRL’s attention and the Company will contest if this additional interest is not awarded. Mr. T.J. Gwebu
our Executive Officer Compliance, is a director of RRL, member of their Remuneration Committee and chairman of their Social and
Ethics Committee and Mr. M. Burrell , our Financial Director Ergo, replaced Mr. D.J. Pretorius, our CEO, as an alternate director of
RRL and is also a member of their Audit Committee.
Ore Reserves
The tables below set out the Proven and Probable Ore Reserves that are the Group’s Ore Reserves as of June 30, 2012,
and 2011, in both imperial and metric units. Our Ore Reserves are comprised of our attributable Ore Reserves.
Ore Reserve estimates in this Annual Report are reported in accordance with the requirements of the SEC’s Industry
Guide 7. Accordingly, as of the date of reporting, all reserves are planned to be mined out under the life of mine business plans
within the period of our existing rights to mine, or within the time period of assured renewal periods of our rights to mine. In
addition, as of the date of 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.
In South Africa, we are legally required to publicly report Ore Reserves and Mineral Resources in compliance with the
South African Code for the Reporting of Exploration Results, Mineral Resources and Mineral Reserves, or SAMREC Code. The
SEC’s Industry Guide 7 does not recognize Mineral Resources. Accordingly, we do not include estimates of Mineral Resources in
this Annual Report.
Ore Reserve calculations are subject to a review conducted in accordance with SEC Industry Guide 7. Components of the
calculations included in the geological models and input parameters of the reserve estimation procedures, were checked. In
addition, visual inspection of the planning to deliver an individual block to the metallurgical plant, and the recovery, and
deposition of the tailings, took place. A check is also made of the financial input into the costs and revenue to affirm that they are
within reasonable limits.
The Ore Reserves are inclusive of diluting materials and allow for losses that may occur when the material is mined. Ore
Reserve tons, grade and content are quoted as delivered to the gold plant. There are two types of methods available to select ore for
mining. The first is pay-limit, which includes cash costs, including overhead costs, to calculate the pay-limit grade. The second is the
cut-off grade which includes cash 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, especially for marginal mining operations.
The pay-limit approach is based on the minimum in-situ grade of ore blocks, for which the production costs, which includes
all overhead costs, including head office charges, are equal to a three-year historical average gold price per ounce for that year. This
calculation also considers the previous three years’ mining and milling efficiencies, which includes metallurgical and other mining
factors and the production plan for the next twelve months. Only blocks 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, especially significant for marginal mines.
When delineating the economic limits to the ore bodies, we adhere to the following guidelines:
· The potential ore to be mined is well defined by an externally verified and approved geological model created using our
  mining software;
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·  The potential ore, which is legally allowed to be mined, is also confined by the mine's lease boundaries; and
· 
A full life of mine business plan (physical 5 year plan) is constructed to mine the ore from existing infrastructure.
Our Ore Reserves figures are estimates, which may not reflect actual reserves or future production. We have prepared these
figures in accordance with industry practice, converting mineral deposits to an Ore Reserve through the preparation of a mining plan.
The Ore Reserve estimates contained herein inherently include a degree of uncertainty and depend to some extent on statistical
inferences which may ultimately prove to have been unreliable.
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.
Our Ore Reserves are prepared using three year average gold prices at the time of reserve determination. In light of the
significant increase in gold prices, since fiscal 2006 the Company prepares its life of mine business plans using the prevailing gold
price at the time of the reserve determination, which is at the end of the fiscal year.
Gold prices and exchange rates used for Ore Reserves and for our business plan are outlined in the following table.
2012                                                                    2011
Three-year average                Business Plan      Three-year average                 Business Plan
Reserve gold price –$/oz
1,388
1,651
1,121
1,536
Reserve gold price –R/kg
331,792
408,381
276,753
328,155
Exchange rate –R/$
7.44
7.69
7.68
6.65
In fiscal 2012, our attributable Ore Reserves (imperial) decreased by 71% from 6.3 million ounces at June 30, 2011, to
1.8 million ounces at June 30, 2012, primarily as a consequence of the disposal of Blyvoor.
Based on the life of mine business plans, the life of mine for each of our operations at June 30, 2012, are set out in the
table below.
                                                                                                    Underground                                                         Surface
Mine 
                                                                                           2012                             2011                              2012                              2011
Blyvoor
1
....................................................
Not applicable
20 years
Not applicable
1 year
Crown ........................................................
Not applicable
Not applicable
Not applicable²
11 years
Ergo
2
.........................................................
Not applicable
Not applicable
10 years
11 years
Our Ore Reserves as of June 30, 2012 and 2011 are set forth in the table below.
1
Blyvoor was sold on June 1, 2012.
2
Ergo has been restated to include Ergo Mining Proprietary Limited, ErgoGold, Crown and ERPM’s surface retreatment operation.
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Ore Reserves: Imperial
At June 30, 2012
At June 30, 2011
Proven Ore Reserves
Probable Ore Reserves
Proven Ore Reserves
Probable Ore Reserves
Tons
Grade
Gold
Content
Tons
Grade
Gold
Content
Tons
Grade
Gold
Content
Tons
Grade
Gold
Content
(mill)
(oz/ton)
('000 ozs)
(mill)
(oz/ton)                 ('000 ozs)            (mill)             (oz/ton)
('000 ozs)
(mill)
(oz/ton)              ('000 ozs)
Blyvoor
1
Underground ...................................................
                    -
-
                                                      -
18.44
0.16
2,913
9.06
0.15
1,352
Surface ................................................................
                    -
-
2.18
0.03                           74                                                                                    -
Total Blyvoor ..................................................
-                      -
-
-                      -                                  -
20.62
0.14
2,987
9.06
0.15
1,352
Ergo
1 2
Surface ................................................................                                                 135.23              0.01                                1,281
  51.21                0.01                           544
147.46
0.01                      1,408
54.90                      0.01                        589
Total Ergo ........................................................                                                 135.23              0.01                                1,281
  51.21                0.01                           544
147.46
0.01                      1,408
54.90                      0.01                        589
Total Group
Underground ....................................................
-                     -
-
-                       -                                  -
18.44
0.16
2,913
9.06
0.15
1,352
Surface ................................................................                                                135.23               0.01                               1,281
  51.21                 0.01                           544
149.64
0.01                      1,482
54.90                     0.01                         589
Total
3
...............................................................                                               135.23               0.01
1  ,281
  51.21
0.01
544
168.08
0.03
4,395
63.96
0.03
1,941
1
Proven and Probable Ore reserves for fiscal 2012 and 2011 reflect our attributable 74% interest in Ergo and for fiscal 2011 our attributable 74% in Ergo and Blyvoor.
2
Ergo’s Ore Reserves include the Elsburg and Benoni tailings complexes which are being processed by Ergo, however the mining rights for these tailings are owned by ERPM. Crown has been included under
Ergo for fiscal 2012 and 2011.
3
The Ore Reserves listed in the above table are estimates of what can be legally and economically recovered from operations, and, as stated, are estimates of mill delivered in tons.
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Ore Reserves: Metric
At June 30, 2012
At June 30, 2011
Proven Ore Reserves
Probable Ore Reserves
Proven Ore Reserves
Probable Ore Reserves
Tonnes                         Grade
Gold
Content                  Tonnes                    Grade
Gold
Content                  Tonnes                Grade
Gold
Content
Tonnes
Grade
Gold
Content
(mill)                  (g/tonne)       (tonnes)                     (mill)               (g/tonne)         (tonnes)                    (mill)            (g/tonne)          (tonnes)
(mill)
(g/tonne)
(tonnes)
Blyvoor
1
Underground .....................................................
                                                      -
                                                     -
16.73
5.42
90.61
8.22
5.12
42.06
Surface .................................................................
                                                      -
1.98
1.16
2.29
                                                   -
Total Blyvoor................................................
-                                   -                      -
-                                -                       -
18.71
4.97
92.90
8.22
5.12
42.06
Ergo
1 2
Underground ......................................................
                                                       -
                                                      -
                                                    -
                                                   -
Surface ..................................................................                                             122.68                            0.32             39.83
  46.46                           0.36             16.92
  133.78                     0.31
43.79
49.81
0.37-
18.32
Total Ergo..........................................................                                              122.68                            0.32             39.83
   46.46                          0.36             16.92
  133.78                     0.31
43.79
49.81                     0.37
18.32
Total Group
Underground .....................................................
                                                        -
                                                       -
  16.73
5.42
90.61
8.22
5.12
42.06
Surface .................................................................                                               122.68                            0.32             39.83
  46.46                            0.36             16.92
   135.76                    0.34
46.08
 49.81                    0.37
18.32
Total
3
................................................................                                              122.68                            0.32              39.83
  46.46                            0.36              16.92
   152.49                    0.90
 136.69
 58.03                    1.04
60.38
1
Proven and Probable Ore Reserves for fiscal 2012 reflect our attributable 74% interest in Ergo and for fiscal 2011 our attributable 74% in Ergo and Blyvoor.
2
Ergo’s Ore Reserves include the Elsburg and Benoni tailings complexes which are being processed by Ergo, however the mining rights for these tailings are owned by ERPM. Crown has been included under
Ergo for fiscal 2012 and 2011.
3
The Ore Reserves listed in the above table are estimates of what can be legally and economically recovered from operations, and, as stated, are estimates of mill delivered in tons.
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The measurement and classification of our Proven and Probable Ore Reserves are sensitive to the fluctuation of the gold
price. If we had used different gold prices than the three-year average prices at the time of reserve determination as of June 30, 2012,
2011 and 2010 respectively, we would 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 attributable Ore Reserves as of June 30, 2012,
2011 and 2010 would be as follows:
Year ended June 30, 2012
Three-year
average price
Business Plan
at prevailing
price
10% Below
prevailing
price
10% Above
prevailing
price
Rand gold price per kilogram
331,792                   408,381                  367,543                    449,219
Dollar gold price per ounce
1,388                       1,651                      1,486                       1,816
Attributable ore reserves (million ounces)
1.8                           1.8                          1.8                           2.1
Year ended June 30, 2011
Three-year
average price
Business Plan
at prevailing
price
10% Below
prevailing
price
10% Above
prevailing
price
Rand gold price per kilogram..........................................
276,753                   328,155                  295,340                   360,971
Dollar gold price per ounce.............................................
1,121                       1,536                      1,382                        1,690
Attributable ore reserves (million ounces) .....................
6.3                           7.3                          6.7                            7.8
Year ended June 30, 2010
Three-year
average price
Business Plan
at prevailing
price
10% Below
prevailing
price
10% Above
prevailing
price
Rand gold price per kilogram..........................................
236,752                   306,081                   275,473                   336,689
Dollar gold price per ounce.............................................
926                       1,244                       1,120                       1,368
Attributable ore reserves (million ounces) .....................
6.0                           7.3                            6.8                          7.8
The approximate mining recovery factors for the 2012 ore reserves shown in the above table are as follows:
Surface
Mine
Mine Call Factor
(%)
Metallurgical and
recovery factor
(%)
Crown
1
.......................
100.0
59.1
Ergo.............................
100.0
38.4
The approximate mining recovery factors for the 2011 ore reserves shown in the above table are as follows:
Underground                                                                             Surface
Mine
Dilution
(Sundries,
Shortfall and
Development)
(%)
Mine Call Factor
(%)
Metallurgical and
recovery factor
(%)
Mine Call Factor
(%)
Metallurgical and
recovery factor
(%)
Crown¹ ........................
Not applicable
Not applicable               Not applicable
100.0
59.3
Ergo.............................
Not applicable
Not applicable               Not applicable
100.0
39.3
Blyvoor .......................
23.2                              81.0                                92.3                             100.0                               40.6
The following table shows the average drill/sample spacing (rounded to the nearest foot), as at June 30, 2012 and 2011, for
each category of Ore Reserves at our mines calculated based on a three year average dollar price of gold.
Mine
Proven
Reserves
Probable
Reserves
Blyvoor...................................................................................................................                          16 ft. by 24 ft.
20 ft. by 20 ft.
Ergo ........................................................................................................................                        328 ft. by 328 ft.
328 ft. by 328 ft.
The pay-limit grades based on the three year average dollar price for gold and costs used to determine reserves as of
1
Crown has been included under Ergo for reporting purposes during fiscal 2012 but is disclosed separately above due to the different
mettalurgical and recovery factor.
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June 30, 2012, are as follows:
Underground                                                    Surface
Mine
Pay-limit grade
(g/t)
Costs used to
determine pay-
limit grade
(R/t)
Pay-limit grade
(g/t)
Costs used to
determine pay-
limit grade (R/t)
Crown
1
......................................................................
Not applicable
Not applicable                            0.27                             64.91
Ergo............................................................................
Not applicable
Not applicable                            0.19                             29.42
The pay-limit grades and costs used to determine reserves as of June 30, 2011, are as follows:
Underground                                                    Surface
Mine
Pay-limit grade
(g/t)
Costs used to
determine pay-
limit grade
(R/t)
Pay-limit grade
(g/t)
Costs used to
determine pay-
limit grade (R/t)
Blyvoor .....................................................................
7.94                     1,284.34
0.27
30.04
Crown¹ ......................................................................
Not applicable
Not applicable                            0.52                             84.86
Ergo............................................................................
Not applicable
Not applicable                            0.24                             25.60
We apply the pay-limit approach to the mineralized material database of our various shafts or business units in order to
determine the tonnage and grade available for mining.
Governmental regulations and their effects on our business
South Africa
Common Law Mineral Rights and Statutory Mining Rights
Prior to the introduction of the Minerals and Petroleum Resources Development Act, or MPRD Act, in 2002, private
ownership in mineral rights and statutory mining rights in South Africa could be acquired through the common law or by statute.
Under the old regime, the term freehold title refers to a right of ownership of land and the surface thereof and the term “mining title”
refers to a right of ownership of the minerals below the surface or the right to mine such minerals. With effect from May 1, 2004, all
minerals have been placed under the custodianship of the South African government under the provisions of the MPRD Act, and old
order proprietary rights need to be converted to new order rights of use within certain prescribed periods, as dealt with in more detail
below.
Old Order Rights - Mining Authorizations
Schedule II of the MPRD Act allows the Minister to issue or grant, on application, the appropriate rights referred to in the
section concerned over the same mineral on the same land which is the subject of the old order right. By way of example, holders of
unused old order rights had for a period of one year from the effective date of the MPRD Act 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. The old order right ceases to exist upon the conversion of the old order
right and the registration of the new right into which the old order right was converted.
Conversion of Rights under the Mineral and Petroleum Resources Development Act, 2002
Existing old order rights, whether statutorily or in terms of common law, need to be converted into new order rights in order
to ensure exclusive access to the mineral for which rights existed at the time of the enactment of the MPRD Act. In respect of used
old order mining rights, the DMR is obliged to convert the rights if the applicant complies with certain statutory criteria. These
include the submission of a mining works program, demonstrable technical and financial capability to give effect to the program,
provision for environmental management and rehabilitation, and compliance with certain black economic empowerment criteria and
the social and labor plan. These applications had to be submitted within five years after the promulgation of the MPRD Act on
May 1, 2004. Similar procedures apply where we hold prospecting rights and a prospecting permit and conduct prospecting
operations. Under the MPRD Act, 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
renewal of three years. Applications for conversion of our old order rights have been submitted to the DMR During this period, we
are permitted to continue to operate under the terms and conditions of the old order rights which we hold. As at September 30, 2012,
1
Crown has been included under Ergo in fiscal 2012 for reporting purposes but is disclosed separately above due to the different
pay-limit grades and costs.
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a substantial portion of our old order mining rights’ conversion to new order mining rights have been approved, but is yet to be issued
by the DMR.
Mining royalties
Royalties from mining activities became payable to the state, as from March 1, 2010, under provisions contained in the
Mineral and Petroleum Resources Royalty Act, or the Royalty Act. The most significant feature of the Royalty Act is that the
royalty is to be determined in accordance with a formula based system and no longer to be a predetermined specific rate for the
different types of minerals. The royalty is deductible for normal income tax purposes.
The Royalty Act defines the tax base as gross sales excluding the transportation and handling costs of the final product.
The final product can be either the “refined” or “unrefined” mineral depending on the nature of the mineral in question. There has
been general consensus that a formula derived mineral royalty rate regime is more equitable and provides the necessary relief for
mines during times of difficulties, e.g. low commodity prices and mines that become marginal due to low grades. The formula-
based mineral royalty rate regime also ensures that the State shares in the benefits of higher commodity prices. The State thus
shares in the downside risks, when mines become marginal, and in the upside benefits during times of high commodity prices.
Based on comments received the formulae were adjusted to take into account the capital intensive nature of certain mining
operations, especially Gold mining and Oil and Gas. The formulae use earnings before income tax, or EBIT, with 100 percent
capital expensing. Given that a distinction is drawn between refined and unrefined minerals, the mineral royalty percentage rates
(Y%) is based on the following formulae:
For refined minerals: Y (%) = 0.5 + [(EBIT divided by (Gross Sales multiplied by 12.5)) multiplied by 100]. This rate is
capped at a maximum of 5.0% and minimum of 0.5%.
For unrefined minerals: Y (%) = 0.5 + [(EBIT divided by (Gross Sales multiplied by 9.0)) multiplied by 100]. This rate is
capped at a maximum of 7.0% and minimum of 0.5%.
For the purpose of calculating the royalty percentage rates a negative EBIT will be set equal to zero.
The Broad Based Socio-Economic Empowerment Charter
In order to promote broader based participation in mining revenue, the MPRD Act provides for a Mining Charter to be
developed by the Minister within six months of commencement of the MPRD Act, beginning May 1, 2004. The Mining Charter was
initially published in August 2004 and its objectives include:
·  increased direct and indirect ownership of mining entities by qualifying parties as defined in the Mining Charter;
·  expansion of opportunities for persons disadvantaged by unfair discrimination under the previous political dispensation;
·  expansion of the skills base of such persons, the promotion of employment and advancement of the social and economic
    welfare of mining communities; and
·  promotion of beneficiation.
The Mining Charter sets certain numerical and timeframe goals on equity participation by historically disadvantaged South
Africans of South African mining assets. It recommends that these are achieved by, among other methods, disposal of assets by
mining companies to historically disadvantaged persons on a willing seller, willing buyer basis at fair market value. The goals set by
the Mining Charter require each mining company to achieve 15 percent ownership by historically disadvantaged South Africans of its
South African mining assets within five years and 26 percent ownership within ten years from May 1, 2004. It also sets out guidelines
and goals in respect of employment equity at management level with a view to achieving 40 percent participation by historically
disadvantaged persons in management and ten percent participation by women in the mining industry, each within five years from
May 1, 2004. Compliance with these objectives is measured on the weighted average “scorecard” approach in accordance with a
scorecard which was first published in or around August 2010.
The Mining Charter and the related scorecard are not legally binding and, instead, simply state a public policy. However,
the DMR places significant emphasis on the compliance therewith. The Mining Charter and scorecard, have a decisive effect on
administrative action taken under the MPRD Act.
In recognition of the Mining Charter’s objectives of transforming the mining industry by increasing the number of black
people in the industry to reflect the country’s population demographics, to empower and enable them to meaningfully participate
in and sustain the growth if the economy, thereby advancing equal opportunity and equitable income distribution, we have
achieved our commitment to ownership compliance with the MPRD Act 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 20% and 6% respectively in our operating subsidiary, EMO. (See Item 4A.: “History and
Development of the Company”).
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Mine Health and Safety Regulation
The South African Mine Health and Safety Act, 1996 (as amended), or the Mine Health and Safety Act, came into effect in
January 1997. The principal object of the Mine Health and Safety Act is to improve health and safety at South African mines and to
this end, imposes various duties on us at our mines, and grants the authorities broad powers to, among other things, close unsafe
mines and order corrective action relating to health and safety matters. In the event of any future accidents at any of our mines,
regulatory authorities could take steps which could increase our costs and/or reduce our production capacity. There are amendments
to the act currently before parliament to ratify the stopping of production and increase punitive measures including increased financial
fines and legal liability of mine management. Some of the more important new provisions in the bill as approved by the Portfolio
Committee are 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.
Under the South African Compensation for Occupational Injuries and Diseases Act, 1993 (as amended), or COID Act,
employers are required to contribute to a fund specifically created for the purpose of compensating employees or their dependants for
disability or death arising in the course of their work. Employees who are incapacitated in the course of their work have no claim for
compensation directly from the employer and must claim compensation from the COID Act fund. Employees are entitled to
compensation without having to prove that the injury or disease was caused by negligence on the part of the employer, although if
negligence is involved, increased compensation may be payable by this fund. The COID Act relieves employers from 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 2012, we contributed approximately R18.2 million under the COID Act to a multi-employer industry fund
administered by Rand Mutual Assurance Limited.
Under the Occupational Diseases in Mines and Works Act, 1973 (as amended), or the Occupational Diseases Act, the multi-
employer fund pays compensation to employees of mines performing “risk work,” usually in circumstances where the employee is
exposed to dust, gases, vapors, chemical substances or other working conditions which are potentially harmful, or if the employee
contracts a “compensatable disease,” which includes pneumoconiosis, tuberculosis, or a permanent obstruction of the airways. No
employee is entitled to benefits under the Occupational Diseases Act for any disease for which compensation has been received or is
still to be received under the COID Act. 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 are often encountered during the ordinary course of gold mining operations in South Africa, and present
potential risks for radiation exposure of workers at those operations and the public to radiation in the nearby vicinity. We monitor our
uranium and radon emissions 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.
Environmental Regulation
Managing the impact of mining on the environment is extensively regulated by statute in South Africa. Recent statutory
enactments set compliance standards both generally, in the case of the National Environmental Management Act, and in respect of
specific areas of environment impact, as in the case of the Air Quality Act 2004, the National Water Act (managing effluent), and the
Nuclear Regulator Act 1999. Liability for environmental damage is also extended beyond the corporate veil to impose personal
liability on managers and directors of mining corporations that are found to have violated applicable laws.
The impact on the environment by mining operations is extensively regulated by the MPRD Act. The MPRD Act has
onerous provisions for personal liability of directors of companies whose mining operations have an unacceptable impact on the
environment.
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Mining companies are also required to demonstrate both the technical and financial ability to sustain an ongoing
environmental management program, or EMP, and achieve ultimate rehabilitation, the particulars of which are to be incorporated in
an EMP. This program is required to be submitted and approved by the 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.
The MPRD Act imposes specific, ongoing environmental monitoring and financial reporting obligations on the holders of
mining rights.
Because of the diverse nature of our operations, ranging from underground mining to surface reclamation activities,
environmental risks vary from site to site. These risks have been addressed in EMP’s which have been submitted to the DMR for
approval. Additionally, key environmental issues have been prioritized and are being addressed through active management input and
support as well as progress measured in terms of activity schedules and timescales determined for each activity.
Our existing reporting and controls framework is consistent with the additional reporting and assessment requirements of the
MPRD Act.
Financial Provision for Rehabilitation
We are required to make financial provision for the cost of mine closure and post-closure rehabilitation, including
monitoring once the mining operations cease. We have funded these environmental rehabilitation costs by making contributions over
the life of the mine to environmental trust funds established for each operation and funds held in insurance instruments. Funds are
irrevocably contributed to trusts 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, 2012, we held a total of R106.3 million (2011: R134.2 million) in trust, the balance held in each fund
being Rnil (2011: R33.5 million) for Blyvoor, R24.3 million (2011: R23.0 million) for Durban Deep, R59.6 million (2011:
R56.5 million) for Crown, R22.4 million (2011: R21.2 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.
The financial provisions for West Wits and Durban Deep have been consolidated into a single rehabilitation trust. The West
Wits financial provision has been impaired as at June 30, 2010, 2011 and 2012, because it will be transferred along with the
rehabilitation liability over the West Wits mining rights which have been disposed of.
We address shortfalls in the funds by accruing trust investment income for the benefit of the funds by replenishing it with
the proceeds from the sale of redundant mining equipment at the end of the life of the mine and gold from mine cleanup. If any of the
operations are prematurely closed, the rehabilitation funds may be insufficient to meet all the rehabilitation obligations of those
operations.
Whereas the old Minerals Act allowed for the establishment of a fully funded rehabilitation fund over the life of mine, the
MPRD Act assumes a fully compliant fund at any given time in the production life of a mine. The DMR appears to have taken a
practical approach in dealing with this change, and has indicated that the traditional ring fencing of funds may, for investment
purposes be relaxed, and that insurance instruments may also be received subject to the DMR’s consent, to make up the shortfall in
available cash funds. The Company has subsequently made use of approved insurance products for a portion of its rehabilitation
liabilities. As of June 30, 2012, we held a total of R59.3 million (2011: R8.3 million) in funds held in insurance instruments.
The aggregate group rehabilitation, reclamation and closure cost provision was R504.3 million at June 30, 2012, compared
to R490.2 million at June 30, 2011. This has been included in the provision for environmental rehabilitation, restoration and closure
in our financial statements as at June 30, 2012.
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4C. ORGANIZATIONAL STRUCTURE
The following chart shows our principal subsidiaries (excludes dormant companies in the process of being deregistered) and
joint venture as of September 30, 2012. All of our subsidiaries are incorporated in South Africa. We hold the majority of the
investments directly or indirectly as indicated below. Refer to Exhibit 8.1 for a list of our significant subsidiaries. In addition,
DRDGOLD holds a 50% joint venture interest in Chizim Gold which is incorporated in Zimbabwe.
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4D. PROPERTY, PLANT AND EQUIPMENT
DRDGOLD OPERATIONS
SEPTEMBER 30, 2012
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Description of Significant Subsidiaries, Properties and Mining Operations
Witwatersrand Basin Geology
Blyvoor, which was sold on June 1, 2012, is predominantly an underground operating mine located within a geographical
region known as the Witwatersrand Basin, exploiting gold bearing reefs in addition to certain surface sources. Ergo, which consists of
the ErgoGold, Crown and ERPM’s Cason operations are also located within the Witwatersrand Basin. Crown exploits various surface
sources, including sand and slime tailings deposited as part of historical mining operations. ERPM, which halted its underground
mining operation in October 2008, continues as a surface operation processing sand from the Cason Dump as part of the Ergo
operating segment. Ergo is a surface retreatment operation which is currently processing slime tailings from the Elsburg tailings
facility, which were historically deposited by ERPM’s underground mining operation.
The Witwatersrand Basin comprises a 4 mile (6 kilometers) vertical thickness of sedimentary rocks situated within the
Kaapvaal Craton, extending laterally for approximately 186 miles (299 kilometers) East-Northeast and 62 miles (100 kilometers)
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.
Gold mineralization in the Witwatersrand Basin occurs within horizons termed reefs. These occur within seven separate
goldfields located along the eastern, northern and western margins of the basin. These goldfields are known as the Evander Goldfield,
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 (2
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.
Ergo (continuing operations)
Overview
We own 74% of EMO, which in turn owns 100% of Ergo. Ergo is a surface tailings retreatment operation consisting of
the Crown Central, City Deep, Knights (also previously referred to as Crown), ERPM’s Cason operation and Ergo (also
previously referred to as ErgoGold) business units which are collectively referred to as Ergo. ERPM’s Cason Dump surface
tailings retreatment operation is expected to continue to operate until 2014 under the management of Ergo based on the current
rate of retreatment of approximately 186,000 tpm. 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 announced on July 3, 2012, the restructuring of the group’s surface operations (Crown, ErgoGold and surface
assets of ERPM) into Ergo (effective July 1, 2012).
At June 30, 2012, Ergo had 2,157 employees, including contractors.
Properties
Ergo's operations are located approximately 43 miles (70 kilometers) east of the Johannesburg’s central business district in
the province of Gauteng. Access to the Brakpan plant is via the Ergo Road on the N17 Johannesburg-Springs motorway.
Crown is situated on the outskirts of Johannesburg, South Africa and consists of three separate locations. It has mining
rights to 5,787 acres (2,342 hectares) and has the right to occupy 1,490 acres (603 hectares) of freehold property. Crown is in the
process of converting these old order rights to new order rights under the MPRD Act. At Crown, the Lycaste dump prospecting right
has been approved, the Top Star dump, City Deep, Crown Mines, Consolidated Main Reef and Knights mining rights have been
approved. An application has been submitted to the DMR for the Crown mining rights to be consolidated.
The Crown Central operation is located on the West Wits line within the Central Goldfield of the Witwatersrand Basin,
approximately 6 miles (10 kilometers) west of the Johannesburg central business district in the province of Gauteng. Access is via
Xavier Road on the M1 Johannesburg-Kimberley-Bloemfontein highway. The City Deep operation is located on the West Wits line
within the Central Goldfields of the Witwatersrand Basin, approximately 3 miles (5 kilometers) south-east of the Johannesburg
central business district in the province of Gauteng. Access is via the Heidelberg Road on the M2 Johannesburg-Germiston
motorway. The Knights operation is located at Stanley and Knights Road Germiston off the R29 Main Reef Road.
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History of Ergo
2007
Ergo was founded as an EMO and Mintails SA joint venture.
On August 6, 2007, the joint venture parties entered into a sale of assets agreement with AngloGold Ashanti pursuant to
which it acquired the remaining moveable and immovable assets of the Ergo plant for a 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 Withok deposition complex for a payment of R45.0 million.
2008
Ergo Phase 1 was launched comprising the refurbishment and recomissioning of the Ergo plant’s first CIL circuit and
the retreatment of the Elsburg and Benoni tailings complexes.
DRDGOLD acquires Mintails SA’s stake in ErgoGold for R277.0 million.
2009
Ergo Phase 1 commissioning continues; first feeder line to the Ergo Plant from Elsburg tailings complex comes into
operation.
Ergo Phase 2 exploration drilling for gold, uranium and acid completed.
2010
DRDGOLD acquired control of Ergo through the acquisition of Mintails SA’s 50% in Ergo for R82.1 million.
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.
2011
Construction of the Crown/Ergo pipeline continued and the second CIL circuit of the Ergo plant was refurbished as part
of the Crown/Ergo pipeline project.
2012
The construction of the Crown/Ergo pipeline and second CIL circuit of the Ergo plant was completed.
In order to improve synergies, effect cost savings and a simpler group structure DRDGOLD announced, on July 3, 2012,
the restructuring of the group’s surface operations into Ergo which took place on July 1, 2012.
Construction of the Ergo flotation/fine-grind plant commenced and is expected to be fully commissioned by July 2013.
History of Crown (consolidated into Ergo on July 1, 2012)
1979
Rand Mines Limited directors approved the formation of the company Rand Mines Milling and Mining Limited (RM3)
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.
1982
First plant commissioned at Crown Mines to process surface material.
1986
Second plant commissioned at City Deep to process surface material.
1997
Randgold Exploration Limited and Continental Goldfields of Australia entered into a joint venture with the intention to
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 Central, City Deep and Knights.
1998
We purchased 100% of CCGR.
2002
Khumo Bathong Holdings Proprietary Limited (KBH) purchased 60% of Crown. We were appointed as joint manager of
the operation with KBH.
2005
On July 6, 2005 we signed a Memorandum of Understanding with KBH 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. We owned an 85% interest in EMO.
2006
On December 11, 2006, Khumo Gold, on behalf of itself and an employee trust, exercised the option granted by us
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, we concluded an agreement with AngloGold Ashanti to purchase the Top Star Dump.
2008
The Department of Mineral Resources issued in favour of Crown a mining right for gold recovery over the Top Star
Dump.
2009
The reclamation of the Top Star Dump commenced in December 2008. Crown also commenced with the reduction of
volumes to 400,000 tpm to implement the planned Crown Tailings Deposition Facility closure plan.
2010
The surface circuit of ERPM was incorporated into Crown for reporting purposes. Crown’s operating and financial
results for fiscal 2009 and fiscal 2008 were restated for comparative reporting purposes.
Board approval was obtained to construct a pipeline to the Ergo tailings deposition site to enable Crown to restore its
deposition capacity to 600 000tpm. Restored deposition capacity provides the operation with the opportunity to bring to
account potential new ore reserves.
2011
Construction of the pipeline to the Ergo tailings deposition site continued and was scheduled for completion in
December 2011.
2012
Construction of the pipeline to the Ergo tailings deposition site was completed. On July 1, 2012, Crown sold its mining
assets, mining and prospecting rights and certain liabilities to Ergo in exchange for shares in Ergo.
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Mining and Processing
Ergo undertakes the retreatment of surface sources deposited as tailings from non-operational mining sites from east to
west, just to the south of Johannesburg’s central business district.
Material processed by Ergo is sourced from numerous secondary surface sources namely, sand and slime. The surface
sources have generally undergone a complex depositional history resulting in grade variations associated with improvements in
plant recovery over the period 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 as well as “river bed” material.
The four metallurgical plants, known as Ergo, Crown Mines, City Deep and Knights, have an installed capacity to treat
approximately 24.0 million tons of material per year. All of the plants have undergone various modifications during recent years
resulting in significant changes to the processing circuits.
In addition to the four metallurgical plants, Ergo’s assets include access to some 750Mt to 900Mt of tailings deposited
across the western, central and eastern Witwatersrand; the Crown milling and pump station close to the Johannesburg central business
district; a 50km pipeline; and tailings deposition facilities including the significant Brakpan tailings facility.
The feed stock is made up of sand and slime which are reclaimed separately. Sand is reclaimed using mechanical front-
end loaders, re-pulped with water and pumped to the plant. Slime is reclaimed using high pressure water monitoring guns. The re-
pulped slime is pumped to the plant and the reclaimed material is treated using screens, cyclones, ball mills and Carbon-in-Leach,
or CIL, technology to extract the gold.
Ergo Plant: The refurbishment of the first CIL circuit at the Ergo plant now has the capacity to treat an estimated 15Mt of
tailings a year. The expansion of the gold plant by refurbishing the second CIL circuit has increased the capacity to treat an estimated
21Mt per year. The Ergo flotation/fine-grind plant project which will be fully commissioned by July 2013, will assist in liberating
the gold particles currently encapsulated in the sulphides. The circuit will enable the Ergo plant to achieve improved gold recoveries
of between 16% to 20%.
City Deep Plant: Commissioned in 1987, this surface/underground plant comprises a circuit including screening, primary,
secondary and tertiary cycloning in closed circuit milling, thickening, oxygen preconditioning, CIL, elution and zinc precipitation
followed by calcining and smelting to doré. Retreatment is continuing at the City Deep Plant for the time being, but the plant will be
decommissioned during fiscal 2013 to operate as a milling and pump station and will pump material to the Ergo Plant for retreatment.
Crown Mines
Plant: Commissioned in 1982, this surface/underground plant has already been modified and comprises a
circuit including screening, 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.
Knights Plant: Commissioned in 1988, this surface/underground plant comprises a circuit including screening, primary
cycloning, milling in closed circuit with hydrocyclones, thickening, oxygen preconditioning, CIL, elution, electro-winning and
smelting to doré. The Knights plant, although historically part of the Crown operation, is located further east and considerably closer
to the Brakpan Tailings Facility. Knights is therefore continuing to treat the nearby Cason dump and due to its location, is able to
access the Brakpan tailings facility to deposit waste.
Electricity to Ergo is supplied from various Eskom supply points for the reclamation units and the tailings storage
facilities. The plant is supplied from the national power grid via a secured source from the Ekurhuleni Council of 11,000 volts.
Plant sub stations are stepped down to 6,600 volts before being further reduced to 525 volts for the motor control purposes.
Electricity is supplied to the Crown Central and City Deep business units from separate substations referred to as Jupiter
and No. 15 Shaft Crown Mines, and for Knights by the Ekhurhuleni Town Council. Electricity is supplied directly from the
national power grid to the substation and town council at 44,000 volts. Substations, located on mine sites, transform the power to
6,600 volts for direct supply to the plants. The power supply is further reduced to 525 volts for smaller devices and equipment.
For Crown Central and City Deep, the average annual power consumption is about 72 GWHr and the maximum demand is about
8.0 MW. For Knights the average annual power consumption is about 36 GWHr and the maximum demand is about 7.0 MW.
As of June 30, 2012, the net book value of Ergo’s mining assets was R1,569.1 million.
During fiscal 2012, capital expenditure was mainly directed towards the Crown/Ergo pipeline and Ergo flotation/fine-grind
plant project. The 50 kilometer Crown/Ergo pipeline links the Crown Mines and City Deep plants to Ergo's Brakpan tailings facility,
while the Ergo flotation/fine-grind plant is expected to improve gold recoveries by between 16% to 20%.
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The following capital expenditure was incurred at Ergo in fiscal 2012, 2011 and 2010:
Year ended June 30,
2012
2011                     2010
R’000
R’000                   R’000
Crown/Ergo Pipeline Project .............................................................................
33,869
119,731                   29,564
CMR dump .......................................................................................................
57
2,069
-
4A11 dump .......................................................................................................
-
10,232
-
Angelo Pan reclamation.....................................................................................
2,995
-
-
Vehicles and equipment.....................................................................................
112
489
1,635
Tailings management .........................................................................................
14,196
15,567                   13,823
New water line to Angelo Pan and Rocsherville................................................
35,068
-                           -
Crown/City Slurry line upgrade.........................................................................
13,916
-                           -
Purchase of Anglogold Ashanti assets ...............................................................
-
-
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Refurbishment of the Ergo plant and second leach section................................
15,460
29,379
8,167
Ergo flotation/fine-grind plant ...........................................................................
38,510
-                           -
Reclamation stations, pipeline and pumps ........................................................
-
-
38,432
Brakpan tailings facility.....................................................................................
50,733
27,705                  19,906
IT Infrastructure.................................................................................................
-
-
41
Tower crane .......................................................................................................
5,573
-
-
Ekurhuleni Business Development Academy (EBDA) training facility............
189
-
397
Other ..................................................................................................................
7,194                         161                   2,535
217,872                  205,333               114,533
Exploration and Development
Exploration and development activity at Ergo involves the drilling of existing surface dumps and evaluating the potential
gold bearing surface material owned by third parties that could be processed on a full treatment basis or purchased outright by Ergo.
Exploration drilling has been done to define the uranium potential of the Elsburg complex. Independent competent person reports
on uranium, sulphur and gold for the Elsburg proven and probable ore reserves have been compiled.
A feasibility study regarding the deposition of the Crown tailings on the Brakpan tailings facility was completed in fiscal
2010 and R43 million was approved for the extension of the Brakpan tailings complex to accommodate the Crown tailings. The
extension of the Brakpan tailings facility was completed during February 2012 and all the Crown, City, Knights and Elsburg tailings
are now being deposited on the Brakpan tailings facility.
Environmental and Closure Aspects
Ergo operates at sites located in close proximity to significant municipal infrastructure, commercial and residential
development. The major environmental risks are associated with dust from various recovery sites, and effective management of
relocated process material on certain tailings dams. The impact of windblown dust on the surrounding environment and community is
addressed through a scientific monitoring and evaluation process, with active input from the University of Witwatersrand and
appropriate community involvement. Environmental management programs, addressing a wide range of environmental issues, have
been prepared by specialist environmental consultants and applied specifically to each dust sample recovery monitoring site and
integrated into Ergo’s internal environmental assessment process. Although Ergo completed a project for thickening re-processed
tailings, there also remains a risk of localized sloughing which can result in that section of the tailings dam required to be closed
temporarily, with repair work being done to the dam wall. 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 that
capacity of return water dams
Dust pollution is controlled through an active environmental management program for the residue disposal sites and
chemical and organic dust suppression on recovery sites. Short-term dust control is accomplished through ridge ploughing the top
surface of dormant tailings dams. Additionally, environmentally friendly dust suppressants, such as molasses, are applied. Dust fall-
out is also monitored. In the long-term, dust suppression and water pollution is managed through a program of progressive vegetation
of the tailings followed by the application of lime, to reduce the natural acidic conditions, and fertilizer to assist in the growth of
vegetation planted on the tailings dam.
A program of environmental restoration that provides for the rehabilitation of areas affected by mining operations during the
life of the mine is in place. The surface reclamation process at Ergo has several environmental merits as it has removed a potential
pollution source and opens up land for development. Crown has conducted its environmental management program performance
assessment, which was submitted to and approved by the DMR during fiscal 2005. Crown has updated its EMP in compliance with
the MPRD Act and submitted it to the DMR for approval.
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While the ultimate amount of rehabilitation costs to be incurred in the future is uncertain, we estimate that the total cost for
Ergo and Crown, in current monetary terms as at June 30, 2012, is approximately R168.3 million and R247.1 million, respectively. A
total of R59.6 million has been contributed to the Crown Rehabilitation Trust Fund, while a total of R21 million has been contributed
by Ergo to funds held in insurance instruments. 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.
Ore Reserves and Life of Mine
As at June 30, 2012, our 74% share of the Proven and Probable Ore Reserves of Ergo was 1.8 million ounces. In fiscal 2011,
our 74% share of Proven and Probable Ore Reserves of Ergo was 2.0 million ounces. A Mineral Resource competent person is
appointed at each operation to review our Ore Reserve calculations for accuracy. For Ergo, Mr. Vivian Labuschagne and Mr. Clive
Mervyn Brett are the appointed Mineral Resource competent persons. The current life of mine business plan is estimated to be ten
years.
Current Production
In fiscal 2012, production decreased to 135,708 ounces from 144,065 ounces in fiscal 2011 as a result of a 9% decrease in
grade to 0.20g/t. The decrease in grade was due to of the conclusion of reclamation from the high-grade Top Star and Menells dumps.
Throughput increased by 6% from 20,326,000 tonnes to 21,603,000 tonnes.
Cash costs in fiscal 2012 increased to $1,094 per ounce from $974 per ounce in fiscal 2011, due mainly to lower gold
production and above inflation increases in the cost of electricity and labor.
The following table details our attributable share of the production results from Ergo for the past fiscal year:
2012                   2011                   2010
Production (imperial)
Surface operations
Ore mined ('000 tons)................................................................................................
23,811                22,407                20,932
Recovered grade (oz/ton) ..........................................................................................
0.006                  0.006                  0.006
Gold produced (ounces) ...........................................................................................
135,708               144,065             134,742
Results of Operations (R)
Revenue (‘000) .........................................................................................................
1,764,191            1,379,459          1,129,113
Operating costs (‘000) ..............................................................................................
1,141,973               972,479             873,743
Cash operating cost (‘000)
1
.....................................................................................
1,151,400               980,746             869,918
Cash cost per ounce of gold ($)¹ ................................................................................
1,094                      974                    848
Total cost per ounce of gold ($)¹.................................................................................
1,341                   1,140                 1,009
ERPM
Overview
We own 74% of ERPM, which is consolidated as a subsidiary, through our 74% holding in EMO. ERPM consists of an
underground section and the Cason Dump surface retreatment operation. Underground mining at ERPM was halted in October 2008
and is included in ‘Corporate head-office and all other’ in the financial statements for segmental reporting purposes. The Cason
Dump surface retreatment operation will continue to operate until June 2014 under the management of Ergo based on the current rate
of production of approximately 196,700tpm and has been included under Ergo in the financial statements for segmental reporting
purposes.
At June 30, 2012, ERPM had 39 employees, including contractors.
1
Cash operating cost, cash cost per ounce and total cost per ounce of gold are financial measures of performance that we use to determine cash
generating capacities of the mines and to monitor performance of our mining operations. For a reconciliation of operating costs see Item 5A.:
“Operating Results.”
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39
Property
ERPM is situated on the Central Rand Goldfield located within and near the northern margin of the Witwatersrand Basin
in the town of Boksburg, 20 miles (32 kilometers) east of Johannesburg. Access is via Jet Park Road on the N12 Boksburg-
Benoni highway. Historically underground mining and recovery operations comprised relatively shallow remnant pillar mining in
the central area and conventional longwall mining in the south-eastern area. Surface reclamation operations including the
treatment of sand from the Cason Dump, is 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.
At June 30, 2012, the net book value of ERPM’s mining assets was R14.1 million, representing the Cason surface
retreatment operation, reported under the Ergo segment.
History
1895
Formation of East Rand Proprietary Mines Limited.
1991
The FEV shaft was commissioned.
1999
East Rand Proprietary Mines Limited was liquidated in August 1999. The mine was run by a small number of
employees during liquidation. Underground flooding continued during liquidation.
2000
KBH took over control of the mine in January 2000. Operating as Enderbrooke Investments Proprietary Limited, or
Enderbrooke, and employing an outside contractor, the mine re-commenced mining operations in February 2000.
2002
Crown purchased 100% of ERPM, from Enderbrooke.
2003
An underground fire occurred at FEV Shaft, in February 2003. There was also the loss of Hercules Shaft in June 2003
and the loss of a secondary outlet at the FEV shaft in November 2003.
2004
In July 2004 it was determined that the underground section would undergo a controlled closure program ending March
2005. The closure program was prevented by a reduction in costs and improved productivity at the mine.
2005
Central Shaft placed on care and maintenance. On July 6, 2005, we signed a Memorandum of Understanding with KBH
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. We owned an 85%
interest in EMO.
2006
On December 11, 2006, Khumo Gold, on behalf of itself and an employee trust, exercised the option granted by us
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.
2007
A prospecting right, incorporating the southern section of the old Van Dyk mining lease area and a small portion of
Sallies, was granted by the DMR. Known as ERPM Extension 2, the additional area is 5,500ha (13,590 acres).
2008
On April 25, 2008, ERPM gave notice of intention to restructure the work force due to operational requirements and 239
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.
2009
In January 2009, consultations in terms of Section 189A of the Labor Relations Act regarding the future of employees
affected by the placing on care and maintenance of the underground operations were concluded and 1,335 employees
were retrenched. In August 2009 the care and maintenance of the underground operations was discontinued.
2010
ERPM’s surface operation, the Cason Dump, was incorporated into Crown for reporting purposes.
2012
On July 1, 2012, ERPM sold all of its surface mining assets (excluding its 50% interest in Ergo) and its 65% interest in
ErgoGold to Ergo in exchange for shares in Ergo.
Mining and Processing
Underground mining operations at ERPM comprised of two vertical shafts known as FEV Shaft and the Central Shaft.
There were also three additional shafts namely the South East Vertical Shaft, or SEV Shaft, used for the transport of employees and
materials and the hoisting of rock, the South West Vertical, or SWV, Shaft and the Hercules Shaft that were used for water pumping
only. The Cason Dump was used for the retreatment of surface material mined from the defunct Cason shaft.
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On October 23, 2008, drilling and blasting operations were suspended after the cessation of pumping of underground water
at SWV Shaft on October 6, 2008 for safety reasons following the deaths of two employees at the shaft on September 19, 2008.
Although the FEV Shaft where production was taking place was sealed off from water ingress from the SWV Shaft, the pumps at
FEV Shaft were no longer able to cope with rising water, which included the water resulting from the ice sent underground every day
to cool down the underground working places. Without being able to continue to supply ice underground for this purpose, the
underground temperature would become unacceptably high and it would not have been safe for employees to continue work
underground at the FEV shaft.
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. In January 2009, the consultations were concluded and 1,335 employees were retrenched. On August
20, 2009, care and maintenance of the underground operations was stopped.
Electricity to ERPM is provided to the Cason Dump, SEV and FEV Shafts from the Bremmer substation, located in close
proximity to the mine in Boksburg. Transmission is at the rate of 88,000 volts. The Simmer Pan substation, located approximately
10 miles (16 kilometers) away from the mine site in Germiston, supplies the SWV and Hercules Shafts. Transmission is at the rate
of 44,000 volts. The two substations, located on mine site, transform the power to 6,600 volts for direct supply to the shaft winder
and air compressors. The power supply is further reduced to 525 volts for smaller devices and equipment used on the mine. The
average annual power consumption has reduced to about 105 GWHr and the maximum demand to about 24 MW. The on-mine
substations are older in nature and undergo annual infrared testing to identify hot connections which are potential fire hazards and
are subject to regular maintenance which includes the inspection of the settings, blades and changing the transformer oil in the
circuit breakers.
Exploration and Development
ERPM has a prospecting right covering an area of 1,252ha (3,094 acres) of the adjacent Sallies mine, referred to as ERPM
Extension 1. The regional geology of the area indicates that there will be a strike change due to faulting associated with an East-West
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.
An additional application to extend ERPM’s existing prospecting right eastwards into the Rooikraal/Withok area,
incorporating the southern section of the old Van Dyk mining lease area and a small portion of Sallies, was granted by the DMR in
fiscal 2007. Known as ERPM Extension 2, the additional area is 5,500ha (13,590 acres).
Environmental and Closure Aspects
There is a regular ingress of water into the underground workings of ERPM, which was contained by continuous pumping
from the underground section. Studies on the estimates of the probable rate of rise of water have been inconsistent, with certain
theories suggesting that the underground water might reach a natural subterranean equilibrium, whilst other theories maintain that the
water could decant or surface. 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.
ERPM’s SWV Shaft was used until October 6, 2008 to manage the rising water level on the Central Witwatersrand Basin.
Some 60 megalitres of water were pumped daily from a depth of approximately 1,000 meters.
On October 6, 2008, pumping of underground water at the South West Vertical Shaft was stopped for safety reasons
following the death of two employees at the shaft on September 19, 2008. Management concluded that the project to upgrade the total
pumping capacity at South West Vertical Shaft with a more efficient system as part of an Eskom-funded demand-side management
project was not economically viable.
While the ultimate amount of rehabilitation costs to be incurred in the future is uncertain, we have estimated that the total
cost for ERPM, in current monetary terms as at June 30, 2012, is R68.6 million. A total of R22.4 million has been contributed to the
ERPM Rehabilitation Trust Fund and R41.8 million in insurance instruments. 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.
Ore Reserves and Life of Mine
As at June 30, 2012, our 74% share of Proven and Probable Ore Reserves of ERPM are included under Ergo. The total
surface Ore Reserves comprise 0.1 million ounces from the Cason Dump and 1.1 million ounces from the Elsburg and Benoni
tailings complexes, which will be processed over the next two and ten years, respectively. A Mineral Resource competent person is
appointed at each operation to review our Ore Reserve calculations for accuracy. For ERPM, Mr. Vivian Labuschagne is the
appointed Mineral Resource competent person.
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Current Production
ERPM underground section produced no gold during fiscal 2012. Production from the surface retreatment section, Cason
Dump, is now reported under Ergo.
Blyvoor (Discontinued operation)
Overview
Until June 1, 2012, when we sold our entire interest and claims against Blyvoor to Business Venture Investment No 1557
Proprietary Limited, a wholly owned subsidiary of Village, we owned 74% of the Blyvoor, which in turn owns 100% of the
Doornfontein Gold Mining Company Limited. The consolidated mining operation, referred to as Blyvoor, consists of the adjacent
mines of Blyvooruitzicht and Doornfontein which are located within the Far West Rand Goldfield on the northwestern edge of the
Witwatersrand Basin. Blyvoor was the first mine in the “West Wits” line. Together, these two operations produced over 38 million
ounces of gold since inception in 1937, of which over 2.4 million ounces were produced while Blyvoor was owned by DRDGOLD.
Property
Blyvoor is located on the West Wits line within the Far West Rand Goldfield on the northwestern rim of the Witwatersrand
Basin, near the town of Carletonville, Gauteng Province, about 50.0 miles (80.5 kilometers) south-west of Johannesburg and is
reached via the R528 road to Carletonville on the N12 Johannesburg-Potchefstroom-Kimberly highway.
The climate of the Highveld area (at an elevation of 5,249 feet (1,600 meters) above mean sea level), where the mine is
situated, is humid continental with warm summers and cold winters. Temperatures range from a minimum of 23 degrees
Fahrenheit (-5 degrees Celsius) in June and July, to a maximum of 93 degrees Fahrenheit (34 degrees Celsius) in December and
January.
The operating facilities are all situated on property belonging to Blyvoor, and include the shaft complexes, administrative
offices for the managerial, administrative, financial and technical disciplines, extensive workshops and consumable stores, the
metallurgical plants, tailings dams and waste rock dumps. Blyvoor also houses the majority of its employees in Blyvoor-owned
houses on the property and in the town of Carletonville. The normal support structures, including training, security, sport and
recreational facilities, schools and churches are situated on the property. Blyvoor has mining title to 16,242 acres (6,573 hectares) and
owns 5,138 acres (2,079 hectares) of freehold property.
Blyvoor consists of one mining license, ML46/99, in respect of statutory mining rights and mineral rights held by Blyvoor.
Blyvoor is in the process of converting these old order mining rights to new order rights under the MPRD Act.
History
1937
Blyvooruitzicht Gold Mining Company Limited was incorporated and registered as a public company in South Africa
on June 10, 1937.
1942
Gold production commenced.
1995
Blyvoor acquired the Doornfontein Gold Mining Company Limited in November 1995.
1996
Blyvoor acquired the mineral rights representing the Western Deep Levels tribute area.
1997
We acquired the entire share capital of Blyvoor on September 15, 1997.
2001
Implementation of the Blyvoor expansion project.
2003
Commissioning of No. 4 and 5 Slimes Dam retreatment facility at a cost of R48.0 million.
2004
On June 28, 2004, we entered into a 60-day review period on Blyvoor. The 60-day review was extended to September 13,
2004. By October 5, 2004, 1,619 employees had been retrenched at a cost of approximately R19.0 million.
2005
In August 2005, our Board of Directors approved No. 2 Sub-Shaft Project (now called the WAP Project) and the Slimes
Dam Project to establish mining operations from the No. 2 Shaft and expansion to further improve plant efficiency,
respectively.
On July 6, 2005, we signed a Memorandum of Understanding with Khumo Bathong Holding Proprietary Limited, or
KBH, regarding the acquisition by Khumo Gold SPV Proprietary Limited, or 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 owns ERPM, Crown and Blyvoor. We
owned an 85% interest in EMO.
2006
On December 11, 2006, Khumo Gold, on behalf of itself and an employee trust, exercised the option granted by us
pursuant to the option agreement concluded between us and Khumo Gold in October 2005 to acquire a further 11% in
EMO.
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2007
After completion of a drilling program to define the uranium resource in Blyvoor’s slimes dam material, a 17.5 million
pound uranium and 0.8 million ton sulphur resource was declared in November 2007.
2008
In January 2008, electricity supply to the mine was interrupted by Eskom which is government owned and production
suspended for a week due to safety concerns.
2009
In January 2009, a direct lightning strike to No. 5 shaft Eskom sub-station interrupted production at No. 5 shaft and other
areas drawing power from this supply. Employees underground at the time remained in the underground refuge bays until
hoisted to safety once the shaft feeder power had been restored. No injuries were recorded.
In May and June 2009, three seismic events in excess of 3.5 magnitude took place at No. 5 shaft. As these events affected
the highest grade carbon leader mining area, production from these areas was expected to resume in the third quarter of the
2010 fiscal year and was back in full production since May 2010.
On November 9, 2009, we announced that, in a bid to save our Blyvoor mine from liquidation, we intended applying to the
High Court of South Africa for a provisional judicial management order over the operation. A provisional judicial
management order was granted by the High Court of South Africa on November 10, 2009.
In December 2009, Aurora Empowerment Systems Proprietary Limited proposed a transaction to purchase 60% of
Blyvoor for R295 million.
2010
In April 2010, the High Court of South Africa agreed to lift, with immediate effect, the provisional judicial management
order in place since November 10, 2009. By mutual agreement between DRDGOLD and Aurora, Aurora’s offer to
purchase 60% of Blyvoor was withdrawn.
2011
In June 2011, DRDGOLD's Board of Directors decided to suspend financial assistance to Blyvoor.
The Blyvoor Board of Directors, in response to the DRDGOLD Board’s decision, resolved to begin business rescue
proceedings for Blyvoor in terms of Chapter 6 of the South African Companies Act.
2012
On June 1, 2012, we sold our entire interest and claims against Blyvoor to Business Venture Investment No 1557
Proprietary Limited a wholly owned subsidiary of Village.
Geology and Mineralization
Blyvoor exploits the two gold-bearing pebble horizons in the Central Rand Goldfields, the Carbon Leader, which is one
of the principal ore bodies in the goldfield, and the Middelvlei Reef horizons which occur in discrete channels over parts of the
lease area approximately 246 feet (75 meters) vertically above the Carbon Leader Reef horizon. The Carbon Leader Reef is the
principal economic horizon across the lease area and is a planar single sheet conglomerate. The Carbon Leader Reef typically
comprises basal carbon seam, overlain by a thin, small pebble conglomerate, enriched in carbon in the lower portion. The grade of
the Carbon Leader Reef is higher than the Middelvlei Reef. The Middelvlei Reef consists of a variable number of polymictic
quartz conglomerate bands, inter-bedded with coarse grain quartzite. The grade of the Middelvlei Reef is more erratic, with
distinctive pay shoots forming as southward-orientated linear zones.
Blyvoor was established in 1937 to exploit the rich Carbon Leader Reef but by the late 1980s had reached a position where
continued existence of mining operations was dependent upon the mining of scattered Carbon Leader Reef remnants and limited
sections of the lower grade Middelvlei Reef.
Mining and Processing
Access from the surface to the current underground workings of the mines is through a system of vertical and incline shafts
situated at the Blyvoor and Doornfontein mines. Doornfontein was previously a separate mine adjacent to the Blyvoor mine but has
since been merged to form Blyvoor. The shaft system consists of four vertical shafts from the surface, thirteen sub-incline shafts and
two sub-vertical shafts underground. Of the thirteen sub-incline shafts, only nine are in operation and are used for the conveyance of
personnel, pumping and hoisting of mined ore and waste.
Two levels have been holed between the previous Doornfontein mine and workings within the Blyvoor lease extension
(purchased in 1996 from Western Deep Levels Limited) to allow ore from the bottom of the Blyvoor workings to be trammed across
and hoisted up via the Blyvoor No. 5 Shaft, from where it is trucked to the gold plant. The average mining depth at Blyvoor is 10,541
feet (3,213 meters) and 5,292 feet (1,613 meters) below mean sea level.
Mining of the reef takes place in stope panels. Holes are drilled into the solid rock and are charged with explosives and
blasted. The loosened rock is removed from the stope panels and is conveyed to the shaft, tipped into the ore-pass systems, hoisted to
the surface and transported to the metallurgical plant for gold extraction.
Metallurgical processing facilities at Blyvoor are comprised of a single metallurgical plant. The process route is based on a
conventional flow sheet comprising multi-stage crushing, open circuit primary and closed circuit secondary milling with hydro
cyclones, thickening and cyanide leaching in a Carbon-in-Pulp, or CIP, carousel arrangement. The gold is recovered through electro-
winning followed by smelting to doré. The circuit was recently modified by the closure of the filtration system and the
commissioning of a modern carbon Kemix pumpcell plant. As at June 30, 2011, the overall plant utilization was 90%.
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Electricity for South Africa is provided by Eskom, which is government owned. Eskom is the largest producer of electricity
in Africa. In South Africa, Eskom operates a national power supply grid consisting of 24 power stations across the country.
Electricity to Blyvoor is provided from the West Wits substation outside Carletonville at 44,000 volts. Further substations, located on
mine site, transform the power to 6,600 volts or 22,000 volts for direct supply to the shaft winder and air compressors. The power
supply is further reduced to 525 volts for smaller devices and equipment used on the mine. The average annual power consumption is
about 432 GWHr and the maximum demand is about 66 MW.
In fiscal 2008, electricity supply to the mine was interrupted by Eskom, as a result of which production suspended for a
week due to safety concerns. The situation did improve during March 2008, the operation is however still on a six hour standby
notice, in the event that power supply becomes unstable in the area. Eskom has requested all of its “Key Customers” to reduce power
consumption by 10%. Blyvoor managed to adhere to this request and continued during fiscal 2010, 2011 and 2012 to save the
maximum amount of energy possible.
In fiscal 2009, seventeen production days were lost because of Section 54 closures imposed by the Department of
Mineral Resources following fatalities suffered after seismic events occurring and a further six production shifts were lost at No. 5
Shaft following a lightning strike at the shaft’s electrical substation. In May and June 2009, three seismic events in excess of 3.5
magnitude took place at No. 5 shaft. As these events affected the highest grade carbon leader mining area, production from these
areas was expected to resume in the third quarter of the 2010 fiscal year and was back to full production since May 2010.
During fiscal 2010, mining ramp-up continued towards the 2,500m
2
per month targeted at the WAP Project, and by fiscal
year-end had reached some 1,750 m
2
per month. On August 26, 2009, DRDGOLD announced that it had advised unions of its
intention to right-size the Blyvoor operation. Blyvoor proceeded with a 60-day facilitated consultation process in terms of Section
189A of the South African Labor Relations Act to determine the future of affected employees. The consultation process was
completed on October 26, 2009 and 330 employees were retrenched. Furthermore, on November 9, 2009, in a bid to save our
Blyvoor mine from liquidation, we applied to the High Court of South Africa for a provisional judicial management order over the
operation. A provisional judicial management order was granted by the High Court of South Africa on November 10, 2009. In April
2010, after Blyvoor had returned to profitability, the High Court of South Africa agreed to lift the provisional judicial
management order in place since November 10, 2009. Refer to Item 4A.: “History and Development of the Company” for a more
detailed discussion.
In fiscal 2011, efforts were directed mainly towards the opening and development of mining areas to ensure more
flexibility. On June 23, 2011, DRDGOLD announced that it had suspended financial assistance to Blyvoor. The decision followed
the promulgation of the new South African Companies Act which requires directors of parent companies to seek the consent of the
parent company’s shareholders and then to consider the effects on the solvency and liquidity of the parent company as conditions
precedent to the provision of financial assistance to subsidiaries. Blyvoor’s production had been trending down in the last quarter
of fiscal 2011 as a result of a drop in grade, attributable to a substitute explosive used for the fourth quarter of fiscal 2011, due to
major overhaul repairs at our regular explosive supplier’s manufacturing plant, public holiday interruptions and seismicity-related
work stoppages, while costs had increased due mainly to higher electricity charges, and particularly power utility Eskom’s winter
tariff, which added R11 million a month to overhead costs. The Board of Directors of Blyvoor had, in response to DRDGOLD’s
decision, resolved to begin business rescue proceedings for Blyvoor in terms of Chapter 6 of the Companies Act. The business
rescue process provided for in Chapter 6 replaces the judicial management process in the previous Act. Refer to Item 4A.: “History
and Development of the Company” for a more detailed discussion.
In fiscal 2012, the Business Rescue Practitioner terminated the business rescue proceedings with effect from
November 10, 2011, following his conclusion that there were no longer grounds to believe that Blyvoor was financially distressed.
At the beginning of February 2012, Blyvoor suspended mining from its Number 4 and 6 shafts as part of a process to reduce costs.
On June 1, 2012, we sold our entire interest and claims against Blyvoor to a wholly owned subsidiary of Village. Refer to Item 4A.:
“History and Development of the Company” for a more detailed discussion.
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The following capital expenditure was incurred at Blyvoor in fiscal 2012, 2011 and 2010:
Year ended June 30,
2012                   2011                   2010
R’000                  R’000                 R’000
Raise boreholes ..........................................................................................................
-
-
3,356
WAP Project ..............................................................................................................
                         -
1,916
Slimes pump stations and residue deposition.............................................................
381
 3,080
3,193
15/29 incline shaft equipping.....................................................................................
                    119
-
Ice plant retrofit and upgrade.....................................................................................
                  1,649                5,212
Symons crusher..........................................................................................................
                         -
3,482
Mobile cooling units ..................................................................................................
-
-
340
Safety related equipment and expansion of seismic monitoring network ..................
                       28                   162
Opening up and development ....................................................................................
50,315                  57,248              48,935
Mining and engineering equipment ...........................................................................
23,326
  25,277              10,317
Other ..........................................................................................................................
8,909                    8,282                2,639
82,939                  95,683              79,552
Exploration and Development
In fiscal 2009, Blyvoor began an exploration drilling program linked to opening up and development to evaluate the south-
west down-dip extension of the Blyvoor ore body south of the Boulder Dyke. Exploration into the south-west block was delayed
due to a fire which temporarily cut off services into this area. In fiscal 2011 and 2012, we continued with exploration and cover
drilling with reconnaissance visits made to the Carbon Leader areas at No 5 Shaft. Normal stope face sampling and geological
mapping was ongoing.
Environmental and Closure Aspects
The predominantly dolomitic geology of the area in and around Blyvoor, and the resultant occasional occurrence of
sinkholes and subsidences, exposes Blyvoor to relatively unique environmental risks and costs associated with the remediation and
filling of these sinkholes.
Blyvoor has to maintain a rate of pumping of fissure water sufficient to keep the rate of rise of underground water below the
level of underground workings. The required rate is in the order of 2 million gallons (8 million liters) per day. Water not used in the
operations is discharged into the Wonderfontein Spruit (a stream adjacent to the Blyvoor mine). In order to address the risk of
contamination of ground water, streams and wetlands, water is sampled and the level of contaminants monitored in accordance with
Blyvoor’s water management plan. Fissure water at Blyvoor is generally of a good quality, therefore we believe that the contribution
of this water to pollution of water in the area is minimal.
Blyvoor is a member of the Mining Interest Group consisting of all mines operating in the Wonderfontein Spruit
catchment area. This group was formed to coordinate efforts and studies in the Wonderfontein Spruit and to liaise with
government departments to determine what action if any is required in cleaning the stream. The government has also established a
specialist task team to determine what needs to be done. At this stage there is no clear solution. The Mining Interest Group is also
represented on the various catchment forums where Non-Governmental Organizations, or NGO’s and other interested and affected
parties are present. Blyvoor continues to meet with the Potchefstroom municipality on a monthly basis where the quality of
Blyvoor’s discharge water is assessed. Blyvoor remains in compliance with the Potchefstroom agreement.
Sinkholes are caused by ground water seeping into the underground dolomitic structures, which dissolve and weaken
causing a collapse in the rock structure. Dolomitic rock could be dissolved, resulting in an increased risk of sinkholes and possible
pollution of fresh water resources stored in the dolomitic formations. The occurrence of sinkholes is limited to a particular area of
Blyvoor, which requires an active program in water management and control. Water from leaking pipes is reported to a monitoring
committee and the necessary repairs are undertaken promptly. Ground subsidence surveys are undertaken to timely identify any
possible sinkholes. Sinkholes that do occur are filled to prevent further inflow of surface water and potential enlargement of the hole.
Sinkholes which form outside of our property are repaired by the Far West Rand Dolomitic Water Association.
Pollution from slime dams is controlled by dust suppression and water management programs. Short-term dust control is
accomplished through ridge ploughing the top surface of dormant tailings dams. Environmentally friendly dust suppressants, such as
molasses, are also applied when deemed necessary. In the long-term, dust suppression and water pollution is managed through a
program of progressive vegetation of the tailings complexes followed by the application of lime, to neutralize the natural acidic
conditions, and fertilizer as the organic growth medium.
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Blyvoor has updated its EMP to meet the new requirements of the MPRD Act. The EMP was submitted to the DMR for
approval. Blyvoor is currently demolishing and rehabilitating redundant surface infrastructures. Blyvoor completed the demolishing
of its uranium plant in fiscal 2011.
Current Production
Blyvoor produced a total of 96,645 ounces of gold for the period July 1, 2011 to May 31, 2012 of fiscal 2012, with
73,048 ounces from underground areas and 23,597 ounces from surface areas. This represented 42% of our total production from
operations for fiscal 2012 of 232,353 ounces.
Cash costs of $1,404 per ounce in fiscal 2012 increased from $1,290 per ounce in fiscal 2011.
The following table details the operating and production results from Blyvoor for the past three fiscal years.
Year ended June 30,
2012
2011                        2010
Production (imperial)
Surface Operations
Ore mined ('000 tons) .................................................................................
3,004
3,448                       3,272
Recovered grade (oz/ton) ............................................................................
0.008
0.009                       0.009
Gold produced (ounces) ..............................................................................
23,597
29,645                     29,226
Underground Operations
Ore mined ('000 tons) .................................................................................
627
807                          698
Recovered grade (oz/ton) ............................................................................
0.117
0.113                       0.111
Gold produced (ounces) ..............................................................................
73,048
91,469                     77,226
Total ounces produced.................................................................................
96,645
121,114                    106,452
Results of Operations (R)
Revenue ('000)..............................................................................................
1,240,073
1,185,860                   861,409
Operating costs ('000)...................................................................................
1,046,914
1,115,820                   845,122
Cash operating cost ('000)
1
........................................................................
1,052,197
1,091,941                   878,888
Cash cost per ounce of gold ($)
¹
................................................................
1,404
1,290                       1,085
Total cost per ounce of gold ($)¹ ...................................................................
1,476
1,988                      1, 086
Durban Deep
Overview
The Durban Deep mine was the original gold mine of the Group. Durban Deep is situated on the northern edge of the
Witwatersrand Basin immediately to the west of Johannesburg. Mining took place within the lease area since the discovery of the
Witwatersrand Goldfield in 1886 at nearby Langlaagte.
As of August 2000, we ceased all underground and open pit mining operations at Durban Deep. Following the withdrawal
of our underground pumping subsidy, the deeper sections of the mine were flooded. On a combined basis, Durban Deep produced
more than 37 million ounces of gold prior to the cessation of operations.
We concluded an agreement with M5 on July 21, 2005, in terms of which M5, against payment of a non-refundable fee of
R1.5 million, was granted an option to acquire Durban Deep’s mine village for R15.0 million. The option lapsed on November 19,
2005. On the exercising of the option the option fee would be deemed part payment of the purchase consideration. If not, the option
fee would be forfeited to us.
1
Cash operating costs, cash cost per ounce and total cost per ounce of gold are financial measures of performance that we use to determine cash
generating capacities of the mines and to monitor performance of our mining operations.
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On November 18, 2005, M5 exercised the option and provided a guarantee for payment. Prior to the registration of the
transfer occurring, we were notified by Rand Leases Properties Limited (formerly JCI Properties Limited) of an alleged pre-
emptive right in respect of the property in terms of an agreement dated December 1996, pursuant to which the property should be
sold to them on similar terms. We subsequently repudiated our agreement with M5 and notified Rand Leases Properties Limited
that we did not intend offering the property to them. Both parties indicated to us their intentions to institute legal proceedings for
the sale and transfer of the property. On December 12, 2006, Rand Leases Properties Limited issued a summons against us and we
filed an Appearance to Defend. A trial date was allocated by the High Court of South Africa for April 25, 2008, but the case was
postponed. Dino Properties Proprietary Limited (previously called M5) instituted action against the Company seeking to enforce
an agreement of sale of the DRD Village entered into on July 21, 2005, or alternatively payment of R195 million which was
alleged to represent the market value of the property. DRDGOLD entered into an agreement with Rand Leases Properties and
purchased the pre-emptive right for an amount of R21.8 million. Both cases were withdrawn by Dino Properties and Rand Leases
Properties. Refer to “Legal Proceedings- Legal proceedings relating to an agreement to sell Durban Deep’s mine village” below
for more details.
Property
Durban Deep is located within the Central Witwatersrand Basin which stretches from Durban Deep in the west to ERPM in
the east. Durban Deep is situated 9.3 miles (15 kilometers) west of Johannesburg and contains mining title to 14,262 acres (5,772
hectares) and owns 3,667 acres (1,484 hectares) of freehold property. These include administrative buildings, hospital, recreation
complexes, housing in both hostel and free-standing houses and a security complex. We have title to substantial land tracts on the
outskirts of the City of Roodepoort, which is located in this section. We do not intend to convert our rights under the MPRD Act.
Mining and Processing
Five different ore bodies have been mined at Durban Deep. Ore was mined from outcrops at the surface down to a
maximum depth of 9,200 feet (2,804 meters) and the reefs are known to persist to 13,000 feet (3,962.4 meters) below the surface
within the lease area.
Environmental and Closure Aspects
Rehabilitation and other responsibilities like the National Nuclear Regulator Certificate of Registration requirements
have been taken over by DRD Proprietary Limited, which is owned by Mintails. An official liability transfer in terms of section 58
of the MRPDA Act has been submitted to the DMR. DRDGOLD retains only the village that has no assessed liability associated
with it. The legal transfer of the liability would be dependent on the DMR's assessment of Mintails' financial capability.
DRDGOLD therefore still has a contingent liability until such legal transfer is affected.
The environmental rehabilitation liabilities increased from R19.0 million in fiscal 2011 to R20.4 million in fiscal 2012.
While the ultimate amount of rehabilitation costs to be incurred in the future is uncertain, we have estimated that the
remaining cost for Durban Deep, in current monetary terms as at June 30, 2012, is R20.4 million. This has been included in the
provision for environmental rehabilitation, restoration and closure costs on the statement of financial position. A total of R24.3
million has been contributed to the Environmental Trust Fund. 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.
West Wits
Overview
We own 100% of West Witwatersrand Gold Holdings Limited, or WWGH, which holds West Witwatersrand Gold
Mines Limited, or West Wits. We acquired the entire share capital of WWGH, as well as Consolidated Mining Corporation Limited's
loan to WWGH, on April 1, 1996. We also acquired the entire issued share capital and the shareholders' claim and loan account of
East Champ d'Or Gold Mine Limited, a gold mining company with mining title in the West Rand. The mining assets were sold to
Bophelo Trading Proprietary Limited, subsequently renamed, Mogale Gold Proprietary Limited, or Mogale, during fiscal 2004,
effectively leading to the closure of the mining operation.
West Wits is situated on the northern edge of the Witwatersrand Basin near the town of Krugersdorp to the west of
Johannesburg.
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Property
West Wits was formed out of the northern section of Randfontein Estates located in the West Rand Goldfields, about 22
miles (35 kilometers) west of Johannesburg, Gauteng Province. The mine was reached via the R28 Johannesburg-Krugersdorp
highway.
West Wits also had rights to mine on three adjacent mining leases, namely, East Champ d'Or, West Rand Consolidated and
Luipaardsvlei. West Wits had mining title to 8,364 acres (3,790 hectares) and owned 72 acres (29 hectares) of freehold property on
which all of its mining operations were situated. These rights were sold to Mogale during fiscal 2004.
History
1967
West Wits was incorporated and registered as a public company in South Africa on December 21, 1967.
1996
We acquired the entire share capital of West Wits on April 1, 1996.
2000
All mining ceased at West Wits in August 2000.
2002
We entered into an agreement with Bophelo Trading Proprietary Limited, subsequently renamed Mogale Gold Proprietary
Limited, or Mogale, for the sale of the West Wits gold plant, freehold areas, surface rights permits and certain related
assets.
2003
The agreement with Mogale was subsequently amended by a Memorandum of Agreement on June 6, 2003. The
effective date of this sale was July 21, 2003.
2004
Mogale was placed under judicial management on April 13, 2004. As a result, the remaining balance on the purchase
price was impaired for R8.3 million.
2005
West Wits entered into an agreement with Randfontein Estates Gold Mines Limited and Atomaer Proprietary Limited,
for the establishment of a regional underground water management vehicle.
Mining and Processing
In August 2000, we decided to cease all operations at both the underground and open pit operations at West Wits. This
decision was taken after the South African government withdrew the water pumping subsidy. Without the subsidy, mining at West
Wits became prohibitively expensive. The mining operation is an agglomeration of old mines on the Randfontein Basin separated
from the main part of the Witwatersrand Basin by a geological structure known as the Witpoortjie Horst. Over fifteen different gold-
bearing pebble horizons have been mined. Ore has been mined from outcrops at the surface down to a maximum depth of 5,900 feet
(1,798.3 meters).
West Wits mined the Livingston Reef package, locally known as the East Reef. It comprises a 100-foot thick package of
conglomerates and quartzites dipping at an average of 18 degrees. The combined West Wits produced more than 1.0 million ounces
of gold since the mine’s inception, before the cessation of underground and open-pit operations at the end of August 2000.
Subsequent to the cessation of mining operations, the metallurgical plant at West Wits was taken over by Crown for the processing of
sand dumps only.
Environmental and Closure Aspects
Responsibility for the mine, including the environmental rehabilitation liability, has been taken over contractually by
Mintails although the legal transfer thereof would be dependent on the DMR's assessment of Mintails' financial capability.
DRDGOLD therefore still has a contingent liability until such legal transfer is affected. Management of the West Rand Consolidated
Mines' tailings dams have been taken over by Mintails which plans to reprocess them. An EMP for the balance of the area has been
submitted to the DMR as part of the conversion process of ML9/2000. The execution of the conversion is imminent.
In terms of Acid Mine Drainage (AMD) from the Western Basin, a proposal has been submitted to the regulators for an
interim solution whereby the Western Basin water is pumped into the Central Basin. Water from the Central Basin is then pumped
from 400m below surface and partly treated in the ERPM High Density Separation (HDS) plant before being released. The proposal
is based on a Public Private Partnership and will prevent untreated water from polluting the environment until the final sustainable
solution is put in place. In terms of this proposal, DRDGOLD will contribute approximately R13.4 million towards the R218 million
capital required. Final approval is awaited. The DMR and affected mining companies are involved in the development of a ‘Regional
Mine Closure Strategy’ in the gold fields’ area. The government has appointed Trans-Calendon Tunnel Authority to propose
solutions for the various basins. They have also provided funding for the interim solution in the Western and Central Basins. In view
of the limitation of current information for the accurate estimation of a liability, no reliable estimate can be made for the obligation.
In fiscal 2010, the Company transferred the environmental rehabilitation liabilities in respect of mining rights over the West
Wits mining license area which was disposed of. A total of R19.9 million previously contributed to the Environmental Trust Fund has
been impaired as a result of the transfer of the liability.
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Legal Proceedings
Litigation regarding environmental issues
On August 2, 2006 and September 4, 2006, two applications were brought against DRDGOLD and its directors for relief
under the MPRD Act by the Legal Resources Centre on behalf of the residents of two communities, Davidsonville and Kagiso, who
reside adjacent to tailings deposition sites of the now dormant Durban Roodepoort Deep mine and the West Witwatersrand mine,
respectively. While no financial compensation is sought, the communities are seeking orders for the revision of the environmental
management programmes of both sites, and for the sites to be rehabilitated and closed in accordance with the standards of the MPRD
Act. DRDGOLD has filed its Appearance to Defend and Answering Affidavits in respect of both matters in the High Court of South
Africa. The responsibility rests with the respondent's attorneys to either apply to the High Court for a date of hearing or file replying
affidavits.
Lawsuit by French shareholders
In August 2008, the Company received by post a summons issued in the Tribunal De Grande Instance District Court of Paris
by the Association for the Defense of the Shareholders of East Rand (the association) against EMO.
The claim was based on the following allegations:
· that the members of the association were shareholders of ERPM;
· that the non-audited ERPM results of the six-month period from July to December 1998 were misleading regarding the
' healthiness' of ERPM prior to its winding up in 1999;
· that the 1999 liquidation of ERPM was fraudulently approved by 15% of shareholders who were representatives of the
  South African state against the interests of French shareholders; and
· that the subsequent scheme of arrangement to remove ERPM from liquidation in 1999 was approved by 15% of
  shareholders without consultation with French shareholders.
On the basis of these allegations, the association was claiming a payment of 5 million euros for damages, 10,000 euros for
costs and costs of suit. EMO raised the point that the French Courts lack jurisdiction to hear the matter and also filed its defenses on
the merits of the case. On May 24, 2011 the Court refused the association’s application for postponement and the case was struck off
the roll.
Legal proceedings relating to an agreement to sell Durban Deep’s mine village
We concluded an agreement with M5 on July 21, 2005, pursuant to which M5, against payment of a non-refundable fee of
R1.5 million, was granted an option to acquire Durban Deep’s mine village for R15.0 million. On November 18, 2005, M5 exercised
the option and provided a guarantee for payment. Prior to the registration of the transfer occurring, we were notified by Rand Leases
Properties Limited (formerly JCI Properties Limited) of an alleged pre-emptive right in respect of the property in terms of an
agreement dated December 1996, pursuant to which the property should be sold to them on similar terms. We subsequently
repudiated our agreement with M5 and notified Rand Leases Properties Limited that we did not intend offering the property to them.
Both parties indicated to us their intentions to institute legal proceedings for the sale and transfer of the property. On
December 12, 2006, Rand Leases Properties Limited issued a summons against us and we filed an Appearance to Defend and were
issued an interdict by the High Court prohibiting us to sell the property in fiscal 2008. The Company bought back the pre-emptive
right in June 2012 and Rand Leases Properties withdrawn the interdict against us to sell the property.
Dino Properties Proprietary Limited (previously M5) (“Dino Properties”) instituted action against us seeking to enforce an
agreement of sale of Durban Deep’s mine Village entered into on July 21, 2005, or alternatively payment of R195 million which was
alleged to represent the market value of the property. This case is in the process of being withdrawn.
Claim for alleged damages at Blyvoor
Duffuel Proprietary Limited and Paul Frederick Potgieter are suing DRDGOLD, EMO, Blyvoor and the latter's directors for
alleged pollution of peat reserves which they claim to sell to the mushroom industry. Since the 20-F for fiscal 2010 the plaintiffs
amended the amounts claimed against DRDGOLD, EMO, Blyvoor and the latter's directors as follows:
·  R41,051,000 for loss of peat reserves;    
·
  R23,657,910 for removal and transportation of the polluted peat;
· 
R2,025,000 for required permits and authorizations;
· 
R1,650,000 for installation of pipelines; and
· 
R192,000 for importation of clean water for domestic use.
The defendants are defending this action and a plea setting out the basis of our defense has been filed at Court. The trial date
allocated by the Court is on October 9, 2013.
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Dispute with the Ekurhuleni Municipality
The Ekurhuleni Municipality brought an action against ERPM claiming an amount of R42 million (R50.8 million as at June
30, 2012) in respect of outstanding rates and taxes which are allegedly owing. ERPM has employed experts to investigate the
allegations and it appears that this claim is unfounded. ERPM is defending this action and has employed Norton Rose Attorneys to
represent it. There are sufficient defenses to repel the claim, therefore the probability of an outflow of resources is not probable.
ITEM 4A. UNRESOLVED STAFF COMMENTS
None.
ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
The following Operating and Financial Review and Prospects section is intended to help the reader understand the factors
that have affected the Company's financial condition and results of operations for the historical period covered by the financial
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.
The Operating and Financial Review and Prospects include the following sections:
· Operating results:
-
Business overview, a general description of our business.
-
Key drivers of our operating results and principal factors affecting our operating results, a general description of the
principal uncertainties and variables facing our business and the primary factors that have a significant impact on our
operating performance.
-
Recent acquisitions and dispositions, a description of the recent acquisitions, disposals and other transactions that
have impacted, or will impact, our performance.
-
Key financial and operating indicators, a presentation of the key financial measures we use to track our operating
performance.
-
Application of critical accounting policies, a discussion of accounting policies that require critical judgments and
estimates.
-
Operating results, an analysis of our consolidated results of operations during the three fiscal years presented in our
financial statements. The analysis is presented both on a consolidated basis, and by operating segment.
· Liquidity and capital resources, an analysis of our cash flows, borrowings and our anticipated funding requirements and
  sources.
· Research and development, patents and licenses, etc.
· Trend information, a review of the outlook for, and trends affecting our business.
· Off-balance sheet arrangements.
· Tabular disclosure of contractual obligations, being the numerical review of our contractual future cash obligations.
· Safe harbor.
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5A. OPERATING RESULTS
Business overview
We are a South African gold mining company engaged in surface gold tailings retreatment, including exploration,
extraction, processing and smelting. As at June 30, 2012, we have surface tailings retreatment operations, including the requisite
infrastructure and metallurgical processing plants, which are currently located in South Africa. On June 1, 2012, we disposed of
our last current operating underground operation, Blyvooruitzicht Gold Mining Company Limited, or Blyvoor. Blyvoor has
therefore been classified as a discontinued operation in this Annual Report and comparatives have been restated for this purpose.
In fiscal 2010, the Group broadened its activities to include initial exploration activities on a small scale in Zimbabwe.
Our strategy is to enhance shareholder value by reducing risk, controlling costs, managing margins and taking a
disciplined approach to growth in the highly competitive mining environment. The company’s key objectives are to:
· consolidate our position as one of the world leaders in the production of gold from the retreatment of surface sand and
  slimes material through our Ergo operation;
· realize value for shareholders from our remaining underground gold resources associated with ERPM Extensions 1 and 2
  exploration areas in South Africa; and
· establish, from ongoing joint venture exploration activity, the viability of alluvial and near-surface gold mining in
  Zimbabwe.
Our short term goal is to maximize gold extraction from Ergo’s current surface resource at the lowest possible cost
through:
· the use of our pump stations, pipelines, deposition capacity and other infrastructure; and
· fast-track development, commissioning and build-up of production from our new R250 million flotation/fine-grind
  circuit, expected to increase gold recovery by between 16% and 20%.
In the longer term, it is anticipated that the Ergo resources can also be exploited for uranium, potentially through the
addition of cost-effective resin-in-pulp technology to the flotation/fine-grind circuit.
During the fiscal years presented in this Annual Report all our operations take place in one geographic region, namely
South Africa (“South African Operations”), based on revenue generated from the location of our subsidiaries, as follows:
Ergo (Continuing operations):
· Ergo Mining Proprietary Limited (Ergo), ErgoGold (unincorporated entity) and Crown Gold Recoveries Proprietary
  Limited (Crown), collectively referred to as Ergo – surface tailings retreatment; and
· East Rand Proprietary Mines Limited (ERPM) – surface tailings retreatment (reported under Ergo) and ERPM Extension
  1 and 2 exploration tenements. ERPM’s underground mining operation has been discontinued and is included under
  ‘Corporate head-office and all other’ in our financial statements’ operating segments.
Blyvoor (discontinued operation):
· Blyvooruitzicht Gold Mining Company Limited (Blyvoor) – underground mining and surface tailings retreatment.
In fiscal 2012, the South African Operations accounted for all of our production and profit for the year of R377.0 million
(fiscal 2011: R415.4 million loss and fiscal 2010: R203.4 million profit). In fiscal 2012, the profit from continuing operations was
R253.0 million (fiscal 2011: R83.5 million and fiscal 2010: R187.1 million) and from discontinued operations was R124.0 million
(fiscal 2011: R498.9 million loss and fiscal 2010: R16.2 million profit).
Exploration activities are undertaken in South Africa and in Zimbabwe.
As at June 30, 2012, we had attributable Ore Reserves of approximately 1.8 million ounces, compared to 6.3 million
ounces as at June 30, 2011 and 6.0 million ounces as at June 30, 2010. The decrease was attributable to the disposal of Blyvoor
which represented 4.3 million ounces of the 6.3 million ounces of our reserves as at June 30, 2011.
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Key drivers of our operating results and principal factors affecting our operating results
The principal uncertainties and variables facing our business and, therefore, the key drivers of our operating results are:
·The price of gold, which fluctuates widely in dollars and rands;
· The production tonnages and gold content thereof, impacting on the amount of gold we produce at our operations;
· The cost of producing that gold as a result of mining efficiencies; and
· General economic factors, such as exchange rate fluctuations and inflation, and factors affecting mining operations
  particularly in South Africa.
Gold price
Our revenues are derived primarily from the sale of gold produced at our mines. As a result, our operating results are
directly related to the price of gold which can fluctuate widely and is affected by numerous factors beyond our control, including
industrial and jewelry demand, expectations with respect to the rate of inflation, the strength of the 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 may affect 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.
The following table indicates the movement in the dollar gold spot price for the 2012, 2011 and 2010 fiscal years:
2012 fiscal year
2011 fiscal year
% change
Opening gold spot price on July 1, ..................................
$1,506 per ounce                     $1,244 per ounce
21%
Closing gold spot price on June 30, .................................
$1,599 per ounce                     $1,506 per ounce
6%
Lowest gold spot price during the fiscal year ..................
$1,483 per ounce
$1,157 per ounce
28%
Highest gold spot price during the fiscal year..................
$1,895 per ounce
$1,553 per ounce
22%
Average gold spot price for the fiscal year ......................
$1,673 per ounce                    $1,369 per ounce
22%
2011 fiscal year
2010 fiscal year
% change
Opening gold spot price on July 1, ..................................
$1,244 per ounce                        $935 per
ounce                         33%
Closing gold spot price on June 30, .................................
$1,506 per ounce                     $1,244 per
ounce
21%
Lowest gold spot price during the fiscal year ..................
$1,157 per ounce
$909 per ounce
27%
Highest gold spot price during the fiscal year..................
$1,553 per ounce
$1,261 per ounce
23%
Average gold spot price for the fiscal year ......................
$1,369 per ounce                    $1,089 per ounce
26%
2010 fiscal year
2009 fiscal year
% change
Opening gold spot price on July 1, ..................................
$935 per ounce
$930 per ounce
1%
Closing gold spot price on June 30, .................................
$1,244 per ounce                        $935 per ounce                          33%
Lowest gold spot price during the fiscal year ..................
$909 per ounce
$713 per ounce
27%
Highest gold spot price during the fiscal year..................
$1,261 per ounce
$989 per ounce
28%
Average gold spot price for the fiscal year ......................
$1,089 per ounce
$873 per ounce
25%
A significant upward trend in the dollar gold price has been noted over the past seven fiscal years. Our production has
been sourced from our South African Operations and as a result the impact of movements in relevant exchange rates during those
six fiscal years, has been significant on our operating results. The average gold price in rand (based on average spot prices for the
year) increased from R8,289 per ounce in fiscal 2010 (a 5% increase from fiscal 2009), to R9,565 per ounce in 2011 (a 15%
increase from fiscal 2010) and R12,970 per ounce in 2012 (a 36% increase from fiscal 2011).
Based on our forecast gold price of R468,261 per kilogram for fiscal 2013, a 10% increase in the rand gold price received
will increase our forecast profit for the year by R178.8 million and a 10% decrease in the rand gold price received will decrease
our profit for the year by R178.7 million.
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Gold production and operating costs
Gold production from our operations totaled 232,353 ounces during fiscal 2012, compared to 265,179 ounces during
fiscal 2011, and 241,194 ounces in fiscal 2010. Gold production from continuing operations totaled 135,708 ounces during fiscal
2012, compared to 144,065 ounces during fiscal 2011, and 134,742 ounces in fiscal 2010. The benefits enjoyed in fiscal 2012
from the 36% increase (fiscal 2011: 15% increase) in the average rand gold price received were partially offset by an increase in
average cash operating costs of 21% (fiscal 2011: 8%). Average operating costs were higher due to high average price increases in
operating costs components and lower production.
Our costs and expenses consist primarily of operating costs and depreciation. Operating costs include labor, contractor
services, stores, electricity and other related costs, incurred in the production of gold. ‘Consumables and other’ and 'labor' are the
largest components of operating costs, constituting respectively, 37% and 32% of operating costs for fiscal 2012. “Consumables
and other’ and 'labor' constituted 48% and 18%, respectively, of our operating costs from continuing operations for fiscal 2012.
For fiscal 2012, 31%, fiscal 2011, 35% and fiscal 2010 32% of our mining operations, based on kilograms of gold produced,
involved deep level underground mining from our discontinued operation, Blyvoor, which is more labor intensive.
In fiscal 2012, production decreased to 232,353 ounces (produced from 24.9 million tonnes milled at an average yield of
0.29g/t) from 265,179 ounces in fiscal 2011 (produced from 24.2 million tonnes milled at an average yield of 0.34g/t). Production
increased to 265,179 ounces in fiscal 2011 from 241,194 ounces in fiscal 2010 (produced from 22.6 million tonnes milled at an
average yield of 0.33g/t). The reasons for the movements in production are explained in more detail below.
Our continuing operation, Ergo, produced 135,708 ounces (from 21.6 million tonnes milled at an average yield of
0.20g/t) in fiscal 2012, in comparison with 144,065 ounces (from 20.3 million tonnes milled at an average yield of 0.22g/t) in
fiscal 2011 and 134,742 ounces (from 19.0 million tonnes milled at an average yield of 0.22g/t) in fiscal 2010. The decrease in
production in fiscal 2012 was due to a decrease in average grade, resulting from the depletion of previous higher grade surface
material being processed from the Top Star and Mennells dumps. The increase in production in fiscal 2011 was mainly due to a
rise in both throughput and average grade, resulting from continued build-up of slimes recovery from the Elsburg Tailings
Complex.
Our discontinued operation, Blyvoor, produced 96,645 ounces (from 3.3 million tonnes milled at an average yield of
0.91g/t) in fiscal 2012, in comparison with 121,114 ounces (from 3.9 million tonnes milled at an average yield of 0.98g/t) in fiscal
2011 and 106,452 ounces (from 3.6 million tonnes milled at an average yield of 0.92g/t) in fiscal 2010. The decrease in
production in fiscal 2012 compared to fiscal 2011, was mainly due to the suspension of Blyvoor’s Number 4 and 6 shafts on
February 6, 2012 and due to only eleven months of production being included as a result of the disposal of Blyvoor on
June 1, 2012. The increase in production at Blyvoor in fiscal 2011 compared to fiscal 2010, reflected continued recovery of the
underground operations from the effects of substantial seismic damage suffered in May 2009 in the high-grade areas of No. 5
Shaft and a protracted, wage related strike in fiscal 2010.
General economic factors
As at September 30, 2012, our operations are located in South Africa. We also engage in small scale exploration activities
in Zimbabwe (such activities are at an early stage and therefore do not affect our results of operations). We are exposed to a
number of factors, which could affect our profitability, such as exchange rate fluctuations, inflation and other risks relating to
South Africa. In conducting mining operations, we recognize the inherent risks and uncertainties of the industry, and the wasting
nature of the assets.
Effect of exchange rate fluctuations
For the year ended June 30, 2012, all of our revenues were generated from our South African operations, all of our
operating costs were denominated in rand and we derived all of our revenues in dollars. As the price of gold is 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. Based upon average rates during the respective years, the
rand weakened by 11% against the dollar in fiscal 2012, compared to a strengthening by 8% against the dollar in fiscal 2011 and a
strengthening by 16% against the dollar in fiscal 2010. The weakening of the rand against the dollar in fiscal 2012 contributed to
the increase in the average rand gold price received of 36%. The strengthening of the rand against the dollar in fiscal 2011 and
2010 limited the increase in the average rand gold price received to only 17% and 5%, respectively.
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As an unhedged gold producer, we do not enter into forward gold sales contracts to reduce our exposure to market
fluctuations in the dollar gold price or the exchange rate movements. If revenue from gold sales falls for a substantial period
below our cost of production at our operations, we could determine that it is not economically feasible to continue commercial
production at any or all of our plants or to continue the development of some or all of our projects. Our weighted average cash
operating costs per kilogram for our operations was R304,912 per kilogram of gold produced in fiscal 2012, R251,296 per
kilogram of gold produced in fiscal 2011 and R233,112 per kilogram of gold produced in fiscal 2010. Our weighted average cash
operating costs per kilogram for our continuing operation was R272,778 per kilogram of gold produced in fiscal 2012, R218,868
per kilogram of gold produced in fiscal 2011 and R207,568 per kilogram of gold produced in fiscal 2010. Our weighted average
cash operating costs per kilogram for our discontinued operation was R350,032 per kilogram of gold produced in fiscal 2012,
R289,870 per kilogram of gold produced in fiscal 2011 and R265,445 per kilogram of gold produced in fiscal 2010. The average
gold price received from operations was R418,538 per kilogram of gold produced in fiscal 2012, R308,220 per kilogram of gold
produced in fiscal 2011 and R267,292 per kilogram of gold produced in fiscal 2010.
Effect of inflation
In the past, our operations have been materially adversely affected by inflation. As we are unable to control the prices at
which our gold is sold, if there is a significant increase in inflation in South Africa without a concurrent devaluation of the rand or
an increase in the price of gold, our costs will increase, negatively affecting our operating results.
The movements in the rand/dollar exchange rate, based upon average rates during the periods presented, and the local
annual inflation rate for the periods presented, as measured by the South African Consumer Price Index, or CPI, are set out in the
table below:
Year ended June 30,
2012
(%)
2011
(%)
2010
(%)
The average rand/dollar exchange rate weakened/(strengthened) by............................................
11
(8.2)
(15.9)
CPI (inflation rate) ......................................................................................................................
5.5                5.3               4.2
The South African CPI inflation rate stabilized in fiscal 2012, 2011 and fiscal 2010 after a significant decrease from 6.9%
in fiscal 2009 and as at September 30, 2012, it was at 5.5%.
South African political, economic and other factors
We are a South African company and all our revenue producing operations are based in South Africa. As a result, we are
subject to various economic, fiscal, monetary and political factors that affect South African companies generally. South African
companies are subject to 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.”
On May 1, 2004, the Mineral and Petroleum Resources Development Act (MPRD Act) became effective. Prior to the
introduction of the MPRD Act, private ownership in mineral rights and statutory mining rights in South Africa could be acquired
through the common law or by statute. Now, all mineral rights have been placed under the custodianship of the South African
Government under the provisions of the MPRD Act, and old order proprietary rights need to be converted to new order rights of
use within certain prescribed periods. We have submitted certain applications in this regard. This process is described in more
detail under Item 4B.: “Business Overview – Governmental regulations and their effects on our business - South Africa - Common
Law Mineral Rights and Statutory Mining Rights.”
The MPRD Act makes reference to royalties being payable to the South African government in terms of the Royalty Bill.
The fourth draft of the Royalty Bill was promulgated in Parliament on August 14, 2008 and provides for the payment of a royalty
according to a formula based on earnings before interest, tax and after the deduction of capital expenditure. The Mineral and
Petroleum Resources Royalty Act, No.28 of 2008 was enacted on November 21, 2008 and was published in the South African
Government Gazette on November 24, 2008 and the Mineral and the Petroleum Resources Royalty Act (Administration), No.29 of
2008 on November 26, 2008. The rate as calculated per the abovementioned formula is then applied to revenue to calculate the
royalty amount due, with a minimum of 0.5% and a maximum of 5% for gold, 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 group which had been consistent for fiscal 2012, 2011 and 2010. The registration process commenced on
November 1, 2009, after which the group duly registered, and the payment of royalties commenced on March 1, 2010, with
DRDGOLD payments due as from June 30, 2010 and every six months thereafter. The royalty is payable on old unconverted mining
rights and new converted mining rights.
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Recent acquisitions and dispositions
The global gold mining industry has experienced active consolidation and rationalization activities in recent years.
Accordingly, we have been, and may continue to be, involved in acquisitions and dispositions as part of this global trend and to
identify value-adding business combinations and acquisition opportunities. To ensure that our Ore Reserve base is maintained, or
increased, we are currently focusing on organic growth from our existing operations, brownfields exploration in South Africa and
greenfield exploration in Zimbabwe.
The following is a description of acquisitions and dispositions completed by us since July 1, 2009:
Ergo (includes Ergo, ErgoGold, Crown and ERPM’s Cason dump) (continuing operation)
On January 21, 2010, Ergo Mining Operations Proprietary Limited, or EMO, through its subsidiary ERPM, acquired the
remaining 50% interest in Ergo Mining Proprietary Limited from Mintails SA for a total consideration of R82.1 million,
consisting of R62.1 million in cash and payment of the balance of R20.0 million with DRDGOLD’s shares in Witfontein Mining
Proprietary Limited. The acquisition was completed on April 15, 2010 and was recorded in the financial statements effective May
1, 2010.
On July 1, 2012, DRDGOLD restructured the group’s surface operations into Ergo in order to improve synergies, affect
cost savings and have a simpler group structure. Ergo is a wholly-owned subsidiary of EMO. EMO is 74% held by DRDGOLD,
20% by its black economic empowerment (BEE) partner, Khumo Gold SPV Proprietary Limited (Khumo Gold) and 6% by the
DRDSA Empowerment Trust.
Various transactions to give effect to the restructuring have been entered into, in terms of which:
· DRDGOLD has sold its 35% direct interest in the ErgoGold unincorporated partnership to Ergo for R200 million on
  loan account;
· Crown has sold its mining assets (excluding its 50% interest in Ergo), mining and prospecting rights and certain
  liabilities to Ergo in exchange for shares in Ergo;
· ERPM sold all of its surface mining assets (excluding its 50% interest in Ergo) and its 65% interest in ErgoGold to
  Ergo in exchange for shares in Ergo; and
· Crown and ERPM will distribute their entire holdings in Ergo to sole shareholder EMO.
Consequently, EMO will hold 100% directly of Ergo.
The ERPM and Crown disposals are subject to the consent of the Minister of Mineral Resources in terms of section 11 of
the MPRD Act.
ERPM
On July 1, 2012, DRDGOLD restructured the group’s surface operations into Ergo, which has been discussed in more
detail above.
Blyvoor (discontinued operation)
On November 9, 2009, in a bid to save the Blyvoor mine from liquidation, we applied to the High Court of South Africa for
a provisional judicial management order over the operation. A provisional judicial management order was granted by the High Court
of South Africa on November 10, 2009.
The application, in terms of the provisions of Section 427 of the South African Companies Act, was prompted by Blyvoor’s
inability to continue to sustain losses incurred since April 2009, which were brought about by the following circumstances:
· a drop in the rand gold price received between April 1, 2009 and September 30, 2009, due to the strengthening of the
  rand against the US dollar;
· extensive damage caused during May 2009 to higher-grade underground production areas at Blyvoor’s No. 5 Shaft by
  seismic activity, restoration of which was expected to take until end of quarter three of fiscal 2010 to complete;
· power utility Eskom’s higher winter tariffs, compounded by a 32% price increase effective from July 1, 2009, and the
  likelihood of further increases in coming months; and
· the wage strike by the National Union of Mineworkers, which lasted for almost a month and resulted in the loss of
  approximately 8,000 ounces of expected production.
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In terms of a provisional judicial management order, the court appointed a judicial manager who had a wide range of powers
at his disposal to take such actions as he deemed necessary to save the business. These could include giving certain creditors
temporary preference over others and agreeing compromises with creditors without the risk of committing an act of insolvency and
thereby exposing the mine to liquidation.
On April 13, 2010, DRDGOLD announced that the High Court of South Africa had agreed to lift, with immediate effect,
the provisional judicial management order in place since November 10, 2009. The Company’s application to the court for the
lifting of the provisional judicial management order indicated that for the period from November 2009 to February 2010, Blyvoor
had traded at an unaudited profit of R33.6 million, the amount owed to trade creditors at the time when the provisional judicial
management order was granted had been reduced from R39.0 million to R2.2 million, monthly production of gold had increased
from 8,745 ounces to 10,127 ounces and the gold price had increased from R240,000/kg to R265,000/kg.
On December 2, 2009, DRDGOLD announced a proposed transaction to sell 60% of Blyvoor to Aurora Empowerment
Systems Proprietary Limited, or Aurora, for R295 million and to provide a R80 million loan facility over a six month period. On
April 1, 2010, the Company announced that through mutual agreement the offer made by Aurora was withdrawn.
On September 14, 2010, DRDGOLD met all formal requirements to restructure its holding in Blyvoor, then a subsidiary
of EMO, which is the holding company of DRDGOLD’s surface operations, such that Blyvoor would become a direct subsidiary
of DRDGOLD. This was done to form separate brands for the Company’s underground and surface operations in two separate
investment vehicles; the first being Blyvoor involved in underground operations at a higher risk, marginal gold mine with a high
potential upside if the rand gold price reaches more favorable levels and the second being EMO involved in surface operations at a
lower risk, higher margin gold mine. Following this restructuring, DRDGOLD’s Board of Directors announced in April, 2011 that
Blyvoor no longer fit within the Company’s strategic focus and that the mine would be sold.
On June 23, 2011, DRDGOLD announced that its Board of Directors had decided to suspend financial assistance to
Blyvoor. The decision followed the promulgation of the new Companies Act of South Africa which requires directors of parent
companies to seek the consent of the parent company shareholders and then to consider the effects on the solvency and liquidity of
the parent company as conditions precedent to the provision of financial assistance to subsidiaries. Blyvoor’s production had been
trending down as a result of a drop in grade and seismicity-related work stoppages, while costs had increased due mainly to higher
electricity charges, and particularly power utility Eskom’s winter tariff which adds R11 million a month to overhead costs. The
Board of Directors of Blyvoor had, in response to the DRDGOLD Board’s decision, resolved to begin business rescue
proceedings for Blyvoor in terms of Chapter 6 of the Companies Act. The business rescue process provided for in Chapter 6
replaced the judicial management process in the previous Companies Act.
On August 17, 2011, DRDGOLD announced that Blyvoor had been granted an extension by the Southern Gauteng High
Court of South Africa (Johannesburg) until November 1, 2011, to publish a business rescue plan. On October 20, 2011 it was
announced that further extension had been granted till December 2, 2011, for the business rescue process in terms of section 132(3)
of the Companies Act, 2008; further extension may, however, be granted. The extension was granted because various processes
critical to finalization of the business rescue plan were ongoing and would require additional time to conclude. These included:
· discussions on terms with key creditors;
· wage negotiations with unions and associations;
· negotiations with neighboring mining companies regarding asset acquisitions; and
· on-mine measures to improve labor, energy and water efficiencies.
On September 27, 2011, the Business Rescue Practitioner overseeing business rescue proceedings at Blyvoor gave notice
of Blyvoor’s intention to enter a 60-day consensus-seeking process in terms of Section 189 (3) of the Labour Relations Act with
the National Union of Mineworkers, or NUM and the United Association of South Africa, or UASA – the Union, to consider
reducing employee numbers by approximately 500 employees. The reason for the need to consider the reduction was that Blyvoor
– under business rescue proceedings in terms of Chapter 6 of the Companies Act since June this year – has been unable to meet
production and financial targets, a situation exacerbated by higher utility costs. Blyvoor was proposing voluntary separation and
application of the principle of “last in, first out” as among the mechanisms to be applied to effect the required reduction in
employee numbers. Measures which have been under consideration at that stage to achieve a targeted 30% improvement in the
cost of production in R/kg terms, and thus to avoid employee reduction, included:
· a reduction in overtime expenditure;
· an increase in available face time and subsequent re-organization of shifts;
· a re-evaluation of the profitability of 6 Shaft, 4 Shaft and the Reef Picking Project;
· a reduction of departmental costs by 10%; and
· revised mining plans.
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On November 10, 2011, the Business Rescue Practitioner terminated the business rescue after concluding that there were
no longer grounds to believe that Blyvoor was financially distressed in terms of Chapter 6 of the South African Companies Act,
2008.
On February 11, 2012, DRDGOLD, Village Main Reef Limited (Village), Blyvoor and Business Venture Investments
No 1557 Proprietary Limited (a wholly owned subsidiary of Village) (Purchaser) entered into a sale of shares and claims
agreement.
Pursuant to terms of the Agreement, DRDGOLD agreed to sell its entire shareholding in Blyvoor (which amounts to 74%
of the total issued ordinary share capital of Blyvoor) (Sale Shares) and its working capital and shareholder loan claims against
Blyvoor ("Sale Claims") to the Purchaser (Transaction). The Transaction is divided into the Part A Sale and the Part B Sale. In
terms of the Part A Sale, the Sale Claims are sold to the Purchaser and in terms of the Part B Sale, the Sale Shares are sold to the
Purchaser. The purchase consideration payable in respect of the Sale Claims and the Sale Shares shall be discharged by Village
through the issue of 85,714,286 new ordinary shares in Village (Village Shares) and an amount of R1 payable in cash by Village,
respectively.
The Part A Sale was completed on June 1, 2012, at which time 65,714,286 of the Village Shares were issued directly to
DRDGOLD and 20,000,000 are held in escrow (Escrow Shares) pending completion of the Part B Sale.
The Part B Sale is subject to the fulfillment, or waiver (if applicable), of the following conditions precedent:
· by not later than 17h00 on the second anniversary of the signature date of the Agreement, the Department of Mineral
  Resources (DMR) has granted the conversion of Blyvoor's old order mining right and the new order mining right has
  been notarially executed and registered in the Mining Titles Office ("Conversion"); and
· by not later than 17h00 on the third anniversary of the signature date of the Agreement, the DMR has unconditionally
  approved the transfer of DRDGOLD's interest in Blyvoor to the Purchaser in terms of section 11 of the Mineral &
  Petroleum Resources Development Act, No 28 of 2002 or conditionally approved it on terms and conditions which each
  of DRDGOLD and the Purchaser confirms to be acceptable (Section 11 Approval).
Upon fulfillment of the Part B Conditions Precedent, the Escrow Shares together with any accrued dividends thereon will
be released to DRDGOLD and the Sale Shares will be transferred to the Purchaser.
If the Conversion does not occur in accordance with the terms of the Agreement, or Conversion occurs but Section 11
Approval is not obtained, any one, or more, of the following may occur:

· the sale of the Sale Shares is implemented and the Sale Shares are transferred to the Purchaser;
· a portion of the Sale Claims revert to DRDGOLD;
· the Escrow Shares together with any accrued dividends thereon are released to DRDGOLD or to the Purchaser;
· the appointment of the Purchaser as DRDGOLD’s agent to render corporate services on behalf of DRDGOLD to Blyvoor
  continues or is terminated; and/or
· the DRDGOLD’s right to receive dividends in respect of the Sale Shares is reinstated.
Key financial and operating indicators
The financial results for the years ended June 30, 2012, 2011 and 2010 below are stated in accordance with IFRS as
issued by the IASB.
We consider the key performance measures for the growth of our business and its profitability to be gold revenue,
production, operating costs, cash costs per kilogram and total costs per kilogram, capital expenditure and Ore Reserves. The
following table presents the key performance measurement data for the past three fiscal years:
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Operating data
Total operations
Year ended June 30,
2012
2011
2010
Revenue (R'000) .........................................................................................................
3,004,264           2,565,319            1,990,522
Gold production (ounces) ...........................................................................................
232,353              265,179               241,194
Gold production (kilograms).......................................................................................
7,227                  8,248                   7,502
Revenue (R/kilogram)..................................................................................................
415,700              311,023               265,332
Average gold price received (R/kilogram)....................................................................
418,538              308,220               267,292
Operating costs (R'000) ..............................................................................................
2,188,887           2,088,299            1,718,865
Cash operating costs (R'000) ......................................................................................
2,203,597           2,072,687            1,748,806
Cash operating costs (R/kilogram)
1
........................................................................
304,912              251,296               233,112
Total costs (R/kilogram)¹ ............................................................................................
360,975              357,486               237,123
Capital expenditure - cash (R'000)..............................................................................
333,175              317,250               194,018
Ore Reserves (ounces) ................................................................................................
1,825,000            6,336,000           6,027,000
Continuing operations
Year ended June 30,
2012
2011
2010
Revenue (R'000) .........................................................................................................
1,764,191           1,379,459            1,129,113
Gold production (ounces) ...........................................................................................
135,708              144,065               134,742
Gold production (kilograms).......................................................................................
4,221                  4,481                   4,191
Revenue (R/kilogram)..................................................................................................
417,956              307,846               269,414
Average gold price received (R/kilogram)....................................................................
418,849              308,880               267,183
Operating costs (R'000) ..............................................................................................
1,141,973               972,479              873,843
Cash operating costs (R'000) ......................................................................................
1,151,400               980,746              869,918
Cash operating costs (R/kilogram)¹ ............................................................................
272,779               218,868             207,568
Total costs (R/kilogram)¹ ............................................................................................
356,129               282,608             214,486
Capital expenditure - cash (R'000)..............................................................................
250,237               221,567             114,466
Ore Reserves (ounces) ................................................................................................
1,825,000            1,997,000           2,054,000
Discontinued operation
Year ended June 30,
2012
2011
2010
Revenue (R'000) .........................................................................................................
1,240,073            1,185,860              861,409
Gold production (ounces) ...........................................................................................
96,645              121,114              106,452
Gold production (kilograms).......................................................................................
3,006                   3,767                  3,311
Revenue (R/kilogram)..................................................................................................
412,533               314,802              260,166
Average gold price received (R/kilogram)....................................................................
418,096               307,457              267,435
Operating costs (R'000) ..............................................................................................
1,046,914             1,115,820             845,122
Cash operating costs (R'000) ......................................................................................
1,052,197             1,091,941             878,888
Cash operating costs (R/kilogram)¹ ............................................................................
350,032               289,870              265,445
Total costs (R/kilogram)¹ ............................................................................................
367,780               446,557             265,776
Capital expenditure - cash (R'000)..............................................................................
82,938                 95,683               79,552
Ore Reserves (ounces) ................................................................................................
n/a            4,339,000          3,973,000
1
Cash operating costs and total costs are non-IFRS financial measures of performance that we use to determine cash generating capacities of the
mines and to monitor performance of our mining operations. For a reconciliation to operating costs see Item 5A.: “Operating Results” Under
“Reconciliation of cash cost per kilogram, total costs, total costs per kilogram and capital expenditure (cash).”
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Revenue
Revenue is derived from the sale of gold. The following table analyzes the revenue per operation:
Year ended June 30,
2012
R'000
2011
R'000
2010
R'000
Continuing operations
Ergo
1
- continuing operation............................................................................................               1,764,191
1,379,459         1,129,113
Discontinued operation
Blyvoor – discontinued operation....................................................................................              1,240,073
1,185,860            861,409
Total ...................................................................................................................................              3,004,264        2,565,319          1,990,522
Revenue increased from R2,565.3 million in fiscal 2011 to R3,004.3 million in fiscal 2012 mainly as a result of the 36%
higher rand gold price received. The increase in revenue was partially offset by a decrease in production at Ergo of 6% due to a
decrease in grade resulting from the completion of Top Star and Mennells higher grade dumps. The increase in revenue was also
offset by the suspension of Blyvoor's Number 4 and 6 shafts at the start of February 2012 and because only eleven months of
Blyvoor's revenue was included following the disposal of Blyvoor on June 1, 2012.
Revenue increased from R1,990.5 million in fiscal 2010 to R2,565.3 million in fiscal 2011 as a result of the 15% higher
rand gold price received and the 10% increase in gold production. Both Blyvoor and Ergo increased their gold production by 14%
and 37%, respectively (discussed in more detail below under “Gold production”). Crown’s gold production decreased by 4%,
mainly as a result of diminishing grades as the processing of the Top Star dump neared completion.

Gold production
The following table analyzes the production per operation:
South African Production in Year ended June 30
2012                                        2011                                     2010
Ounces             Kilograms                    Ounces                Kilograms                 Ounces               Kilograms
Continuing operations
Ergo¹...........................................................
135,708              4,221
144,065                4,481
134,742                4,191
Discontinued operation
Blyvoor......................................................
96,645              3,006
121,114                3,767
106,452                3,311
Surface operations ....................................
23,597                 734
29,645                   922
29,226                   909
Underground operations ...........................
73,048              2,272            91,469                2,845          77,226                2,402
Total production .........................................
232,353               7,227
265,179                8,248
241,194                7,502
For fiscal 2012, our total gold production decreased by 32,826 ounces, or 12%, to 232,353 ounces from 265,179 ounces
produced in fiscal 2011.
For fiscal 2011, our total attributable gold production from operations increased by 23,985 ounces, or 10%, to 265,179
ounces from 241,194 ounces produced in fiscal 2010.
At Ergo, total gold production was 6% lower at 135,708 ounces (fiscal 2011: 144,065 ounces). This reflects a 6% rise in
throughput to 21,603,000 tonnes (fiscal 2011: 20,326,000 tonnes) and a 9% reduction in average grade to 0.20g/t (fiscal 2011:
0.22g/t), resulting from the completion of the Top Star and Mennells higher grade dumps. During fiscal 2011 total gold production
at Ergo was 7% higher at 144,065 ounces (fiscal 2010: 134,742 ounces). This was mainly as a result of a 7% rise in throughput to
20,326,000 tonnes (fiscal 2010: 18,989,000 tonnes) and a steady average grade of 0.22g/t (fiscal 2010: 0.22g/t), reflecting a
continued build-up of the slimes recovery from the Elsburg Tailings Complex, which was offset by lower throughput at Crown as
a result of deposition constraints at Crown's deposition facility.
1
Ergo results have been restated during fiscal 2012 to include ErgoGold, Ergo, Crown and ERPM’s Cason dump. ErgoGold started gold
production at the end of the second quarter of fiscal 2009, at which stage the Group owned 50% of the joint venture and the Mintails group
owned the remaining 50%. Effective March 31, 2009 the Group acquired Mintails’ 50% interest, resulting in the Group owning 100% of
ErgoGold. Effective May 1, 2010 the Group acquired Mintails’ 50% interest in the Ergo, resulting in the Group owning 100%.
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At Blyvoor, total gold production for the year was 96,645 ounces, down by 20% from 121,114 ounces in fiscal 2011,
primarily due to the suspension of Blyvoor’s No.4 and No.6 shafts at the start of February 2012 and the inclusion of eleven
months of Blyvoor production for fiscal 2012. Total gold production at Blyvoor for fiscal 2011 was 121,114 ounces, up by 14%
from 106,452 ounces in fiscal 2010. This reflected continued recovery of the underground operations from the effects of
substantial seismic damage in the high-grade areas of No 5 Shaft and a protracted, wage related strike in the previous year.
Underground production rose by 18% to 91,469 ounces from 77,226 ounces in fiscal 2010, as a result of a 16% increase in
throughput to 732,000 tonnes from 633,000 tonnes in fiscal 2010 and an increase in average grade to 3.89g/t from 3.79g/t. The
increase was partly offset by a drop in grade for the last quarter of fiscal 2011 due to the use of a substitute explosive for the
fourth quarter of fiscal 2011, due to the major overhaul of our regular preferred supplier’s explosive manufacturing plant. While
surface production was stable, rising by 1% to 29,645 ounces from 29,226 ounces in fiscal 2010, as a result of a 5% increase in
throughput to 3,129,000 tonnes from 2,968,000 tonnes in fiscal 2010 which had been offset by a 6% decrease in average grade to
0.29g/t from 0.31g/t in fiscal 2010.
Cash costs
1
and total costs¹ per kilogram
For fiscal 2012, cash costs from total operations increased to R304,912 per kilogram of gold from R251,296 per kilogram
of gold in fiscal 2011. Total costs increased to R360,975 per kilogram of gold in fiscal 2012 from R357,486 per kilogram of gold
in fiscal 2011. The increase in cash costs per kilogram of gold produced in fiscal 2012 was due to above inflation increases in
prices of key consumables, labor and electricity as well as the 12% decrease in production. The increase in total costs was
primarily due to the non-recurring R546.6 million impairment of Blyvoor’s property, plant and equipment recorded in fiscal 2011.
In fiscal 2011, cash costs increased to R251,296 per kilogram of gold from R233,112 per kilogram of gold in fiscal 2010. Total
costs increased to R357,486 per kilogram of gold from R237,123 per kilogram of gold in fiscal 2010. The increase in cash costs
per kilogram of gold produced in fiscal 2011 was due to price increases in key consumables together with above inflation
increases in both labor and electricity, which were partially offset by higher production. The increase in total costs was due to a
R546.6 million impairment of Blyvoor’s property, plant and equipment.
Ergo's cash costs for fiscal 2012 increased to R272,779 per kilogram of gold from R218,868 per kilogram of gold in fiscal
2011. Total costs increased to R334,257 per kilogram of gold from R256,085 per kilogram of gold in fiscal 2011. The increase was
due to above inflation increases in prices of key consumables, labor and electricity as well as the decrease in production. For fiscal
2011, Ergo's cash costs increased to R218,868 per kilogram of gold from R207,568 per kilogram of gold in fiscal 2010. Total costs
increased to R256,085 per kilogram of gold from R246,899 per kilogram of gold in fiscal 2010. The increase was due to price
increases in key consumables together with above inflation increases in both labor and electricity, which were partially offset by
higher production.
Blyvoor's cash costs for fiscal 2012 increased to R350,032 per kilogram of gold from R289,870 per kilogram of gold in
fiscal 2011. Total costs decreased to R367,780 per kilogram of gold from R446,557 per kilogram of gold in fiscal 2011. The decrease
in total costs was due to a R546.6 million impairment of Blyvoor’s property, plant and equipment included in fiscal 2011. For fiscal
2011, Blyvoor's cash costs increased to R289,870 per kilogram of gold from R265,445 per kilogram of gold in fiscal 2010. Total
costs increased to R446,557 per kilogram of gold from R265,776 per kilogram of gold in fiscal 2010. The increase in total costs was
due to a R546.6 million impairment of Blyvoor’s property, plant and equipment included in fiscal 2011.
Reconciliation of cash costs per kilogram, total costs, total costs per kilogram and capital expenditure (cash)
Cash costs of production include costs for all mining, processing, administration, royalties and production taxes, but
exclude depreciation, depletion and amortization, rehabilitation, retrenchment costs and corporate administration costs. Cash costs
per kilogram are calculated by dividing cash costs by kilograms of gold produced. Cash costs per kilogram have been calculated
on a consistent basis for all periods presented. Prior periods have been adjusted to distinguish between continuing operations and
discontinued operations as well as for the Ergo operation which now also includes the Crown operation and ERPM’s Cason
operation.
Total operating costs include cash costs of production, depreciation, retrenchment costs, depletion and amortization and
the accretion of rehabilitation, reclamation and closure costs.
Total costs, as calculated and reported by us, include total operating costs, plus other operating and non-operating
income, finance expenses and other operating and non-operating costs, but exclude taxation, minority interest, profit or loss from
associates and the cumulative effect of accounting adjustments. These costs are excluded as the mines do not have control over
these costs and they have little or no impact on the day-to-day operating performance of the mines. Total costs per kilogram are
calculated by dividing total costs by kilograms of gold produced. Total costs and total costs per kilogram have been calculated on
a consistent basis for all periods presented.
1
Cash costs and total costs are non - IFRS financial measure of performance that we use to determine cash generating capacities of the mines
and to monitor performance of our mining operations. For a reconciliation to operating costs see Item 5A.: “Operating Results.”
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Cash costs per kilogram, total costs and total costs per kilogram are non - IFRS financial measures that should not be
considered by investors in isolation or as alternatives to operating costs, net profit/(loss) attributable to equity owners of the
parent, profit/(loss) before tax and other items or any other measure of financial performance presented in accordance with IFRS
or as an indicator of our performance. While the Gold Institute has provided definitions for the calculation of cash costs, the
calculation of cash costs per kilogram, total costs and total 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 costs per kilogram, total costs and total 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:
· an indication of a mine’s profitability and efficiency;
· the trend in costs;
· a measure of a mine's margin per kilogram, by comparison of the cash 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.
Capital expenditure (cash), is the actual cash flow for the particular fiscal period as taken from the statement of cash
flows for additions to property, plant and equipment under investing activities. Prior periods have been adjusted to distinguish
between continuing operations and discontinued operations as well as for the Ergo operation which now also includes the Crown
operation and ERPM’s Cason operation.
A reconciliation of operating costs to total costs, cash costs per kilogram and total costs per kilogram, for each of the
three years ended June 30, 2012, 2011 and 2010 is presented below. In addition, we have also provided below details of the
amount of gold produced by each mine for each of those periods.
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For the year ended June 30, 2012
(in R'000, except as otherwise noted)
Continuing Operations
Discontinued
operation
Ergo
1
ERPM
2
Other
2
Total
Blyvoor
3
Total
Cash operating costs
4
............................................................
1,151,400
-
-
1,151,400
1,052,197
2,203,597
Movement in gold in process ..................................................
(9,427)
-
-
(9,427)
(5,283)
(14,710)
Operating costs
1,141,973
-
-
1,141,973
1,046,914
2,188,887
Plus:
Depreciation..........................................................................                         117,457
-
1,732                 119,189
1,661
120,850
Retrenchment costs...............................................................
-
-
-
-
43,747
43,747
Movement in provision for environmental
rehabilitation.......................................................................... 
                         48,292
9,861
1,333
59,486
(301)
59,185
Actuarial loss on post-retirement benefits..............................
67
-
-
67
-
67
Ongoing rehabilitation expenditure.........................................
39,445
7,702
148
47,295
990
48,285
Net other operating costs/(income) ........................................
23,930
28,440
(28,695)
32,258
8,583
40,481
Total operating costs.............................................................
1,371,164
46,003
(25,482)
1,400,268
1,101,594
2,501,862
Plus:
Impairments .........................................................................                                   -
-
1,100
1,100
-
1,100
Administration expenses and general costs/(income) ...........
40,172
(11,602)
82,049
110,619
10,918
121,537
Finance income......................................................................
(3,915)
(2,920)
(17,611)
(24,446)
(8,994)
(33,440)
Finance expenses .................................................................. 
3,475
8,111
4,092
15,678
2,028
17,706
Total costs ..............................................................................
1,410,897
39,592
44,147
1,503,219
1,105,546
2,608,765
Gold produced (ounces)...........................................................
135,708
-
-
135,708
96,645
232,353
Gold produced (kilograms) ......................................................
4,221
-
-
4,221
3,006
7,227
Cash costs per kilogram (R per kilogram) ...............................
272,779
-
-
272,779
350,032
304,912
Total costs per kilogram (R per kilogram)...............................
334,257
-
-
356,129
367,780
360,975
1
Ergo has been restated during fiscal 2012 to include Ergo, ErgoGold, Crown and ERPM’s surface Cason operation. Comparative numbers have accordingly been restated.
2
Relates to other non-core operating entities within the Group and is included under ‘Corporate head office and other’ in our segmental reporting.
3
Blyvoor was sold on June 1, 2012, and has been classified as a discontinued operation. Comparable prior year numbers have been adjusted to distinguish between continuing- and discontinued operations where
relevant.
4
Cash operating costs equate to cash costs of production.
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For the year ended June 30, 2011
(in R'000, except as otherwise noted)
Continuing Operations
Discontinued
operation
Ergo
1
ERPM
2
Other
2
Total
Continuing
Operations                             Blyvoor
3
Total
Group
Cash operating costs
4
............................................................
980,746
-
-
980,746
1,091,941
2,072,687
Movement in gold in process ..................................................
(8,267)
-
-
(8,267)
23,879
15,612
Operating costs
972,479
-                       -
972,479
1,115,820
2,088,299
Plus:
Depreciation...........................................................................                         98,164
-                   117                   98,281
32,638
130,919
Retrenchment costs................................................................
-
839
-
839
-
839
Movement in provision for environmental
rehabilitation.......................................................................... 
                         36,352
11,049
(483)                   46,918
5,649
52,567
Actuarial gain on post-retirement benefits...............................
(5,651)
-
-
(5,651)
-
(5,651)
Ongoing rehabilitation expenditure...........................................
32,311
9,047
167
41,525
1,453
42,978
Net other operating costs/(income) .........................................
1,194
18,623
5,141
25,037
8,559
33,596
Total operating costs.............................................................
1,134,849
39,558                4,942              1,179,428
1,164,119
2,343,547
Plus:
Impairments ...........................................................................                                 -
-
1,090
1,090
546,566
547,656
Administration expenses and general costs/(income) ............
11,394
(3,380)
78,291
86,305
1,781
88,086
Finance income......................................................................                         (5,038)
(2,847)             (9,179)
(17,064)
(35,728)
(52,792)
Finance expenses .................................................................. 
6,312
11,290
(996)
16,606
5,441
22,047
Total costs ...............................................................................
1,147,517
44,621              74,148              1,266,365
1,682,179
2,948,544
Gold produced (ounces)...........................................................
144,065
-
-
144,065
121,114
265,179
Gold produced (kilograms) ......................................................
4,481
-
-
4,481
3,767
8,248
Cash costs per kilogram (R per kilogram) ...............................
218,868
-
-
218,868
289,870
251,296
Total costs per kilogram (R per kilogram)...............................
256,085
-
-
282,608
446,557
357,486
1
Ergo has been restated during fiscal 2012 to include Ergo, ErgoGold, Crown and ERPM’s surface Cason operation. Comparative numbers have accordingly been restated.
2
Relates to other non-core operating entities within the Group and is included under ‘Corporate head office and other’ in our segmental reporting.
3
Blyvoor was sold on June 1, 2012, and has been classified as a discontinued operation. Comparable prior year numbers have been adjusted to distinguish between continuing- and discontinued operations where
relevant.
4
Cash operating costs equate to cash costs of production.
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For the year ended June 30, 2010
(in R'000, except as otherwise noted)
Continuing Operations
Discontinued
Operations
Ergo
1
ERPM
2
Other
2
Total South
African
Operations
Other-
Offshore
Operations
Total
Continuing
Operations
Blyvoor
3
Total
Group
Cash operating costs
4
......................................                             869,918
-
-
869,918                        -
869,918
878,888
1,748,806
Movement in gold in process
3,825
-
-
3,825                        -
3,825
(33,766)
(29,941)
Operating costs
873,743
-
-
873,743                        -
873,743
845,122
1,718,865
Plus:
Depreciation.....................................................                            156,423
1,452
278
158,153                        -
158,153
32,616
190,769
Retrenchment costs..........................................
-
4,029
5,173
9,202                        -
9,202
10,925
20,127
Movement in provision for environmental
rehabilitation.................................................. 
                             (16,416)
(4,618)
(68,246)
(89,280)                        -
(89,280)
1,246
(88,034)
Actuarial gain on post-retirement benefits......
(35,290)
-
-
(35,290)
-
(35,290)
-
(35,290)
Ongoing rehabilitation expenditure..................
26,196
4,390
2,323
32,909
-
32,909
1,942
34,851
Net other operating costs/(income) .................
13,878
26,398
2,873
43,149
-
43,149
7,350
50,499
Total operating costs.....................................
1,018,534
31,651
(57,599)
992,586
-
992,586
899,201
1,891,787
Plus:
(Reversal of impairments)/Impairments ........
(12,514)
-
18,738
6,224
-
6,224
-
6,224
Administration expenses and general costs ....
25,921
18,541
6,765
51,227
190
51,417
5,609
57,026
Finance income................................................                              (5,693)
17,150
(19,980)
(8,523)
(155,194)
(163,717)
(36,556)
(200,273)
Finance expenses ............................................ 
8,505
36,799
(32,902)
12,402
-
12,402
11,730
24,132
Total costs ........................................................
1,034,753
104,141
(84,978)
1,053,916
(155,004)
898,912
879,984
1,778,896
Gold produced (ounces)....................................
134,742
-
-
134,742
-
134,742
106,452
241,194
Gold produced (kilograms) ...............................
4,191
-
-
4,191
-
4,191
3,311
7,502
Cash costs per kilogram(4) (R per kilogram).....
207,568
-
-
207,568
-
207,568
265,445
233,112
Total costs per kilogram (R per kilogram).........
246,899
-
-
251,471
-
214,486
265,776
237,123
1
Ergo has been restated during fiscal 2012 to include Ergo, ErgoGold, Crown and ERPM’s surface Cason operation. Comparative numbers have accordingly been restated.
2
Relates to other non-core operating entities within the Group and is included under ‘Corporate head office and other’ in our segmental reporting.
3
Blyvoor was sold on June 1, 2012, and has been classified as a discontinued operation. Comparable prior year numbers have been adjusted to distinguish between continuing- and discontinued operations where
relevant.
4
Cash operating costs equate to cash costs of production.
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Capital expenditure (cash)
During fiscal 2012, total capital expenditure (cash)
1
was R333.2 million, compared to R317.3 million in fiscal 2011, an
increase of 5%. Capital expenditure increased primarily as a result of the new flotation and fine-grind project and the completion
of the Crown/Ergo pipeline project. In fiscal 2012, Ergo spent R33.9 million on the Crown/Ergo pipeline project, R50.7 million on
the extension of the Brakpan tailings facility, R15.5 million on the refurbishment of the Ergo plant, R38.5 million on the new
flotation and fine-grind project, R49.0 million on infrastructure upgrades equipment, R14.2 million on the tailings facilities and
R16.1 million to replace old equipment and acquire new equipment. Blyvoor spent R50.3 million on opening up and development,
R23.3 million on equipment and R9.3 million on other equipment and the tailings facilities. The corporate head office had capital
expenditure amounting to R21.7 million relating to property, R7.8 million relating to the exploration in Zimbabwe and R2.9 million
on other equipment. For a detailed summary of capital expenditure, see Item 4D.: “ Property, Plant and Equipment”.
During fiscal 2011, total capital expenditure¹ (cash) was R317.3 million, compared to R194.0 million in fiscal 2010, an
increase of 64%. Capital expenditure increased primarily as a result of the Crown/Ergo pipeline project which commenced during
June 2010. In fiscal 2011, Ergo spent R29.4 million on the refurbishment of the second CIL circuit at the Ergo plant,
R27.7 million on the extension of the Brakpan tailings facility and R119.7 million on the Crown/Ergo pipeline project. Ergo also
spent R27.9 million on tailings deposition site and R0.6 million on vehicles and equipment. Blyvoor spent R57.2 million on
opening up and development, R25.3 million on equipment and R13.2 million on other equipment and the tailings facilities. For a
detailed summary of capital expenditure, see Item 4D.: “ Property, Plant and Equipment”.
Subsequent to June 30, 2012 and up to September 30, 2012 we spent R79.6 million on capital expenditure relating mainly
to:
· Ergo for construction of the flotation plant amounting to R55.6 million, the Angelo Pan water line amounting to R12.9
  million and the Brakpan tailings facility amounting to R1.3 million; and
· Zimbabwe exploration amounting to R5.0 million.
Ore Reserves
As at June 30, 2012, our Ore Reserves were estimated at 1.8 million ounces, as compared to approximately 6.3 million
ounces at June 30, 2011, representing a 71% decrease. The decrease was due to the disposal of Blyvoor which comprised 68% of the
6.3 million reserves at the end of fiscal 2011. As at June 30, 2011, our Ore Reserves were estimated at 6.3 million ounces, as
compared to approximately 6.0 million ounces at June 30, 2010, representing a 5% increase. The increase was mainly due to an
increase in the rand gold price. Excluding the effect of depletion, our Ore Reserves increased by 0.686 million ounces, or 11% in
fiscal 2011.
We seek to increase our attributable Ore Reserves through development and to acquire additional new Ore Reserves through
acquisitions as well as exploration.
Year ended June 30,
2012                                          2011                                          2010
Ounces
Kilograms
Ounces
Kilograms
Ounces       Kilograms
‘000
‘000
‘000
Continuing operations
Ergo
2
..........................................................
1,825
56,961                 1,997            62,111                 2,054             63,859
Discontinued operation
Blyvoor......................................................
-
-                4,339
134,963                 3,973
123,544
Total Ore......................................................
1,825              56,961
6,336            197,074                 6,027           187,403
Our Ore Reserves presented in Item 4B.: “Business Overview” and above are prepared using three year average gold prices
at the time of reserve determination. For purposes of our financial statements, depreciation and impairment of property, plant and
equipment is determined based upon our "recoverable minerals", which means proven and probable ore reserves, which are
calculated using our life of mine business plans and the gold price at the end of each financial year.
1 Total capital expenditure (cash) is a non - IFRS financial measure of performance that we use to determine cash generating capacities of the
mines and to monitor performance of our mining operations.
2
Ergo’s Ore Reserves include the Elsburg and Benoni tailings complexes which are being processed by Ergo, however the mining rights for
these tailings are owned by ERPM. Crown's Ore Reserves have also been included under Ergo.
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Application of critical accounting policies
Some of our significant accounting policies require the application of significant judgment by management in selecting the
appropriate assumptions for calculating financial estimates. By their nature, these judgments are subject to an inherent degree of
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.
Management believes the following critical accounting policies involve the more significant judgments and estimates used
in the preparation of our consolidated financial statements and could potentially impact our financial results and future financial
performance:
· Property, plant and equipment
· Impairment of property, plant and equipment
· Deferred income and mining taxes
· Reclamation and environmental costs
· Post-retirement medical benefits
· Financial instruments
Management has discussed the development and selection of each of these critical accounting policies with the Board of
Directors and the Audit Committee, both of which have approved and reviewed the disclosure of these policies. Our significant
accounting policies relating to our accounting estimates and judgments are described in more detail in note 1 to the consolidated
financial statements. Refer to Item 18.: “Financial statements’’. This discussion and analysis should be read in conjunction with the
consolidated financial statements and related notes included in Item 18.: “Financial statements’’.
Property, plant and equipment
Actual expenditures incurred for mineral property interests, mine development costs, mine plant facilities and equipment are
capitalized to the specific mine to which the cost relates. Depreciation is calculated on a mine-by-mine basis using the units of
production method. Other assets are depreciated using the straight-line method over the expected life of these assets. Under the units
of production method, we estimate the depreciation rate based on actual production over total Proven and Probable Ore Reserves of
the particular mine, which are calculated using our life of mine business plans and a gold price at the end of each financial year.
This rate is then applied to actual costs capitalized to date to arrive at the depreciation expense for the period. Proven and Probable
Ore Reserves of the particular mine reflect estimated quantities of economically and legally recoverable reserves. Changes in
management’s estimates of the quantities of economically recoverable reserves impact depreciation on a prospective basis. The
estimate of the total reserves of our mines could be materially different from the actual gold mined due to changes in the factors used
in determining our Ore Reserves, such as the gold price, foreign currency exchange rates, labor costs, engineering evaluations of
assay values derived from sampling of drill holes and other openings. Any change in management’s estimate of the total Proven and
Probable Ore Reserves would impact the depreciation charges recorded in our consolidated financial statements. The prevailing
market price of gold at the end of the financial year was R306,081, R328,155 and R408,381 per kilogram for the fiscal years
ended June 30, 2010, 2011 and 2012, respectively.
Impairment of property, plant and equipment
The carrying amounts of assets, other than inventories and deferred tax assets are reviewed at each reporting date to
determine whether there is any indication of impairment. If any such indication exists, the asset's recoverable amount is estimated.
The recoverable amount of an 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. Future cash flows are estimated based on
quantities of recoverable minerals, expected gold prices, production levels and cash costs of production, all based on life of mine
business plans. The term “recoverable minerals” means Proved and Probable Ore Reserves, which are calculated using our life of
mine business plans and a gold price at the end of each financial year. The prevailing market price of gold at the end of the
financial year was R306,081, R328,155 and R408,381 per kilogram for the fiscal years ended June 30, 2010, 2011 and 2012,
respectively. 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.
The recoverable amount of property, plant and equipment is generally determined utilizing discounted future cash flows. We
also consider such factors as our market capitalization, the quality of the individual ore body and country risk in determining the
recoverable amount. During fiscal 2012, Rnil, and during fiscal 2011, R546.6 million, was recorded as an impairment and during
fiscal 2010 a reversal of impairment of R12.5 million were recorded by applying these principles.
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In fiscal 2012, we calculated the recoverable amount based on updated life-of-mine business plans, a gold price of R441,936
per kilogram in year one escalating at 5.3% per annum, and a discount rate of 14.4%. With a 10% reduction in the gold price to
R397,742 per kilogram, an impairment of R914.8 million would be raised, or at an increase in the discount rate of 8.5 percentage
points (59%) to 22.9%, the group would begin impairment of the mining assets. The increase in discount rate from 13.9% in fiscal
2011 to 14.4% in fiscal 2012, was mainly as a result of the increase in the group’s risk premium from 8.1% in fiscal 2011 to 9.6% in
fiscal 2012.
In fiscal 2011, we calculated the recoverable amount based on updated life-of-mine business plans, a gold price of R350,649
per kilogram in year one escalating at 6.1% per annum, and a discount rate of 13.9%. With a 10% reduction in the gold price to
R315,584 per kilogram, an additional impairment of R366.2 million would be raised, or at an increase in the discount rate of 3.8
percentage points (27.3%) to 17.7%, the group would start to raise an additional impairment of the mining assets. The increase in
discount rate from 13.7% in fiscal 2010 to 13.9% in fiscal 2011, was as a result of the increase in the groups average borrowing rate
from 10.0% to 10.7% as well as an increase in the beta factor from 0.63 to 0.77 indicating an increased volatility in the group’s share
price. The increase in the escalation rate from 5.8% in fiscal 2010 to 6.1% in fiscal 2011 was a result of higher inflation rates from
4.2% (CPI) up to 5.3% (CPI).
The R546.6 million impairment in fiscal 2011, related to Blyvoor which represents one cash generating unit. A discount rate
of 14.4% (2010: 13.7%), together with further risk adjustments to future cash flows were used in determining the impairment.
Management also took into consideration as part of their reasonableness assessment, a sensitivity analysis and the fact that Blyvoor
was under business rescue proceedings, with the business rescue plan not being approved as at the end of fiscal 2011. Further
considerations included the group's market capitalization, which were lower than the group's net asset value before the impairment
had been raised.
Deferred income and mining taxes
Deferred taxation is recognized in respect of temporary differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognized 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 jointly controlled entities 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.
The amount recognized as a deferred tax asset is generally determined utilizing discounted future cash flows. We consider
all factors that could possibly affect the probability that future taxable profit will be available against which unused tax credits can be
utilized. These factors included profitability of the operations and an estimate of the gold price. The amount recognized as a deferred
tax asset is sensitive to the current gold spot price. As at June 30, 2012 we recognized a deferred tax asset of R38.3 million (June 30,
2011: R69.2 million and June 30, 2010: R140.7 million). The amount recognized at June 30, 2012 was based on a future gold price
received of R441,936 per kilogram in year one, escalating at an average of 5.3% per annum.
Reclamation and environmental costs
The provision for environmental rehabilitation (which includes restoration costs) represents the cost that will arise from
rectifying damage caused before production commenced. Accordingly an asset is recognized and included within mining properties.
Provisions for environmental rehabilitation are provided at the present value of the expenditures expected to settle the obligation,
using estimated cash flows based on current prices. The unwinding of the obligation is included in profit or loss. Estimated future
costs of environmental rehabilitation are reviewed regularly and adjusted as appropriate 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.
Estimated provisions for environmental rehabilitation, comprising pollution control rehabilitation and mine closure, are
based on our environmental management plans in compliance with current technological, environmental and regulatory requirements.
An average discount rate of 7.3%, average inflation rate of 5.4% and expected life of mines according to the life-of-mine plans were
utilized in the calculation of the estimated net present value of the rehabilitation liability (fiscal 2011: average discount rate of 8.5%,
average inflation rate of 6.0% and fiscal 2010: average discount rate of 9.0% and inflation rate of 5.8%). During fiscal 2012 there was
a net increase in the provision of R13.4 million which was capitalized to property, plant and equipment for Ergo, representing an
increase in its respective footprints and a reduction amounting to R19.8 million for rehabilitation costs incurred (during fiscal 2011
there was a net increase in our provision of R29.0 million representing an increase in Ergo’s footprint and a reduction amounting to
R21.4 million rehabilitation costs incurred). As a result of the disposal of Blyvoor the provision for environmental rehabilitation
decreased by R46.0 million.
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67
Charges to profit or loss for the environmental rehabilitation of R59.2 million, R52.6 million and a credit of R88.0 million
(which includes the transfer of liabilities to the amount of R63.4 million and R4.8 million relating to the disposal of the mining rights
of Durban Roodepoort Deep and West Witwatersrand Gold Mine Proprietary Limited, respectively) were raised in fiscal 2012, 2011
and 2010, respectively. Unwinding of the provisions amounting to R7.3 million, R9.4 million and R10.8 million were recorded in
fiscal 2012, 2011 and 2010, respectively.
In South Africa, annual contributions are made to dedicated Rehabilitation Trust Funds and investments in funds held in
insurance instruments, which are to be used to fund the estimated cost of rehabilitation during and at the end of the life of the relevant
mine.
Post-retirement medical benefits
Post-retirement medical benefits in respect of qualifying employees are recognized as an expense over the expected
remaining service lives of relevant employees. We have an obligation to provide medical benefits to certain of our pensioners and
dependants of ex-employees. These liabilities are provided in full, calculated on an actuarial basis. 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. Actuarial gains and losses are recognized immediately in profit or loss. Assumptions used to
determine the liability include a discount rate, health cost inflation rate, real discount rate, retirement age, spouse age gap,
continuation at retirement and proportion married at retirement. At June 30, 2012 a provision of R6.0 million (June 30, 2011:
R5.5 million, June 30, 2010: R12.5 million) for post-retirement medical benefits has been raised. During fiscal 2012, an expense
of R0.7 million (fiscal 2011: R4.0 million gain; fiscal 2010: R29.7 million gain) relating to these post-retirement medical benefits
went to profit or loss. The gain in fiscal 2011 was brought about by the partial settlement of the liability. The gain in fiscal 2010
was brought about by an actuarial valuation after management revised their assumptions used in this provision as a result of a
project initiated during fiscal 2010 to optimize the synergies of our surface retreatment operations and the resulting possibility of a
settlement of existing post retirement medical benefits. An independent legal opinion was obtained in this regard. While we
believe that these assumptions are appropriate, significant changes in the assumptions may materially affect post-retirement
obligations as well as future expenses, which may have an impact on earnings in the periods where the changes in the assumptions
occur.
Financial instruments
Financial instruments recognized on the statement of financial position include investments, trade and other receivables,
cash and cash equivalents, long- and short-term interest-bearing borrowings, trade and other payables, and bank overdrafts.
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.
If the value of the financial instrument cannot be obtained from an active market, we have established fair value by using
valuation techniques. These include the use of recent arm’s length transactions, reference to other instruments that are
substantially the same, discounted cash flow analysis and option pricing models, refined to reflect the issuer’s specific
circumstances. Listed shares are measured at fair value based on the market close price at the reporting date and applying a
discount factor for liquidity constraints pertaining to the relevant listed shares. Preference shares were measured at amortized cost
based on expected future discounted cash flows. The original risk adjusted discount rate of 13% is used when estimating the future
liability and are re-measured on an annual basis. This original risk adjusted discount rate is replaced with a risk adjusted market
rate to determine a fair value on an annual basis.
Operating results
Comparison of financial performance for the fiscal year ended June 30, 2012 with fiscal year ended June 30, 2011
Revenue
The following table illustrates the year-on-year change in revenue by evaluating the contribution of each segment to the
total change on a consolidated basis for fiscal 2012 in comparison to fiscal 2011:
Impact of change in volume
R’000
Total
revenue
2011
Disposals
Internal
growth/
(decline)
Impact of
change in
price
Net change
Total
revenue
2012
Ergo
1
..........................................
1,379,459                          -
(80,040)
464,772
384,732
1,764,191
Blyvoor
2
.....................................
1,185,860
(112,734)
(126,830)
293,777
54,213
1,240,073
Total Operations ......................
2,565,319
(112,734)
(206,870)
758,549
438,945
3,004,264
1
Ergo has been restated during fiscal 2012 to include ErgoGold , Ergo Mining Proprietary Limited, Crown and the surface retreatment operation
of  ERPM.
2
Blyvoor has been disposed of on June 1, 2012, and has been restated during 2012 as a discontinued operation.
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Revenue for fiscal 2012 increased by R438.9 million, or 17%, to R3,004.3 million, mainly due to the 36% higher average
gold price received. The average gold price increased from R311,023 per kilogram in fiscal 2011 to R415,700 per kilogram in
fiscal 2012. The increase in revenue was partially offset by a decrease in production at Ergo of 6% due to a decrease in grade
resulting from the completion of Top Star and Mennells higher grade dumps. The increase in revenue was also offset by the
suspension of Blyvoor's Number 4 and 6 shafts at the start of February 2012 and because only eleven months of Blyvoor's revenue
was included following the disposal of Blyvoor on June 1, 2012.
Operating costs
The following table illustrates the year-on-year change in operating costs by evaluating the contribution of each segment
to the total change on a consolidated basis for fiscal 2012 in comparison to fiscal 2011:
Impact of change in volume
R’000
Operating
costs
2011           Disposals
Internal
growth/
(decline)
Impact of
change in
costs       Net change
Operating
costs
2012
Ergo
1
...........................................
972,479                           -
(56,426)
225,920
169,494
1,141,973
Blyvoor
2
......................................
1,115,820                (95,174)           (130,241)              156,509              (68,906)
1,046,914
Total ...........................................
2,088,299                (95,174)           (186,667)              382,429              100,588
2,188,887
The following table lists the major components of operating costs for each of the years set forth below:
Years ended June 30,
Costs
2012
2011
Labor..............................................................................................................................................                                     32%
35%
Contractor services ........................................................................................................................                                    12%
12%
Consumables and other ................................................................................................................                                      37%
35%
Electricity and water......................................................................................................................                                     19%
18%
As gold mining in South Africa is very labor intensive, labor costs and contractor services are one of the largest
components of operating costs. Operating costs are linked directly to the level of production of a specific fiscal year. Operating
costs in fiscal 2012 increased by 5% to R2,188.9 million compared to operating costs of R2,088.3 million in fiscal 2011. This
increase was mainly as a result of above inflation increases in labor, electricity and consumable costs at both Ergo and Blyvoor.
The increase in operating costs was partially offset by the closure of Number 4 and 6 shafts at Blyvoor and the fact that only
eleven months of Blyvoor's operating costs are included due to the disposal of Blyvoor on June 1, 2012.
Rehabilitation provision and amounts contributed to environmental trust funds
As of June 30, 2012, we estimate our total rehabilitation provision, being the discounted estimate of future costs, to be
R504.3 million as compared to R490.2 million at June 30, 2011. The increase in the provision for environmental rehabilitation in
fiscal 2012 was due to changes in discount and inflation rate assumptions, changes in estimates resulting from changes to the life-of-
mines and additional environmental damage incurred which had been off-set by a R46.0 million reduction in the provision resulting
from the disposal of Blyvoor on June 1, 2012. In fiscal 2012, an expense of R59.2 million (fiscal 2011: R52.6 million) including
the unwinding of the provision of R7.3 million (fiscal 2011: R9.4 million) was recorded in profit or loss.
A total of R106.3 million was invested in our various environmental trust funds as at the end of fiscal 2012, as compared
to R134.2 million for fiscal 2011. The decrease is attributable to the disposal of Blyvoor on June 1, 2012, which reduced the trust
funds by R35.1 million. The decrease was partially offset by an R8.3 million increase for interest received on the investment of
these funds during fiscal 2012. A total of R59.3 million was invested in funds held in insurance instruments to provide financial
guarantees to the DMR through an insurance cell captive company called, Guardrisk Cell Captive. 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, the proceeds on the disposal of remaining assets and gold
from plant clean-up.
1
Ergo has been restated during fiscal 2012 to include Ergo Mining Proprietary Limited, ErgoGold, Crown and the surface retreatment operation
of  ERPM.
2
Blyvoor was sold on June 1, 2012, and has been restated during 2012 as a discontinued operation.
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Depreciation
Depreciation charges were R120.9 million for fiscal 2012 compared to R130.9 million for fiscal 2011. The decrease is
mainly attributable to the classification of Blyvoor as held-for-sale in accordance with IFRS 5 – Non-current Assets Held of Sale
and Discontinued Operations, on December 31, 2011, at which date depreciation ceased. This was followed by the disposal of
Blyvoor on June 1, 2012.
Retrenchment costs
Retrenchment costs increased to R43.7 million in fiscal 2012 from R0.8 million in fiscal 2011. In fiscal 2012, these costs
related to the closure of the Number 4 and 6 shafts at Blyvoor, resulting in the retrenchment of 1,542 employees.
Impairments
In fiscal 2012, an impairment amounting to R1.1 million was raised against the West Witwatersrand Gold Mines
Proprietary Limited rehabilitation trust fund, due to the disposal of the relating mining rights over the West Wits mining lease
area.
Administration expenses and general costs
The administration expenses and general costs increased in fiscal 2012 to R121.5 million from R88.1 million in fiscal
2011, an increase of R33.4 million. In fiscal 2012, administration expenses and general costs included a non-recurring cost of
approximately R9.6 million relating to the loss on the sale of property, plant and equipment. In fiscal 2011, administration
expenses and general costs included a non-recurring credit of approximately R5.7 million as a result of a decrease in the provision
for post-retirement medical benefits. Other than inflation-related increases, these were the main reasons for the year-on-year
increase.
Finance income
Finance income decreased from R52.8 million in fiscal 2011 to R33.4 million in fiscal 2012. The decrease was mainly
due to a non-recurring net gain on financial liabilities measured at amortized cost in fiscal 2011, amounting to R24.8 million.
Finance expenses
Finance expenses decreased from R22.0 million in fiscal 2011 to R17.7 million in fiscal 2012. The decrease was mainly
attributable to the unwinding of discount on financial liabilities measured at amortized cost, which decreased from R7.7 million in
fiscal 2011 to R0.7 million in fiscal 2012.
Income tax
The net tax charge of R8.0 million for fiscal 2012 comprises a current taxation charge of R12.5 million, a deferred tax
credit of R9.0 million and secondary tax on companies amounting to R4.5 million. This compares to a net tax charge of
R32.2 million for fiscal 2011, which comprises a current taxation charge of R1.2 million, a deferred tax charge of R25.9 million
and secondary tax on companies amounting to R5.1 million. The year-on-year decrease in the net tax charge was mainly due to
recognition of a R26.9 million deferred tax asset attributable to Ergo Mining Proprietary Limited for tax losses previously not
recognized.
Comparison of financial performance for the fiscal year ended June 30, 2011 with fiscal year ended June 30, 2010
Revenue
The following table illustrates the year-on-year change in revenue by evaluating the contribution of each segment to the
total change on a consolidated basis for fiscal 2011 in comparison to fiscal 2010:
Impact of change in volume
R’000
Total
revenue
2010       Acquisitions
Internal
growth
Impact of
change in
price
Net change
Total
revenue
2011
Ergo
1
..........................................
1,129,113                            -
78,130
172,216
250,346
1,379,459
Blyvoor
2
.....................................
861,409
-
118,636
205,815
324,451
1,185,860
Total Operations ......................
1,990,522
-
196,766
378,031
574,797
2,565,319
1
Ergo has been restated during fiscal 2012 to include Ergo Mining Proprietary Limited, ErgoGold, Crown and the surface retreatment operation
of  ERPM.
2
Blyvoor was sold on June 1, 2012, and has been restated during 2012 as a discontinued operation.
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Revenue for fiscal 2011 increased by R574.8 million, or 29%, to R2,565.3 million, due to the higher gold price received
and the 10% increase in gold production. The average gold price increased from R265,332 per kilogram in fiscal 2010 to
R311,023 per kilogram in fiscal 2011.
Operating costs
The following table illustrates the year-on-year change in operating costs by evaluating the contribution of each segment
to the total change on a consolidated basis for fiscal 2011 in comparison to fiscal 2010:
Impact of change in volume
R’000
Operating
costs
2010        Acquisitions
Internal
growth
Impact of
change in
costs
Net change
Operating
costs
2011
Ergo
1
...........................................
873,743                            -
60,459
38,277
98,736
972,479
Blyvoor
2
......................................
845,122                            -
116,393
154,305
270,698
1,115,820
Total ...........................................
1,718,865                            -
176,852
192,582
369,434
2,088,299
The following table lists the major components of operating costs for each of the years set forth below:
Years ended June 30,
Costs
2011
2010
Labor..............................................................................................................................................                                    35%
34%
Contractor services ........................................................................................................................                                   12%
12%
Consumables and other ................................................................................................................                                     35%
38%
Electricity and water......................................................................................................................                                    18%
16%
As gold mining in South Africa is very labor intensive, labor costs and contractor services are one of the largest
components of operating costs. Operating costs are linked directly to the level of production of a specific fiscal year. Operating
costs in fiscal 2011 increased by 21% to R2,088.3 million compared to operating costs of R1,718.9 million in fiscal 2010. This
increase was mainly as a result of a 7% rise in volumes, together with above inflation increases in both labor and electricity costs
which affected Blyvoor in particular.
Operating costs at Ergo increased from R873.7 million in fiscal 2010 to R972.5 million in fiscal 2011 which was mainly due
to a ramp-up in volumes at Ergo and higher labor and electricity costs. At Blyvoor operating costs increased from R845.1 million in
fiscal 2010 to R1,115.8 million in fiscal 2011, a consequence of increased volumes and above inflation increases in both labor and
electricity costs.
Rehabilitation provision and amounts contributed to environmental trust funds
As of June 30, 2011, we estimated our total rehabilitation provision, being the discounted estimate of future costs, to be
R490.2 million as compared to R420.6 million at June 30, 2010. The increase in the provision for environmental rehabilitation in
fiscal 2011 was due to changes in discount and inflation rate assumptions, changes in estimates resulting from changes to the life-of-
mines and additional environmental damage incurred. In fiscal 2011 an expense of R52.6 million (fiscal 2010: R88.0 million
benefit) including an unwinding of the discount of R9.4 million (fiscal 2010: R10.8 million) were recorded in profit or loss.
A total of R134.2 million was invested in our various environmental trust funds as at the end of fiscal 2011, as compared
to R126.1 million for fiscal 2010. The increase was attributable to interest received on the investment of these funds and
contributions of R1.2 million during fiscal 2011. The shortfall between the trust funds and the estimated provisions was expected
to be financed by ongoing financial contributions in available financial investments over the remaining production life of the
respective mining operations, the proceeds on the disposal of remaining assets and gold from plant clean-up.
Depreciation
Depreciation charges were R130.9 million for fiscal 2011 compared to R190.8 million for fiscal 2010. The decrease was
mainly attributable to the extension of Ergo's life-of-mine due to the construction of the Crown/Ergo pipeline.
1
Ergo has been restated during fiscal 2012 to include ErgoGold , Ergo Mining Proprietary Limited, Crown and the surface retreatment operation
of  ERPM.
2
Blyvoor has been disposed of on June 1, 2012, and has been restated during 2012 as a discontinued operation.
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Retrenchment costs
Retrenchment costs decreased to R0.8 million in fiscal 2011 from R20.1 million in fiscal 2010. In fiscal 2011, these costs
relate to the last of the retrenchments at ERPM due to the closure of its underground operation.
Impairments
In fiscal 2011, an impairment of R546.6 million was raised against Blyvoor’s property, plant and equipment due to its
distressed financial position and the uncertainties relating to the outcome of the business rescue plan. Blyvoor represented one cash
generating unit. A discount rate of 14.4% (2010: 13.7%), together with further risk adjustments to future cash flows were used in
determining the impairment. Management also took into consideration as part of their reasonableness assessment, a sensitivity
analysis and the fact that Blyvoor was under business rescue proceedings, with the business rescue plan not being approved as at the
end of fiscal 2011. Further considerations included the group's market capitalization in comparison to the group's net asset value.
In addition, an impairment amounting to R1.1 million was raised against the West Witwatersrand Gold Mines Proprietary
Limited rehabilitation trust fund, due to the disposal of the relating mining rights over the West Wits mining lease area.
Administration expenses and general costs
The administration expenses and general costs increased in fiscal 2011 to R88.1 million from R57.0 million in fiscal
2010, an increase of R31.1 million. In fiscal 2010, administration expenses and general costs included a non-recurring credit of
approximately R30.0 million as a result of a decrease in the provision for post-retirement medical benefits as part of a project
initiated during fiscal 2010 to optimize the synergies of DRDGOLD’s surface operations, and the resulting settlement of the post-
retirement medical benefit. Management had revised the assumptions used in calculating the provision. Other than inflation
related increases, this was the main reason for the year-on-year increase.
Finance income
Finance income decreased from R200.3 million in fiscal 2010 to R52.8 million in fiscal 2011. The majority of the
decrease in fiscal 2011 was due to the fact that finance income in fiscal 2010 included a non-recurring gain of R156.7 million for
foreign currency translation reserves realized on the liquidation of foreign subsidiaries, which included the Australasian
Operations.
Finance expenses
Finance expenses decreased from R24.1 million in fiscal 2010 to R22.0 million in fiscal 2011. The decrease was mainly
attributable to the capitalization of borrowing costs in fiscal 2011 relating to the Crown/Ergo pipeline, amounting to R6.4 million.
Income tax
The net tax charge of R32.2 million for fiscal 2011 comprises a current taxation charge of R1.2 million, a deferred tax
charge of R25.9 million and secondary tax on companies amounting to R5.1 million. This compares to a net tax charge of
R8.3 million for fiscal 2010, comprising a current taxation charge of R8.5 million, a deferred tax benefit of R2.0 million and
secondary tax on companies amounting to R1.8 million. The year-on-year increase in the net tax charge was mainly due to higher
profits, in particular at Ergo, which resulted in an increase in the deferred tax charge for the year.
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5B. LIQUIDITY AND CAPITAL RESOURCES
Operating activities
Net cash of R621.2 million (fiscal 2011: R324.0 million and fiscal 2010: R53.6 million) was generated by operating
activities for fiscal 2012. During fiscal 2012, the net working capital movement represented an inflow of cash of R63.5 million,
compared to an outflow of R3.3 million in fiscal 2011 and an outflow of R31.5 million in fiscal 2010. Cash generated from operating
activities increased largely due to the 36% increase in the average rand gold price in fiscal 2012, which resulted in a significant rise in
the group’s revenue. The increase in fiscal 2011 of cash generated from operating activities was largely due to the 15% increase in the
rand gold price and the 10% improvement in gold production for the year.
Investing activities
Net cash utilized by investing activities amounted to R413.3 million in fiscal 2012 compared to R335.2 million in fiscal
2011 and R226.4 million in fiscal 2010.
In fiscal 2012, cash utilized by investing activities mainly consisted of R333.2 million in additions to property, plant and
equipment, R63.2 million in acquisitions of investments, and R19.8 million spent on environmental trust funds and rehabilitation
payments. In fiscal 2011, cash utilized by investing activities mainly consisted of R317.3 million in additions to property, plant and
equipment, of which R176.8 million related to the Crown/Ergo pipeline project. In addition, R22.6 million was spent on
environmental trust funds and rehabilitation payments. Cash utilized by investing activities in fiscal 2010, mainly consisted of
R194.0 million in additions to property, plant and equipment and R40.4 million for the acquisition of the remaining 50% of Ergo
Mining Proprietary Limited.
Total capital expenditure (cash)
1
for fiscal 2012 was R333.2 million. Capital expenditure was predominantly on the
Crown/Ergo pipeline project, Ore Reserve development, new infrastructure and new mining equipment at our operations. Significant
capital projects for fiscal 2012 included:
· Ergo spent R33.9 million on the Crown/Ergo pipeline project, R50.7 million on the extension of the Brakpan tailings
  facility, R15.5 million on the refurbishment of the Ergo plant, R38.5 million on the new floatation and fine-grind project,
  R49.0 million on infrastructure upgrades and equipment, R14.2 million on the tailings facilities and R16.1 million to
  replace old equipment and acquire new equipment.
· Blyvoor for opening up and development amounting to R50.3 million, equipment replacement amounting to R23.3 million
  and R9.3 million for other equipment and the tailings facilities.
Total capital expenditure (cash)¹ for fiscal 2011 was R317.3 million. Capital expenditure was predominantly on the
Crown/Ergo pipeline project, Ore Reserve development, new infrastructure and new mining equipment at our operations. Significant
capital projects for fiscal 2011 included:
· Ergo for construction, long-lead items relating to the Crown/Ergo pipeline project amounting to R119.7 million,
  construction, commissioning and refurbishment of the second CIL circuit amounting to R29.4 million, expansion of the
  tailing complex amounting to R27.7 million and for tailings deposition site maintenance R27.9 million.
· Blyvoor for opening up and development amounting to R57.2 million, equipment replacement amounting to R25.3 million
  and R13.2 million for other equipment and the tailings facilities.
Total capital expenditure (cash)¹ for fiscal 2010 was R194.0 million. Capital expenditure was predominantly on Ore Reserve
development, new infrastructure and new mining equipment at our operations. Significant capital projects for fiscal 2010 included:
· Ergo for construction and commissioning of the second feeder pipeline from the Elsburg Tailings Complex to the Brakpan
  plant amounting to R34.4 million and for long-lead items relating to the Crown/Ergo pipeline amounting to R29.6 million.
· Blyvoor for opening up and development amounting to R48.9 million.
We anticipate increasing our capital expenditure in fiscal 2013 by about 8% over fiscal 2012. We expect to incur
R343.5 million on capital expenditure for mining equipment, upgrading current metallurgical plants and tailings facilities as
follows:
·  Ergo - R306.8 million;
· 
ERPM - R14.4 million; and
· 
Exploration in Zimbabwe - R22.2 million.
1
Total capital expenditure (cash) is a non - IFRS financial measure of performance that we use to determine cash generating capacities of the
mines and to monitor performance of our mining operations.
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Financing activities
Net cash outflow from financing activities was R168.6 million in fiscal 2012 compared to a net cash inflow of R81.3 million
in fiscal 2011 and the net cash inflow of R7.8 million in fiscal 2010.
During fiscal 2012, the net cash outflow consisted of R96.2 million for repayments of loans and borrowings, R58.2 million
for the acquisition of treasury shares and a dividend payment of R28.9 million, which were offset by proceeds of R13.5 million on
disposal of treasury shares.
During fiscal 2011, the net cash inflow consisted of R108.0 million raised through a Domestic Medium Term Notes
Program, which had been offset by an R8.3 million repayment of borrowings and a dividend payment of R19.2 million.
During fiscal 2010, we issued 6,620,413 shares for cash consideration of R29.9 million and we issued 262,663 shares to the
share option scheme for a consideration of R1.0 million. Costs relating to these share issues were incurred, amounting to R2.0
million. A dividend of R19.0 million was paid and there was a repayment of borrowings amounting to R2.1 million.
Cash and cash equivalents
Cash and cash equivalents as at June 30, 2012 amounted to R298.5 million compared to R259.1 million in fiscal 2011 and
R188.2 million in fiscal 2010. This included $1.1 million as at 30 June 2012 compared to $2.5 million in fiscal 2011 and $1.3 million
in fiscal 2010, the remainder of the cash and cash equivalent balances were denominated in South African rand. Surplus cash is held
in low-risk, high interest bearing products with various large financial institutions.
Borrowings and funding
Borrowing and funding requirements are not seasonal and there are no legal or economic restrictions on the transfer of funds
from subsidiaries.
Our external sources of capital include the issuance of debt, bank borrowings, loan notes and the issuance of equity
securities, which include the following:
On October 1, 2010 EMO established a R500 million Domestic Medium Term Note Programme, or DMTN Programme,
under which it could from time to time issue notes. On October 1, 2010, EMO issued R108 million in notes under the DMTN
Programme and maturity dates of 12 and 24 months from the date of issue and interest set at the three month JIBAR rate plus a
margin ranging from 4% to 5% per annum. The loan notes with a 12 month maturity, amounting to R78.0 million, were repaid on
October 3, 2011. The remaining loan notes with a 24 month maturity, amounting to R30.0 million, were repaid on October 3,
2012. The EMO DMTN Programme was cancelled and has been replaced by the DRDGOLD DMTN Programme below.
On July 2, 2012, DRDGOLD established a R2.0 billion DMTN Programme under which it may from time to time issue
notes. This DMTN Programme replaces the DMTN Programme established by EMO on October 1, 2010. In July and September
2012, DRDGOLD issued R165 million in notes under the DMTN Programme and maturity dates of 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 month maturity, amounting to R54.0 million, are repayable on September 15, 2013. The remaining loan notes with
a 24 and 36 month maturity, amounting to R66.0 million and R45.0 million, respectively, are repayable on July 3, 2014 and July
3, 2015, respectively.
Anticipated funding requirements and sources
At June 30, 2012, we had cash and cash equivalents of R298.5 million, and positive working capital (defined as current
assets less current liabilities) of R209.7 million, compared to cash and cash equivalents of R259.1 million and positive working
capital of R100.0 million at June 30, 2011 and cash and cash equivalents of R188.2 million and positive working capital of
R132.9 million at June 30, 2010. At September 30, 2012, our cash and cash equivalents were R409.9 million.
Our management believes that existing cash resources, net cash generated from operations and the availability of
negotiated funding facilities will be sufficient to meet our anticipated commitments for fiscal 2013 as described above.
Our estimated working capital, capital expenditure and other funding commitments, as well as our sources of liquidity,
would be adversely affected if:
· our operations fail to generate forecasted net cash flows from operations;
· 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.”
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74
In such circumstances, we could have insufficient capital to meet our current obligations in the normal course of
business, which would have an adverse impact on our financial position and our ability to continue operating as a going concern.
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.
5C. RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES, ETC.
We are not involved in any research and development and have no registered patents or licenses.
5D. TREND INFORMATION
During the first quarter of fiscal 2013, we produced 35,815 ounces at average cash costs of R305,265 per kilogram from our
operations. Gold production from our operations for the second quarter of fiscal 2013 is expected to be in line with the first quarter
results. Cash costs for the second quarter of fiscal 2013 are expected to be slightly lower due to winter tariffs for electricity applying
for two months of the first quarter of fiscal 2013.
For the full year fiscal 2013, we are expecting gold production from our operations of approximately 145,500 ounces at cash
costs of approximately R301,578 per kilogram, based on an exchange rate assumption of approximately $1.00/R8.23. Our ability to
meet the full year’s production target could be impacted by, amongst other factors, lower grades, achieving the targets set at Ergo and
timely completion of the flotation and fine-grind project. We are also subject to cost pressures due to above inflation increases in
labor costs, electricity and water prices; increases in crude oil, steel, 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, which could adversely impact the cash costs for fiscal 2013.
5E. OFF-BALANCE SHEET ARRANGEMENTS
The Company does not engage in off-balance sheet financing activities, and does not have any off-balance sheet debt
obligations, unconsolidated special purposes entities or unconsolidated affiliates.
5F. TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS
Estimated and actual payments due by period
Total
Less than
1 year
Between
1-3 years
Between
3-5 years
More than 5
years
R’000                  R’000             R’000           R’000               R’000
Loan notes (including interest)................................................
30,802
30,802
               -
-
Purchase obligations – contracted capital expenditure
1
.....
93,015
93,015
               -
-
Environmental rehabilitation, reclamation and closure
costs
2
......................................................................................
504,327
42,057
    153,789
308,481
Operating leases.......................................................................
4,386
1,733
2,536             117
-
Total contractual cash obligations ......................................
632,530
167,607
2,536      153,906
308,481
5G.       SAFE HARBOR
See “Special Note regarding Forward-Looking Statements.”
1
Represents planned capital expenditure for which contractual obligations exist.
2
Operations of gold mining companies are subject to extensive environmental regulations in the various jurisdictions in which they operate. These
regulations establish certain conditions on the conduct of our operations. Pursuant to environmental regulations, we are also obliged to close our
operations and reclaim and rehabilitate the lands upon which we have conducted our mining and gold recovery operations. The estimated closure
costs at existing operating mines and mines in various stages of closure are reflected in this table. For more information on environmental
rehabilitation obligations, see Item 4D.: “Property, Plant and Equipment” and Note 19 “Provision for environmental rehabilitation, reclamation and
closure costs” under Item 18.: “Financial Statements”.
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ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
6A. DIRECTORS AND SENIOR MANAGEMENT
Directors and Executive Officers
Our board of directors may consist of not less than four and not more than twenty directors. As of June 30, 2012 and as of
June 30, 2011, our board consisted of six directors.
In accordance with JSE listing requirements and our Memorandum of Incorporation, or MOI, one third of the directors
comprising the board of directors, on a rotating basis, are subject to re-election at each annual general shareholders’ meeting.
Additionally, all directors are subject to election at the first annual general meeting following their appointment. Retiring directors
normally make themselves available for re-election.
The address of each of our Executive Directors and Non-Executive Directors is the address of our principal executive
offices.
Executive Directors
Daniël Johannes Pretorius (45) Chief Executive Officer. Mr. D.J. Pretorius was appointed as Chief Executive Officer
Designate on August 21, 2008. On January 1, 2009 he succeeded Mr. John William Cornelius Sayers as Chief Executive Officer. Mr.
Pretorius holds a B Proc, LLB degree and was appointed Group Legal counsel for the Company in September 2004. He has 19 years
of experience in the mining industry. He was appointed as Chief Executive Officer of Ergo Mining Operations in July 2006.
Craig Clinton Barnes (42) Chief Financial Officer. Mr. C.C. Barnes joined the Company in August 2004 as Group Financial
Accountant. A Chartered Accountant, he has a B Com degree from the University of the Witwatersrand, or Wits University, and a B
Com Honors degree from the University of South Africa, or Unisa. Prior to joining the Company, he was head of financial reporting
for Liberty Group Limited and he has over 18 years financial experience. He was appointed as Chief Financial Officer of Ergo
Mining Operations in July 2006 and as Chief Financial Officer of DRDGOLD in May 2008.
Non-Executive Directors
Geoffrey Charles Campbell (51). Mr. G.C. Campbell was appointed as Non-Executive Director in 2002, as a Senior
Independent Non-Executive Director in December 2003 and as Non-Executive Chairman in October 2005. A qualified geologist, he
has worked on gold mines in Wales and Canada. He then spent 15 years first as a stockbroker and afterwards as a fund manager,
during which time he managed the Merrill Lynch Investment Manager’s Gold and General Fund, one of the largest gold mining
investment funds. He was also Research Director for Merrill Lynch Investment Managers. Mr. G.C. Campbell is also a director of
Oxford Abstracts.
Robert Peter Hume (72). Mr. R.P. Hume was appointed as a Non-Executive Director in 2001. He has 42 years experience in
the field of auditing, including 18 years as a partner in the East London (South Africa) office of KPMG. Since retiring from KPMG in
1999, he has been an Investment Manager at Nvest Securities Proprietary Limited (formerly Sasfin Frankel Pollak) in East London.
James Turk (65). Mr. J. Turk was appointed a Non-Executive Director in October 2004. He is the founder and a director of
GoldMoney Network Limited, formerly G.M. Network Limited (also known as GoldMoney.com), the operator of a digital gold
currency payment system. Since graduating from George Washington University with a BA degree in International Economics in
1969, he has specialized in international banking, finance and investments. After starting his career with Chase Manhattan Bank (now
J.P. Morgan Chase) he joined RTB Inc., a private investment and trading company of a prominent precious metals trader in 1980. He
moved to the United Arab Emirates in 1983 as Manager of the Commodity Department of the Abu Dhabi Investment Authority.
Since resigning from this position in 1987, he has written frequently on money and banking.
Edmund Jeneker (50). Mr. E.A. Jeneker (SAIPA, FIAC, Cert.Dir(IoD)) was appointed a Non-Executive Director on
November 1, 2007. He trained as an accountant and has over 21 years’ experience in finance, taxation, business strategy and
general management at Grant Thornton, SwissReSA, World Bank Competitiveness Fund and Deloitte. He is active in community
development and serves as a member of the Provincial Development Commission of the Western Cape Provincial Government.
He currently holds the position of Managing Director – Absa AllPay Consolidated Investment Holdings at Absa Group Limited.
Senior Management
Wilhelm Jacobus Schoeman (38) Executive Officer Business Development. Mr. W.J. Schoeman (Dip Analytical Chemistry,
BTech Analytical Chemistry) joined DRDGOLD on October 1, 2011 to focus on expanding the group’s surface retreatment business
and extracting maximum value from existing resources. He also has a chief executive role at Watermark Global Plc and Western
Utilities (which recently listed on the JSE AltX as Mine Restoration Investments).
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David Johannes Botes (55) Group Risk Manager. Mr. D.J. Botes (Dip Comm, HDip Tax) joined DRDGOLD on
September 7, 1988 as Group Financial Manager. He was appointed Group Risk Manager on February 1, 2003. He has 29 years of
financial management experience.
Jacob Hendrik Dissel (54) Group Financial Manager. Mr. J.H. Dissel (B Comm Hons) joined DRDGOLD as Group
Financial Manager in October 1999. He has 29 years experience in the mining industry
Themba John Gwebu (48) Executive Officer: Legal, Compliance and Company Secretary. Mr. T.J. Gwebu (B Iuris, LLB,
LLM) is a qualified attorney who worked as a magistrate prior to joining the Company in April 2004 as Assistant Legal Advisor. He
was appointed to the position of Company Secretary in April 2005 and Executive Officer: Legal, Compliance and Company
Secretary on January 1, 2007.
Henry Gouws (43) Managing Director: Ergo. Mr. H. Gouws graduated from Technicon Witwatersrand and obtained a
National Higher Diploma in Extraction Metallurgy in 1991. He completed a MDP in 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 25 years experience in the mining industry.
Kevin Peter Kruger (44) Managing Director: Chizim Gold. Mr. K.P. Kruger holds a BSc degree in mechanical engineering
from Wits University and joined the Company in 1994. Previously the Engineering Manager at the Company’s North West
Operations, he was appointed to his current position with effect from October 1, 2011.
Charles Methley Symons (58) Chief Operating Officer. Mr. C.M. Symons joined the mining industry in February 1977 and
transferred to Crown in January 1986 where he was appointed General Manager in 1995. He holds a Masters degree in Business
Leadership and a B Comm degree from Unisa, and he also has a National Diploma in Extractive Metallurgy. He was appointed
Executive Officer: Surface Operations on January 1, 2008, Executive Officer: Operations on May 11, 2010 and Chief Operating
Officer with effect from October 1, 2011.
Martin Bruce Ebell (54) Manager Metallurgical Technical Services. Mr. M.B. Ebell joined the Company in 2008 as
Manager Metallurgical Technical Services. He was previously employed by Bateman Minerals and Metals, Alex Steward Assayers,
Dowding Reynard and Associates, Millsell/Henry Gould and Rand Mines, and has 31 years of experience in the field of extractive
metallurgy in various managerial, consulting and project engineering positions. He is registered professional engineer and a member
of SAIMM and MMMA and holds a MEng (MEM) USA, BSc (Eng) Minerals Processing, B Comm degrees and a MDP certificate.
Barry Gordon de Blocq (50) General Manager Corporate Services. Mr. de Blocq joined DRDGOLD in September 1998
from AngloGold, where he was Divisional Industrial Relations Manager. He holds a B Soc Sc, degree and was promoted to his
current position on January 1, 2010. He has 25 years experience in the mining industry.
There are no family relationships between any of our executive officers or directors. There are no arrangements or
understandings between any of our directors or executive officers and any other person by which any of our directors or executive
officers has been so elected or appointed.
6B. COMPENSATION
Our MOI provide that the directors' fees should be determined from time to time in a general meeting or by a quorum of
Non-Executive Directors. The total amount of directors' remuneration paid and or accrued for the year ended June 30, 2012 was
R16.6 million. Non-Executive Directors receive the following fees:
· Base fee as Non-Executive Chairman of R1,212,892 per annum;
· Base fee as Non-Executive Directors of R539,063 per annum;
· Annual fee for Audit Committee Chairman of R53,908;
· Annual fee for Audit Committee member of R26,954;
· Annual fee for Nominations Committee Chairman of R20,216;
· Annual fee for Nominations Committee member of R10,108;
· Annual fee for the chairman of Remuneration Committee, Risk Committee, and Social and Ethics Committee of R40,430;
· Annual fee for members of Remuneration Committee, Risk Committee and Social and Ethics Committee of R20,216 each;
· Half-day fee for participating by telephone in special board meetings;
· Daily fee of R20,216 and hourly rate of R2,695; and
· The Chairman of the board to receive committee fees.
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Non-executive directors’ fees are adjusted annually on the basis of the consumer price index.
The following table sets forth the compensation for our directors and prescribed officers for the year ended June 30, 2012:
Directors
Basic
salary/board
fees
(R'000)
Retirement fund
contributions/
bonus/restraint
of
trade/expenses
(R'000)
Total
(R'000)
Share
option
scheme
gains
(R'000)
Executive
D.J. Pretorius....................................................
4,470
3,666
8,136
-
C.C. Barnes ......................................................
3,113
2,078
5,191
-
Subtotal ...........................................................
7,583
5,744
13,327 -
Non-Executive
G.C. Campbell..................................................
1,317
-
1,317
-
R. Hume ...........................................................
691
-
691
-
J. Turk...............................................................
616
-
616
-
E.A. Jeneker
686
-
686
-
Subtotal ...........................................................
3,310
-
3,310
-
Prescribed officers
1
C.M. Symons....................................................
2,043
1,492
3,535
-
T.J. Gwebu…………………………………….
W.J. Schoeman………………………………...
1,870
1,989
994
960
2,864
2,949
298
-
Subtotal ...........................................................
5,902
3,446
9,348                   298
Total.................................................................
16,795
9,190
25,985                   298
See also Item 6E.: “Share Ownership” for details of share options held by directors.
Compensation of senior management
Our senior management comprises of executive directors, prescribed officers and executive officers. Under the JSE
Listing Rules we are not required to, and we do not otherwise, disclose compensation paid to individual senior managers other
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 2012 was R22.4 million (fiscal 2011: R22.1 million),
representing nine executive officers in fiscal 2012 and eleven executive officers in fiscal 2011.
Bonuses or incentives are paid based upon performance against predetermined key performance indicators. Should an
Executive Director meet all the targets set in terms of such predetermined key performance indicators, he will be entitled to a bonus
of up to 50%, 75% or 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.
Service Agreements
Service contracts negotiated with each executive and non-executive director incorporate their terms and conditions of
employment and are approved by our Remuneration Committee.
The Company’s executive directors, Mr. D.J. Pretorius and Mr. C.C. Barnes, entered into agreements of employment
with us, on January 1, 2009 and May 5, 2008, respectively. Mr. C.C. Barnes’ service contract has been renewed for another three
years, effective from May 5, 2011, by our Remuneration Committee at a meeting held in August 2011. Mr. D.J. Pretorius’s
service contract has been renewed for another three years, effective January 1, 2012, by our Remuneration Committee at a
meeting held in February 2012. These agreements regulate the employment relationship with Messrs. D.J. Pretorius and
C.C. Barnes.
1
The Companies Act, 2008 (Act 71 of 2008), under section 30, requires the remuneration of prescribed officers, as defined in regulation 38 of
Company Regulations 2008, to be disclosed with that of directors of the Company. A person is a prescribed officer if they have general
executive authority over the company, general responsibility for the financial management or management of legal affairs, general managerial
authority over the operations of the company or directly or indirectly exercise or significantly influence the exercise of control over the general
management and administration of the whole or a significant portion of the business and activities of the company.
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Mr. D.J. Pretorius receives from us a remuneration package of R4.5 million per annum. Mr. D.J. Pretorius is 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 he achieves certain key performance indicators. In
addition, Mr. D.J. Pretorius’ employment agreement requires DRDGOLD to issue to Mr. D.J. Pretorius 100,000 ordinary
DRDGOLD shares as a conversion bonus. DRDGOLD issued 50,000 of these shares on the signing of the agreement, while the
remaining tranche of the conversion of mining rights bonus of 50,000 shares will become due on the date that the conversion of
mining rights of DRDGOLD’s South African operations is completed.
Mr. C.C. Barnes receives from us a remuneration package of R3.1 million per annum. Mr. C.C. Barnes is eligible under
his employment agreement, for an incentive bonus of up to 75% of his annual remuneration package in respect of one bonus cycle
per annum over the duration of his appointment, on condition that he achieves certain key performance indicators. As a further
consideration for agreeing to remain in the employment of the company as set out in the agreement, the company issues
Mr. C.C. Barnes with, up to 50% of his annual remuneration package, share options in DRDGOLD Limited, calculated in
accordance with DRDGOLD’s share option scheme rules and principals, on an annual basis.
Each service agreement with our directors provides for the provision of benefits to the director where the agreement is
terminated by us in the case of our executive officers, except where terminated as a result of certain action on the part of the director,
or upon the director reaching a certain age, or by the director upon the occurrence of a change of control of us. A termination of a
director's employment upon the occurrence of a change of control of us 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.
Messrs. R.P. Hume, J. Turk and E.A. Jeneker each have service agreements which run for fixed periods until
September 30, 2012, October 31, 2012, and October 31, 2013 respectively. 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. Mr. G.C.
Campbell has a service agreement which continues indefinitely until terminated by either party on not less than three months prior
written notice.
The company does not administer any pension, retirement or any other similar scheme in which the directors receives a
benefit.
6C. BOARD PRACTICES
Board of Directors
As at September 30, 2012, the board of directors comprises two Executive Directors (Mr. D.J. Pretorius and
Mr. C.C. Barnes), and four Non-Executive Directors (Messrs. G.C. Campbell, R.P. Hume, J. Turk and E.A. Jeneker). The Non-
Executive Directors are independent under the NYSE requirements (as affirmatively determined by the Board of Directors) and
the South African King III Report.
In accordance with the King III Report on corporate governance, as encompassed in the JSE Listings Requirements, and
in accordance with the United Kingdom Combined Code, the responsibilities of Chairman and Chief Executive Officer are
separate. Mr. G.C. Campbell is the Non-Executive Chairman, Mr. D.J. Pretorius is the Chief Executive Officer and Mr. C.C.
Barnes is the Chief Financial Officer. The board has established a nominations committee, and it is our policy for details of a
prospective candidate to be distributed to all directors for formal consideration at a full meeting of the board. A prospective
candidate would be invited to attend a meeting and be interviewed before any decision is taken. In compliance with the NYSE
rules a majority of independent directors will select or recommend director nominees.
The board’s main roles are to create value for shareholders, to provide leadership of the Company, to approve the
Company’s strategic objectives and to ensure that the necessary financial and other resources are made available to management
to enable them to meet those objectives. The board retains full and effective control over the Company, meeting on a quarterly
basis with additional ad hoc meetings being arranged when necessary, to review strategy and planning and operational and
financial performance. The board further authorizes acquisitions and disposals, major capital expenditure, stakeholder
communication and other material matters reserved for its consideration and decision under its terms of reference. The board also
approves the annual budgets for the various operational units.
The board is responsible for monitoring the activities of executive management within the Company and ensuring that
decisions on material matters are referred to the board. The board approves all the terms of reference for the various
subcommittees of the board, including special committees tasked to deal with specific issues. Only the executive directors are
involved with the day-to-day management of the Company.
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To assist new directors, an induction program has been established by the Company, which includes background
materials, meetings with senior management, presentations by the Company’s advisors and site visits. The directors are assessed
annually, both individually and as a board, as part of an evaluation process, which is driven by an independent consultant. In
addition, the Remuneration and Nominations Committees formally evaluates the executive directors on an annual basis, based on
objective criteria.
All directors, in accordance with the Company’s MOI, are subject to retirement by rotation and re-election by
shareholders. In addition, all directors are subject to election by shareholders at the first annual general meeting following their
appointment by directors. The appointment of new directors is approved by the board as a whole. The names of the directors
submitted for re-election are accompanied by sufficient biographical details in the notice of the forthcoming annual general
meeting to enable shareholders to make an informed decision in respect of their re-election.
All directors have access to the advice and services of the Company Secretary, who is responsible to the board for
ensuring compliance with procedures and regulations of a statutory nature. Directors are entitled to seek independent professional
advice concerning 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.
Two of the Non-Executive Directors (Messrs. G.C. Campbell and R.P. Hume) have share options under the Company’s
share option scheme, but we do not believe that this interferes with their independence. No new share options have been issued to
Non-Executive Directors since June 2005. See Item 6A.: “Directors and Senior Management” and Item 6E.: “Share ownership”.
Board meetings are held quarterly in South Africa and abroad. The structure and timing of the Company’s board
meetings, which are scheduled over two or three days, allows adequate time for the Non-Executive Directors to interact without
the presence of the Executive Directors. The board meetings include the meeting of the Risk Committee, Audit Committee,
Remuneration Committee, 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, except for the Risk Committee which is
chaired by the Chief Executive Officer, who provide 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.
The board sets the standards and values of the Company and much of this has been embodied in the Company’s Code of
Ethics and Conduct, a copy of which is available on our website at www.drdgold.com. The Code of Ethics and Conduct applies to
all directors, officers and employees, including the principal executive, financial and accounting officers, in accordance with
Section 406 of the US Sarbanes-Oxley Act of 2002, the related US securities laws and the NYSE rules. The Code contains
provisions under which employees can report violations of Company policy or any applicable law, rule or regulation, including
US securities laws.
Directors' Terms of Service
The following table shows the date of appointment, expiration of term and number of years of service with us of each of the
directors as at June 30, 2012:
Director                                Title                                                                                          Year first
appointed
Term of
current
office
Unexpired
term of
current office
G.C. Campbell
Non-Executive Director
2002
2 years
16 months
D.J. Pretorius
1
Chief Executive Officer
2008
3 years
30 months
C.C. Barnes
2
Chief Financial Officer
2008
3 years
22 months
R.P. Hume
Non-Executive Director
2001
2 years
3 months
E.A. Jeneker
Non-Executive Director
2007
2 years
16 months
J. Turk
Non-Executive Director
2004
2 years
4 months
¹Mr. D.J. Pretorius’s service contract has been renewed for another three years, effective January 1, 2012, in the Remuneration Committee meeting held in
February 2012.
2
Mr. C.C. Barnes’ service contract has been renewed for another three years, effective from May 5, 2011 in the Remuneration Committee meeting held in August 2011.
Executive Committee
As at September 30, 2012, the Executive Committee consisted of Mr. D.J. Pretorius (Chairman), Mr. C.C. Barnes, Mr. C.M.
Symons, Mr W.J. Schoeman and Mr. T.J. Gwebu.
The Executive Committee meets on a weekly basis to review current operations, develop strategy and policy proposals for
consideration by the board of directors. Members of the Executive Committee, who are unable to attend the meetings in person, are
able to participate via teleconference facilities, to allow participation in the discussion and conclusions reached.
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Board Committees
The board has established a number of standing committees to enable it to properly discharge its duties and
responsibilities and to effectively fulfill its decision-making process. Each committee acts within written terms of reference which
have been approved by the board and under which specific functions of the board are delegated. The terms of reference for all
committees can be obtained by application to the Company Secretary at the Company’s registered office. Each committee has
defined purposes, membership requirements, duties and reporting procedures. Minutes of the meetings of these committees are
circulated to the members of the committees and made available to the board. Remuneration of Non-Executive Directors for their
services on the committees concerned is determined by the board. The committees are subject to regular evaluation by the board
with respect to their performance and effectiveness.
The following information reflects the composition and activities of these committees.
Committees of the Board of Directors
Remuneration Committee
As at June 30, 2012, the Remuneration Committee consisted of Mr. E.A. Jeneker (Chairman), Mr. G.C. Campbell,
Mr. R.P. Hume and Mr. J. Turk.
The Remuneration Committee, which is comprised of Non-Executive Directors, has been appointed by the board of
directors. The committee meets quarterly, but may meet more often on an ad hoc basis if required. The Remuneration Committee
is governed by its terms of reference and is responsible for approving the remuneration policies of the Company, the terms and
conditions of employment, and the eligibility and performance measures of the DRDGOLD (1996) Share Option Scheme
applicable to executive directors and senior management.
The committee’s objective is to evaluate and recommend to the board competitive packages which will attract and retain
executives of the highest caliber and encourage and reward superior performance. The committee also aims to ensure that criteria
are in place to measure individual performance. The committee approves the performance-based bonuses of the executive
directors based on such criteria. The Executive Officer: Human Resources provides the committee with access to comparative
industry surveys, which assist in formulating remuneration policies. As and when required the committee may also engage the
services of independent consultants to evaluate and review remuneration policies and related issues and brief members on
pertinent issues. The committee has in the past year engaged the services of such consultants to review the employment contracts
of the executive directors.
The remuneration policy, relating to the remuneration of directors and senior executives, is based on a reward system
comprising four principal elements:
· Basic remuneration, as benchmarked against industry norms;
· Bonuses or incentives, which are measured against agreed outcomes or Key Performance Indicators, or KPIs;
· Short-term rewards for exceptional performance; and
· Long-term retention of key employees based on scarcity of skill and strategic value, using share options granted under
the DRDGOLD (1996) Share Option Scheme.
A copy of the policy is available by application to the Company Secretary at the Company’s registered office.
Nominations Committee
The board resolved to separate the Nominations Committee from the Remunerations Committee. The Nominations
Committee is chaired by the Chairman of the board, Mr. G.C. Campbell. The terms of reference were approved in August 2008.
Its duties include:
· making recommendations to the board on the appointment of new Executive and Non-Executive directors, including
  making recommendations on the composition of the board generally and the balance between Executive and Non-
  Executive directors appointed to the board;
· regular reviewing of the board structure, size and composition and making recommendations to the board with regard to
  any adjustments that are deemed necessary;
· identifying and nominating candidates for the approval of the board to fill board vacancies as and when they arise as well
  as putting in place plans for succession, in particular for the Chairman and Chief Executive Officer; and
· making recommendations on directors who are retiring by rotation to be put forward for re-election.
As at September 30, 2012, the members of the Nominations Committee consisted of Mr. G.C. Campbell (Chairman) and
Mr. R.P. Hume.
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Audit and Risk Committees
On February 11, 2005, the Audit and Risk Committees started conducting joint meetings in respect of the quarterly
meetings. The members meet and the business of each committee is handled in joint deliberations taking place on the issues
raised. The Audit Committee is chaired by Mr. R.P. Hume and the Risk Committee by Mr. D.J. Pretorius. The reason for the joint
sittings is that there is a great deal of overlap between the financial risks discussed at Audit Committee level and at Risk
Committee level. The joint sittings of the Committees bring about better disclosure and ensure that the Company conforms more
closely to the process prescribed by the US Sarbanes-Oxley Act of 2002.
Audit Committee
As at June 30, 2012, the Audit Committee consisted of Mr. R.P. Hume (Chairman), Mr. J. Turk and Mr. E.A. Jeneker.
The Audit Committee is comprised solely of Non-Executive Directors, all of whom are independent. See Item 16G.:
“Corporate Governance”. The primary responsibilities of the Audit Committee, as set out in the Audit Committee charter, is to
assist the board in carrying out its duties relating to accounting policies, internal financial control, financial reporting practices and
the preparation of accurate financial reporting and financial statements in compliance with all applicable legal requirements and
accounting standards. A copy of the charter is available by application to the Company Secretary at the Company’s registered
office.
The Audit Committee meets quarterly with the external auditors, the Company’s internal audit practitioner, the Chief
Financial Officer and the Internal Audit and Compliance Manager to review the audit plans of the internal auditors, to ascertain
the extent to which the scope of the internal audits can be relied upon to detect weaknesses in the internal controls and to review
the annual and interim financial statements prior to approval by the board. The Audit Committee reviews our annual results, the
effectiveness of our system of internal financial controls, internal audit procedures and legal and regulatory compliance. The
committee also reviews the scope of work carried out by our internal auditors and holds regular discussions with the external
auditors and internal auditors.
The committee appoints, re-appoints and removes the external auditors and approves the remuneration and terms of
engagement of the external auditors. The committee is required to pre-approve, and has pre-approved, non-audit services provided
by our external auditors. The Company’s external audit function is currently being undertaken by KPMG Inc.
The Company’s internal and external auditors have unrestricted access to the chairman of the Audit Committee and,
where necessary, to the Chairman of the board and Chief Executive Officer. All important findings arising from audit procedures
are brought to the attention of the committee and, if necessary, to the board.
Risk Committee
As at June 30, 2012, the Risk Committee consisted of Mr. D.J. Pretorius (Chairman), Mr. J. Turk, Mr. G.C. Campbell,
Mr. E.A. Jeneker, Mr. R.P. Hume and Mr. C.C. Barnes.
The Risk Committee was established in January 2004 and currently comprises four Non-Executive Directors and two
Executive Directors. Its overall objective is to assist the board in its duties relating to risk management and control
responsibilities, assurance issues, health, safety and environmental compliance, and the monitoring and reporting of all these
matters. The Risk Committee facilitates communication between the board, the Audit Committee, internal auditors and other
parties engaged in risk management activities. The terms of reference of the Risk Committee can be obtained by application to the
Company Secretary at the Company’s registered office.
The Risk Committee’s role is to ensure that:
· an effective risk management program is implemented and maintained;
· risk management awareness is promoted amongst all employees;
· risk programs (financing/insurance) adequately protect the Company against catastrophic risks;
· regular risk assessments are conducted;
· total cost of risk in the long term is reduced;
· the protection of the Group's assets is promoted throughout the Group;
· the health and safety and well being of all stakeholders is improved; and
· the Company’s activities are carried out in such a way so as to ensure the safety and health of employees.
The Risk Committee meets quarterly and reports to the board. Additional ad hoc meetings may be arranged as and when
required. Certain members of executive management are occasionally invited to attend Risk Committee meetings, such as the
Internal Audit and Compliance Manager, the Group Risk Manager, the Group Financial Manager, the Operational Managers and
the Group Legal Counsel.
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The system to manage risk involves all significant business and operational risks which could undermine the
achievement of business objectives and undermine the preservation of shareholder value. The significant risks facing the Group
including those at operations have been identified and have been included in Item 3D.: “Risk factors.” Individuals have been
appointed to address each risk and the results thereof are reviewed by senior management through regular risk meetings. The aim
of the internal control systems is for management to provide reasonable assurance that the objectives will be met. In addition to
the above initiatives the Group also employs third party consultants to benchmark our operations against other mining operations
throughout South Africa and worldwide.
An important aspect of risk management is the transfer of risk to third parties to protect the Company from any major
disaster. We have embarked on a program to ensure that our major assets and potential business interruption and liability claims
are covered by group insurance policies that encompass our operations. The majority of the cover is through reputable insurance
companies in London and continental Europe and the insurance programs are renewed on an annual basis. A cell captive has been
established to enable further reduction in annual insurance premiums.
Social and Ethics Committee
The board, taking into account that all the group’s operations are now based in South Africa and in order to achieve the
triple bottom line espoused in the King III Report and in order to reach the empowerment goal to which it is committed,
establishing a committee, the focus of which will be transformation and sustainable development. The terms of reference were
approved by the board at the August 2008 meeting. The board resolved to convert the Transformation and Sustainable
Development Committee into the Social and Ethics Committee which the Company is required to set up in terms of the
Companies Act, 2008. The objectives of this committee are:
· promoting transformation within the company and the economic empowerment of previously disadvantaged
  communities, particularly within areas where the company conducts business;
· striving towards achieving the goal of equality as the South African constitution and other legislation require within the
  context of the demographics of the country at all levels of the company and its subsidiaries; and
· conducting business in a manner which is conducive to internationally acceptable environmental and sustainability
  standards.
As at September 30, 2012, the Social and Ethics Committee consisted of Mr. E.A. Jeneker (Chairman), Mr. D.J. Pretorius
and Mr. C.C. Barnes.
6D. EMPLOYEES
Employees
The geographic breakdown of our employees (including contractors who are contracted employees employed by third
parties), was as follows at the end of each of the past three fiscal years:
Year ended June
30
2012
2011
2010
South Africa.............................................................................................................................................                       2,222
6,875
6,409
The total number of employees at June 30, 2012, of 2,222 comprises 1,430 contractors and 792 employees who are directly
employed by us and our subsidiary companies. As of September 30, 2012, we had 2,288 employees (including 1,380 contract
employees). The decrease in the number of employees in fiscal 2012 is mainly due to the disposal of Blyvoor on June 1, 2012.
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As of June 30, 2012, the breakdown of our employees by main categories of activity for the periods below was as follows:
Year ended June 30,
Category of Activity                                                                                                                                          2012            2011
2010
Mining - Our Employees........................................................................................................................
30          2,719
2,368
Mining - Contractors .............................................................................................................................
1,430          1,715
1,749
Engineering.............................................................................................................................................
311          1,164
1,113
Metallurgy .............................................................................................................................................
318             687
672
Mineral Resources..................................................................................................................................
10               92
91
Administration........................................................................................................................................
70             134
126
Environmental ........................................................................................................................................
9               71
62
Human Resources...................................................................................................................................
15             245
183
Medical ..................................................................................................................................................
18               18
17
Safety .....................................................................................................................................................
11               30
28
Total........................................................................................................................................................
2,222           6,875
6,409
Labor Relations
As at June 30, 2012, we employed and contracted 2,222 people in South Africa. Approximately 71% of our South African
employees are members of trade unions or employee associations. South Africa's labor relations environment remains a platform for
social reform. The National Union of Mineworkers, 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/NUM coordinating forum meets regularly to discuss matters pertinent to both parties at a
DRDGOLD SA level, while operations level forums continue to deal with local matters.
On August 26, 2009, the Company advised unions of its intention to right-size the Blyvoor operations and that Blyvoor
would proceed with a 60-day facilitated consultation process in terms of Section 189A of the Labour Relations Act to determine
the future of affected employees. A combined management/unions task team was appointed to investigate possible cost-reduction
measures at the mine.
In September 2009, the NUM rejected the company’s offer of a 7% increase for lowest-category employees at Blyvoor
and 6.5% for the balance, a 6.0% across-the-board increase at Crown and a 4% across-the-board increase at ERPM. The NUM
also rejected the gold price/profit linked incentive scheme. The NUM was granted strike certificates in respect of the three
operations and strike action started with the night shift on Tuesday, September 15, 2009.
On October 7, 2009, the Company and NUM reached agreement on a wage settlement at Crown. The agreement was
implemented for a twenty-one month period, with effect from October 1, 2009. In terms of the settlement, employees of all unions
and associations received an 8% increase for year one and will receive a minimum increase of 8% in year two. The strike by the
NUM was called off and employees returned to work on October 8, 2009. On October 9, 2009, the Company and NUM reached
agreement on a wage settlement at Blyvoor. The agreement was implemented for a period of two years, with effect from July 1,
2009. In terms of the settlement, employees of all unions and associations received an 8% increase for year one and will receive a
minimum increase of 8% in year two. The strike by the NUM was called off and employees returned to work on October 11,
2009.
On November 9, 2009, the Company announced its intention to apply to the High Court of South Africa for a judicial
management order over the Blyvoor operation after the restructuring process in terms of Section 189A of the Labour Relations
Act failed to deliver the expected turnaround and the mine faced a four-week wage strike by the National Union of Mineworkers
which resulted in decreased production. The result of the process saw 278 employees retrenched.
On September 27, 2011, the Business Rescue Practitioner overseeing business rescue proceedings at Blyvoor gave notice
of Blyvoor’s intention to enter a 60-day consensus-seeking process in terms of Section 189A of the Labour Relations Act with
NUM, and United Association of South Africa, or UASA to consider reducing employee numbers by approximately 500
employees. The reason for the need to consider the reduction was that Blyvoor – under business rescue proceedings in terms of
Chapter 6 of the Companies Act since June 2011 – had been unable to meet production and financial targets, a situation
exacerbated by higher utility costs. In October 2011, the Section 189A process was terminated and Blyvoor signed a three-year
wage settlement agreement with the NUM and UASA. In terms of the settlement, employees in Categories 4 and 5 miners would
receive a 7% increase and employees in Categories 6 - 8, miners, artisans and Officials would receive a 6% increase in each year,
with the third year being the greater of these percentages or CPI as at 1 July 2013. In addition, employees would participate in a
gold price/profit linked profit share bonus scheme, in terms of which their overall increases could rise to a total of 15%.
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84
On November 7, 2011, Crown, ERPM and Ergo signed a two year wage settlement agreement with NUM and UASA. In
terms of the settlement, employees in categories 4-8 would receive a 8.5% increase and employees in categories 9-15 would
receive a 7.5% increase in both years, making the average increase equal to 8%.
On February 6, 2012, Blyvoor suspended all further mining at Blyvoor’s low-grade Number 4 and 6 Shafts. Blyvoor’s
management gave notice in terms of Section 189 (3) of the Labour Relations Act to NUM and UASA of a 60-day process to seek
consensus on the possible cutbacks. These measures followed a decline since April 2011 in recovery grades to below cut-off at the
two shafts. Both shafts failed to respond to turnaround efforts since the introduction of business rescue proceedings in the second
half of 2011. A total of 1,542 employees were retrenched.
The Company is placing a greater emphasis on its Corporate Social Responsibility by becoming increasingly involved in
appropriate projects that give effect to the ideals of the Mining Charter and good corporate governance. We recognize the need for
transformation and have put structures in place to address this at both management and board level.
By statute we are required to pay each employee who is dismissed for reasons based on the operational requirements of
our operations, a severance package of not less than one week’s remuneration for every completed year of service. In specific
agreements 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.
AIDS represents a very serious threat to us and the gold mining industry as a whole in terms of the potential reduced
productivity and increased medical costs. The exact extent of infection in our workforce is not known at present, although it is
roughly estimated by the industry that the prevalence of HIV, the virus that causes AIDS, in the South African industry is
currently approximately 30% to 35%. We have several AIDS awareness campaigns in place at our operations.
Safety statistics
Due to the importance of our labor force, we continuously strive to create a safe and healthy working environment. The
following are our 2012 overall safety statistics for our operations:
(Per million man hours)
Year ended June 30,
2012
2011
Lost time injury frequency rate (LTIFR)
1
...........................................................................................
15.09                     16.36
Reportable incidence
1
.........................................................................................................................
4.48                       5.14
Fatalities
1
.............................................................................................................................................
0.05                       0.04
Number of fatalities (average per month).............................................................................................
0.08                       0.08
1
Calculated as follows: actual number of instances divided by the total number of man hours worked multiplied by one million.
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85
6E. SHARE OWNERSHIP
As of September 30, 2012, options to purchase ordinary shares held by directors were as follows:
Directors
Options
at
June 30,
2011
Options
granted
during
the
period
Average
Purchase
price of
option
granted
(R)
Average
Exercise
price (R)
Options
exercised
during
the
year
Average
Exercise
Price (R)
Options
lapsed
during
the
year
Options at
September
30,
2012
Expiration
Dates
1
Non-Executive
G.C. Campbell...........
57,994                   -
19.35
-
-
-
-
57,994
3/20/2012-
6/17/2015
R.P. Hume .................
77,907                   -
16.92
-
-
-
-
77,907
10/1/2011-
6/17/2015
Executive
C.C. Barnes................    1,168,104       285,563
4.84
-
-
-
-      1,453,667
11/1/2014-
10/20/2018
D.J. Pretorius .............   1,283,486                  -
6.19
-
-
-
-
1,283,486
4/22/2013-
10/20/2018
Prescribed Officers
C.M. Symons.............    1,068,825      340,200
5.44
-      (100,957)
5.60
(25,092)       1,282,976
30/4/2012-
20/10/2018
T.J. Gwebu.................       823,522      267,000
5.01
-       (132,364)
5.80
-          958,158
26/4/2014-
20/10/2018
W.J Schoeman ...........
-       396,700
5.12
-
-
-
-          396,700
2/11/2016
Each option is representative of a right to acquire one ordinary share at a predetermined exercise price.
Closed periods apply to share trading by directors and other employees, whenever certain employees of the Company
become or could potentially become aware of material price sensitive information, such as information relating to an acquisition,
quarterly 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 embargo is group-wide.
Under the listings requirements of the JSE, we are not required to disclose, and we do not otherwise disclose or ascertain,
share ownership of individual officers in our share capital. However, to the best of our knowledge, we believe that our ordinary
shares held by executive officers, in aggregate, do not exceed one percent of the Company’s issued ordinary share capital. For details
of share ownership of directors and prescribed officers see Item 7A.: “Major Shareholders.”
1
Certain Directors hold options which expire at various times. For those directors, a range is provided indicating the earliest and latest expiration
dates.
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86
DRDGOLD (1996) Share Option Scheme, or the Scheme
We operate a securities option plan as an incentive tool for our Executive Directors and senior employees whose skills and
experience are recognized as being essential to the Company’s performance. Two of our Non-Executive Directors (Messrs.
G.C. Campbell and R.P. Hume) have share options under the Scheme; however, no new share options have been issued to Non-
Executive Directors since December 2004. In compliance with JSE Listing Requirements, DRDGOLD has amended the terms of the
share option scheme, with the amendment being approved at the annual general meeting on November 26, 2010. According to the
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, 2012, the number of issued and exercisable share options was approximately 5.1% of the issued ordinary share
capital, representing 19.6 million of the available 40.0 million share options. After taking into account share options which have
been exercised, only 15.0 million of the 40.0 million are available to be granted to participants of the share scheme as at
September 30, 2012. In addition, 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.
The price at which an option may be granted will be, in respect of each share which is the subject of the option, the volume
weighted 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 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:
Percentage vested in each period
Period after the original date of the option grant
25%                                                                                                      6 months
25%                                                                                                         1 year
25%                                                                                                         2 years
25%                                                                                                         3 years
Any options not exercised within five years (issued prior to 2009: ten years) from the original date of the option grant will
expire and may not thereafter be exercised. The previous bi-annual allocation of options was changed in April 2006 to an annual
allocation.
Options to purchase a total of 19,624,585 ordinary shares were outstanding on June 30, 2012, of which options to purchase
ordinary shares were currently exercisable. In fiscal 2012, a total of 62 employees participated in the Scheme, including Executive
Directors and other senior employees. The outstanding options are exercisable at purchase prices that range from R3.50 to R29.10 per
share and expire five years (issued prior to 2009: ten years) from the date of issue to the participants.
In August 2012, the board of directors decided to replace the Scheme with a cash-settled phantom share scheme. The new
phantom share scheme will be considered by the board of directors in October 2012.
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87
ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
7A. MAJOR SHAREHOLDERS
As of September 30, 2012, our issued capital consisted of:
· 385,383,767 ordinary shares of no par value; and
· 5,000,000 cumulative preference shares.
To our knowledge, we are not directly or indirectly owned or controlled by another corporation or any person or foreign
government and there are no arrangements, the operation of which may at a subsequent date result in a change in control of us.
Based on information available to us, as of September 30, 2012:
· there were 7,003 record holders of our ordinary shares in South Africa, who held approximately 127,760,045 or
  approximately 33.2% 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 no US record holders of our ordinary shares, excluding those shares which are held as part of our ADR program;
  and
· there were 712 record holders of our ADRs in the United States, who held approximately 181,135,790 (18,113,579 ADRs)
  or approximately 47.0% of our ordinary shares.
The following table sets forth information regarding the beneficial ownership of our ordinary shares as of September 30,
2012 by:
· each of our directors and prescribed officers; and
· any person whom the directors are aware of as at September 30, 2012 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.
Shares Beneficially
Owned
Holder
Number
Percent
D.J. Pretorius....................................................................................................................................................
*
*
C.C. Barnes ......................................................................................................................................................                            None
None
J. Turk...............................................................................................................................................................
*
*
G.C. Campbell..................................................................................................................................................
*
*
R.P. Hume ........................................................................................................................................................
*
*
E.A. Jeneker .....................................................................................................................................................                            None
None
W.J. Schoeman.................................................................................................................................................                             None
None
C.M. Symons....................................................................................................................................................                            None
None
T.J. Gwebu .......................................................................................................................................................                            None
None
Soges Fiducem SA (Brussels) .........................................................................................................................                     19,539,923
5.1%
Investec.............................................................................................................................................................                    34,824,347
9.0%
Bank of New York ADRs................................................................................................................................
101 Barclay Street
New York, NY 10011
174,789,263
45.4%
* Indicates share ownership of less than 1% of our outstanding ordinary shares.
Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment
power with respect to securities. Ordinary shares issuable pursuant to options, to the extent the options are currently exercisable or
convertible within 60 days of September 30, 2012, are treated as outstanding for computing the percentage of any other person. As of
September 30, 2012, we are not aware of anyone owning 5% or more of our ordinary shares other than the Bank of New York which
holds 45.4% of our issued ordinary shares through our ADR program, Soges Fiducem SA which holds 5.1% and Investec which
holds 9.0%. 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. Unless indicated otherwise, the business address of the beneficial
owner is: DRDGOLD Limited, 50 Constantia Boulevard, Constantia Kloof Ext. 28, Roodepoort, 1709, South Africa.
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88
Cumulative Preference Shares
Randgold and Exploration Company Limited, or Randgold, owns 5,000,000 (100%) of our cumulative preference shares.
Randgold's address is 23 Southerland Avenue, Craighall Park, Johannesburg, South Africa.
The holders of cumulative preference shares do not have voting rights unless any preference dividend is in arrears for more
than six months. The terms of issue of the cumulative preference shares are that they carry the right, in priority to the Company's
ordinary shares, to receive a dividend equal to 3% of the gross future revenue generated by the exploitation or the disposal of the
Argonaut mineral rights acquired from Randgold in September 1997. They 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. 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. No shareholder has voting rights which differ from the voting rights of any other shareholder.
The Department of Mineral Resources (DMR) granted DRDGOLD a prospecting right over an area which was going to be too
small to mine. When an application for a greater area was lodged, the DMR stated that the additional area is in an urban location
and an application for a prospecting right cannot be granted. We are in the process, together with this shareholder, of cancelling
these preference shares.
7B. RELATED PARTY TRANSACTIONS
Rand Refinery Proprietary Limited (RRL) agreement
On October 12, 2001, we entered into an agreement with RRL for the refining and sale of all of our gold produced in South
Africa. Under the agreement, RRL performs the final refining of our gold and casts it into troy ounce bars. RRL then usually sells the
gold on the same day as delivery, for the London afternoon close price on the day the gold is sold. In exchange for this service, we
pay RRL a variable refining fee plus fixed marketing, loan and administration fees. We received no dividend during fiscal 2012
however, we received R6.0 million in fiscal 2011. Mr. T.J. Gwebu, Executive Officer: Legal, Compliance and Company Secretary of
DRDGOLD is a director of RRL and a member of their Remuneration Committee and chairman of their Social and Ethics
Committee. Mr. M. Burrell, Financial Director of Ergo, is an alternate director of RRL and a member of their Audit Committee. The
Company currently owns 4% (Fiscal 2011: 4%) of RRL (which is jointly owned by South African mining companies), however the
Company believes it has the right to a further 6.22% in RRL. The Company brought a summons against RRL and Simmers and Jack
Mines Limited and is waiting for a plea document from RRL and Simmers and Jack Mines Limited, where after the Company will
apply for a court date.
Guardrisk Insurance Cell Captive (Guardrisk)
Insurance premiums were paid to Guardrisk amounting to R41.8 million and R21.0 million by ERPM and Ergo, respectively
(2011: R2.9 million by Crown). As at June 30, 2012 financial guarantees amounting to R66.3 million have been issued to the DMR
by Guardrisk.
Management service agreements
We provide management services for EMO, Blyvoor (until June 1, 2012 when Blyvoor was sold), Crown and ERPM under
management service agreements entered into with each of them. These services include financial management, treasury services, gold
administration, technical and engineering services, mineral resource services and other management related services. We own a 74%
interest in EMO and Blyvoor (until June 1, 2012 when Blyvoor was sold). Crown and ERPM are wholly-owned subsidiaries of
EMO. These arrangements allow us to monitor and provide input on the management of these companies in which we have an
investment.
The management services at Blyvoor (until September 30, 2010, which is the date the group restructured and the group's
interest in Blyvoor was transferred from EMO to DRDGOLD), Crown and ERPM are provided by EMO. EMO’s management fee
for services performed in fiscal 2012 at Blyvoor was Rnil (2011: R4.1 million), Crown R16.6 million (2011: R16.5 million) and
ERPM R16.6 million (2011: R16.5 million). Management fees recovered from EMO were R21.6 million (2011: R23.3 million) and
from Blyvoor (until June 1, 2012 when Blyvoor was sold) R15.2 million (2011: R12.3 million from October 1, 2010).
EMO received interest from Blyvoor (up until September 30, 2010, which is the date the group restructured and the groups
interest in Blyvoor was transferred from EMO to DRDGOLD), Crown and ERPM. EMO’s interest received in fiscal 2012 from
Blyvoor was Rnil (2011: R1.2 million), Crown R1.9 million (2011: R0.8 million) and ERPM R29.5 million (2011: R30.6 million).
Interest recovered from EMO was R26.6 million (2011: R26.8 million) and from Blyvoor (until June 1, 2012 when Blyvoor was
sold) R2.6 million (2011: R3.2 million from October 1, 2010).
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89
Consultancy agreement
On June 23, 2008, EMO approved a consultancy agreement with Khumo Gold SPV Proprietary Limited, or Khumo Gold,
which owns 20% of EMO and Blyvoor, to provide guidance and participate in the Company’s transformation initiatives. The
agreement provides for a monthly retainer of R200,000
.
During the year ended June 30, 2012, no consultancy fees were paid to Mr. P Judge who is a shareholder of Khumo Gold
(2011: R0.5 million).
Treasury shares
During the year ended June 30, 2012, EMO acquired 9,852,800 (2011: nil) ordinary shares (held as treasury shares for
consolidation purposes) in DRDGOLD. 3,584,627 (2011: nil) of these treasury shares were used to settle share options exercised
by key management personnel. As at June 30, 2012, EMO held 6,268,173 (2011: nil) treasury shares.
Subordination agreements and letters of support to subsidiaries
In October 2012, DRDGOLD Limited entered into a subordination agreements with EMO and Crown, subordinating loans
made to EMO and Crown amounting to R846.2 million and R71.6 million, respectively, for the benefit of EMO’s and Crown’s third
party creditors. Consecutively, DRDGOLD Limited issued letters of support to EMO and Crown committing to support EMO and
Crown financially for 367 days from July 1, 2012, or until all other liabilities are paid, or the total assets of EMO and Crown, fairly
valued, exceeds their total liabilities, fairly valued, and that they will not call for the repayment of their loans within that period.
7C. INTERESTS OF EXPERTS AND COUNSEL
Not applicable.
ITEM 8. FINANCIAL INFORMATION
8A. CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION
1.   Please refer to Item 18.: "Financial Statements."
2.   Please refer to Item 18.: "Financial Statements."
3.   Please refer to Item 18.: "Financial Statements."
4.   The last year of audited financial statements is not older than 15 months.
5.   Not applicable.
6.   Not applicable.
7.   See under Item 4D.: "Property, plant and equipment—Legal Proceedings."
8.   Please see Item 10B.: "Memorandum and Articles of Association."
8B. SIGNIFICANT CHANGES
For a discussion of significant changes that have occurred since June 30, 2012, the date of the last audited financial
statements included in this Annual report, please see Note 31 “Subsequent Events” under Item 18.: "Financial Statements," which
describes post balance sheet (statement of financial position) events.
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90
ITEM 9. THE OFFER AND LISTING
9A.
OFFER AND LISTING DETAILS
The following tables set forth, for the periods indicated, the high and low market sales prices and average daily trading
volumes of our ordinary shares on the JSE and ADSs on the New York Stock Exchange and Nasdaq Capital Market. On December
29, 2011, we transferred our listing from the Nasdaq Capital Market to the New York Stock Exchange.
Price Per
Ordinary Share
R
Price Per
ADS
1
$
Average Daily
Trading
Volume
Year Ended
High
Low
High
Low
Ordinary
Share
ADSs
1
June 30, 2008.........................................................................................
10.25
3.50
13.52
4.73
1,200,052
260,761
June 30, 2009.........................................................................................
9.55
2.86
10.59
2.85
932,905
186.575
June 30, 2010.........................................................................................
6.98
3.20
9.00
4.07
691.256
209,087
June 30, 2011.........................................................................................
4.00
2.80
6.23
3.92
558,675
113,932
June 30, 2012.........................................................................................
6.28
2.97
8.16
4.21
1,090,043
97,107
Price Per
Ordinary Share
R
Price Per
ADS
1
$
Average Daily
Trading
Volume
Quarter
High
Low
High
Low
Ordinary
Share
ADSs
1
Q1 July – September 2010 ....................................................................
3.79
2.80
5.35
3.92
662,904
84,599
Q2 October – December 2010...............................................................
3.82
3.04
5.65
4.60
505,415
102,819
Q3 January – March 2011 .....................................................................
3.55
2.88
5.30
4.40
374,581
104,749
Q4 April – June 2011.............................................................................
4.00
2.98
6.23
4.26
699,962
164,055
Q1 July – September 2011 ....................................................................
4.89
2.97
5.79
4.21
912,881
135,675
Q2 October – December 2011...............................................................
5.95
3.66
7.27
4.93
1,211,099
111,431
Q3 January – March 2012 .....................................................................
6.28
4.46
8.16
5.28
1,618,230
93,431
Q4 April – June 2012.............................................................................
5.84
4.70
7.43
5.60
610,278
47,116
Q1 July – September 2012 ....................................................................
5.49
4.49
6.71
5.35
380,536
37,224
Price Per
Ordinary Share
R
Price Per
ADS
$
Average Daily
Trading Volume
Month Ended
High
Low
High
Low
Ordinary
Share
ADSs
April 30, 2012 ........................................................................................
5.70
5.00
7.43
6.24
638,037
42,905
May 31, 2012 .........................................................................................
5.59
4.70
7.05
5.60
621,690
53,801
June 30, 2012 .........................................................................................
5.84
5.30
6.96
6.17
574,531
44,124
July 31, 2012..........................................................................................
5.47
4.60
6.71
5.40
248,353
26,422
August 31, 2012.....................................................................................
5.47
4.49
6.52
5.35
441,288
33,807
September 30, 2012 ...............................................................................
5.49
4.60
6.70
5.60
463,247
53,119
The cumulative preference shares are not traded on any exchange.
There have been no significant trading suspensions with respect to our ordinary shares on the JSE during the past three years
ended June 30, 2012, nor have there been any significant trading suspensions with respect to our ADRs on the Nasdaq Capital Market
from June 30, 2009 until December 29, 2011 and the New York Stock Exchange since our listing on that market.
1
Note that with effect from July 23, 2007, we changed our ADS ratio to reflect one ADS for ten of our ordinary shares.
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9B. PLAN OF DISTRIBUTION
Not applicable.
9C. MARKETS
Nature of Trading Markets
The principal trading market for our equity securities is the JSE (symbol: DRD) and our ADSs that trade on the New York
Stock Exchange (symbol: DRD). Our ordinary shares also trade on the Marche Libre on the Paris Bourse (symbol: DUR) and
Brussels Bourse (symbol: DUR) in the form of International Depository Receipts. The ordinary shares also trade on the over the
counter markets in Berlin, Stuttgart and the Regulated Unofficial Market on the Frankfurt Stock Exchange. The ADRs are issued by
The Bank of New York, as depositary. Each ADR represents one ADS. 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.
9D. SELLING SHAREHOLDERS
Not applicable.
9E. DILUTION
Not applicable.
9F. EXPENSES OF THE ISSUE
Not applicable.
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ITEM 10. ADDITIONAL INFORMATION
10A. SHARE CAPITAL
Not applicable.
10B. MEMORANDUM AND ARTICLES OF ASSOCIATION
1
Description of Our Memorandum and Articles of Association and Ordinary Shares
As of June 30, 2012, we had authorized for issuance 600,000,000 (as of September 30, 2012: 600,000,000) ordinary shares,
no par value, and 5,000,000 (as of September 30, 2012: 5,000,000) cumulative preference shares, R0.10 par value. On that date, we
had issued 385,383,767 (as of September 30, 2012: 385,383,767) ordinary shares and 5,000,000 (as of September 30, 2012:
5,000,000) cumulative preference shares.
Set out below are brief summaries of certain provisions of our Memorandum of Incorporation
1
, or our MOI, the South
African Companies Act, 2008 (as amended), or the Companies Act, and the JSE Listings Requirements, all as in effect on September
30, 2012. The summary does not purport to be complete and is subject to and qualified in its entirety by reference to the full text of
the MOI, the Companies Act, and the JSE Listings Requirements.
We are registered under the Companies Act of South Africa under registration number 1895/000926/06. As set forth in our
Memorandum of Incorporation, our purpose is to explore and exploit mineral rights and establish and own mining enterprises.
Borrowing Powers
Our directors may, at their discretion, raise or borrow or secure the payment of any sum or sums of money for our use as
they see fit. For so long as we are a listed company, the directors shall so restrict our borrowings and exercise all voting and other
rights or powers of control exercisable by us in relation to our subsidiary companies so that the aggregate principal amount
outstanding in respect of us and any of our subsidiary companies, as the case may be, exclusive of inter-company borrowings, shall
not, except with the consent of our shareholders at a general meeting, exceed R30.0 million or the aggregate from time to time of our
issued and paid up capital, together with the aggregate of the amounts standing to the credit of all distributable and non-distributable
reserves, any of our share premium accounts and our subsidiaries' share premium accounts certified by our auditors and which form
part of our and our subsidiaries' financial statements, whichever is higher, refer to note 21 of our financial statements documented in
Item 18.
Share Ownership Requirements
Our directors are not required to hold any shares to qualify or be appointed as a director.
Voting by Directors
A director may authorize any other director to vote for him at any meeting at which neither he nor his alternate director
appointed by him is present. Any director so authorized shall, in addition to his own vote, have a vote for each director by whom he is
authorized.
The quorum necessary for the transaction of the business of the directors may be fixed by the directors and unless so fixed
shall be not less than two.
Directors are required to notify our board of directors of interests in companies and contracts. If a director's interest is under
discussion, depending on the nature of the interest, he shall not be allowed to vote and shall not be counted, for the purpose of any
resolution regarding his interest, in the quorum present at the meeting.
The King Report on Corporate Governance for South Africa (King III Report) which came into effect on March 1, 2010,
sets out guidelines to promote the highest standards of corporate governance among South African companies. The board of directors
believes that our business should be conducted according to the highest legal and ethical standards. In accordance with the board
practice, all remuneration of directors is approved by the Remuneration Committee.
DRDGOLD commits itself to observing the provision of the King III Report and enforcing these to the extent possible
within the context of the report’s ‘apply or explain’ principle.
1
The Companies Act, 2008 (Act 71 of 2008) came into operation on May 1, 2011. However, the current Memorandum and Articles of
Association are now called the Memorandum of Incorporation and will remain in place until amended by the company. Companies have been
given a period of two years within which to amend their Memorandum of Incorporation. DRDGOLD has a project in place to determine the
impact of the revised regulation and implement the necessary amendments, if any.
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Under South African common law, directors are required to comply with certain fiduciary duties to the company and to
exercise proper care and skill in discharging their responsibilities.
Age Restrictions
There is no age limit for directors.
Election of Directors
Directors may be appointed at a general meeting from time to time. The directors may appoint any eligible person as a
director but he shall only hold office until the next annual general meeting when the relevant director shall be eligible for election.
One third of our directors, on a rotating basis, are subject to re-election at each annual general shareholder’s meeting. Retiring
directors usually make themselves available for re-election.
General Meetings
On the request of 100 shareholders or shareholders holding not less than one-twentieth of our share capital which carries the
right of voting at general meetings, we shall within 14 days of the lodging of a request by such shareholders issue a notice to
shareholders convening a general meeting for a date not less than 21 days and not more than 35 days from the date of the notice.
Directors may convene general meetings at any time.
Our annual general meeting and a meeting of our shareholders for the purpose of passing a special resolution may be called
by giving 21 days advance written notice of that meeting. For any other general meeting of our shareholders, 14 days advance written
notice is required.
Our MOI provides that if at a meeting convened upon request by our shareholders a quorum is not present within one half
hour after the time selected for the meeting, such meeting shall be dissolved. The necessary quorum is three members present in
person or represented by proxy.
Voting Rights
The holders of our ordinary shares are generally entitled to vote at general meetings and on a show of hands have one vote
per person and on a poll have one for every share held. The holders of our cumulative preference shares are not entitled to vote at a
general meeting unless any preference dividend is in arrears for more than six months at the date on which the notice convening the
general meeting is posted to the shareholders. Additionally, holders of cumulative preference shares may vote on resolutions which
adversely affect their interests and on resolutions regarding the disposal of all or substantially all of our assets or mineral rights. When
entitled to vote, holders of our cumulative preference shares are entitled to one vote per person on a show of hands and that portion of
the total votes which the aggregate amount of the nominal value of the shares held by the relevant shareholder bears to the aggregate
amount of the nominal value of all shares issued by us.
Dividends
We may, in a general meeting, or our directors may, from time to time, declare a dividend to be paid to the shareholders in
proportion to the number of shares they each hold. No dividend shall be declared except out of our profits. Dividends may be
declared either free or subject to the deduction of income tax or duty in respect of which we may be charged. Holders of ordinary
shares are entitled to receive dividends as and when declared by the directors.
Ownership Limitations
There are no limitations imposed by our MOI or South African law on the rights of shareholders to hold or vote on our
ordinary shares or securities convertible into our ordinary shares.
Winding-up
If we are wound-up, then the assets remaining after payment of all of our debts and liabilities, including the costs of
liquidation, shall be applied to repay to the shareholders the amount paid up on our issued capital and thereafter the balance shall be
distributed to the shareholders in proportion to their respective shareholdings. On a winding up, our cumulative preference shares
rank, in regard to all arrears of preference dividends, prior to the holders of ordinary shares. As of September 30, 2012, 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.
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Reduction of Capital
We may, by special resolution, reduce the share capital authorized by our MOI, or reduce our issued share capital including,
without limitation, any stated capital, capital redemption reserve fund and share premium account by making distributions and buying
back our shares.
Amendment of the MOI
Our MOI may be altered by the passing of a special resolution or in compliance with a court order. The Board may also
amend the MOI by increasing or decreasing the number of authorized shares, classifying or reclassifying shares, or determining the
terms of shares in a class. A special resolution is passed when the shareholders holding at least 25% of the total votes of all the
members entitled to vote are present or represented by proxy at a meeting and, if the resolution was passed on a show of hands, at
least 75% of those shareholders voted in favor of the resolution and, if a poll was demanded, at least 75% of the total votes to which
those shareholders are entitled were cast in favor of the resolution.
Consent of the Holders of Cumulative Preference Shares
The rights and conditions attaching to the cumulative preference shares may not be cancelled, varied or added, nor may we
issue shares ranking, regarding rights to dividends or on winding up, in priority to or equal with our cumulative preference shares, or
dispose of all or part of the Argonaut mineral rights without the consent in writing of the registered holders of our cumulative
preference shares or the prior sanction of a resolution passed at a separate class meeting of the holders of our cumulative preference
shares.
Distributions
Under an amendment to the MOI on October 21, 2002, we are authorized to make payments in cash or in specie to our
shareholders in accordance with the provisions of the Companies Act and other consents required by law from time to time. We may,
for example, in a general meeting, upon recommendation of our directors, resolve that any surplus funds representing capital profits
arising from the sale of any capital assets and not required for the payment of any fixed preferential dividend, be distributed among
our ordinary shareholders. However, no such profit shall be distributed unless we have sufficient other assets to satisfy our liabilities
and to cover our paid up share capital.
Directors’ power to vote compensation to themselves
The remuneration of non-executive directors may not exceed in aggregate in any financial year the amount fixed by the
Company in general meeting. The Companies Act requires that remuneration to non-executive directors may be paid only in
accordance with a special resolution approved by shareholders within the previous two years.
Time limit for dividend entitlement
All unclaimed dividends may be invested or otherwise made use of by the directors for the benefit of the company until
claimed. Directors may declare that a dividend not claimed for 12 (twelve) years should be forfeited to the company.
Staggered director elections & cumulative voting
At each annual general meeting of the Company one-third of the directors shall retire and be eligible for re-election. No
provision is made for cumulative voting.
Sinking fund provisions and liability to further capital calls
There are no sinking fund provisions in the MOI attaching to any class of the company shares, and the company does not
subject shareholders to liability to further capital calls.
Provision that would delay/prevent change of control
The Companies Act provides that companies which propose to merge or amalgamate must enter into a written agreement
setting out the terms thereof. They must prove that upon implementation of the amalgamation or merger each will satisfy the
solvency and liquidity test. Companies involved in disposals, amalgamations or mergers, or schemes of arrangement must obtain a
compliance certificate from the Takeover Regulation Panel, pass special resolutions and in some instances they must obtain an
independent expert report.
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10C. MATERIAL CONTRACTS
ZAR2,000,000,000 Domestic Medium Term and High Yield Note Programme (“DMTN Programme”) agreement entered into
between DRDGOLD Limited (“Issuer”), Crown Gold Recoveries Proprietary Limited (“Crown”), East Rand Proprietary Mines
Limited (“ERPM”), Ergo Mining Operations Proprietary Limited (“EMO”), Ergo Mining Proprietary Limited (“Ergo”) and
ABSA Bank Limited (“ABSA”) dated June 30, 2012.
Under this agreement the Issuer may from time to time issue loan notes to certain investors. The maximum aggregate
nominal amount of all such notes from time to time outstanding under the DMTN Programme may not exceed R2,000,000,000
(two billion South African Rand). Crown, ERPM, EMO and Ergo (“Guarantors”) are joint and several guarantors in favour of the
Issuer. The Guarantors guarantee to the holders of the notes the due and punctual performance by the Issuer of its payment
obligations under the DMTN Programme. The notes may be listed on the JSE Limited. ABSA Capital, a division of ABSA Bank
Limited, has been appointed dealer and arranger of the notes.
Sale of Shares and Claims Agreement entered into by Village Main Reef Limited (“Village”), DRDGOLD Limited
(“DRDGOLD”) (“Seller”), Business Venture Investments No 1557 Proprietary Limited (“Purchaser”) and Blyvooruitzicht
Gold Mining Company Limited (“Blyvoor”) dated February 11, 2012.
Under this agreement the Seller agreed to sell its entire shareholding in Blyvoor and its working capital and shareholder
loan claims against Blyvoor to the Purchaser. The purchase consideration is discharged by Village through the issue of 85,714,286
new ordinary shares in Village. Refer to Item 4A. ‘History and Development of the Company: Disposal of Blyvoor’ for a further
discussion of this matter.
Sale of Interest Agreement between DRDGOLD Limited (“DRDGOLD”) and Ergo Mining Proprietary Limited (“Ergo”) dated
June 29, 2012.
Under this agreement DRDGOLD sells and Ergo purchases DRDGOLD’s 35% participation interest in the assets and
liabilities of the unincorporated joint venture, called the Elsburg JV, between DRDGOLD and East Rand Proprietary Mines
Limited. The purchase price payable is R200,000,000 (two hundred million South African rand). The purchase price was
advanced by DRDGOLD to Ergo on loan account.
10D. EXCHANGE CONTROLS
The following is a summary of the material South African exchange control measures, which has been derived from
publicly available documents. The following summary is not a comprehensive description of all the exchange control regulations.
The discussion in this section is based on the current law and positions of the South African Government. Changes in the law may
alter the exchange control provisions that apply, possibly on a retroactive basis.
Introduction
Dealings in foreign currency, the export of capital and revenue, payments by residents to non-residents and various other
exchange control matters in South Africa are regulated by the South African exchange control regulations, or the Regulations. The
Regulations form part of the general monetary policy of South Africa. The Regulations are issued under Section 9 of the Currency
and Exchanges Act, 1933 (as amended). In terms of the Regulations, the control over South African capital and revenue reserves, as
well as the accruals and spending thereof, is vested in the Treasury (Ministry of Finance), or the Treasury.
The Treasury has delegated the administration of exchange controls to the Exchange Control Department of the South
African Reserve Bank, or SARB, which is responsible for the day to day administration and functioning of exchange controls. SARB
has a wide discretion. Certain banks authorized by the Treasury to co-administer certain of the exchange controls, are authorized by
the Treasury to deal in foreign exchange. Such dealings in foreign exchange by authorized dealers are undertaken in accordance with
the provisions and requirements of the exchange control rulings, or Rulings, and contain certain administrative measures, as well as
conditions and limits applicable to transactions in foreign exchange, which may be undertaken by authorized dealers. Non-residents
have been granted general approval, in terms of the Rulings, to deal in South African assets, to invest and disinvest in South Africa.
The Regulations provide for restrictions on exporting capital from the Common Monetary Area consisting of South Africa,
Namibia, and the Kingdoms of Lesotho and Swaziland. Transactions between residents of the Common Monetary Area are not
subject to these exchange control regulations.
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There are many inherent disadvantages to exchange controls, including distortion of the price mechanism, problems
encountered in the application of monetary policy, detrimental effects on inward foreign investment and administrative costs
associated therewith. The South African Finance Minister has indicated that all remaining exchange controls are likely to be
dismantled as soon as circumstances permit. Since 1998, there has been a gradual relaxation of exchange controls. The gradual
approach to the abolition of exchange controls adopted by the Government of South Africa is designed to allow the economy to
adjust more smoothly to the removal of controls that have been in place for a considerable period of time. The stated objective of the
authorities is equality of treatment between residents and non-residents with respect to inflows and outflows of capital. The focus of
regulation, subsequent to the abolition of exchange controls, is expected to favor the positive aspects of prudential financial
supervision.
The present exchange control system in South Africa is used principally to control capital movements. South African
companies are not permitted to maintain foreign bank accounts without SARB approval and, without the approval of SARB, are
generally not permitted to export capital from South Africa or hold foreign currency. In addition, South African companies are
required to obtain the approval of 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.
Foreign investment and outward loans by South African companies are also restricted. In addition, without the approval of
SARB, South African companies are generally required to repatriate to South Africa profits of foreign operations and are limited in
their ability to utilize profits of one foreign business to finance operations of a different foreign business. South African companies
establishing subsidiaries, branches, offices or joint ventures abroad are generally required to submit financial statements on these
operations as well as progress reports to SARB on an annual basis. As a result, a South African company's ability to raise and deploy
capital outside the Common Monetary Area is restricted.
Although exchange controls have been gradually relaxed since 1998, unlimited outward transfers of capital are not permitted
at this stage. Some of the more salient changes to the South African exchange control provisions over the past few years have been as
follows:
· corporations wishing to invest in countries outside the Common Monetary Area, in addition to what is set out below, apply
  for permission to enter into corporate asset/share swap and share placement transactions to acquire foreign investments. The
  latter mechanism entails the placement of the locally quoted corporation's shares with long-term overseas holders who, in
  payment for the shares, provide the foreign currency abroad which the corporation then uses to acquire the target
  investment;
· corporations wishing to establish new overseas ventures are permitted to transfer offshore up to R500 million to finance
  approved investments abroad and up to R500 million to finance approved new investments in African countries on an
  annual bases. Approval from 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
  by authorized dealers, in terms of the Rulings.
Authorized dealers in foreign exchange may, against the production of suitable documentary evidence, provide forward
cover to South African residents in respect of fixed and ascertained foreign exchange commitments covering the movement of goods.
Persons who emigrate from South Africa are entitled to take limited amounts of money out of South Africa as a settling-in
allowance. The balance of the emigrant's funds will be blocked and held under the control of an authorized dealer. These blocked
funds may only be invested in:
· blocked current, savings, interest bearing deposit accounts in the books of an authorized dealer in the banking sector;
· securities quoted on the JSE and financial instruments listed on the Bond Exchange of South Africa which are deposited
  with an authorized dealer and not released except temporarily for switching purposes, without the approval of 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.
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Aside from the investments referred to above, blocked rands may only be utilized for very limited purposes. Dividends declared
out of capital gains or out of income earned prior to emigration remain subject to the blocking procedure. It is not possible to predict
when existing exchange controls will be abolished or whether they will be continued or modified by the South African Government
in the future.
Sale of Shares
Under present exchange control regulations in South Africa, our ordinary shares and ADSs are freely transferable outside
the Common Monetary Area between non-residents of the Common Monetary Area. In addition, the proceeds from the sale of
ordinary shares on the JSE on behalf of shareholders who are not residents of the Common Monetary Area are freely remittable to
such shareholders. Share certificates held by non-residents will be endorsed with the words “non-resident,” unless dematerialized.
Dividends
Dividends declared in respect of shares held by a non-resident in a company whose shares are listed on the JSE are freely
remittable.
Any cash dividends paid by us are paid in rands. Holders of ADSs on the relevant record date will be entitled to receive any
dividends payable in respect of the shares underlying the ADSs, subject to the terms of the deposit agreement entered on August 12,
1996, and as amended and restated, between the Company and The Bank of New York, as the depository. Subject to exceptions
provided in the deposit agreement, cash dividends paid in rand will be converted by the depositary to dollars and paid by the
depositary to holders of 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.
Voting rights
There are no limitations imposed by South African law or by our MOI on the right of non-South African shareholders to
hold or vote our ordinary shares.
10E. TAXATION
Material South African Income Tax Consequences
The following is a summary of material income tax considerations under South African income tax law. No representation
with respect to the consequences to any particular purchaser of our securities is made hereby. Prospective purchasers are urged to
consult their tax advisers with respect to their particular circumstances and the effect of South African or other tax laws to which they
may be subject.
South Africa imposes tax on worldwide income of South African residents. Generally, South African non-residents do not
pay tax in South Africa except in the following circumstances:
Income Tax and withholding tax on dividends
Non-residents will pay income tax on any amounts received by or accrued to them from a source within (or deemed to be
within) South Africa. Interest earned by a non-resident on a debt instrument issued by a South African company will be regarded as
being derived from a South African source but will be regarded as exempt from taxation in terms of Section 10(1)(i) of the South
African Income Tax Act, 1962 (as amended), or the Income Tax Act. This exemption applies to so much of any interest and
dividends (which are not otherwise exempt) received from a South African source not exceeding (a) R32,000 if the taxpayer is 65
years of age or older or (b) R22,300 if the taxpayer is younger than 65 years of age at the end of the relevant tax year.
No withholding tax is deductible in respect of interest payments made to non-resident investors.
In 1993, all existing gold mining companies had the option to elect to be exempt from secondary tax on companies, or
STC. If the election was made, a higher tax rate would apply for both mining and non-mining income. With the introduction of
dividends tax at a rate of 15% which replaced STC with effect from April 1, 2012, there is no election on STC applicable
anymore. These amendments are set out in Part VIII in Chapter II of the Income Tax Act. Section 64F of the amendments, sets out
beneficial owners who are exempt from the withholding tax, which includes resident companies receiving a dividend after the
effective date, being April 1, 2012. As a result of these amendments, 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.
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In fiscal 2012, the tax rates for taxable mining and non-mining income, for companies were 34% and 28%, respectively.
For the fiscal years prior to fiscal 2012 for companies that elected the STC exemption for fiscal 2011 were 43% (2010: 43%) and
35% (2010: 35%), respectively. During those same years prior to fiscal 2012 the tax rates for companies that did not elect the STC
exemption for fiscal 2011 were 34% (2010: 34%) and 28% (2010: 28%), respectively. The Company, is subject to 34% tax on
mining income and 28% for non-mining income. For fiscal years prior to the introduction of the new dividends tax (prior to fiscal
2011), Crown was our only subsidiary that elected not to be exempt from STC.
No income tax over and above the dividends tax is payable on dividends paid to residents or non-residents, in terms of
Section 10(1)(k) of the Income Tax Act, except in respect of foreign dividends received by or accrued to residents of South Africa.
Accordingly, only the 15% dividends tax is withheld on dividends received by or accrued to non-resident shareholders of companies
listed in South Africa and non-residents will receive the same dividend as South African resident shareholders (prior to fiscal 2012
there was no dividend tax). Prior to fiscal 2012, the Company paid STC at a rate of 10% (before October 1, 2007 12.5%) of the
excess of dividends declared over dividends received in a dividend cycle but the full amount of the dividend declared was paid to
shareholders, prior to payment of the dividend.
The above provisions shall not apply if the beneficial owner of the dividends is resident in the US, carries on business in
South Africa through a permanent establishment situated in South Africa, or performs in South Africa independent personal services
from a fixed base situated in South Africa, and the dividends are attributable to such permanent establishment or fixed base.
Capital Gains Tax
Non-residents are generally not subject to Capital Gains Tax, or CGT, in South Africa. They will only be subject to CGT on
gains arising from the disposal of capital assets if the assets disposed of consist of:
· immovable property owned by the non-residents situated in South Africa, or any interest or right in or to immovable
  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.
If the non-residents are not subject to CGT because the assets disposed of do not fall within the categories described above,
it follows that they will also not be able to claim the capital losses arising from the disposal of the assets.
Material United States Federal Income Tax Consequences
The following is a summary of material US federal income tax consequences to US holders (as defined below) of the
purchase, ownership and disposition of ordinary shares or ADSs. It deals only with US holders who hold ordinary shares or ADSs as
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.
This discussion does not address all aspects of US federal income taxation that may be applicable to holders in light of their
particular circumstances and does not address special classes of US holders subject to special treatment (such as dealers in securities
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 or the application of the federal estate or gift tax.
A “US holder” is a beneficial owner of ordinary shares or ADSs that is, for US federal income tax purposes:
· a citizen or resident of the US;
· a corporation or other entity subject to tax as a corporation that is 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.
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If a partnership holds any ordinary shares or ADSs, the tax treatment of a partner will generally depend on the status of the
partner and on the activities of the partnership. Partners of partnerships holding any ordinary shares or ADSs are urged to consult
their tax advisors.
Because individual circumstances may differ, US holders of ordinary shares or ADSs are urged to consult their tax
advisors concerning the US federal income tax consequences applicable to their particular situations as well as any
consequences to them arising under the tax laws of any foreign, state or local taxing jurisdiction.
Ownership of Ordinary Shares or ADSs
For purposes of the Code, a US holder of ADSs will be treated for US federal income tax purposes as the owner of the
ordinary shares represented by those ADSs. Exchanges of ordinary shares for ADSs and ADSs for ordinary shares generally will not
be subject to US federal income tax.
Subject to the discussion below under the heading “Passive Foreign Investment Company”, distributions with respect to the
ordinary shares or ADSs, other than distributions in liquidation and distributions in redemption of stock that are treated as exchanges,
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.
“Qualified dividend income” received by individual US holders (as well as certain trusts and estates) for taxable years
beginning on or before December 31, 2012 generally will be taxed at a maximum US federal income tax rate of 15% provided certain
conditions are met, including a minimum holding period. This reduced rate generally would apply to dividends paid by us if, at the
time such dividends are paid, either (i) we are eligible for benefits under a qualifying income tax treaty with the 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.
For purposes of this discussion, the “spot rate” generally means a rate that reflects a fair market rate of exchange available to
the public for currency under a “spot contract” in a free market and involving representative amounts. A “spot contract” is a contract
to buy or sell a currency on or before two business days following the date of the execution of the contract. If such a spot rate cannot
be demonstrated, the US Internal Revenue Service has the authority to determine the spot rate.
Dividend income derived with respect to the ordinary shares or ADSs will not be eligible for the dividends received
deduction generally allowed to a US corporation under Section 243 of the Code. Dividend income will be treated as foreign source
income for foreign tax credit and other purposes. In computing the separate foreign tax credit limitations, dividend income should
generally constitute “passive category income,” or in the case of certain US holders, “general category income.”
Disposition of Ordinary Shares or ADSs
Subject to the discussion below under the heading “Passive Foreign Investment Company”, upon a sale, exchange, or other
taxable disposition of ordinary shares or ADSs, a US holder will recognize gain or loss in an amount equal to the difference between
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 below, 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.
In the case of a cash basis US holder who receives rands in connection with the taxable disposition of ordinary shares or
ADSs, the amount realized will be based on the spot rate as determined on the settlement date of such exchange. A US holder who
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.
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An accrual basis US holder may elect the same treatment required of cash basis taxpayers with respect to a taxable
disposition of ordinary shares or ADSs, provided that the election is applied consistently from year to year. Such election may not be
changed without the consent of the Internal Revenue Service. In the event that an accrual basis holder does not elect to be treated as a
cash basis taxpayer, such 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.
Passive Foreign Investment Company
A special and adverse set of US federal income tax rules apply to a US holder that holds stock in a passive foreign
investment company, or PFIC. We would be a PFIC for US federal income tax purposes if for any taxable year either (i) 75% or more
of our gross income, including our pro rata share of the gross income of any company in which we are considered to own 25% or
more of the shares by value, were passive income or (ii) 50% or more of our average total assets (by value), including our pro rata
share of the assets of any company in which we are considered to own 25% or more of the shares by value, were assets that produced
or were held for the production of passive income. If we were a PFIC, 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:
· the gain or excess distribution will be allocated ratably over a US holder's holding period for the ordinary shares or ADSs, as
  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).
Although we generally will be treated as a PFIC as to any US holder if we are a PFIC for any year during a US holder's
holding period, if we cease to satisfy the requirements for PFIC classification, the US holder may avoid PFIC classification for
subsequent years if such holder elects to recognize gain based on the unrealized appreciation in the ordinary shares or ADSs through
the close of the tax year in which we cease to be a PFIC.
A US holder who beneficially owns stock in a PFIC must file Form 8621 (Return by a Shareholder of a Passive Foreign
Investment Company or Qualified Electing Fund) with the Internal Revenue Service for each tax year such holder holds stock in a
PFIC and (i) recognizes gain on a direct or indirect disposition of such stock, (ii) receives certain direct or indirect distributions from
such PFIC, or (iii) is making certain elections (including a mark-to-market election and an election to be treated as a “qualified
electing fund,” as described below) with respect to such PFIC. This form describes any distributions received with respect to such
stock and any gain realized upon the disposition of such stock. Under newly enacted legislation, unless otherwise provided by the US
Secretary of Treasury, shareholders of a PFIC are required to file an annual report with the Internal Revenue Service containing such
information as the US Secretary of Treasury may require. Although the information required to be reported to the Internal Revenue
Service pursuant to such newly enacted legislation remains unknown, it could enhance the reporting requirements applicable to US
holders of our ordinary shares or ADSs.
A US holder of the ordinary shares or ADSs that are treated as “marketable stock” under the PFIC rules may be able to
avoid the imposition of the special tax and interest charge described above by making a mark-to-market election. Pursuant to this
election, the 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.
In the case of a US holder who holds ordinary shares or ADSs and who does not make a mark-to-market election, the
special tax and interest charge described above will not apply if such holder makes an election to treat us as a “qualified electing
fund” in the first taxable year in which such holder owns the ordinary shares or 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.
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We believe that we were not a PFIC for our 2012 fiscal year ended June 30, 2012. However, under the PFIC rules income
and assets are require to be measured and classified in accordance with US federal income tax principles. Our analysis is based on our
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 2012 fiscal year ended June 30, 2012. Furthermore, the tests for
determining whether we would be a PFIC for any taxable year are applied annually and it is difficult to make accurate predictions of
future income and assets, which are relevant to this determination. In addition, certain factors in the PFIC determination, such as
reductions in the market value of our capital stock, are not within our control and can cause us to become a PFIC. Accordingly, there
can be no assurance that we will not become a PFIC.
The rules relating to PFICs are very complex. US holders are urged to consult their tax advisors regarding the application of
the PFIC rules to their investments in our ordinary shares or ADSs.
Information Reporting and Backup Withholding
Payments made in the United States or through certain US-related financial intermediaries of dividends or the proceeds of
the sale or other disposition of our ordinary shares or ADSs may be subject to information reporting and US federal backup
withholding if the recipient of such payment is not an “exempt recipient” and fails to supply certain identifying information, such as
an accurate taxpayer identifica