FORM 20-F
 
 
 
 sectio18   REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
 OR
 
 sectio17   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 OR
 
 sectio18   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 OR
 
 sectio18   SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT 1934
 For the fiscal year ended June 30, 2017
 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)
 
 1 Sixty Jan Smuts Building, 2nd Floor - North Tower, 160 Jan Smuts Avenue, Rosebank, 2196, South Africa
 (Address of principal executive offices)
 Riaan Davel, Chief Financial Officer, Tel. no. +27 11 470 2600, Email riaan.davel@drdgold.com
 
 Francois Bouwer, Group Financial Accountant, Tel. no. +27 11 470 2600, Email francois.bouwer@drdgold.com
 1 Sixty Jan Smuts Building, 2nd Floor - North Tower, 160 Jan Smuts Avenue, Rosebank, 2196, South Africa
 (Name, Telephone, Email and/or Facsimile number and Address of Company Contact Person)
                   period covered by the annual report.
   
 
  
  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
  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
 
 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
 
  
  
   1 Sixty Jan Smuts Building, 2nd Floor - North Tower, 160 Jan Smuts Avenue, Rosebank, 2196


Page
  ITEM 1.
 IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS ......................................................
 5
 ITEM 2.
 OFFER STATISTICS AND EXPECTED TIMETABLE .........................................................................................
 5
 ITEM 3.
 KEY INFORMATION ................................................................................................................................................
 5
 
 3A.
 Selected Financial Data ...............................................................................................................................................
 5
 
 3B.
 Capitalization And Indebtedness .................................................................................................................................
 7
 
 3C.
 Reasons For The Offer And Use Of Proceeds ............................................................................................................
 7
 
 3D.
 Risk Factors..................................................................................................................................................................
 7
 ITEM 4.
 INFORMATION ON THE COMPANY ....................................................................................................................
 19
 
 4A.
 History And Development Of The Company .............................................................................................................
 19
 
 4B.
 Business Overview ......................................................................................................................................................
 20
 
 4C.
 Organizational Structure ..............................................................................................................................................
 29
 
 4D.
 Property, Plant And Equipment ...................................................................................................................................
 29
 ITEM 4A.
 UNRESOLVED STAFF COMMENTS .....................................................................................................................
 37
 ITEM 5.
 OPERATING AND FINANCIAL REVIEW AND PROSPECTS ...........................................................................
 37
 
 5A.
 Operating Results  ........................................................................................................................................................
 37
 
 5B.
 Liquidity And Capital Resources ................................................................................................................................
 48
 
 5C.
 Research And Development, Patents And Licenses, Etc............................................................................................
 49
 
 5D.
 Trend Information ........................................................................................................................................................
 50
 
 5E.
 Off-Balance Sheet Arrangements ................................................................................................................................
 50
 
 5F.
 Tabular Disclosure Of Contractual Obligations ..........................................................................................................
 50
 
 5G.
 Safe Harbor ..................................................................................................................................................................
 50
 ITEM 6.
 DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES .............................................................................
 50
 
 6A.
 Directors And Senior Management .............................................................................................................................
 50
 
 6B.
 Compensation ..............................................................................................................................................................
 52
 
 6C.
 Board Practices ............................................................................................................................................................
 54
 
 6D.
 Employees ....................................................................................................................................................................
 57
 
 6E.
 Share Ownership ..........................................................................................................................................................
 58
 ITEM 7.
 MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS ..........................................................
 60
 
 7A.
 Major Shareholders ......................................................................................................................................................
 60
 
 7B.
 Related Party Transactions ..........................................................................................................................................
 61
 
 7C.
 Interests Of Experts And Counsel ...............................................................................................................................
 61
 ITEM 8.
 FINANCIAL INFORMATION ..................................................................................................................................
 61
 
 8A.
 Consolidated statements And Other Financial Information .......................................................................................
 61
 
 8B.
 Significant Changes .....................................................................................................................................................
 61
 ITEM 9.
 THE OFFER AND LISTING .....................................................................................................................................
 62
 
 9A.
 Offer And Listing Details ............................................................................................................................................
 62
 
 9B.
 Plan Of Distribution .....................................................................................................................................................
 63
 
 9C.
 Markets .........................................................................................................................................................................
 63
 
 9D.
 Selling Shareholders ....................................................................................................................................................
 63
 
 9E.
 Dilution ........................................................................................................................................................................
 63
 
 9F.
 Expenses Of The Issue.................................................................................................................................................
 63
 ITEM 10.
 ADDITIONAL INFORMATION ...............................................................................................................................
 63
 
 10A.
 Share Capital ................................................................................................................................................................
 63
 
 10B.
 Memorandum of Incorporation ...................................................................................................................................
 63
 
 10C.
 Material Contracts ........................................................................................................................................................
 66
 
 10D.
 Exchange Controls .......................................................................................................................................................
 67
 
 10E.
 Taxation .......................................................................................................................................................................
 69
 
 10F.
 Dividends And Paying Agents ....................................................................................................................................
 72
 
 10G.
 Statement By Experts ..................................................................................................................................................
 72
 
 10H.
 Documents On Display ................................................................................................................................................
 72
 
 10I.
 Subsidiary Information ................................................................................................................................................
 73
 ITEM 11.
 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK .........................................
 73
 ITEM 12.
 DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES .........................................................
 73
 12A.
 Debt Securities .............................................................................................................................................................
 73
 12B.
 Warrants and Rights.....................................................................................................................................................
 74
 12C.
 Other Securities ............................................................................................................................................................
 74
 12D
 American Depositary Shares .......................................................................................................................................
 74


ITEM 13.
 DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES ...................................................................
 75
 ITEM 14.
 MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS ..
 75
 ITEM 15.
 CONTROLS AND PROCEDURES ...........................................................................................................................
 75
 ITEM 16A.
 AUDIT COMMITTEE FINANCIAL EXPERT ........................................................................................................
 76
 ITEM 16B.
 CODE OF ETHICS .....................................................................................................................................................
 76
 ITEM 16C.
 PRINCIPAL ACCOUNTANT FEES AND SERVICES ...........................................................................................
 76
 ITEM 16D.
 EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES .........................................
 77
 ITEM 16E.
 PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS ...................
 77
 ITEM 16F
 CHANGE IN REGISTRANT'S CERTIFYING ACCOUNTANT ...........................................................................
 77
 ITEM 16G.
 CORPORATE GOVERNANCE ................................................................................................................................
 77
 ITEM 16H.
 MINE SAFETY DISCLOSURES ..............................................................................................................................
 77
 
 
 
  ITEM 17.
 FINANCIAL STATEMENTS ....................................................................................................................................
 78
 ITEM 18.
 FINANCIAL STATEMENTS ....................................................................................................................................
 78
 ITEM 19.
 EXHIBITS ...................................................................................................................................................................
 79


1
 
 **Preparation of Financial Information**
 
  account are maintained in South African Rand. Our financial statements included in our corporate filings are prepared in accordance with International Financial Reporting Standards (IFRS), as issued by the International Accounting Standards Board (IASB) for the financial years ended June 30, 2017, 2016 and 2015 included in this report. All references to “dollars” or “$” herein are to United States Dollars and references to “rand” or “R” are to South African rands.
  the IASB. All financial information, except as otherwise noted is stated in accordance with IFRS as issued by the IASB.
  convenience, this Annual Report contains translations of certain rand amounts into dollars at specified rates. These rand amounts do not represent actual dollar amounts, nor could they necessarily have been converted into dollars at the rates indicated. Unless otherwise indicated, rand amounts have been translated into dollars at the rate of R13.51 per $1.00, the noon buying rate in New York City on September 29, 2017.
  per kilogram”, “all-in sustaining costs per kilogram” and “all-in costs per kilogram” which have been determined using industry guidelines  promulgated  by  the  World  Gold  Council,  which  we  use  to  determine  costs  associated  with  producing  gold,  cash generating capacities of the mines and to monitor performance of our mining operations. An investor should not consider these items in isolation or as alternatives to cash and cash equivalents, operating costs, profit/(loss) attributable to equity owners of the parent, profit/(loss) for the year or any other measure of financial performance presented in accordance with IFRS or as an indicator of  our  performance.  While  the  World  Gold  Council  has  provided  definitions  for  the  calculation  of  cash  operating  costs,  the calculation of cash operating costs per kilogram, all-in sustaining costs and all-in costs per kilogram may vary significantly among gold mining companies, and these definitions by themselves do not necessarily provide a basis for comparison with other gold mining  companies.  See  Glossary  of  Terms  and  Explanations  and  Item  5A.  Operating  Results  –  “Cash  operating  costs,  all-in sustaining costs and all-in costs” and “Reconciliation of cash operating costs per kilogram, all-in sustaining costs per kilogram, all-in costs per kilogram”.
 **DRDGOLD Limited**
 
  “the Group” refer to the Company and its subsidiaries, associates and joint ventures, as appropriate in the context.


2
 
 **Special Note Regarding Forward-Looking Statements**
 
  Exchange Act of 1934, 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, including statements in connection with, or relating to, among other things:
 ·   our reserve calculations and underlying assumptions; ·  the trend information discussed in Item 5D.- Trend Information, including target gold production and cash operating costs; ·  estimated future throughput capacity and production; ·   expected trends in our gold production as well as the demand for and the price of gold;  ·  our anticipated labor, electricity, water, crude oil and steel costs; ·  our ability to fund our operations in the next 12 months including our anticipated commitments; ·    estimated production costs, cash operating costs per ounce, all-in sustaining costs per ounce and all-in costs per ounce. ·   expectations on future gold price, supply and pricing trends; ·   expected timing for completing rehabilitation of the Crown plant; ·  expected regulatory approval for the sale of ERPM; ·  expected gold production and cash operating costs in fiscal year 2018; and ·    expected effective gold mining tax rate.
  
  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 South Africa;  ·   regulatory developments adverse to us or difficulties in maintaining necessary licenses or other governmental approvals; ·    changes in our competitive position; ·    changes that affect our business strategy; ·    adverse changes in our gold production as well as the demand for and the price of gold;  ·    any major disruption in production at our key facilities;  ·    adverse changes in foreign exchange rates; ·    adverse environmental changes; ·    adverse changes in ore grades and recoveries, and to the quality or quantity of reserves; ·    unforeseen technical production issues, industrial accidents and theft; ·    anticipated capital expenditure on property, plant and equipment; and ·    various other factors, including those set forth in Item 3D. Risk Factors.
  For a discussion of such risks, see Item 3D. Risk Factors. The risk factors described 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.
    thereof. We do not undertake any obligation to update publicly or release any revisions to these forward-looking statements to reflect events or circumstances after the date of this Annual Report or to reflect the occurrence of unanticipated events.
 Special Note Links to external, or third-party websites
  third-party information contained in such third-party websites, and we specifically disclaim adoption or incorporation by reference of such information into this report.


The table below sets forth units stated in this document, which are measured in Imperial and Metric.
 
 Metric
 Imperial
 Imperial
 Metric
 1 metric tonne
 1.10229 short tons
 1 short ton
 0.9072 metric tonnes
 1 kilogram
 2.20458 pounds
 1 pound
 0.4536 kilograms
 1 gram
 0.03215 troy ounces
 1 troy ounce
 31.10353 grams
 1 kilometer
 0.62150 miles
 1 mile
 1.609 kilometers
 1 meter
 3.28084 feet
 1 foot
 0.3048 meters
 1 liter
 0.26420 gallons
 1 gallon
 3.785 liters
 1 hectare
 2.47097 acres
 1 acre
 0.4047 hectares
 1 centimeter
 0.39370 inches
 1 inch
 2.54 centimeters
 1 gram/tonne
 0.0292 ounces/ton
 1 ounce/ton
 34.28 grams/tonnes
 0 degree Celsius
 32 degrees Fahrenheit
 0 degrees Fahrenheit
 - 18 degrees Celsius
 Glossary of Terms and Explanations
 The table below sets forth a glossary of terms used in this Annual Report:
  
 All-in  sustaining  costs  per kilogram ..................................
 All-in sustaining costs is a measure on which guidance is provided by the World Gold Council and include  cash  operating  costs  of  production,  plus  movement  in  gold  in  process  on  a  sales  basis, corporate administration  expenses and  other  (costs)/income, the accretion  of rehabilitation costs and  sustaining  capital  expenditure.  Costs  other  than  those  listed  above  are  excluded.  All-in sustaining costs per kilogram are calculated by dividing total all-in sustaining costs by kilograms of gold produced. This is a non-IFRS financial measure and should not be considered a substitute measure of costs and expenses reported by us in accordance with IFRS.
 All-in costs per kilogram ........                   All-in costs is a measure on which guidance is provided by the World Gold Council and include
 all-in  sustaining  costs,  retrenchment  costs,  care  and  maintenance  costs,  ongoing  rehabilitation expenditure,  growth  capital  expenditure  and  capital  recoupments.  Costs  other  than  those  listed above  are  excluded.  All-in  costs  per  kilogram  are  calculated  by  dividing  total  all-in  costs  by kilograms of gold produced. This is a non-IFRS financial measure and should not be considered a substitute measure of costs and expenses reported by us in accordance with IFRS.
 Assaying ..................................                 The chemical testing process of rock samples to determine mineral content. $/oz ..........................................                US dollar per ounce. Capital expenditure .................                Purchases of property, plant and equipment paid in cash. Care and maintenance .............          Cease active mining activity at a shaft, but continue to incur costs to ensure that the Ore Reserves are
 open, serviceable and legally compliant.
 Cash  operating  costs  of production ................................
 Cash operating costs of production are operating costs less ongoing rehabilitation expenses, care and maintenance costs and net other operating costs/(income).
 Cash  operating  costs  per kilogram ..................................
 Cash operating costs are operating costs incurred directly in the production of gold and include labor costs, contractor and other related costs, inventory costs and electricity costs. Cash operating costs per kilogram are calculated by dividing cash operating costs by kilograms of gold produced. This is a non-IFRS financial measure and should not be considered a substitute measure of costs and expenses reported by us in accordance with IFRS.
 Conglomerate ..........................   A coarse-grained sedimentary rock consisting of rounded or sub-rounded pebbles. Cut-off grade ...........................   The minimum in-situ grade of ore blocks for which the cash operating costs per ounce, excluding
 overhead costs, are equal to a projected gold price per ounce.
 Called gold content .................   The theoretical gold content of material processed. 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.
 Doré .........................................   Unrefined gold and silver bullion bars consisting of approximately 90% precious metals which will
 be further refined to almost pure metal.
 Grade .......................................   The amount of gold contained within auriferous material generally expressed in ounces per ton or
 grams per tonne of ore.
 Growth capital expenditure .....   Growth capital expenditure are those capital expenditures that are not sustaining capital expenditure. g/t .............................................   Grams per tonne.


4
 
   Metallurgical plant ..................   A processing plant (mill) erected to treat ore and extract the contained gold. Mine call factor .......................   The gold content recovered expressed as a percentage of the gold content called. Mt ............................................   Million tons. Ore ...........................................   A mixture of valuable and worthless materials from which the extraction of at least one mineral is
    Expenses incurred, and income generated in the course of operating activities, but are not directly attributable to production activities.
     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.
  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
  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
     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.
     t’000 .........................................   Tonnes in thousands. Tailings ....................................   Finely ground rock from which valuable minerals have been extracted by milling, or any waste rock,
     reserves of gold-bearing material in-situ or quantities of ore and waste material mined, transported or milled.
 Tpm .........................................   Tonne per month. Yield ........................................   The amount of recovered gold from production generally expressed in ounces or grams per ton or


5
 
 **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**
 
  and 2015 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.  The selected consolidated financial data as at June 30, 2015, 2014 and 2013, and for the years ended June 30, 2014 and 2013 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.


6
 
 **Selected Consolidated Financial Data(in millions, except share, per share and ounce data)**
 
 
 Year ended June 30,
 
 2017
 1
 
 2017
 2016
 2015
 2014
 2013
 
        
 
 
 
 
 
 
                                                                          Depositary Shares for the year         (USD cents) ...............................................
        1
                                                         2
   2
   2
   2
   2
   2
  
 
 Month
 
 2017
 2017
 2017
 2017
 2017
 2017
 
 
 September
 August
 July
 June
 May
 April
  
 
 
 
 
 
 
               
 
 1
 
 Translations into Dollars in this table are for the purpose of convenience only and are computed at the noon buying rate in New York City at
 September 29, 2017 of R13.51 per $1.00, or the annual average as noted. You should not view such translations as a representation that such amounts represent actual Dollar amounts. All other translations in this Annual Report are based on exchanges rates quoted by local financial service providers.  This line item has been prepared in accordance with Item 3.A(3) of Form 20-F 2 Ordinary share capital as of June 30, 2017 is stated after the deduction of R50.7 million (2016: R50.7 million and 2015: R44.2 million) share capital relating to treasury shares held by the Group.


7
 
 **3B. CAPITALIZATION AND INDEBTEDNESS**
    **3C. REASONS FOR THE OFFER AND USE OF PROCEEDS**
    **3D. RISK FACTORS**
  our operational processes, while others relate to our business environment. It is important to understand the nature of these risks and the impact they may have on our business, financial condition and operating results. Some of these risks are summarized below and have been organized into the following categories:
 ·    Risks related to our business and operations; ·    Risks related to the gold mining industry; ·    Risks related to doing business in South Africa; and  ·    Risks related to ownership in our ordinary shares or American Depositary Shares (ADSs).
 **Risks related to our business and operations**
 Changes in the rand 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.
    operation and financial condition have been and could be in the future materially affected 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 would adversely affect us, and any decline in the price of gold below the cost of production could result in the closure of some or all of our operations which would result in significant costs and expenditure, such as, incurring retrenchment costs earlier than expected which could lead to a decline in, and even total loss of, profits, or losses. Accordingly, any sustained decline in the price of gold and/or the strengthening of the South African rand against the dollar would negatively and adversely affect our business, operating results and financial condition.
    rate movements of the rand. We sell gold at spot prices based on the afternoon London Bullion Market fixing price on the day of delivery. We sell our foreign currency at the spot price in the market on the date of trade. If the dollar gold price should fall and/or the rand should strengthen against the dollar, this would adversely affect us, and we may experience losses, and if these changes result in revenue below our cost of production and remain at such levels for any sustained period, we may be forced to curtail or suspend some or all our operations. We might not be able to recover any losses we may incur during that period or maintain adequate gold reserves for future exploitation.
  In fiscal year 2016 and 2015 the rand weakened against the dollar by 21% and 14% respectively compared to the prior year (based on exchange rates at June 30 of each year). At September 30, 2017 the rand traded at R13.51 = $1.00 (based on closing rates), a 4% weakening relative to the Dollar from June 30, 2017.
  profitability as was the case in fiscal year 2017. For all periods presented, all of our production was from South Africa. If the rand was to appreciate against the dollar for a continued time, our operations could experience a reduction in cash flow and profitability and this would adversely affect our business, operating results and financial condition.
 **A failure to acquire new Ore Reserves could negatively affect our future cash flow, results of operations and financial**
 **condition**.
  Ore Reserves. A failure to acquire new Ore Reserves in sufficient quantities and quality to maintain or grow the current level and quality of our reserves will negatively affect our future cash flow, results of operations and financial condition. In addition, if we are unable  to  identify  Ore  Reserves  that  have  reasonable  prospects  for  economic  extraction  while  maintaining  sufficient  controls  on production and other costs, this will have a material effect on the future viability of our operations.


8
 
   mainly  because  of  a  drilling  program  and  pre-feasibility  study  (“PFS”)  that  commenced  during  September  2016  aimed  at  re-evaluating  our  surface  gold  tailings.  The  increase  was  offset  by  depletion  through  ongoing  mining  activities  and  other  survey adjustments. Our Ore Reserves (imperial) decreased from 1.9 million ounces at June 30, 2015, to 1.8 million ounces at June 30, 2016, mainly because of depletion through ongoing mining activities. Our Ore Reserves (imperial) increased by 22% from 1.5 million ounces at June 30, 2014, to 1.9 million ounces at June 30, 2015, mainly as a result of the acquisition of the non-controlling interest in Ergo Mining Operations Proprietary Limited (“EMO”) and, to a lesser extent, the decrease in the cut-off grade. These increases were offset by a decrease due to ongoing mining activities.
  We may not be able to meet our cash requirements because of a number of factors, many of which are beyond our control.
 
  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 financing and we cannot guarantee that any such financing would be permitted under the terms of our existing financing arrangements, or would be available on acceptable terms, or at all. In the absence of sufficient cash flows or adequate financing, our ability to respond to changing business and economic conditions, make future acquisitions, react to adverse operating results, meet our  debt service obligations and fund required capital expenditures  or meet  our working capital requirements may be adversely affected.
 **We have incurred losses in the past and may incur losses in the future.**
 
  year 2015.
  Such exposure and other factors could result in us incurring losses in the future, which would have a material adverse effect on our business, operating results and financial condition.
 Any interruption in production of gold at our single operating segment will have an adverse effect on the company.
 
  through pipeline infrastructure. The Ergo plant is currently our major processing plant and we have one deposition site.
    ("Brakpan/Withok TDF") are exposed to numerous risks, including operational down time due to planned or unplanned maintenance, destruction of infrastructure, spillages, higher than expected operating costs, or lower than expected production as a result of decreases in extraction efficiencies due to imbalances in the metallurgical process as well as inconsistent volume throughput.
  upward trend in global temperature is directly correlated with the increase in global severe weather events both in terms of magnitude and frequency.
  South Africa. Municipalities where we operate put in place water consumption restrictions with penalties if restrictions are not adhered to. The drought ended in late calendar 2016 which resulted in the relevant water restrictions being lifted, but future droughts could result in similar restrictions.
  in the production of gold.  Although freeboard on the Brakpan/Withok TDF is continually monitored to maintain acceptable levels, such monitoring may not provide adequate warning if the facility is exposed to significant rainfall. Such incidents and other weather events may also damage the facility and therefore cause the interruption of deposition and gold production until the facility is repaired or alternative deposition is brought on line.
     **Inflation may have a material adverse effect on our results of operations.**
   in our operational costs in rand, unless such inflation is accompanied by a concurrent devaluation of the rand against the dollar or an increase in the dollar price of gold. Significantly higher and sustained inflation in the future, with a consequent increase in operational costs could have a material adverse effect on our results of operations and our financial condition, and could result in operations being discontinued or reduced or rationalized.


9
 
 Increased production costs could have an adverse effect on our results of operations.
 
       ·    labor stability, 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.
 Our production costs consist mainly of materials including reagents and steel, labor, electricity, specialized service providers
 water, fuels, lubricants and other oil and petroleum based products. Production costs have in the past, 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.
    Association of South Africa (UASA) for a wage increase averaging 8.2% (10% for categories 4 – 5), (9% for categories 6 – 9) and (7% for categories 10 – 15) per annum. The next round of wages and conditions of employment negotiations will take place in 2018.
  2012/2013 has approached the company for recognition to represent their members in labor related matters at the company. On March 30, 2017, a recognition agreement was reached with AMCU.
  increases for consumables and cost controls may not be successful or sufficient to offset the increases affecting our operations and could adversely affect our business, operating results and financial condition.
 Flooding at our discontinued underground operations may cause us to incur liabilities for environmental damage.
 
  come  into  contact  with  naturally  occurring  underground  water  or  decant  into  surrounding  underground  mining  areas  and  could ultimately also rise to surface. Progressive flooding of these abandoned underground mining areas and surrounding underground mining areas could eventually cause the discharge of polluted water to the surface and to local water sources.
    we, together with all other mining companies in those areas, may face claims relating to environmental damage.  These claims may have a material adverse effect on our business, operating results and financial condition.
 Our operations are subject to extensive environmental regulations which could impose significant costs and liabilities.
 
  various  state,  provincial  and  local  laws,  which  regulate  air  and  water  quality,  hazardous  waste  management  and  environmental rehabilitation and reclamation. Our mining and related activities have the potential to impact the environment, including land, habitat, streams and environment near the mining sites. Failure to comply with environmental laws or delays in obtaining, or failures to obtain government permits and approvals may adversely impact our operations. In addition, the regulatory environment in which we operate could change in ways that could substantially increase costs of compliance, resulting in a material adverse effect on our profitability.
  We have estimated our aggregate group Provision for Environmental Rehabilitation at a net present value of R531.7 million which is included in our statement of financial position as at June 30, 2017 (Refer to Item 18. ‘‘Financial Statements - Note 8 – Provision for environmental rehabilitation). However, the ultimate amount of rehabilitation costs may in the future exceed the current estimates due to factors beyond our control, such as changing legislation, higher than expected cost increases, or unidentified rehabilitation costs. We fund these environmental rehabilitation costs by making contributions over the life of the mine to environmental trust funds or funds held in insurance instruments established for our operations. If any of the operations are prematurely closed, the rehabilitation funds may be insufficient to meet all the rehabilitation obligations of those operations. The closure of mining operations, without sufficient financial  provision  for  the  funding  of  rehabilitation  liabilities,  or  unacceptable damage  to  the  environment,  including  pollution  or environmental degradation, may expose us and our directors to prosecution, litigation and potentially significant liabilities.


10
 
  Damage to tailings dams and excessive maintenance and rehabilitation costs could result in lower production and health
 safety and environmental liabilities
 Our tailings facilities are exposed to numerous risks and events, the occurrence of which may result in the failure, breach or
 damage of such a facility. These may include sabotage, failure by our employees to adhere to the codes of practice and natural disasters such as excessive rainfall, any of which could force us to stop or limit operations. In addition, the dams could overflow and the health and safety of our employees and communities living around these dams could be jeopardized. In the event of damage to our tailings facilities, our operations will be adversely affected and this in turn could have a material adverse effect on our business, operating results and financial condition.
 **Due to the nature of our business, our operations face extensive health and safety risks.**Gold mining is exposed to numerous risks and events, the occurrence of which may result in the death of, or personal injury,
 to employees. According to section 54 of the Mine, Health and Safety Act of 1996, if an inspector believes that any occurrence, practice or condition at a mine endangers or may endanger the health or safety of any person at the mine, the inspector may give any instruction necessary to protect the health or safety of persons at the mine. These instructions could include the suspension of operations at the whole or part of the mine. These incidents could lead to mine operations being halted and that will increase our unit production costs, which could have a material adverse effect on our business, operating results and financial condition.
   Events may occur for which we are not insured which could affect our cash flows and profitability.
 
  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 a total of R5.9 billion as the insured value for property and loss of profits due to business interruption with a total loss limit of R650 million for the 2017 financial year. Business interruption is only covered from the time the loss occurs and is subject to time and amount deductibles that vary between categories.
    pollution related  accidents, for which coverage  is  not available.  If we  are required  to  meet the costs  of claims, which exceed  our insurance coverage, this could have a material adverse effect on our business, operating results and financial condition.
  
  personnel including the positions of Chief Executive Officer and Chief Financial Officer. In addition, we compete with mining and other companies on a global basis to attract and retain key human resources at all levels with appropriate technical skills and operating and managerial experience necessary to operate the business. Factors critical to retaining our present staff and attracting additional highly qualified personnel include our ability to provide these individuals with competitive compensation arrangements, and other benefits. If we are not successful in retaining or attracting highly qualified individuals in key management positions, our business may be harmed. We do not maintain “key man” life insurance policies on any members of our executive team. The loss of any of our key personnel could delay the execution of our business plans, which may result in decreased production, increased costs and decreased profitability.
 **Operational risk associated with our flotation and fine-grind (FFG) project.**
   
  efficiencies. The established Low Grade Section was brought back to steady state and gold production stabilized during the last quarter of fiscal year 2014 and became fully operational in February 2015, treating the remainder of the Ergo plant throughput through the FFG from this date.
  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.


11
 
 Risks related to the gold mining industry
   A change in the dollar price of gold, which in the past has fluctuated widely, is beyond our control.
    a significant amount of above-ground gold in the world that is used for trading by investors;   the physical supply of gold from world-wide production and scrap sales, and the purchase, sale or divestment by central
  ·    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.
 
  negatively impacted by a decline in the gold price as we incur losses when 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.
   from previous highs. The uncertainty in the outlook of resources generally and of gold resulted in 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 still not shown signs of sustained recovery - consumer sentiment remains bearish, unemployment remains high, economic growth is marginal and corporate earnings are uncertain and volatile.
 The exploration of mineral properties is highly speculative in nature, involves substantial expenditures, and is frequently
 **unproductive**.
    bodies  to  quantify  the  extent  of  the  gold  reserve.  Many  gold  exploration  programs, including  some  of  ours,  do  not  result in the discovery of mineralization and any mineralization discovered may not be of sufficient quantity or quality to be mined profitably. If we discover a viable deposit, it usually takes several years from the initial phases of exploration until production is possible. During this time, the economic feasibility of production may change.
  whether to commence or continue mining. These estimates generally rely on scientific and economic assumptions, which in some instances may not be correct, and could result in the expenditure of substantial amounts of money on a deposit before it can be determined with any degree of accuracy whether the deposit contains economically recoverable mineralization. Uncertainties as to the metallurgical recovery of any gold discovered may not warrant mining based on available technology.
  on the costs and results of our continued exploration and development programs. Our business focuses mainly on the extraction of gold from tailings, which is a volume driven exercise. Only significant deposits within proximity of services and infrastructure that contain  adequate  gold  content  to  justify  the  significant  capital  investment  associated  with  plant,  reclamation  and  deposition infrastructure are suitable for  exploitation in terms  of our model. There is a limited supply  of these deposits which may inhibit exploration and developments, especially in a declining gold price environment.
  Probable Ore Reserves in sufficient  quantities to justify commercial operations in any  of our operations. The costs incurred on exploration activities that do not identify commercially exploitable reserves of gold are not likely to be recovered and therefore likely to be impaired.


12
 
 **There is uncertainty with our Ore Reserve estimates.**
  and are reported in accordance with the requirements of Industry Guide 7 of the SEC. These estimates may not reflect actual reserves or future production.
  examinations, reserve estimates may have to be adjusted and mining plans may have to be altered in a way that might ultimately cause our reserve estimates to decline. Moreover, if the rand price of gold declines, or stabilizes at a price that is lower than recent levels, or if our labor, water, steel, electricity and other production costs increase or recovery rates decrease, it may become uneconomical to recover Ore Reserves, particularly those containing relatively lower grades of mineralization. Under these circumstances, we would be required to re-evaluate our Ore Reserves. Short-term operating factors relating to the ability to reclaim our Ore Reserves, at the required rate, such as an interruption or reduction in the supply of electricity or a shortage of water may have the effect that we are unable to achieve critical mass, which may render the recovery of Ore Reserve, or parts of the Ore Reserve no longer feasible, which could negatively affect production rate and costs and decrease our profitability during any given period. The estimates are based on drilling results and because unforeseen conditions may occur in these mine dumps that may not have been identified by the drilling results, the actual results may vary from the initial estimates. These factors have and could result in reductions in our Ore Reserve estimates, which could in  turn  adversely  impact the  total  value  of  our mining asset base and  our business,  operating results and financial condition.
    and issuing an updated reserve statement during fiscal year 2017.
 Gold mining is susceptible to numerous events that could have an adverse impact on a gold mining business
 
  personal injury  to employees, the loss of mining and reclamation equipment, damage to or destruction of mineral properties  or production facilities, monetary losses, delays in production, environmental damage, loss of the license to mine and potential legal claims. The risks and events associated with the business of gold mining include:
 ·
  ·    flooding, landslides, sinkhole formation, ground subsidence, ground and surface water pollution and waterway contamination; ·    a decrease in labor productivity due to labor disruptions, work stoppages, disease, slowdowns or labor strikes; ·    unexpected decline of ore grade; ·    metallurgical conditions and gold recovery; ·    failure of unproven or evolving technologies; ·    mechanical failure or breakdowns and ageing infrastructure; ·    energy and electrical power supply interruptions; ·    availability of water; ·    injuries to employees or fatalities resulting from falls from heights and accidents relating to mobile machinery or electrocution; ·    activities of illegal or artisanal miners; ·    material and equipment availability; ·    legal and regulatory restrictions and changes to such restrictions; ·    social or community disputes or interventions; ·    accidents caused from the collapse of tailings dams; ·    pipeline failures and spillages; ·    safety-related stoppages; and ·    corruption, fraud and theft including gold bullion theft.
 The occurrence of any of these hazards could delay production, increase production costs and may result in significant legal
 claims.


13
 
 **Risks related to doing business in South Africa**
 Political or economic instability in South Africa may reduce our production and profitability
 
  risks relating to South Africa  could have a significant effect  on our production and profitability. Large parts of the South African population are unemployed and do not have access to adequate education, health care, housing and other services, including water and electricity.  Government  policies  aimed  at  alleviating  and  redressing  the  disadvantages  suffered  by  most  citizens  under  previous governments may increase our costs and reduce our profitability. In recent years, South Africa has experienced high levels of crime. These problems may impede fixed inward investment into South Africa and increase emigration of skilled workers. As a result, we may have difficulties retaining qualified employees.
 Inflation can adversely affect us
 
  annual Consumer Price Inflation Index, or CPI, stood at 5.1% compared to 6.3% in June 2016 and 4.7% in June 2015. Annual CPI was 5.1%  as  at  September  30,  2017.  Continuing  high  levels  of  inflation  in  South  Africa  for  prolonged  periods,  without  a  concurrent devaluation of the rand or increase in the dollar price of gold, could result in an increase in our costs which could reduce our profitability. See also “Risks related to our business and operations – Inflation may have a material adverse effect on our results of operations.”
 **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.**
  occupational  lung  diseases  (OLD)  and  tuberculosis  (TB).  We  provide  occupational  health  services  to  our  employees,  we  provide training and protective gear and continue to improve preventive occupational hygiene initiatives. The costs associated with providing such  occupational  health  services  could  increase  significantly.  We  assess  all  claims,  if  and  when  filed,  on  their  merits.  Liability associated with such claims and expenses of dealing with them could have a material adverse effect on our business, operating results and financial condition.
  (collectively referred to as "Respondents") were served with a court application issued in the High Court of South Africa (“Court") for a class certification (“Certification Application”) on behalf of former mineworkers and dependants of deceased mineworkers (“Applicants”).  In  the  application  the  Applicants  allege  that  the  Respondents  conducted  underground  mining  operations  in  a negligent and complicit manner causing the former mineworkers to contract occupational lung diseases. The Applicants have as yet not quantified the amounts which they are demanding from the Respondents in damages.
  and a tuberculosis class, both of which cover current and former underground mineworkers who have contracted the respective diseases (or the dependants of mineworkers who died of those diseases); and (2) that the common law be developed to provide that in instances where a claimant claiming general damages passed away, the claim for general damages will be transmitted to the estate of the deceased claimant.
  September 2016 respectively. The appeal has been set down for hearing from March 19 to 13, 2018.
  discuss issues pertaining to the action.
  since indicated that they would be seeking a possible settlement of the class action and have all raised an accounting provisions at 30 June 2017 due to progress made by the Working Group towards settlement of the claims.
 DRDGOLD took the view that it is too early to consider settlement of the matter, mainly for the following reasons:  • the Applicants have as yet not issued and served a summons (claim) in the matter;  •  there  is  no  indication  of  the  number  of  potential  claimants  that  may  join  the  class  action  against  the  DRDGOLD respondents; • many principles upon which legal responsibility is founded, are required to be substantially developed by the trial court (and possibly subsequent courts of appeal) to establish liability on the bases alleged by the applicants.
   liability, and to quantify such potential liability.


14
 
  Theft at our sites, particularly of copper, may result in greater risks to employees or interruptions in production.
 
   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.
 Power stoppages or increases in the cost of power could negatively affect our results and financial condition.
 
  a result of insufficient generating capacity, owing to poor maintenance and lagging capital infrastructure investment, South Africa has faced significant disruptions in electricity supply in the past and Eskom has warned that the country could continue to face disruptions in electrical power supply in the foreseeable future. So far, while such power supply disruptions have not had a material impact on our production, the country’s current reserve capacity remains insufficient and the risk of electricity stoppages is expected to continue for the foreseeable future. Supply interruptions may pose a significant risk to the operations.
  year lease agreement for the supply of temporary power generation equipment and services during fiscal year 2014 to drive certain key installations associated with the disposal of tailings.
  between 10% and 20% when the grid is under pressure, but Eskom maintains uninterrupted power supply to the operations. This has enabled us to maintain continuous operations and very little reduction in volume since its inception.
  
  average tariff increase of 9.4% and from April 1, 2017 an average tariff increase of 2.2%. These increases have had an adverse effect on our production costs and similar or higher future increases could have a material adverse effect on our operating results and financial condition.
 **Possible scarcity of water may negatively affect our operations.**
 
  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.
 DRDGOLD invested R22 million in the construction of a filtration plant at the Rondebult Waste Water Works (operated by
 the East Rand Water Care Company) to treat sewage water to reduce the use of potable water. The plant was commissioned in early fiscal year 2016 and provides Ergo with 10
 
  both to reclaim and carry production materials and also, ultimately, to irrigate rehabilitation vegetation at a significantly lower cost than that of potable water.
 DRDGOLD installed new gland service infrastructure at the Ergo plant during October 2016 to allow for the use of recycled
 process water for gland service requirements. This initiative has resulted in the reduction of approximately 70Ml a month in potable water use.
 The Central Water Facility was commissioned at a cost of R29.5 million during the last quarter of Fiscal year 2017 to store
 and distribute water emanating from Rondebult waste water treatment works, treated Acid Mine Drainage (“AMD”) water from Trans-Caledon  Tunnel  Authority  (“TCTA”)    and  recycled  water  from  our  Brakpan/Withok  Tailings  Deposition  Facility.  The  Centrally Located Water Facility allows us to distribute water more efficiently throughout the operations.
 As part of the Heads of agreement signed between EMO, Ergo, ERPM and TCTA in December 2012, Ergo secured the right
 to purchase up to 30Ml of partially treated AMD from TCTA at cost, in order to reduce Ergo’s reliance on potable water for mining and processing purposes. AMD water entered our system for the first time in fiscal year 2017.
 There is no assurance that these measures will be sufficient to alleviate all the water scarcity issues.


15
 
 Government Regulation
 
  Government policies in South Africa may adversely impact our operations and profits.
  
   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 discretionary and unpredictable on certain issues, including changes in conditions for the issuance of licenses insofar as social and labor plans are concerned, transformation of the workplace, laws relating to mineral rights, ownership of mining assets and the rights to prospect and mine, additional taxes on the mining industry and in extreme cases, nationalization. A change in regulatory or government policies could adversely affect our business.
    *Mining royalties and other tax reform could have an adverse effect on the business, operating results and financial*
 ***condition of our operations**.*
  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 taxed entity. The royalty is payable on old unconverted mining rights  and  new  converted  mining rights.  Based  on a legal  opinion the  Company  obtained,  mine  dumps created  before the enactment  of  the  Mineral  and  Petroleum  Resources  Development  Act  (“MPRDA”)  fall  outside  the  ambit  of  this  royalty  and consequently the Company does not pay any royalty on any dumps created prior to the MPRDA. Introduction of further revenue based royalties or any adverse future tax reforms could have an adverse effect on our business, operating results and financial condition.
  proposed form may have a fundamental impact on the Group's estimated environmental provisions due to the inclusion of historic and old mine dumps in the definition of “residue stockpiles” which creates certain rehabilitation obligations for the discarded mines to which  they  pertain  as  well  as  the  extension  of  the  liability  for  rehabilitation  beyond  the  issuance  of  a  closure  certificate  and  the requirement to maintain financial provision for closed sites for a period of 20 years after a site is closed.
 *Failure to comply with the requirements of the Broad Based Socio-Economic Empowerment Charter could have an*
 ***adverse effect on our business, operating results and financial condition of our operations.***
  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, in each case, from May 1, 2004. This is to be achieved by, among other methods, the sale of assets to historically disadvantaged persons on a willing seller/willing buyer basis at market value.
  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.
    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. There is also no guarantee that any steps we might take to comply with the Mining Charter would ensure that we could successfully acquire new order mining rights in place of our existing rights. In addition, the terms of such new order rights may not be as favorable to us as the terms applicable to our existing rights. In addition, we may incur expenses in giving additional effect to the Mining Charter and the “scorecard”, and we risk losing our mining rights if we do not comply with the requirements stipulated in facilitating the financing of initiatives towards ownership by historically disadvantaged persons. Any of the foregoing could have an adverse effect on our business, operating results and financial condition.


16
 
   African Mining and Minerals Industry, 2016 (“Mining Charter 3”). Mining Charter 3 was gazetted by the DMR on 15 June 2017.
 ·
  o  8% employees o  8% mine communities o  14% black entrepreneurs
  ·  Right-holders already at 30% not required to apportion ·  Right-holders already at 26% must increase to 30% within 12 months but do not need to apportion  ·   30% BEE shareholding must be held in entities or persons which are separate from the right-holder ·  Minimum 50% plus 1 Black Person shareholding for all new prospecting rights; must include voting rights ·  Right holder to pay 1% of annual turnover to the 30% BEE prior to any distribution to its shareholders.  The solvency
  ·
 up to 30% within 12 months. Applies even where black person shareholding is no longer 26% due to either a BEE partner exiting or the contract with the BEE partner lapsing or the transfer of shares by the BEE partner to non-BEE persons.
 
  determined by the judiciary through litigation.
  of the original and 2010 Mining Charter has been re-enrolled by the Deputy Judge President of the North Gauteng High Court, Pretoria for November 9 and 10, 2017.
  Minister of Mineral Resources has undertaken not to implement the charter until judgment has been handed down in respect of the application. The case is to be heard on December 13 and 14, 2017 by a full bench of judges in the North Gauteng High Court.
   http://www.notourcharter.co.za/component/jdownlo/ads
  
     
   Management  Act,  107  of  1998  (“NEMA”)  and  became  effective  from  the  date  of  publication  thereof.  Under  these  FRPs  to  be implemented by the DMR, existing environmental rehabilitation trust funds may only be used for post closure activities and may no longer be utilised for their intended purpose of concurrent and final rehabilitation and closure. This is likely to affect the amount of funds set aside for financial provision for rehabilitation of the mine.
 
  on our operations.
  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 these countries identified, it ranked among the top 20 countries measured by absolute carbon dioxide emissions. During the 2009 Copenhagen climate change negotiations, South Africa voluntarily announced that it would act to reduce domestic GHG emissions by 34% by 2020 and 42% by 2025, subject to the availability of adequate financial, technological and other support. The two main economic policy instruments available for setting a price on carbon and curbing GHG emissions are carbon taxation and emissions trading schemes. In a discussion paper on carbon taxation by the National Treasury of the South African Government released in June 2013 different methods of carbon taxation were discussed.  The implementation of these carbon taxes has been postponed pending consideration by the South African Parliament. Should these taxes be implemented, they might have a direct or indirect cost impact on our operations which could have an adverse effect on our business, operating results and financial condition.


17
 
  the business, operating results and financial condition of our operations.
  different mines regarding the deduction of certain capital expenditure and the carry over to subsequent years. After the restructuring of the surface operations, effective July 1, 2012, Ergo is treated as one taxpaying operation pursuant to the relevant ring-fencing legislation. In the event that we are unsuccessful in confirming our position or should the South African Receiver of Revenue have a different interpretation of section 36 of the ITA, it could have an adverse effect on our business, operating results and financial condition.
    disputes and new South African labor laws.
  our  operations  provided  full-time  employment  for  850  employees  while  our  main  service providers  deployed  an  additional  1,365 employees to our operations, of whom approximately 91% are members of trade unions or employee associations. We have entered into various agreements regulating wages and working conditions at our mines. Unreasonable wage demands could increase production costs to levels where our operations are no longer profitable. This could lead to accelerated mine closures and labor disruptions. We are also susceptible to strikes by workers from time to time, which result in disruptions to our mining operations.
  that provide for mandatory compensation in the event of termination of employment for operational reasons and that impose large monetary penalties for non-compliance with the administrative and reporting requirements of affirmative action policies could result in significant costs to us. In addition, future South African legislation and regulations relating to labor may further increase our costs or alter our relationship with our employees. Labor cost increases could have an adverse effect on our business, operating results and financial condition.
    
  to these strikes resulted in 45 people being killed. Between February and June 2014, the platinum industry had a wage strike that lasted for five months. To bring the strike to an end, above inflation wage increases and changes to working conditions were agreed to.
   Such events at  our  operations  or elsewhere could  have  an adverse  effect  on  our  business,  operating results and financial
 condition.
    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 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.
 
  relaxation of controls will continue in the future. For further information see Item 10D. Exchange Controls. Risks related to ownership of our ordinary shares or ADSs
   Our Company, certain members of our board of directors and executive officers are residents of South Africa. All our assets
 are located outside the United States and a major portion with respect to the assets of members of our board of directors and executive officers are either wholly or substantially located outside the United States. As a result, it may not be possible for you to effect service of legal process, within the United States or elsewhere including in South Africa, upon most of our directors or officers, including matters arising under United States federal securities laws or applicable United States state securities laws.


18
 
   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 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
  
  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.
  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 use in South African courts. It may not be possible therefore for an investor to seek to impose liability on us in a South African court arising from a violation of United States federal securities laws.
 Dividend withholding tax will reduce the amount of dividends received by beneficial owners. On April 1, 2012, the South African Government replaced Secondary Tax on Companies (then 10%) with a 15% withholding
 tax on dividends and other distributions payable to shareholders. The dividend withholding tax rate was increased to 20%, effective from February 22, 2017.  The withholding tax reduced the amount of dividends or other distributions received by our shareholders. Any further increases in such tax will further reduce net dividends received by our shareholders.
   shareholders under the laws of other jurisdictions.
  of holders  of  our  ordinary  shares, and therefore  many  of the rights  of  our ADS  holders, are  governed  by  our  memorandum  of incorporation  and  by  South  African  law.  These  rights  differ  in  material  respects  from  the  rights  of  shareholders  in  companies incorporated elsewhere, such as in the United States. In particular, South African law significantly limits the circumstances under which shareholders of South African companies may institute litigation on behalf of a company.
   affect the prevailing market price of such securities.
  our stockholders, or there is the perception in the marketplace that such sales could occur. Current holders of our ordinary shares or ADSs may decide to sell them at any time. Sales of our ordinary shares or ADSs, if substantial, or the perception that any such substantial sales may occur, could exert downward pressure on the prevailing market prices for our ordinary shares or ADSs, causing their market prices to decline. Trading activity of hedge funds and the ability to borrow script in the market place will increase trading volumes and may place our share price under pressure.


19
 
 ITEM 4. INFORMATION ON THE COMPANY
  4A. HISTORY AND DEVELOPMENT OF THE COMPANY
 
  
   retreatment in South Africa including exploration, extraction, processing and smelting.
    shares were listed on the Johannesburg Stock Exchange ("JSE"). 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 120 years.
   
   Rosebank,  2196,  South  Africa.  The  postal  address  is  P.O. Box  390,  Maraisburg,  1700,  South  Africa.  Our  telephone  number  is (+27 11) 470-2600 and our facsimile number is (+27 86) 524-3061. We are registered under the South African Companies Act 71, 2008 under registration number 1895/000926/06. For our ADSs, the Bank of New York Mellon, at 101 Barclay Street, New York, NY 10286, United States, has been appointed as agent.
 
   
  subject to government consents not yet obtained) and Crown (which was restructured into Ergo in fiscal year 2012 of which some sites are currently being rehabilitated).
 
  
   Crown Gold Recoveries Proprietary Limited (Crown), East Rand Proprietary Mines Limited's (ERPM) Cason Dump operation and the ErgoGold business units which are now collectively referred to as Ergo. On July 1, 2012, Ergo acquired the mining assets and certain liabilities of Crown and all the surface assets and liabilities of ERPM as part of the restructuring of our surface operations. Also as part of this restructuring, Ergo acquired DRDGOLD's 35% interest in ErgoGold for R200 million.
  
  which are derived from the separation of gold contained within the sulfides of the tailings material by subjecting the treated material to a flotation circuit, further regrinding and a leach circuit.
  R18.3 million to increase volume capacity by approximately 0.3Mtpm to a total of 2.1Mtpm.
  obtained through specific financing arrangements if required. Brakpan/Withok TDF expansion
  typical metallurgical processing. Although we pump processing material from as far as 60km away, most of our tailings mine residue recovery sites are based in the vicinity of Ergo, including our surface and pipeline infrastructure. This is the key focus of DRDGOLD’s operations. We process approximately 1,8Mt of material through Ergo’s Brakpan plant every month. In order to extend the life of our operation, it is necessary to increase residue tailings deposition capacity at our Brakpan/Withok TDF.
  TDF.  The  results  indicated  that  most  of  the  current  authorizations  are  sufficient,  however  certain  documentation  will  need  to  be amended. This could increase the potential deposition capacity by approximately 800Mt, and thus, our life of mine from 10 years to more than 20 years. 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.


20
 
 ERPM
  Extension 1 and 2 exploration tenements, were 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.
  agreement with ERPM South Africa Holding Proprietary Limited, the nominee of Australian based Walcot Capital for the disposal of certain of the underground mining and prospecting rights held by ERPM including the related liabilities. This agreement is subject to a number of conditions, including a number of regulatory consents and permission, most notably consent to the sale by the Minister of Mineral Resources.
  Crown
  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. Due to the depletion of ore reserves in the western Witwatersrand, we took the decision at the end of fiscal year 2016 that in fiscal year 2017 we would complete the recovery of material from a number of Crown reclamation sites and to close the Crown  plant.  This  plant  operated  as  a  pump/milling  station  feeding  the  metallurgical  plants  until  March  2017  when  it  ceased  all operations.
 4B. BUSINESS OVERVIEW
   extraction,  processing  and  smelting.  Our  surface  tailings  retreatment  operations,  including  the  requisite  infrastructure  and metallurgical processing plants, are located in South Africa. Our operating footprint is unique in that it involves some of the largest concentration of gold tailings deposits in the world, situated within the city boundaries of Johannesburg and its suburbs.
 The success of DRDGOLD’s long-term goal to extract as much gold as possible from its assets depends, to a large extent,
 on how effectively it continues to manage its capitals. DRDGOLD uses sustainable development to direct its strategic thinking. We seek sustainable benefits in respect to financial, manufactured, natural, social and human capitals, each of which is essential to our operations.
    into value-added increases in as many of the others as possible. We therefore seek to achieve an enduring and harmonious alignment between them, and we pursue these criteria in the feasibility analysis of each investment. The board intends to explore the opportunities made possible by technology, which means further investment in research and development (“R&D”) to improve gold recoveries even further over the long term.
 During the fiscal years presented in this Annual Report, all of our operations took place in one geographic region, namely
 South Africa.


21
 
 Description of Our Mining Business Surface tailings retreatment
  
  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 were the product of the “tube and ball mill” recovery process. This material has become economically more viable to process owing to improved treatment methods. The material from the slimes dams is broken down using monitor guns that spray jets of high pressure water at the target area. The resulting slurry is then pumped to a treatment plant for processing. Exploration
  existing sites and at undeveloped sites. Once a potential site has been identified, exploration is extended and intensified in order to enable clearer definition of the site and the portions with the potential to be mined. Geological techniques are constantly refined to improve the economic viability of exploration and exploitation.  Our Metallurgical Plants and Processes
  Gold Market
  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).
  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 average gold spot price increased by 8% from $1,167 per ounce to $1,257 per ounce after having decreased by 5% from
 $1,224 per ounce to $1,167 per ounce during the fiscal year 2016 and by 6.0% from $1,296 per ounce to $1,224 per ounce during the fiscal year 2015. The average gold price received by us for fiscal year 2017 was R548,268 per kilogram which was flat compared to the previous year at R546,142 per kilogram.
  economic volatility and the oversupply of foreign currency, will again make gold attractive to investors. The supply of gold has shrunk and is likely to shrink even more due to the significantly reduced capital expenditure and development occurring in the sector.  We believe that this, coupled with global economic uncertainty, is likely to provide significant support to the gold price in the long term.
 All of our revenue is generated in South Africa. Our total revenue for year ended June 30, 2017 amounted to R2,339.9
 million (2016: R2,443.1 million and 2015: R2,105.3 million).
  agreement entered into in October 2001. The gold bars which we produce consist of approximately 85% gold, 7-8% silver and the balance comprises copper and other common elements. The gold bars are sent to Rand Refinery for assaying and final refining where the gold is purified to 99.9% and cast into troy ounce bars of varying weights. Rand Refinery then usually sells the gold on the same day as delivery, for the London afternoon fixed dollar price, with the dollar proceeds remitted to us within two days. In exchange for this service we pay Rand Refinery a variable refining fee plus fixed marketing, loan and administration fees. We currently own 11% (fiscal year 2016 and 2015: 11%) of Rand Refinery.


22
 
  
 
  7. Accordingly, as of the date of reporting, all ore reserves are planned to be mined out under the life of mine plan within the period of our existing rights to mine, or within the time period of assured renewal periods of our rights to mine. In addition, as of the date of  this  report,  all  ore  reserves  are covered  by  required  permits  and  governmental  approvals.  See  Item  4D.  Property,  Plant  and Equipment for a description of the rights in relation to each mine.
 
  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.
  grade and content are quoted as delivered to the gold plant. There are two types of methods available to select ore for mining. The first is pay-limit, which includes cash operating costs, including overhead costs, to calculate the pay-limit grade. The second is the cut-off grade which includes cash operating costs, excluding fixed overhead costs, to calculate the cut-off grade, resulting in a lower figure than the full pay-limit grade. The cut-off grade is based upon direct costs from the mining plan, taking into consideration production levels, production efficiencies and the expected costs. We use the pay-limit to determine which areas to mine as an overhead inclusive amount that is indicative of the break-even position.
  includes all overhead costs, including head office charges, are equal to a three-year historical average gold price per ounce for that year. This calculation also considers the previous three years’ mining and milling efficiencies, which includes metallurgical and other mining factors and the production plan for the next twelve months. Only areas above the pay-limit grade are considered for mining. The pay-limit  grade  is  higher  than  the  cut-off  grade,  because  this  includes  overhead  costs,  which  indicates  the  break-even  position  of  the operation.
 
   ·  The potential ore to be mined is well defined by an externally verified and approved geological model;  ·  The potential ore, which is legally allowed to be mined, is also confined by the mine's lease boundaries; and ·  A business plan is prepared to mine the potential ore.
 
   prepared in accordance with industry practice, converting mineral deposits to an Ore Reserve through the preparation of a mining plan. The  Ore  Reserve  estimates  contained  herein  inherently  include  a  degree  of  uncertainty  and  depend  to  some  extent  on  statistical inferences. Ore reserve estimates require revisions based on actual production experience or new information. Should we encounter mineralization or formations different from those predicted by past drilling, sampling and similar examinations, ore reserve estimates may have to be adjusted and mining plans may have to be altered in a way that might adversely affect our operations. 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.
  rand gold price at the time of the ore reserve determination.
                                        Our Ore Reserves (imperial) increased from 1.84 million ounces at June 30, 2016, to 2.99 million ounces at June 30, 2017,
 mainly  because  of  a  drilling  program  and  pre-feasibility  study  (“PFS”)  that  commenced  during  September  2016  aimed  at  re-evaluating  our  surface  gold  tailings.  The  increase  was  offset  by  depletion  through  ongoing  mining  activities  and  other  survey adjustments. The life of mine for Ergo based on proven and probable ore reserves under Industry Guide 7 of the SEC as at June 30, 2017, was 12 years and the life of mine as at June 30, 2016, 7 years. The difference between the life of mine as described above versus the life of mine contemplated in Note 7 of Item 18 Financial Statements is due to differences in prevailing mineral reporting regulation in the different jurisdictions within which we report.


DRDGOLD's Ore Reserves as of June 30, 2017 and 2016 are set forth in the tables below.
 Ore Reserves: Imperial
 
 At June 30, 2017
 At June 30, 2016
 
 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)
 
 
 
 
 
 
 
 
 
 
 
 
 
 Ergo
 1
 
 
 
 
 
 
 
 
 
 
 
 
 
 Surface .............................................................
 99.691
 0.01
 881  230.136
 0.01
 2,110
 140.780
 0.01
 1,262  47.632
 0.01
 578
 Total
 2
 ...................................................................
 99.691
 0.01
 881  230.136
 0.01
 2,110
 140.780
 0.01
 1,262  47.632
 0.01
 578
 
  
 At June 30, 2017
 At June 30, 2016
 
 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)
 
 
 
 
 
 
 
 
 
 
 
 
 
 Ergo
 1
 
 
 
 
 
 
 
 
 
 
 
 
 
 Surface ..............................................................
 90.44
 0.303
 27.414
 208.78
 0.314
 65.621  127.716
 0.31
 39.246
 43.212
 0.42
 17.989
 Total
 2
 ...................................................................
 90.44
 0.303
 27.414
 208.78
 0.314
 65.621  127.716
 0.31
 39.246
 43.212
 0.42
 17.989
 
 
 1
 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 tons delivered to the mill.


The measurement and classification of our Proven and Probable Ore Reserves are sensitive to an extent to the fluctuation of
 the rand gold price. If we had used different rand gold prices than the three-year average prices at the time of ore reserve determination, as of June 30, 2017 and 2016 respectively, we would not have had significantly different ore reserves as of those dates. Using the same methodology and assumptions as were used to estimate Ore Reserves but with different rand gold prices as detailed below, our Ore Reserves as of June 30, 2017 and 2016 would be as follows:
 Year ended June 30, 2017
 
 Three-year
 average gold
 price
 Prevailing
 price
 10% Below
 prevailing
 price
 10% Above
 prevailing
 price
 Rand gold price per kilogram
 
 514,785
 565,000
 508,500
 621,500
 Dollar gold price per ounce
 1,216
 1,280
 1,152
 1,408
 Ore Reserves (million ounces)
 3.0
 3.0
 2.9
 3.0
 
 Year ended June 30, 2016
 
 Three-year
 average gold
 price
 Prevailing
 price
 10% Below
 prevailing
 price
 10% Above
 prevailing
 price
 Rand gold price per kilogram
 
 475,268
 591,697
 532,527
 650,867
 Dollar gold price per ounce
 1,228
 1,293
 1,164
 1,423
 Ore Reserves (million ounces)
 1.8
 1.8
 1.8
 1.8
 The approximate mining recovery factors for the 2017 ore reserves shown in the above table are as follows:
 
 
 
 
 Mine Call Factor
 (%)
 Metallurgical and
 recovery factor
 (%)
 Ergo .........................
 
 
 95
 47.4
 
 The approximate mining recovery factors for the 2016 ore reserves shown in the above table are as follows:
 
 
 
 
 Mine Call Factor
 (%)
 Metallurgical and
 recovery factor
 (%)
 Ergo .........................
 
 
 95
 42.8
 The following table shows the average drill/sample spacing (rounded to the nearest foot), as at June 30, 2017 and 2016, for
 each category of Ore Reserves at our mines calculated based on a three year average dollar price of gold.
 
 Proven
 Reserves
 Probable
 Reserves
 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 amounting to R514,785 and costs used to determine
 reserves as of June 30, 2017, are as follows
 
 Pay-limit grade (g/t)
 Costs used to determine pay-
 limit grade (R/t)
 Ergo .........................................................................................
 0.284
 65.95
 
 The pay-limit grades based on the three year average dollar price for gold amounting to R475,268 and costs used to determine
 reserves as of June 30, 2016, are as follows:
 
 
 
 Pay-limit grade
 (g/t)
 Costs used to
 determine pay-
 limit grade (R/t)
 Ergo .......................................................................
 
 
 0.26
 60.08
 We apply the pay-limit approach to the mineralized material database of our business in order to determine the tonnage and
 grade available for mining.


Governmental regulations and their effects on our business Common Law Mineral Rights and Statutory Mining Rights
  mineral rights in South Africa could be acquired through the common law or by statute. With effect from May 1, 2004, all minerals have  been  placed  under  the  custodianship  of  the  South  African  government  under  the  provisions  of  the  MPRDA  and  old  order proprietary rights were required to be converted to new order rights of use within certain prescribed periods, as dealt with in more detail below.  Conversion of Rights under the Mineral and Petroleum Resources Development Act, 2002
  for which rights existed at the time of the enactment of the MPRDA. 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 a social and labor plan. These applications had to be submitted within five years after the promulgation of the MPRDA on May 1, 2004. Similar procedures apply where we hold prospecting rights and a prospecting permit and conduct prospecting operations. Under the MPRDA mining rights are not perpetual, but endure for a fixed period, namely a maximum period of thirty years, after which they may be renewed for a further period of thirty years. Prospecting rights are limited to five years, with one further period of renewal of three years. Applications for conversion of our old order rights were submitted to the DMR within the requisite time periods. As at September 30, 2017, all of our old order mining rights have been converted into new order rights under the terms of the MPRDA.
  Amendment Bill to the MPRDA
  once signed by the State President. Some of the more important changes introduced by the Bill is to allow the holder of a Mining Right to also mine “associated minerals” not specifically included in the Mining Right; it addresses anti-competitive conduct by requiring the Minister of Minerals to refuse an application for exploration rights if it will cause a “concentration of rights” as defined in the Bill; historic and old mine dumps are to be included in the definition of “residue stockpiles” and certain rehabilitation obligations are created in respect of the discarded mines to which they pertain; and liability for rehabilitation will extend beyond the issuance of a closure certificate and financial provision for closed sites will be required to be maintained for a period of 20 years after a site is closed. Should the amendment bill to the MPRDA be enacted in its currently proposed form, the latter three amendments referred to above may have a fundamental impact on the Group's estimated environmental provisions.
  impact on the industry is further investigated. No further developments occurred during the year ended June 30, 2017.
  The Broad Based Socio-Economic Empowerment Charter
  by  the  Minister  within  six  months  of  commencement  of  the  MPRDA  beginning  May  1,  2004.  The  Mining  Charter  was  initially published in August 2004 and was subsequently amended in September 2010. 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
  ·
   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 by May 1, 2014. It also sets out guidelines and goals  in  respect  of  employment  equity  at  management  level  with  a  view  to  achieving  40 percent  participation  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 around August 2010.
  DMR  places  significant  emphasis  on  the  compliance  therewith.  The  Mining  Charter  and  scorecard,  have  a  decisive  effect  on administrative action taken under the MPRDA.


people in the industry to reflect the country’s population demographics, to empower and enable them to meaningfully participate in and sustain the growth of the economy, thereby advancing equal opportunity and equitable income distribution, we have achieved our commitment to ownership compliance with the MPRDA through our existing black economic empowerment structure with Khumo Gold and the DRDSA Empowerment Trust. Our black economic empowerment partners, Khumo Gold and the DRDSA Empowerment Trust, hold 8% and 2%, respectively, in DRDGOLD Limited. (See Item 4C. Organizational Structure).
  African Mining and Minerals Industry, 2016 (“Mining Charter 3”). Mining Charter 3 was gazetted by the DMR on 15 June 2017.
  ·
 o  8% employees o  8% mine communities o  14% black entrepreneurs
  ·  Right-holders already at 30% not required to apportion ·  Right-holders already at 26% must increase to 30% within 12 months but do not need to apportion  ·  30% BEE shareholding must be held in entities or persons which are separate from the right-holder ·    Minimum 50% plus 1 Black Person shareholding for all new prospecting rights; must include voting rights ·  Right holder to pay 1% of annual turnover to the 30% BEE prior to any distribution to its shareholders.  The solvency
  ·
 up to 30% within 12 months. Applies even where black person shareholding is no longer 26% due to either a BEE partner exiting or the contract with the BEE partner lapsing or the transfer of shares by the BEE partner to non-BEE persons.
 
  determined by the judiciary through litigation.
  of the original and 2010 Mining Charter has been re-enrolled by the Deputy Judge President of the North Gauteng High Court, Pretoria for November 9 and 10, 2017. The Chamber of Mines, on behalf of its members including DRDGOLD, is applying to court to have the charter set aside. The Minister of Mineral Resources has undertaken not to implement the charter until judgment has been handed down in respect of the application. The case is to be heard on December 13 and 14, 2017 by a full bench of judges in the North Gauteng High Court.
     http://www.notourcharter.co.za/component/jdownlo/ads
  its current form, the revised Mining Charter 3 may adversely impact the industry and our business. Mine Health and Safety Regulation
  January 1997. The principal object of the Mine Health and Safety Act is to improve health and safety at South African mines and, to this end, imposes various duties on us at our mines and grants the authorities broad powers to, among other things, close unsafe mines and order corrective action relating to health and safety matters. In the event of any future accidents at any of our mines, regulatory authorities could take steps which could increase our costs and/or reduce our production capacity. The 2009 amendments to the Act dealt with inter alia the stoppage of production and increase punitive measures including increased financial fines and legal liability of mine management. Some of the more important new provisions in the 2009 amendment bill are the insertion of a new section 50(7A) that obliges an inspector to impose a prohibition on the further functioning of a site where a person’s death, serious injury or illness to a person or a health threatening occurrence has occurred; a new section 86A(1) creating a new offence for any person who contravenes or fails to comply  with the provisions  of the Mine Health and Safety Act thereby causing a person’s death or serious injury or illness to a person. Subsection (3) further provides that (a) the “fact that the person issued instructions prohibiting the performance or an omission is not in itself sufficient proof that all reasonable steps were taken to prevent the performance or omission”; and that (b) “the defense of ignorance or mistake by any person accused cannot be permitted”; or that (c) “the defense that the death of a person, injury, illness or endangerment was caused by the performance or an omission of any individual within the employ of the employer may not be admitted”; a new section 86A(2) creating an offence of vicarious liability for the employer where  a  Chief  Executive  Officer,  manager,  agent  or  employee  of  the  employer  committed  an  offence  and  the  employer  either connived at or permitted the performance or an omission by the Chief Executive Officer, manager, agent or employee concerned; or did not take all reasonable steps to prevent the performance or an omission. The maximum fines have also been increased. Any owner convicted in terms of section 86 or 86A may be sentenced to “withdrawal or suspension of the permit” or to a fine of R3 million or a period of imprisonment not exceeding five years or to both such fine and imprisonment, while the maximum fine for other offences and for administrative fines have all been increased, with the highest being R1 million. The President assented to the amendment bill in April 2009. The amendment Act was proclaimed and came into law in May 2009.


employers are required to contribute to a fund specifically created for the purpose of compensating employees or their dependents for disability or death arising in the course of their work. Employees who are incapacitated in the course of their work have no claim for compensation  directly  from  the  employer  and  must  claim  compensation  from  the  COID  Act  fund.  Employees  are  entitled  to compensation without having to prove that the injury or disease was caused by negligence on the part of the employer, although if negligence is involved, increased compensation may be payable by this fund. The COID Act relieves employers of the prospect of costly damages, but does not relieve employers from liability for negligent acts caused to third parties outside the scope of employment. In fiscal year 2017, we contributed approximately R3.6 million under the COID (2016: R3.4 million and 2015: R4.6 million) Act to a multi-employer industry fund administered by Rand Mutual Assurance Limited.
  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.
    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
  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.
    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.
  mining rights.
  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.
  MPRDA.
  currently proposed form may have a fundamental impact on the Group's estimated environmental provisions due to the inclusion of historic and old mine dumps in the definition of “residue stockpiles” which creates certain rehabilitation obligations for the discarded mines to which they pertain as well as the extension of the liability for rehabilitation beyond the issuance of a closure certificate and the requirement to maintain financial provision for closed sites for a period of 20 years after a site is closed.


Financial Provision for Rehabilitation
  once the mining operations cease. We fund these environmental rehabilitation costs by irrevocable contributions to environmental trust funds that function under the authority of trustees that have been appointed by, and who owe a statutory duty of trust to the Master of the High Court of South Africa. The funds held in these trusts are invested primarily in interest bearing debt securities. As of June 30, 2017, we held a total of R110.5 million (2016: R103.0 million) in trust, the balance held in each fund being R100.6 million (2016: R93.8 million) for Ergo and R9.9 million (2016: R9.2 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.  If  any  of  the  operations  are  prematurely  closed,  the rehabilitation funds may be insufficient to meet all the rehabilitation obligations of those operations.
  mine, the MPRDA assumes a fully compliant fund at any given time. Insurance instruments may also be utilized to make up the shortfall in available cash funds subject to the DMR’s consent. The Company has subsequently made use of approved insurance products for a portion of its rehabilitation liabilities. As of June 30, 2017, we held a total of R117.2 million (2016: R108.3 million) in funds held in insurance instruments. As at June 30, 2017 guarantees amounting to R427.3 million (2016: R427.2 million) were issued to the DMR.
  compared to R538.5 million at June 30, 2016. This has been included in the provision for environmental rehabilitation amounting to R531.7 million (2016: R522.9 million) as well as in assets and liabilities classified as held for sale amounting to nil (2016: R15.6 million) in our financial statements as at June 30, 2017.
  Management Act, 107 of 1998 (“NEMA”). Under these FRPs to be implemented by the DMR, existing environmental rehabilitation trust funds, of which DRDGOLD has R110.5 million, may be used only for post closure activities and may no longer be utilized for their intended purpose of concurrent and final rehabilitation on closure. As a result, new provisions will have to be made for these activities.


4C. ORGANIZATIONAL STRUCTURE
 
  South Africa. Our voting interest in each of our subsidiaries are equal to our ownership interests. 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.
   4D. PROPERTY, PLANT AND EQUIPMENT DRDGOLD OPERATIONS SEPTEMBER 30, 2017
    Description of Significant Subsidiaries' Properties and Mining Operations Ergo Overview
  central and east Johannesburg. In order to improve synergies, effect cost savings and establish a simpler group structure, DRDGOLD restructured the Group’s surface operations (Crown, ERPM’s Cason Dump surface operation and ErgoGold) into Ergo with effect from July 1, 2012. ERPM’s Cason Dump surface tailings retreatment operation was depleted in the first half of fiscal year 2015. At June  30,  2017,  DRDGOLD  employed  850  full-time  employees.  In  addition,  specialist  service  providers  deployed  a  further  1,365 employees to our operations bringing the total number of in-house and outsourced employees to 2,215.   Properties
  province of Gauteng on land owned by Ergo. Access to the Ergo plant is via the Ergo Road on the N17 Johannesburg-Springs motorway. As of June 30, 2017, and September 2017, no encumbrances exist on Ergo's property.


Deep, Crown Mines and Knights. The entire mining footprint consists of the mining rights of City Deep, Consolidated Main Reef & Estates, Crown Mines (“3Cs”) and Knights. Crown’s mining rights have been converted to new order rights under the MPRDA and the mining rights in respect of the 3Cs and Knights were registered at the Mineral and Petroleum Titles Registration Office in January 2014. Following the restructuring of the company into a single surface retreatment business unit, these mining rights were transferred to Ergo in March 2014.
  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.  However,  over  a  period  of  more than  30  years  our  ore reserves in the western Witwatersrand had become depleted. We therefore took a decision at the end of fiscal year 2016 that in fiscal year 2017 we would complete the recovery of material from a number of Crown reclamation sites and to close the Crown plant. This plant operated as a pump/milling station feeding the metallurgical plants until March 2017 when it ceased all operations. By the end of fiscal year 2017, most of the Crown sites had been cleared and substantial progress had been made on the rehabilitation of the Crown plant site, which is expected to be completed by the end of the 2017 calendar year.
  approximately 3 miles (5 kilometers) south-east of the Johannesburg central business district in the province of Gauteng. Access is via the Heidelberg Road on the M2 Johannesburg-Germiston motorway. The City Deep plant continues to operate as a pump/milling station feeding the metallurgical plants.
    continues to operate as a metallurgical plant. History of Ergo
  Anglo  American  Corporation  commissioned  the  Ergo  plant  in  Brakpan  in  1977.  The  operation  became  part  of AngloGold Ashanti in 1998 and was closed by that company in 2005.
  Ergo was founded by EMO (owned by DRDGOLD at the time) and Mintails SA as a joint venture. On August 6, 2007, the joint venture parties entered into an agreement with AngloGold Ashanti - pursuant to which it acquired the remaining assets of the Ergo plant for 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 Brakpan/Withok TDF for a consideration of R45.0 million.
 
  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.
  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.
  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.
  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.
    To improve synergies, effect cost savings and a simpler group structure DRDGOLD restructured the Group’s surface operations  into  Ergo  on  July  1,  2012,  which  consisted  of  Crown,  the  surface  operations  of  ERPM  and  ErgoGold. Construction and commissioning of the Ergo flotation/fine-grind plant (FFG) was completed in late December 2013.
  The FFG was suspended in April 2014 after metallurgical efficiencies declined. Test-work recommenced in August. A prospecting right in respect of surface tailings dumps on various portions of the Farm Grootvlei and a portion of the Farm Geduld was registered on May 12, 2014 for a period of 5 years ending on April 21, 2019.
  The FFG became fully operational in February 2015. Ministerial consent in terms of section 11 of the MPRDA for the restructuring of the Group’s surface operations into Ergo were obtained.
  A legal review of the existing authorisations was undertaken for increasing the deposition capacity of the Brakpan/Withok TDF. The results indicated that most of the current authorisations are sufficient, however certain documentation will need to be amended.
 
 History of Crown (consolidated into Ergo on July 1, 2012)
  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.
      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 Mines, City Deep and Knights.
    Khumo Bathong Holdings Proprietary Limited (KBH) purchased 60% of Crown. We were appointed as joint manager of the operation with KBH.
  On July 6, 2005 we signed a Memorandum of Understanding with KBH regarding the acquisition by Khumo Gold of a 15% stake in our then South African operations. On October 27, 2005, our board of directors approved the transaction with Khumo Gold. The new structure resulted in Khumo Gold acquiring a 15% interest in a newly created vehicle, EMO, which included 100% of ERPM, Crown and Blyvoor. As a result we owned an 85% interest in EMO.
  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, Crown concluded an agreement with AngloGold Ashanti to purchase the Top Star Dump.
    The reclamation of the Top Star Dump commenced in December 2008. Crown also commenced with the reduction of volumes to 0.4Mtpm to implement the planned Crown Tailings Deposition Facility closure plan.
  The surface circuit of ERPM was incorporated into Crown for 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 0.6Mtpm. Restored deposition capacity provides the operation with the opportunity to exploit potential new ore reserves.
    On July 1, 2012, Crown sold its mining assets, mining and prospecting rights and certain liabilities to Ergo in exchange for shares in Ergo.
  Ministerial consent in terms of section 11(2) of the MPRDA to cede the converted mining rights of Crown to Ergo was obtained and in August 2015 the converted mining rights were registered.
   Mining and Processing
  
  generally undergone a complex depositional history resulting in grade variations associated with improvements in plant recovery over the period 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.
 
   tons of material per year based on 92% availability and are fully operational. All of the plants have undergone various modifications during  recent  years  resulting  in  significant  changes  to  the  processing  circuits.  The  City  Deep  plant  continues  to  operate  as  a pump/milling station feeding the metallurgical plants. The Crown plant operated as a pump/milling station feeding the metallurgical plants until March 2017 when it ceased all operations.
 
   pipeline; and tailings deposition facilities including the significant Brakpan/Withok TDF.
  loaders, re-pulped with water and pumped to the plant. Slime is reclaimed using high pressure water monitoring guns also known as hydraulic reclamation. The re-pulped slime is pumped to the plant and the reclaimed material is treated using screens, cyclones, ball mills as well as floatation and fine grind, or FFG, and Carbon-in-Leach, or CIL, technology to extract the gold.
 
 
   
  Ergo Plant:  Commissioned by Anglo American Corporation in 1977, became part of AngloGold Ashanti in 1998 from which it was acquired for a consideration of R42.8 million in 2007. The remaining five CIL tanks were refurbished during fiscal year 2015 to increase capacity to treat up to 25.2Mt per year. The Ergo FFG project is designed to assist in liberating the gold particles  currently  encapsulated  in  the  sulphides  and  to  achieve  a  targeted  improvement  in  gold  recovery  efficiencies  of between  16%  and  20%.  This  circuit  commenced  a  three  month  test  phase  during  August  2014  after  it  was  temporarily suspended in April 2014 following a decline in metallurgical efficiencies. By February 2015 the FFG was returned to full operation.
 
 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 TDF. Due to the location of the Knights plant it is able to access the Brakpan TDF to deposit waste. The Knights plant has an installed capacity to treat an estimated 3.6Mt per year.


Crown  Plant:    Commissioned  in  1982,  this  surface/underground  plant  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. It continued to screen, mill and thicken material before being pumped to the Ergo plant for the final extraction of gold up to March 2017 when all operations were ceased at this plant. The rehabilitation of the Crown plant site is expected to be completed by the end of calendar year 2017.
 
  City Deep Plant:  Commissioned in 1987, this surface/underground plant comprises a circuit including screening, primary, secondary  and  tertiary  cycloning  in  closed  circuit  milling,  thickening,  oxygen  preconditioning,  CIL,  elution  and  zinc precipitation followed by calcining and smelting to doré. Retreatment continued at the City Deep Plant until the plant was decommissioned in August 2013 to operate as a milling and pump station and is currently pumping material to the Ergo Plant for the final extraction of gold.
 
   Capital Expenditure
    on line, being one of three new reclamation sites that were commissioned during fiscal year 2017 to replace the various Crown sites that were closed, as well as R29.5 million on the Centralised Water Facility to reduce the use of potable water and reduce the associated cost of water. The balance was spent on various other smaller items.
     
  obtained through specific financing arrangements if required. For a summary of capital expenditure, see Item 5A. Operating Results. Exploration and Development
 
    
 
 Environmental and Closure Aspects
  The major environmental risks are associated with dust from various reclamation sites, and effective management of relocated process material on certain tailings dams. The impact of windblown dust on the surrounding environment and community is addressed through a scientific monitoring and evaluation process, with active input from Professor H. Annagran from the Cape Peninsula University of Technology  and  appropriate  community  involvement.  Environmental  management  programs,  addressing  a  wide  range  of environmental  issues,  have  been  prepared  by  specialist  environmental  consultants,  which  are  audited  annually.  Water  pollution  is controlled by means of a comprehensive system of return water dams which allow for used water to be recycled for use in Ergo’s metallurgical plants. Overflows of return water dams may, depending on their location, pollute surrounding streams and wetlands. Ergo has an ongoing monitoring program to ensure that its water balances (in its reticulation system, on its tailings and its return water dams) are maintained at levels that are sensitive to the capacity of return water dams.
  and organic dust suppression on recovery sites. Short-term dust control is accomplished through ridge ploughing the top surface of dormant tailings dams. Additionally, environmentally friendly dust suppressants are applied. Dust fall-out is monitored through an extensive dust monitoring network monthly, and is utilized as a management measure to ensure the effectiveness of mitigation measures employed. In the long-term, dust suppression and water pollution is managed through a program of progressive vegetation of the tailings followed by the application of lime, to reduce the natural acidic conditions, and fertilizer to assist in the growth of vegetation planted on the tailings dam.
  life of the mine is in place. The surface reclamation process at Ergo has several environmental merits as it removes potential pollution sources and opens up land for development.
 Environmental  management  and  compliance  is  further  assisted  by  the  in–house  developed  electronic  monitoring  system
 (Compliance  Management  Tool) that incorporates all existing  Environmental  Impact Assessments (“EIAs”), EMPs,  Mining Right Conversions, Performance Assessments and Social and Labor Plans (“SLPs”) associated with each mining right. The existing and most recent  studies  are  used  to  supplement  the  management  components  with  regards  to  the  mining  right  boundaries  and  its  required compliance parameters. The individual  management items are integrated to provide a holistic  overview  of the state  of each of the mining right areas. Spatial data pertaining to the mining right boundaries is stored onto a central database and is utilized to create a live map  which  illustrates  the  mining  right  area  and  various  environmental  monitoring  systems.  This  map  depicts  the  mining  right boundaries, roads, rails, mine dumps, plants, rivers, pipeline routes, servitudes, way leaves, municipal services and other spatial data relevant to our mining operations.


current monetary terms as at June 30, 2017 is approximately R531.7 million. As at June 30, 2017, a total of R110.5 million is held in the Crown Rehabilitation Trust Fund which 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. In addition, a total of R48.9 million is held in insurance instruments. Ore Reserves
  Probable Ore Reserves was 1.8 million ounces. A Mineral Resource competent person is appointed at each operation to review our Ore Reserve calculations for accuracy. For Ergo, Mr. Gary Viljoen is the designated competent person in terms of the SAMREC Code responsible for the compilation and reporting of ore reserves. Ore reserves were independently reviewed by Red Bush Geoservices Proprietary  Limited  (Red  Bush)  for  compliance  with  the  SAMREC  Code,  the  National  Instrument  43-101  and  the  United  States Securities and Exchange Commission (SEC) Industry Guide 7. Production
    yield from 0.180g/t to 0.171g/t. The lower average yield was mainly a consequence of a bigger than expected knock-on effect of treating the material from the Crown sites that were closed. This was due to this reclaimed material requiring high volumes of water to treat.  As  a  result,  the  treatment  system  contained  more  water  than  material,  leading  to  lower  densities  and  with  no  capacity  for augmentation with material from our other operating sites. Volume throughput for the year remained flat at 24,958,000 tonnes compared to 24,842,000 tonnes in fiscal year 2016.
  to the decline in the average yield.
                               (1)
      (1)
      (1)
      (1)
       (1)
 Cash operating cost, cash operating costs per kilogram, all-in sustaining costs per kilogram and all-in costs per kilogram are financial measures of performance that we use to determine cash generating
 capacities of the mines and to monitor performance of our mining operations. These are all non IFRS measures. For a reconciliation of these measure see Item 5A.: “Operating Results - Reconciliation
 of cash cost per kilogram, all-in sustaining costs per kilogram and all-in costs per kilogram.”
 
  ERPM
 
 Overview
  ERPM consists of an underground section that was halted in October 2008. At June 30, 2017, ERPM had no employees. The financial results and assets and liabilities of these halted underground operations are included in ‘Corporate office and other reconciling items’ in the financial statements for segmental reporting purposes for all three years presented.
  
  nominee of Australian based Walcott Capital, for the disposal of certain of the underground mining and prospecting rights held by ERPM  including  the  related  liabilities.  All  regulatory  approvals  required  for  this  disposal  have  now  been  obtained,  with  the exception  of  the  approval  required  under  Section  11  of  the  Mineral  and  Petroleum  Resource  Development  Act  as  a  result  of circumstances beyond our control.


in the town of Boksburg, 20 miles (32 kilometers) east of Johannesburg on land owned by ERPM. Access is via Jet Park Road on the  N12  Boksburg-Benoni  highway.  Historically  underground  mining  and  recovery  operations  comprised  relatively  shallow remnant pillar mining in the central area and conventional longwall mining in the south-eastern area. Surface reclamation operations including the treatment of sand from the Cason Dump, was conducted through the Knights metallurgical plant, tailings deposition facilities and associated facilities. Until underground mining was halted in October 2008, the mine exploited the conglomeratic South Reef, Main Reef Leader and Main Reef in the central area and the Composite Reef in the south-eastern area. ERPM operates under mining license ML5/1997 in respect of statutory mining and mineral rights. As of June 30, 2017, and September 30, 2017, no encumbrances exist on ERPM's property.
 
      
  
      ERPM  was  liquidated  in  August  1999.  The  mine  was  run  by  a  small  number  of  employees  during  liquidation. Underground flooding continued during liquidation.
  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.
    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.
  In July 2004 it was determined that the underground section would undergo a controlled closure program ending March 2005. The closure program was delayed due to a reduction in costs and improved productivity at the mine.
  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. As a result, we owned an 85% interest in EMO.
  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.
  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).
  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.
  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.
    On July 1, 2012, ERPM sold all its surface mining assets (excluding its 50% interest in Ergo) and its 65% interest in ErgoGold to Ergo in exchange for shares in Ergo.
 
  During July 2014 EMO and ERPM entered into an agreement with ERPM South Africa Holding Proprietary Limited, the nominee of Australian based Walcott Capital for the disposal of certain of the underground mining and prospecting rights held by ERPM including the related environmental liabilities. This agreement is subject to a number of suspensive conditions including regulatory consent and permission which had not been fulfilled at the date of this report. ERPM Extension 2 prospecting right was renewed.
  Ministerial consent in terms of section 11(2) of the MPRDA to cede the converted mining rights of ERPM’s surface operations to Ergo was obtained and in August 2015 the converted mining rights were registered.
  Management concluded the restructure of payment terms in support of the timely conclusion of the disposal of certain underground assets


Mining and Processing
    Exploration and Development
  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  would  take  place  through  development  situated  50m  in  the  footwall.  Owing  to  high  induced  stress experienced at depth, there will be concurrent over-stoping (that is stoping taking place concurrently with development) on the reef plane for safety reasons. Prior to this prospecting right in respect of ERPM Ext. 1 lapsing, an application for a mining right in respect of the same prospecting footprint was made in terms of the provisions of the MPRDA. The said mining right was approved and granted and the registration thereof took place in March 2012. The mining right will expire in January 2042.
  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  year  2007. Known  as ERPM Extension 2, the additional area is 5,500ha (13,590 acres). This prospecting right was initially granted for a period of 4 years and expired in March 2011. An application for renewal thereof was made in terms of the provisions of the MPRDA. The renewal of the prospecting right was initially refused by the DMR, but after an appeal was lodged with the Legal Services Directorate of the DMR, the renewal of the prospecting right was granted in November 2014. These rights, ERPM Ext 1 and ERPM Ext 2, both form part of the sale assets of the transaction with Walcott Capital. Environmental and Closure Aspects
 
 
  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.
    plant) to prevent the ground water being contaminated. TCTA completed the construction of the neutralisation plant for the Central Basin and commenced treatment during July 2014. As part of the Heads of agreement signed in December 2012 between EMO, Ergo, ERPM and TCTA, sludge emanating from this  plant is co-disposed onto the Brakpan/Withok TDF. Partially treated water is then discharged by TCTA into the Elsburg Spruit. This agreement includes the granting of access to the underground water basin through one of ERPM shafts and the rental of a site  onto which it constructed its  neutralisation plant.  In exchange, Ergo and its associate companies including ERPM have a set-off against any future directives to make any contribution toward costs or capital of up to R250 million. Through this agreement, Ergo also secured the right to purchase up to 30 ML of partially treated AMD from TCTA at cost, in order to reduce Ergo’s reliance on potable water for mining and processing purposes.
    30, 2017 the present discounted value of the total cost of rehabilitation for ERPM is approximately R16.8 million. A total of R9.9 million in the ERPM Rehabilitation Trust Fund and R68.2 million in insurance instruments is available for the settlement of these rehabilitation costs. This is an irrevocable trust, managed by specific responsible people who we nominated and who are appointed as trustees by the Master of the High Court of South Africa.  Ongoing Legal Proceedings Ekurhuleni Metropolitan Municipality Electricity Tariff Dispute – Main Application
    Ekurhuleni Metropolitan Municipality (“Municipality”) and Eskom Holdings SOC Limited in terms of which Ergo contends, among other things, that the Municipality does not “supply” electricity to Ergo from a “supply main” as contemplated in the Municipality’s Electricity By-Laws of 2002 (“Main Application”), for the following reasons:
 ·  The Municipality is not licensed to supply electricity to Ergo ito the Municipality’s Temporary Distribution Licence.  ·  The Municipality is not entitled to render tax invoices to Ergo for supply and consumption of electricity from the substation.  ·  The Municipality is furthermore not competent to add a surcharge or premium of approximately 40% (forty percent) of the
  ·
 for any amounts claimed in the invoices rendered by the Municipality in excess of its actual consumption, therefore, as determined by Eskom on a monthly basis.
 ·
 that were erroneously paid to the Municipality in the bona fide and reasonable belief that the Municipality was competent to supply electricity to it.


surcharges of which R86.1 million has been paid into an attorney’s trust account at June 30, 2017 pending the final determination of the Main Application.
  Ekurhuleni Metropolitan Municipality Electricity Tariff Dispute – Urgent Application
   Municipality, on May 25, 2015 threatened to terminate the electricity supply at the Substation in terms of the provisions of the By-Laws described above. The Municipality was, furthermore, contending that ERGO was allegedly in arrears of its account and was seeking to employ its debt collection and credit control measures in relation the alleged arrears. ERGO proceeded to launch an urgent application at the South Gauteng High Court, Johannesburg, to interdict the Municipality from terminating the electricity supply at the Substation. On May 03, 2016, the Court found in favour of ERGO and interdicted and prohibited the Municipality from terminating or otherwise interfering with the supply of electricity at the Substation. The Municipality subsequently, and ultimately, petitioned the Supreme Court of Appeal (“SCA”) for leave to appeal against the judgment. The appeal hearing was heard by the full bench of the South Gauteng High Court, Johannesburg on June 20 and 21, 2017. Judgment in respect thereof was handed down on August 29, 2017 and the full bench found in favour of the Municipality. ERGO filed its petition for leave to appeal to the SCA on September 26, 2017. Silicosis Litigation
  (collectively referred to as "Respondents") were served with a court application issued in the High Court of South Africa (“Court") for a class certification (“Certification Application”) on behalf of former mineworkers and dependants of deceased mineworkers (“Applicants”).  In  the  application  the  Applicants  allege  that  the  Respondents  conducted  underground  mining  operations  in  a negligent and complicit manner causing the former mineworkers to contract occupational lung diseases. The Applicants have as yet not quantified the amounts which they are demanding from the Respondents in damages.
  and a tuberculosis class, both of which cover current and former underground mineworkers who have contracted the respective diseases (or the dependants of mineworkers who died of those diseases); and (2) that the common law be developed to provide that in instances where a claimant claiming general damages passed away, the claim for general damages will be transmitted to the estate of the deceased claimant.
  September 2016 respectively. The appeal has been set down for hearing from March 19 to 13, 2018.
  discuss issues pertaining to the action.
  since indicated that they would be seeking a possible settlement of the class action and have all raised an accounting provisions at 30 June 2017 due to progress made by the Working Group towards settlement of the claims.
 DRDGOLD took the view that it is too early to consider settlement of the matter, mainly for the following reasons:  • the Applicants have as yet not issued and served a summons (claim) in the matter;  •  there  is  no  indication  of  the  number  of  potential  claimants  that  may  join  the  class  action  against  the  DRDGOLD respondents; • many principles upon which legal responsibility is founded, are required to be substantially developed by the trial court (and possibly subsequent courts of appeal) to establish liability on the bases alleged by the applicants.
    
     valuation of various surface right permits (“SRPs”) of which ERPM is the registered holder in terms of the Municipal Property Rates Act. ERPM entered an appearance to defend the matter within the requisite time frames.
    payment of rates and taxes for which it recognised an accrual of R22.7 million.


had been written off and the balance owing by ERPM was reduced to zero. The statements issued by the Municipality up to the date of this report continue to reflect a zero balance. As a result, the accrual was reversed during fiscal year 2016.
 ITEM 4A. UNRESOLVED STAFF COMMENTS
 None.
 ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
   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.
  5A. OPERATING RESULTS
 Business overview
  extraction,  processing  and  smelting.  All  our  surface  tailings  retreatment  operations,  including  the  requisite  infrastructure  and metallurgical processing plants, are located in South Africa. Our operating footprint is unique, in that it involves some of the largest concentration of gold tailings deposits in the world, situated within the city boundaries of Johannesburg and its suburbs.
 The success of DRDGOLD’s long-term goal to extract as much gold as possible from its assets depends, to a large extent,
  DRDGOLD’s strategic thinking is informed by principles of sustainable development. Our goal is to optimally exploit our
 entire resource over the long term, thereby seeking sustainable benefits in respect to the following capitals, each of which is essential to our operation – financial, manufactured, natural, human and social capital.
 We also aim to align and overlap the interests of each of these capitals in such a manner that an investment in any one
 translates into value-add in as many of the others as possible. We therefore seek to achieve an enduring and harmonious alignment between them, and we pursue these criteria in the feasibility analysis of each investment.
    received remained flat at R548 268. The lower gold production was due to a lower average yield as the throughput volumes were consistent with fiscal year 2016. The profit for fiscal year 2017 also includes a profit on disposal of property, plant and equipment of R12.9 million and a net income tax credit of R50.4 million which mainly consist of a deferred tax rate adjustment of R37.5 million.
  per kilogram despite a 4% decrease in gold produced. It also includes a reversal of an accrual of R22.7 million and a profit on disposal of property, plant and equipment of R10.5 million.
  per  kilogram  and  an  13%  increase  in  gold  produced.  It  also  includes  a  fair  value  adjustment  on  available-for-sale  investments reclassified to profit or loss of R19.9 million and a profit on disposal of equity accounted investment of R5.9 million.
  Key drivers of our operating results and principal factors affecting our operating results
 The principal uncertainties and variables facing our business and, therefore, the key drivers of our operating results are:
 ·  The price of gold, which fluctuates both in terms of dollars and rands; ·  Our production tonnages and gold content thereof, impacting on the amount of gold we produce at our operations; ·  Our cost of producing gold, including the effects of mining efficiencies; and ·  General economic factors, such as exchange rate fluctuations and inflation, and factors affecting mining operations in South


Gold price
  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 U.S. dollar (the currency in which the price of gold is generally quoted) and of other currencies, interest rates, actual or expected gold sales by central banks, forward sales by producers, global or regional political or economic events, and production and cost levels  in major  gold-producing regions  such as South  Africa. In addition,  the price  of  gold is  often subject to rapid  short-term changes because of speculative activities. The demand for and supply of gold affects gold prices, but not necessarily in the same manner  that  supply  and  demand  affect  the  prices  of  other  commodities.  The  supply  of  gold  consists  of  a  combination  of  new production  from  mining  and  existing  stocks  of  bullion  and  fabricated  gold  held  by  governments,  public  and  private  financial institutions, industrial organizations and private individuals. As a general rule we sell the gold produced at market prices to obtain the maximum benefit from prevailing gold prices and we do not hedge against changes in gold prices.
 The following table indicates data relating to the dollar gold spot prices for the 2017, 2016 and 2015 fiscal years:
                                                                     is significant to our operating results. The average gold price in rand (based on average spot prices for the year) increased from R13,989 per ounce in 2015 to R16,939 per ounce in 2016, a 21% increase from fiscal year 2015 and to R17,094 per ounce in 2017, a 1% increase from fiscal year 2016.
 An increase/(decrease) of 10% in the rand gold price throughout fiscal year 2017 would have increased/(decreased) revenue
      yield  of  0.171g/t)  from  143,457  ounces  in  fiscal  year  2016  (produced  from  24.8  million  tonnes  milled  at  an  average  yield  of 0.180g/t). The decrease in total gold produced is mainly due to the lower average yield achieved. The decrease in yield was due to the reclaimed material from the Crown sites in the western Witwatersrand that were closed that required higher volumes of water to treat.  As  a  result,  the  treatment  system  contained  more  water  than  material,  leading  to  lower  densities  and  with  no  capacity  for augmentation with material from our other operating sites.
  yield  of  0.180g/t)  from  150,145  ounces  in  fiscal  year  2015  (produced  from  23.8  million  tonnes  milled  at  an  average  yield  of 0.197g/t). The decrease in total gold produced was mainly due to the lower average yield achieved which was a consequence of various factors:


Cash operating costs
  non-IFRS financial measure of performance that is
   is used to monitor performance
  reconciliation of this measure see Item 5A.: “Reconciliation of cash cost per kilogram, all-in sustaining costs per kilogram and all-in costs per kilogram.”.
  incurred in the production of gold. Consumables, water and electricity, labor, specialized service providers and other costs are the largest components  of cash  operating costs.  The breakdown  of cash  operating costs into these costs  are  described in  Item 5A.: “Comparison of financial performance for the fiscal year ended June 30, 2017 with fiscal year ended June 30, 2016” General economic factors
  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
  operating costs were denominated in rand and we derived all of our revenues in dollars before being translated to rands. As the price of gold is denominated in dollars which is then translated into rands, the appreciation of the dollar against the rand increases our profitability, whereas the depreciation of the dollar against the rand reduces our profitability.
 In fiscal year 2017 the increase in the average Dollar gold price approximated to the strengthening of the rand against the
 dollar. This resulted in a flat Rand gold price received in fiscal year 2017 compared to fiscal year 2016. In fiscal year 2016 and 2015 the decrease in the average Dollar gold price was outweighed by the weakening of the rand against the dollar. This resulted in an increase in the Rand gold price received of 21% in fiscal year 2016 and 3% in fiscal year 2015.
 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.  Effect of inflation and exchange rates
  in South Africa, our costs will increase and if such a cost increase is not offset by an increase in the rand price of gold, this will negatively affect our operating results.
 The movements in the rand/dollar exchange rate, based upon average rates during the  periods presented, and the local
 annual inflation rate for the periods presented, as measured by the South African Consumer Price Index, or CPI, are set out in the table below:
 
                           Recent developments Clean-up and closure of various Crown sites
   • complete the recovery of material from a number of legacy reclamation sites and to close the Crown plant – in full and timely compliance with our environmental obligations; and  • commission three new reclamation sites in the center and to the east of the Witwatersrand which – with a fourth to be commissioned by the third quarter of the 2018 financial year – would see us well into the future.
 By the end of the 2017 financial year most of the legacy sites had been cleared and substantial progress had been made on
 the rehabilitation of the Crown plant site, which is expected to be completed by the end of calendar year 2017.


DRDGOLD  began  a  drilling  programme  and  pre-feasibility  study  (PFS)  in  September  2016  aimed  at  re-evaluating  its
 surface gold tailings. The PFS focused on tailings on the East Rand, to the east of the Ergo plant, with the aim of adding these to the Mineral Reserve base. The Group increased its Measured Mineral Resources as measured under the SAMREC code by 56.8% and our Mineral Reserves by 62.5% after accounting for depletion in the second half of the financial year.
   The table below presents the key performance measurement data for the past three fiscal years: The financial results for
 the years ended June 30, 2017, 2016 and 2015 below are stated in accordance with IFRS as issued by the IASB. The table also includes  the  key  performance  measures  for  our  business  and  its  profitability,  which  are  revenue,  gold  production,  gold  prices, operating  costs,  cash  operating  costs  per  kilogram,  all-in  sustaining  costs  per  kilogram  and  all-in  costs  per  kilogram,  capital expenditure (additions to PP&E) and Ore Reserves.
                                                  (1)
      (1)
      (1)
              (1)
 Cash  operating  costs,  all-in  sustaining  costs  and  all-in  costs  are  non-IFRS  financial  measures  of  performance  that  we  use  to  monitor
 performance. A reconciliation of these measures to cash operating costs, are included in Item 5A.: “Operating Results - Reconciliation of cash cost per kilogram, all-in sustaining costs per kilogram and all-in costs per kilogram.”
 Revenue
  decrease in the gold sold, with gold prices relatively flat.
  increase in the average rand gold price received of R546,142 per kilogram despite a 5% decrease in gold sold.
  for a discussion regarding the impact of the gold price received and the production levels on revenue.  Ore Reserves
  June 30, 2016,  representing  a  62.5%  increase.  The  increase  was  mainly  because  of  a  drilling  program  and  pre-feasibility  study (“PFS”)  that  commenced  during  September  2016  aimed  at  re-evaluating  our  surface  gold  tailings.  The  increase  was  offset  by depletion through ongoing mining activities and other survey adjustments.
  mainly because of depletion through ongoing mining activities.
  ounces at June 30, 2015, mainly as a result  of the acquisition of the non-controlling interest in EMO and, to a lesser  extent, the decrease in the cut-off grade due to the increase in the Rand gold price. These increases were offset by a decrease due to ongoing mining activities.


increase of 11%. Capital expenditure increased primarily as a result of R31.9 million spent on bringing new Reclamation Site 4L37 on line, being one of three new reclamation sites that were commissioned during fiscal year 2017 to replace the various Crown sites that were closed, R29.5 million spent on the Centralised Water Facility reduce the use of potable water and reduce the associated cost of water, R13.4 million spent on various exploration and grade verification projects and the balance was spent on various other capital items.
 During fiscal year 2016, capital expenditure was R100.0 million, compared to R90.9 million in fiscal year 2015, an increase
 of 10%. Capital expenditure increased primarily as a result of R40.2 million spent on bringing the 4L2 site on line and R13 million on phase II of the refurbishment of the No 3 tailings thickener. R46.6 million was spent on various other items.
 During fiscal year 2015, capital expenditure was R90.9 million, compared to R158.6 million in fiscal year 2014, a decrease
 of 43%. Capital expenditure decreased primarily as a result of the completion of the new flotation and fine-grind project. In fiscal year 2015, Ergo spent R16.1 million on the refurbishment of the remaining five carbon-in-leach tanks at Ergo and R7.3 million on bringing the Van Dyk site on line, both for increased flexibility and volume capacity, R21.7 million on the Rondebult sewerage water project, R7.4 million on expansion and rehabilitation of the Brakpan/Withok TDF, R6.1 million on the refurbishment of a thickener, R5.7 million on the conversion of the high-grade CIP circuit to CIL to optimise the high-grade circuit, and R26.6 million on other items.
 For a summary of capital expenditure, see Item 4D. Property, Plant and Equipment.
 Critical accounting policies that require significant judgment
  judgements that affect the application of the Group's accounting policies and reported amounts of assets and liabilities, income and expenses.  By  their  nature,  judgments  are  subject  to  an  inherent  degree  of  uncertainty.  Accounting  assumptions,  estimates  and judgements are reviewed on an ongoing basis. Revisions to reported amounts are recognized in the period in which the revision is made and in any future periods affected. Actual results may differ from these estimates.
  in  the  preparation  of  our  consolidated  financial  statements  and  could  potentially  impact  our  financial  results  and  future  financial performance:
 ·  Depreciation of property, plant and equipment ·  Impairment of property, plant and equipment ·  Future environmental rehabilitation costs  ·  Income tax
 
  preparation of our consolidated financial statements and could potentially impact our financial results and future financial performance:
 ·  Assets and liabilities classified as held for sale ·  Contingent liabilities
   Directors and the Audit and Risk Committee, both of which have approved and reviewed the disclosure of these policies. This discussion and analysis should be read in conjunction with the consolidated financial statements and related notes included in Item 18 “Financial statements”.


Property, plant and equipment
  the units of production method which is based on the life of mine. The group’s life of mine is primarily based on proved and probable ore reserves  and  may  include  some resources.  It reflects the estimated quantities  of economically  recoverable  gold  that  can  be recovered from reclamation sites based on the gold price prevailing at the end of the financial year. Changes in the life of mine will impact  depreciation  on  a  prospective  basis.  The  life  of  mine  is  prepared  using  a  methodology  that  takes  account  of  current information to assess the economically recoverable gold from specific reclamation sites and includes the consideration of historical experience. Other assets are depreciated using the straight-line method over the expected life of these assets.  Impairment of property, plant and equipment
  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. 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. Each metallurgical plant or combination of plants that, together with its deposition facility, is capable of operating independently is considered to be a 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.
 Management  considers  such  factors  as  the  market  capitalization  of  the  group,  mineral  reserves  and  resource  estimates,
 production estimates, spot and future gold prices, foreign currency exchange rates, discount rates, estimates of costs to produce and future capital expenditure in determining the recoverable amount. Income tax
 
   financial reporting purposes and the amounts used for tax purposes.  The deferred tax liability is calculated by applying a forecast weighted average tax rate that is based on a prescribed formula. The calculation of the forecast weighted average tax rate requires the use of assumptions and estimates and are inherently uncertain and could change materially over time. These assumptions and estimates include the expected future profitability and timing of the reversal of the temporary differences. Due to the forecast weighted average tax rate being based on a prescribed formula that increase the effective tax rate with an increase in forecast future profitability, and vice versa, the tax rate can vary significantly year on year and can move contrary to current period financial performance.
 
  
   to settle the obligation based on current prices. The unwinding of the obligation is included in profit or loss. Estimated future costs of environmental rehabilitation are reviewed regularly and adjusted as appropriate. Changes in estimates are capitalized or reversed against the related asset but taken to profit or loss if there is no related asset left. Gains or losses from the expected disposal of assets are not taken into account when determining the provision.
 
   developed  in  accordance  with  regulatory  requirements,  the  life-of-mine  plan  and  the  planned  method  of  rehabilitation  which  is influenced by developments in trends and technology. Assets classified as held for sale
 
   outcome of future events that are not wholly within the control of the Group. Contingent liabilities
 
   outcome of future events that are not wholly within the control of the Group. Litigation and other judicial proceedings inherently entail complex legal issues that are subject to uncertainties and complexities and are subject to interpretation.


Revenue for fiscal year 2017 decreased by R93.2 million, or 4%, to R2,339.9 million. The decrease in revenue is mainly
 due to a 4% decrease in gold sold, reflecting a 4% reduction in production. This reduction in production was due to the reclaimed material from the Crown sites that were cleaned up requiring high volumes of water to treat. As a result, the treatment system contained more water than material, leading to lower densities and with no capacity for augmentation with material from our other operating sites. The rand gold price received remained flat at R548,268/kg. Cost of sales
  million, retrenchment costs  of R23.0 million, change in estimate  of environmental rehabilitation  of R0.6 million and a positive movement in gold in process of R4.8 million. These are discussed as follows:  Operating costs
  inflationary increases. Depreciation
 Depreciation  charges  were  R179.8  million  for  fiscal  year  2017  compared  to  R180.2  million  for  fiscal  year  2016.
 Depreciation remained flat due to the increase in depreciation resulting from the clean-up and closure of the various Crown sites being offset by the net decrease in depreciation resulting from the increase in the expected units-of-production in Ergo’s life of mine that became effective on 1 January 2017. Retrenchment costs
    due to closure of the various Crown sites. Change in estimate of environmental rehabilitation
 As of June 30, 2017, we estimate our total rehabilitation provision, being the discounted estimate of future costs, to be
 R531.7 million as compared to R538.5 million at June 30, 2016. Refer to Item 18. ‘‘Financial Statements - Note 8 – Provision for environmental  rehabilitation  of  the  consolidated  financial  statements  for  a  discussion  of  the  movements  in  the  provision  for environmental rehabilitation in fiscal year 2017.
 A  total  of  R110.5 million  was  invested  in  our  various  environmental  trust  funds  as  at  the  end  of  fiscal  year  2017,  as
 compared to R103.0 million for fiscal year 2016. The increase is attributable to R6.8 million interest received on these funds during fiscal  year  2017.  A  total  of  R117.2 million  (2016:  R108.3 million)  is  invested  in  funds  held  in  insurance  instruments  to  secure financial guarantees provided to the DMR through an insurance cell captive company, the Guardrisk Cell Captive. As at June 30, 2017 guarantees amounting to R427.3 million were issued to the DMR (2016: R427.2 million). The shortfall between the invested funds and the estimated provisions is expected to be financed by ongoing contributions to the Guardrisk  Cell Captive, over the remaining production  life of the respective mining operations and, at the time of mine closure, the proceeds on the disposal of remaining assets and gold from plant clean-up. Movements in gold in process
 Movement in gold in process in fiscal year 2017 amounted to a benefit of R4.8 million mainly due to an increase in the
 volume of gold in the plant as at June 30, 2017 compared to June 30, 2016 and an expense of R7.1 million in fiscal year 2016 due to a decrease in the volume of gold in the plant as at June 30, 2016 compared to June 30, 2015.


year 2016, a decrease of R17.8 million. These costs decreased mainly due to the decrease in the share-based payment expense as well as implementation of various cost cutting initiatives at the corporate office.
   Finance income increased from R36.8 million in fiscal year 2016 to R40.0 million in fiscal year 2017. The increase was
 mainly due to higher average cash balances during the year. Finance expenses
  mainly attributable to the increase in the unwinding of the provision for environmental rehabilitation. Income tax
 Income tax amounted to a credit of R50.4 million for fiscal year 2017 (tax charge amounting to R46.9 million for fiscal
 year 2016) consisted of current tax relating to fiscal year 2017 of R1.9 million, mostly relating to non-mining income and a deferred tax credit for fiscal year 2017 of R52.3 million, mostly relating to mining income.
 The tax credit resulted from a loss before tax as well as R37.5 million relating to the forecast weighted average deferred
 tax rate that decreased from 23.1% in fiscal year 2016 to 18.6% in fiscal year 2017 because of a decrease in forecast profitability of Ergo. The decrease in the effective tax rate resulted in a decrease in the deferred tax liability and the associated tax credit. Comparison of financial performance for the fiscal year ended June 30, 2016 with fiscal year ended June 30, 2015
 
  
  
                 Revenue for fiscal year 2016 increased by R327.8 million, or 16%, to R2,433.1 million. The increase in revenue is mainly
 due to a 21% increase in the average rand gold price received amounting to R546,143 per kilogram despite gold sold decreasing by 5% because of the 4% decrease in gold produced. Cost of sales
  million, change in estimate of environmental rehabilitation R19.3 million and a movement in gold in process R7.1 million. These are discussed as follows:  Operating costs
  to the 5% increase in throughput, as well as general inflationary increases, relatively high costs associated with the Crown clean-up and increased trucking of sand material to the City Deep plant. Depreciation
 Depreciation  charges  were  R180.2  million  for  fiscal  year  2016  compared  to  R193.3  million  for  fiscal  year  2015.  The
 increase in the expected units-of-production in Ergo’s life of mine that became effective on July 1, 2015 resulted in a net decrease in the depreciation charge recognised. Retrenchment costs


As of June 30, 2016, we estimate our total rehabilitation provision, being the discounted estimate of future costs, to be
 R538.5 million as compared to R510.9 million at June 30, 2015. Refer to Item 18. ‘‘Financial Statements - Note 8 – Provision for environmental rehabilitation and Note 22 Assets and Liabilities classified as held for sale’’ of the consolidated financial statements for a discussion of increase in the provision for environmental rehabilitation in fiscal year 2016.
 A total of R103 million was invested in our various environmental trust funds as at the end of fiscal year 2016, as compared
 to R96.5 million for fiscal year 2015. The increase is attributable to R6.5 million interest received on these funds during fiscal year 2016.  A  total  of  R108.3 million  (2015:  R100.3 million)  is  invested  in  funds  held  in  insurance  instruments  to  provide  financial guarantees provided to the DMR through an insurance cell captive company, the Guardrisk Cell Captive. The increase is attributable to R8 million interest received on these funds during fiscal year 2016. As at June 30, 2016 guarantees amounting to R427.2 million were issued to the DMR (2015: R404.0 million). The shortfall between the invested funds and the estimated provisions is expected to be financed by ongoing contributions to the Guardrisk Cell Captive, over the remaining production life of the mining operations and, at the time of mine closure, the proceeds on the disposal of remaining assets and gold from plant clean-up. Movements in gold in process
 Movement in gold in process in fiscal year 2016 amounted to a charge of R7.1 million mainly due to a decrease in the
 volume of gold in the plant as at June 30, 2016 compared to June 30, 2015 and a benefit of R20.6 million in fiscal year 2015 due to an increase in the volume of gold in the plant as at June 30, 2015 compared to June 30, 2014. Impairments
 No impairments were recognised in fiscal year 2016 compared with R7.9 million in fiscal year 2015.
  
  year 2015, an increase of R17.8 million. In fiscal year 2016 administration expenses and general costs included short term incentives of R11.3 million (2015: R7.3 million), long term incentives of R9.4 million (2015: R0.2 million) and legal costs amounting to R6.1 million (2015: R2 million).
   Finance income decreased from R51.5 million in fiscal year 2015 to R36.8 million in fiscal year 2016. The decrease was
 mainly due to a non-recurring fair value adjustment on available-for-sale investments reclassified to profit or loss of R19.9 million and a non-recurring profit on disposal of equity accounted investment of R5.9 million that was recognized in fiscal year 2015. Interest on loans and receivables and the growth on the reimbursive right increased from R25.7 million in fiscal year 2015 to R36.8 million in fiscal year 2016 due to an increase in the cash generated from operating activities during fiscal year 2016. Finance expenses
  interest paid on the Domestic Medium Term Note Program which decreased with the decrease in borrowings from R23.1 million as at June 30, 2015 to nil as at June 30, 2016 (see Item 5B. Liquidity and Capital Resources – Borrowings and Funding”). Income tax
 The  tax  expense  of  R46.9 million  for  fiscal  year  2016  (R28.6 million  for  fiscal  year  2015)  consisted  of  current  tax  of
 R5.7 million, mostly relating to non-mining income earned by the Group, and a deferred tax charge of R41.3 million, mostly relating to mining income. The tax expense for fiscal year 2015 also included an overprovision for current tax amounting to R4.4 million and an under provision of deferred tax amounting to R3.1 million relating to the impact of new tax legislation governing the tax treatment of interest on loan accounts between group entities. Refer to Item 18. ‘‘Financial Statements - Note 15– Income tax’’ of the consolidated financial statements for a discussion of increase in the deferred tax in fiscal year 2016.


Cash operating costs per kilogram, all-in sustaining costs per kilogram and all-in costs per kilogram are non-IFRS financial
 measures that should not be considered by investors in isolation or as alternatives to cost of sales, 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 World Gold Council provided guidance for the calculation of cash operating costs, the calculation of cash operating costs per kilogram, all-in sustaining costs and all-in costs per kilogram may vary significantly among gold mining companies, and these definitions by themselves do not necessarily provide a basis for comparison with other gold mining companies. However, we believe that these measures 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:
  ·
  ·
  ·
  ·
   2016. All-in sustaining costs per kilogram increased to R530,930 per kilogram from R499,425 per kilogram in fiscal year 2016. All-in costs per kilogram increased to R552,243 per kilogram of gold from R512,353 per kilogram of gold in fiscal year 2016. The increase in cash operating costs and all-in sustaining costs per kilogram were mainly due to lower gold production resulting from the clean-up of the Crown sites that caused a decrease in the average yield. The increase in the all-in sustaining costs was mainly due to the increase in cash operating costs, with reduced charges resulting from movement in gold in process, movement in provision for environmental rehabilitation and corporate costs mitigating the overall increase. The total all-in costs per kilogram increased due to the above increase in the all-in sustaining cost, as well as increased retrenchment costs and growth capital expenditure.
 For fiscal year 2016, cash operating costs increased by 20% to R446,153 per kilogram compared to R372,932 per kilogram
 in fiscal year 2015. For the same period all-in sustaining costs per kilogram increased to R499,425 per kilogram from R411,548 per kilogram and all-in costs per kilogram increased to R512,353 per kilogram from R422,095 per kilogram. The increase in all these measures is due to lower gold production, the increase in throughput, general inflationary increases, relatively high costs associated with the Crown clean-up and increased trucking of sand material from the Kleinfontein dump in Benoni to the City Deep plant.
  Reconciliation of cash operating costs per kilogram, all-in sustaining costs per kilogram, all-in costs per kilogram
 2017
 2016
 2015
                                      (1)
                                                                         
 (1)
 Cash operating costs equate to cash operating costs of production.


Cash operating costs
  
                                                
  million  in  fiscal  year  2015  due  to  the  5%  increase  in  throughput,  as  well  as  general  inflationary  increases,  relatively  high  costs associated with the Crown clean-up and increased trucking of sand material to the City Deep plant.
         Decrease in throughput
               million in fiscal 2014 due to the cost of running all three streams of the float circuit and of general inflationary increases averaging 7.4% year-on-year.
 The following table lists the major components of cash operating costs for each of the fiscal years set forth below:


5B. LIQUIDITY AND CAPITAL RESOURCES
 
  
   fiscal year 2015: R283.6 million). Net working capital movements resulted in an outflow of cash of R117.8 million in fiscal year 2017 compared to an inflow of cash of R81.9 million during fiscal year 2016 and R42.4 million in fiscal year 2015.
  as the net working capital movements described above. The average rand gold price received of gold sold remained flat.
  gold price received, despite a 5% decrease in gold sold, as well as the net working capital movements described above.
  gold price received and a 12% increase in gold sold as well as the net working capital movements described above.
   
   
  and equipment and R11.6 million spent on environmental rehabilitation payments. These outflows were reduced by R20.5 million proceeds on the disposal of property, plant and equipment.
   mining  equipment  at  our  operations.  Significant  capital  projects  for  Ergo  during  fiscal  year  2017  included  R31.9 million  on Reclamation Site 4L37, R29.5 million on the centralized water facility, R13.4 million on various exploration and grade verification projects and R42.1 million on various other capital items.
   equipment and R10.6 million spent on environmental rehabilitation payments. These outflows were reduced by R7.0 million proceeds on the disposal of property, plant and equipment.
    o  R40.2 million spent on bringing the 4L2 reclamation site on line; o  R13 million on phase II of the refurbishment of the No 3 tailings thickener; and o  R46.6 million was spent on various other capital items.
   property, plant and equipment and R9.0 million spent on environmental rehabilitation payments and inflows of R46.4 million proceeds on the disposal of investments and R17.4 million proceeds on the disposal of property, plant and equipment.
 Additions to property, plant and equipment were predominantly to create increased flexibility and volume capacity, new
    o  R21.7 million on the Rondebult sewerage water project;  o  R7.4 million on expansion and rehabilitation of the Brakpan/Withok TDF;  o  R6.1 million on the refurbishment of a thickener; o  R5.7 million on the conversion of the high-grade CIP circuit to CIL to optimise the high-grade circuit; and  o  R34.1 million on various other capital items.


Net cash outflow from financing activities was R53.0 million in fiscal year 2017 compared to R281.1 million in fiscal year
  During fiscal year 2017, the net cash outflow consisted mostly of a dividend payment of R50.6 million. During  fiscal  year  2016,  the  net  cash  outflow  consisted  mostly  of  a  dividend  payment  of  R252.9  million,  R22.5  million
  During fiscal year 2015, the net cash outflow consisted mostly of R122.5 million repayments of the Domestic Medium Term
   Cash and cash equivalents
  year 2016 and R324.4 million at the end of fiscal year 2015. Substantially all of our cash and cash equivalent balances were denominated in South African rand, except for $2.3 million as at June 30, 2016 and $0.1 million as at June 30, 2015 held in foreign currency. Surplus cash is held in low-risk, high interest bearing products with various large financial institutions.
  Borrowings and funding
 Our available external sources of capital include an overdraft facility of R100 million and loan notes as follows: On July 2, 2012, DRDGOLD established a R2.0 billion DMTN Program under which it may from time to time issue notes.
 In July and September 2012, DRDGOLD issued R165 million in notes under the DMTN Program with 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 and 24 month maturity, amounting to R20.0 million and R69.5 million respectively, were repaid on October 3, 2013 and July 3, 2014 respectively. The remaining loan notes with a 36 month maturity, amounting to R75.5 million, were repayable on July 3, 2015.
  initially repayable on July 3, 2015. On July 3, 2015, DRDGOLD repaid the remaining R23.1 million including capital and interest. This loan program remains available to DRDGOLD to access capital from time to time. Anticipated funding requirements and sources
  cash resources, net cash generated from operations and the availability of negotiated funding facilities will be sufficient to meet the anticipated commitments of our existing operations for fiscal year 2018.
  would be adversely affected if:
  ·
  ·  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.
     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.
 
  responses of gold encapsulated in sulphides we completed the construction of the fine grind and flotation circuit at a total cost of R389 million during the year ended June 30, 2014. While the team remains active with an ongoing focus on improving extraction efficiencies, the projects undertaken during the year ended June 30, 2017 were focused on optimizing the existing facilities rather than implementing new technologies to improve extraction efficiencies. We have no registered patents or licenses.


50
  
 For the fiscal year 2018, we are planning gold production from our operations of 138,000 to 145,000 ounces at cash operating
 costs of approximately R480,000 per kilogram. Our ability to meet the full year’s production target could be impacted by, amongst other factors, lower grades and failure to achieve the targets set at Ergo. We are also subject to cost pressures due to above inflation increases in labor, electricity and water; crude oil and steel costs. Unforeseen changes in ore grades and recoveries, unexpected changes in the quality  or  quantity of reserves and resource, technical  production issues, environmental and industrial accidents, gold  theft, environmental factors and pollution could adversely impact the production, sales and cash operating costs for fiscal year 2018.
 Refer to Item 5A.: “Key drivers of our operating results and principal factors affecting our operating results” for a discussion
 of the trend in the US Dollar gold price as well as the exchange rate impacting our business.
  
 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 m
 R m
 R m
 R m
 R m
 Provision for environmental rehabilitation
 (2)
 ......................
 531.7
 55.7
 117.2
 102.1
 256.7
 Finance leases .......................................................................
 21.8
 5.3
 16.5
 -
 -
 Trade and other payables.....................................................
 251.8
 251.8
 -
 -
 -
 Purchase obligations – contracted capital expenditure
 (1)
 ....
 11.2
 11.2
 -
 -
 -
 Other contractual obligations ...............................................
 3.8
 1.3
 2.5
 -
 -
 Total contractual cash obligations ....................................
 820.3
 325.3
 136.2
 102.1
 256.7
 
 (1)
 Represents planned capital expenditure for which contractual obligations exist.
 (2)
 Gold mining companies are subject to extensive environmental regulations in the various jurisdictions in which they operate. These regulations
 establish certain conditions on the conduct of our operations. Pursuant to environmental regulations, we are also obliged to close our operations and reclaim and rehabilitate the lands upon which we have conducted our mining and gold recovery operations. The estimated closure costs at existing operating mines and mines in various stages of closure are reflected in this table. For more information on environmental rehabilitation obligations, see Item 4D. “Property, Plant and Equipment” and Note 8 “Provision for environmental rehabilitation” under Item 18. “Financial Statements”.
 
 
   
 See Special Note Regarding Forward-Looking Statements.
  ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES  6A. DIRECTORS AND SENIOR MANAGEMENT
 Directors and Executive Officers
 Our board of directors may consist of not less than four and not more than twenty directors. As of June 30, 2017, our board
 consisted of seven 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 (50) Chief Executive Officer. Niël Pretorius has two decades of experience in the mining industry.
 He was appointed Chief Executive Officer designate of DRDGOLD on August 21, 2008 and Chief Executive Officer on January 1, 2009. Having joined the company on May 1, 2003 as legal advisor, he was promoted to Group Legal Counsel on September 1, 2004 and General Manager: Corporate Services on April 1, 2005. Niël was appointed Chief Executive Officer of Ergo Mining Operations Proprietary Limited (formerly DRDGOLD SA) on July 1, 2006 and became Managing Director thereof on April 1, 2008.


years’ experience in the professional services industry, the majority obtained in the mining industry in Africa.  As part of gaining that experience, Mr Davel provided assurance and advisory services, including support and training on International Financial Reporting Standards (IFRS) to clients and teams across the African continent.
  including SEC registrants. He has also gained experience as an IFRS technical partner, and represented the South African Institute of Chartered Accountants on the International Accounting Standards Board’s project on Extractive Activities from 2003 to 2010. Mr Davel also served on committees that compile or update the South African Codes for reporting and valuation of mineral reserves and resources. Non-Executive Directors
     non-executive director in December 2003 and non-executive chairman in October 2005. A qualified geologist, he has worked on gold mines  in  Wales  and  Canada.  He  spent  15  years  as  a  stockbroker  before  becoming  a  fund  manager,  managing  the  Merrill  Lynch Investment  Managers Gold and General Fund, one of the largest gold mining investment funds. He was also research director for Merrill Lynch Investment Managers. Geoffrey is a director of Oxford Abstracts Limited.
  Requirements to become an independent non-executive director. He is the founder and director of Goldmoney Inc., which is traded on  the  Toronto  Stock  Exchange  (symbol:  XAU).  Goldmoney.com  is  an  online  provider  of  physical  gold,  silver,  platinum  and palladium  bullion to  buyers  worldwide and  operator  of a digital  gold currency  payment  system.  Since  graduating  from George Washington University in 1969, he has specialised in international banking, finance and investments. Having begun his career with the  Chase  Manhattan  Bank  (now  JP  Morgan  Chase),  in  1980  James  joined  the  private  investment  and  trading  company  of  a prominent precious metals trader. He moved to the United Arab Emirates in 1983 to become Manager of the Commodity Department of the Abu Dhabi Investment Authority, that country’s sovereign wealth fund. Since resigning in 1987, he has written frequently on money and banking. His latest venture is Lend & Borrow Trust Co. Ltd. a UK-based online peer-to-peer lending platform in which loans are secured by investment grade gold and silver.
  Independent Director in August 2017. He has more than 30 years’ experience as an executive in banking, business strategy, advisory and  management  at  Grant  Thornton  South  Africa  Proprietary  Limited,  Swiss  Re  Corporate  Solutions  Advisors  South  Africa Proprietary Limited, the World Bank Competitiveness Fund and Deloitte South Africa. More recently, he completed almost 14 years at Barclays Africa Group, where he was Managing Executive and served as director on the boards of several subsidiaries in the Barclays Africa Group. Edmund is active in community social upliftment and served as a member of the Provincial Development Commission of the Western Cape Provincial Government. He currently serves on the Advisory Board of the Institute of Directors Southern Africa and member of BADISA Investment Committee and is a member of the Good Governance Forum. He is a Chartered Director (SA).
  He has more than 42 years’ experience in the accounting profession, having served as a senior partner at KPMG, and held the highest Generally  Accepted  Accounting  Principles  (United  States),  Generally  Accepted  Auditing  Standards  and  Sarbanes-Oxley  Act accreditation required to service clients listed on stock exchanges in the United States. His clients included major corporations listed in South Africa, Canada, the United Kingdom, Australia and the United States.
  Enterprise Partnership. He also chairs the Audit and Risk Committee of Tshipi é Ntle Manganese Mining Proprietary Limited. He is a non-executive director of Caledonia Mining Corporation Plc, a Jersey corporation listed in the United States, Canada and the United Kingdom, and he chairs its Audit Committee.
  December 1, 2016. She is the Chief Executive Officer of Vitom Technologies (Pty) Ltd and Vitom Brands Communication (Pty) Ltd. Toko started her career as a prosecutor for the erstwhile KaNgwane homeland. She later became a legal advisor for the Eastern Cape Development Corporation, the province’s development financier. She has held senior executive positions in Gijima, a leading black owned information and communications technology services provider. She has also worked at social cohesion projects aimed at the achievement of socio-economic transformation and at increasing the strength of South Africa’s democracy.Toko has held directorships on a number of listed and unlisted company boards including Gijima, EOH Mthombo (Proprietary) Limited, AllPay  Eastern  Cape  (Proprietary)  Limited,  a  subsidiary  of  ABSA  Limited.  She  was  also  on  the  Board  of  the  Ryk  Neethling Foundation. an organisation, the primary objective of which is to generate funds for the sustainable development and upliftment of swimming facilities in South Africa, to empower previously disadvantaged communities by training coaches to develop swimming within their communities and to procure scholarships for future swimming champions. Toko holds a Dip. Juris and BJuris degree from the then University of Transkei, now the Walter Sisulu University.


Senior Management
     DRDGOLD in 2011 as Executive Officer: Business Development to focus on expanding the group’s surface retreatment business and extracting maximum value from existing resources. In July  2014,  he was appointed Operations  Director: Ergo Mining Operations Proprietary Limited.
  
   Diploma  in  Extraction  Metallurgy  in  1990  and  a  National  Higher  Diploma  in  Extraction  Metallurgy  in  1991.  He  completed  a Management Development Programme ("MDP") in 2003 through Unisa School of Business Leadership and an Executive Development Programme in 2012 through the University of Stellenbosch Business School. He was appointed Operations Manager of Crown in January 2006 and General Manager in July 2006. He was appointed to his current position with effect from October 1, 2011. He has 29 years’ experience in the mining industry.
  joined  DRDGOLD  in  2004  on  a  consulting  basis  and  later  that  year  was  appointed  as  Financial  Manager  of  the  Blyvooruitzicht operation. He was appointed as Financial Director of Ergo in January 2012 and has 19 years’ experience in the mining sector. Mark serves as an alternate director to Charles on the Board of Rand Refinery (Proprietary) Limited.
  February 1977 and transferred to Crown Gold Recoveries Proprietary Limited in January 1986. He joined DRDGOLD as General Manager in 1995 and was appointed Executive Officer: Surface Operations on January 1, 2008 before he became Executive Officer: Operations  on  May  11,  2010.  On  October  1,  2011,  he  was  appointed  Chief  Operating  Officer.  Following  restructuring  of  senior management  in  July  2014,  Charles  Symons  assumed  the  role  of  Chairman  of  the  Oversight  Committee:  Ergo  Mining  Operations Proprietary Limited. He was appointed director of Ergo Mining Operations Proprietary Limited in August 2014 after his service period concluded  on July  31,  2016.  Charles continued to  serve as a non-executive  director  on  the Board  of  Rand  Refinery  (Proprietary) Limited, a position he has held since September 2014. He also serves on the Remuneration and Nominations Committee thereof.
    as a Legal Advisor. She was appointed to the position of Senior Legal Advisor in October 2011 and Prescribed Officer of Ergo Mining Proprietary Limited in June 2012. She was appointed to the position of Group Legal Counsel in August 2014 and Company Secretary in March 2016. With over 10 years of experience, she has significant experience in all areas of mining law, as well as in the corporate, commercial, contractual, employment and litigious aspects related to mining.
    executive and senior management. There are no arrangements or understandings between any of our directors or executive officers and any other person by which any of our directors or executive officers has been so elected or appointed. Furthermore, none of the non-executive directors, executive directors, group executive and senior management members or other key management personnel are elected  or  appointed  under  any  undertaking  by,  arrangement  or  understanding  with  any  major  shareholder,  customer,  supplier  or otherwise.
 6B. COMPENSATION
   Executive Directors. The total amount of directors' remuneration paid and or accrued for the  year ended June 30, 2017 was R13.0 million.
   ·  Base fee as Non-Executive Chairman of R1,309,923 per annum; ·  Base fee as Non-Executive Directors of R582,188 per annum; ·  Annual fee for Audit and Risk Committee Chairman of R29,110 (excluding fee received as a committee member); ·  Annual fee for Audit and Risk Committee member of R29,110; ·  Annual fee for the chairman of Remuneration and Nominations Committee and Social and Ethics Committee of R21,832
  ·  Annual fee for members of Remuneration Committee and Social and Ethics Committee of R21,832 each; ·  Daily fee of R21,832 and hourly rate of R2,911;  ·  Half-day fee for participating by telephone in special board meetings; and ·  The Chairman of the board to receive committee fees.


The following table sets forth the compensation for our directors and prescribed officers for the year ended June 30, 2017:
                                          (1)
 No incentives accrued during the 2017 fiscal year.
 (2)
 The Companies Act, 2008 (Act 71 of 2008), under section 30, requires the remuneration of prescribed officers, as defined in regulation 38
 of Company Regulations 2008, to be disclosed with that of directors of the Company. A person is a prescribed officer if they have general executive authority over the company, general responsibility for the financial management or management of legal affairs, general managerial authority over the operations of the company or directly or indirectly exercise or significantly influence the exercise of control over the general management and administration of the whole or a significant portion of the business and activities of the company. (3) Service period concluded on July 31, 2016. Basic salary includes pension scheme contributions of R28 263.
 See also Item 6E. Share Ownership for details of share options held by directors.
 Compensation of key management
  Refer to Item 18. ‘‘Financial Statements - Note 16.2 – Related party transactions’’ for the total compensation paid to key management (including executive and non-executive directors as well as prescribed officers).
  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 short term incentive of up to 100% of his remuneration package, depending on his particular agreement. Should an Executive Director not meet all the targets set in terms of the predetermined key performance indicators, he will be entitled to a lesser bonus as determined at the discretion of the Remuneration Committee. Service Agreements
 Service  contracts  negotiated  with  each  executive  and  non-executive  director  incorporate  their  terms  and  conditions  of
  The Company’s current executive directors, Mr. D.J. Pretorius and Mr. A.J. Davel, entered into agreements of employment
 with us, on January 1, 2009 and January 1, 2015, respectively. These agreements regulated the employment relationship with Messrs. D.J. Pretorius and A.J. Davel during the year ended June 30, 2017.
 On July 1, 2015 Mr. D.J. Pretorius entered into a new agreement of employment for a period of 3 years and thereafter it
 continues  indefinitely  until  terminated  by  either  party  on  not  less  than  three  months’  written  notice.  Under  the  employment agreement effective up to June 30, 2018 Mr. D.J. Pretorius received from us a guaranteed remuneration package of R5.5 million per annum.  Mr. D.J.  Pretorius  was  eligible  under  his  employment  agreement,  for  an  incentive  bonus  of  up  to  100%  of  his  annual remuneration package in respect of one bonus cycle per annum over the duration of his appointment, on condition that DRDGOLD achieves certain key performance indicators. In addition, he is eligible to participate in the long term incentive scheme and was awarded 2,323,009 phantom shares during November 2015.


it continues indefinitely until terminated by either party on not less than three months’ prior written notice. Mr. A.J. Davel received from us a guaranteed remuneration package of R3.1 million per annum. Mr. A.J. Davel is eligible under his employment agreement, for a short term incentive of up to 100% of his annual remuneration package in respect of one bonus cycle per annum over the duration of his appointment, on condition that DRDGOLD achieves certain key performance indicators. He is eligible to participate in the long term incentive scheme. He was issued 205,207 phantom shares under the long term incentive scheme on his joining DRDGOLD and 1,305,033 phantom shares during November 2015.
  2017. Mr. J.A Holtzhausen has a service agreement which runs for a fixed period until April 25, 2018. Mrs. TVBN Mnyango has a service agreement which runs for a fixed period until November 30, 2018. After expiration of the initial two year periods, the agreements continue indefinitely until terminated by either party on not less than three months’ prior written notice.
  
  terminated by us in the case of our executive officers, except where terminated as a result of certain action on the part of the director, upon the director reaching a certain age, or by the director upon the occurrence of a change of control. A termination of a director's employment upon the occurrence of a change of control is referred to as an “eligible termination.” Upon an eligible termination, the director is entitled to receive a payment equal to at least one year's salary or fees, but not more than three years' salary for Executive Directors or two years’ fees for Non-Executive Directors, depending on the period of time that the director has been employed.
 6C. BOARD PRACTICES
 Board of Directors
  Davel),  and  five  Non-Executive  Directors  (Messrs.  G.C. Campbell,  J. Turk,  E.A. Jeneker,  J.A.  Holtzhausen  and  Mrs.  TVBN Mnyango).  The  Non-Executive  Directors  are  independent  under  the  New  York  Stock  Exchange,  or  NYSE,  requirements  (as affirmatively determined by the Board of Directors) and the South African King IV Report.
 In accordance with the King IV 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. A.J Davel is the Chief Financial  Officer.  The  board  has  established  a  Remuneration  and  Nominations  committee,  and  it  is  our  policy  for  details  of  a prospective candidate to be distributed to all directors for formal consideration at a full meeting of the board. A prospective candidate would be invited to attend a meeting and be interviewed before any decision is taken. In compliance with the NYSE rules a majority of independent directors will select or recommend director nominees.
 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.
 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 evaluate the executive directors on an annual basis, based on objective criteria.
 All directors, in accordance with the Company’s MOI, are subject to retirement by rotation and re-election by shareholders.
 In addition, all directors are subject to election by shareholders at the first annual general 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.


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.
 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 days, allows adequate time for the Non-Executive Directors to interact without the presence of the Executive Directors. The board meetings include the meeting of the Audit and Risk Committee, Remuneration and Nominations Committee and Social and Ethics Committee which act as subcommittees to the board. Each subcommittee is chaired by one of the Independent Non-Executive Directors, each of which provides a formal report back to the board. Each subcommittee meets for approximately half a day. Certain senior members of staff are invited to attend the subcommittee meetings.
 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, 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 for employees to report violations of Company policy or any applicable law, rule or regulation, including US securities laws.
 A description of the significant ways in which our corporate governance practices differ from practices followed by U.S.
 companies listed on the NYSE can be found in Item 16G. Corporate Governance. Directors' Terms of Service
  directors as at June 30, 2017:
   Year first appointed
                                          Executive Committee
  and Mrs. R. Masemene.
   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.  Board Committees
  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 and Nominations Committee
  E A Jeneker (Chairman: remuneration), J A Holtzhausen and J Turk.


Nominations Committee. The committee meets on an ad hoc basis. All members of this committee are independent NEDs. It is chaired by the board chairman when matters relating to nominations are discussed and by an independent NED when matters relating to remuneration are discussed.
 The primary remuneration role of the committee is to execute the following functions:
 ·  Ensure the establishment of a formal process for the appointment of directors; ·  ensure that inexperienced directors are developed through a mentorship programme; ·  ensure that directors receive regular briefings on changes in risks, laws and the appropriate contribution; ·  drive an annual process to evaluate the board, board committees and individual directors;  ·  ensure  that  formal  succession  plans  for  the  board,  chief  executive  officer  and  senior  management  appointments  are
  The committee has an obligation to offer competitive packages that will attract and retain executives of the highest caliber
 and encourage and reward superior performance. Industry surveys are provided for comparative purposes, and to assist the committee in the formulation of remuneration policies that are market related.
 The key nominations responsibilities of the committee include the following:
 ·  make recommendations to the board on the appointment of new directors; ·  make recommendations on the composition of the board and the balance between executive and NEDs appointed to
  ·  review board structure, size and composition on a regular basis; ·  make recommendations on directors eligible to retire by rotation; and ·  apply the principles of good corporate governance and best practice in respect of nominations matters.
 
   In August 2014, the board combined the Audit Committee and the Risk Committee to form the Audit and Risk Committee. As at June 30, 2017 the Audit and Risk Committee consisted of J A Holtzhausen (Chairman), J Turk and E A Jeneker. All members of the Audit and Risk Committee are independent according to the definition set out in the NYSE Rules. See
 Item 16G. Corporate Governance. The committee’s charter deals with all the aspects relating to its functioning.
   ·  External auditors, audit process and financial reporting; ·  Internal audit; ·  integrated reporting and assurance model; ·    oversee the development and annual review of a policy and plan for risk management; ·  ensure that risk management assessments are performed on a continuous basis; ·  ensure that reporting on risk management assessment is complete, timely, accurate and accessible; ·  ensure that frameworks and methodologies are implemented to increase the possibility of anticipating unpredictable risks; ·  ensure that continuous risk monitoring by management takes place.
 The Audit and Risk Committee meets each quarter with the external auditors, the company’s manager: risk and internal
 audit, and the CFO. The committee reviews the audit plans of the internal auditors to ascertain the extent to which the scope of the audits can be relied upon to detect weaknesses in internal controls. It also reviews the annual and interim financial statements prior to their approval by the board.
 The committee is responsible for making recommendations to appoint, reappoint or remove the external auditors as well
 as determining their remuneration and terms of engagement. In accordance with its policy, the committee preapproves all audit and non-audit services provided by the external auditors. KPMG Inc. was reappointed by shareholders at the 2016 AGM to perform DRDGOLD’s external audit function.
 The internal audit function is performed in-house, with the assistance of Pro-Optima Audit Services Proprietary Limited.
 Internal  audits  are  performed  at  all  DRDGOLD  operating  units  and  are  aimed  at  reviewing,  evaluating  and  improving  the effectiveness of risk management, internal controls and corporate governance processes.
 Significant deficiencies,  material weaknesses, instances of non-compliance and exposure to high risk and development
 needs are brought to the attention of operational management for resolution. The committee members have access to all the records of the internal audit team.


and, where necessary, to the chairman of the board and the CEO. All significant findings arising from audit procedures are brought to the attention of the committee and, if necessary, to the board.
 Section 404 of SOx stipulates that management is required to assess the effectiveness of the internal controls surrounding
 the financial reporting process. The results of this assessment are reported in the form of a management attestation report that has to be filed with the SEC as part of the Form 20-F. Additionally, DRDGOLD’s external auditors are required to express an opinion on the operating effectiveness of internal controls over financial reporting, which is also contained in the Company’s Form 20-F.
 An  important  aspect  of  risk  management  is  the  transfer  of  risk  to  third  parties  to  protect  the  company  from  disaster.
 DRDGOLD’s major assets and potential business interruption and liability claims are therefore covered by the group insurance policy, which encompasses all the operations. Most of these policies are held through insurance companies operating in the United Kingdom, Europe and South Africa. The various risk-management initiatives undertaken within the group as well as the strategy to reduce costs without compromising cover have been successful and resulted in substantial insurance cost savings for the Group.
  Social and Ethics Committee
    local guidance on best practice in corporate governance and to reach the empowerment goals to which this company is committed. Its terms of reference were approved by the board in April 2017 and its objectives are to:
 ·
  ·
  ·
     ·
 and the OECD recommendations regarding Corruption, the Employment Equity Act and the Broad Based Black Economic Empowerment Act;
 ·  records of sponsorship, donations and charitable giving; ·  the environment, health and public safety, including the impact of the company’s activities and of its products or services;  ·  labour and employment ·  review and recommend the company’s code of ethics; ·  review and recommend any corporate citizenship policies; ·  review  significant  cases  of  employee  conflicts  of  interests,  misconduct  or  fraud,  or  any  other  unethical  activity  by
   6D. EMPLOYEES
 Employees
        
      
  who are directly employed by us and our subsidiary companies. As of September 30, 2017, we had 2,169 employees (including 1,330 contract employees).


Labor Relations
  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. DRDGOLD and the organized labor coordinating forum meets regularly to discuss matters pertinent to both parties, while operations level forums continue to deal with local matters.
  Association of South Africa (UASA) for a wage increase averaging 8.2% (10% for categories 4 – 5), (9% for categories 6 – 9) and (7% for categories 10 – 15) per annum. The next round of wages and conditions of employment negotiations will take place in 2018.
  2012/2013 has approached the company for recognition to represent their members in labor related matters at the company. On March 30, 2017, a recognition agreement was reached with AMCU.
  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.
  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. Safety statistics
  following are our 2016 overall safety statistics for our operations:
       (1)
     (1)
 
 
          (1)
 Calculated as follows: actual number of instances divided by the total number of man hours worked multiplied by one million.
  6E. SHARE OWNERSHIP
 
  become or could potentially become aware of material price sensitive information, such as information relating to an acquisition, bi-annual results etc., which is not in the public domain. When these employees have access to this information an embargo is placed on share trading for those individuals concerned. The embargo need not involve the entire Company in the case of an acquisition and may only apply to the board of directors, executive committee, and the financial and new business teams, but in the case of quarterly results the closed-period is group-wide.


percent of the Company’s issued ordinary share capital. For details of share ownership of directors and prescribed officers see Item 7A. Major Shareholders.
   DRDGOLD Phantom Share Scheme (before amendment)
  employees whose skills and experience are recognized as being essential to the Company’s performance. The scheme is cash settled. In terms of the phantom share scheme rules, 50% of the phantom shares granted will be valued based on the Group meeting certain pre-determined  performance  criteria  and  the  remaining  50%  to  defined  retention  periods.  The  maximum  incentive  pay-out  per annum to any single employee may not exceed 75% of that employee’s gross remuneration package. The participants in the scheme are fully taxed at their marginal rate on any gains realized on the exercise of their phantom shares.
  Committee is determined by the price in respect of each share which is the subject  of the phantom share, 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 a phantom share. The allocation date will be the date when the directors approve allocation of the phantom shares. Each phantom share remains in force until the date of vesting, subject to the terms of the scheme rules. Phantom shares granted under the phantom share scheme vest primarily according the following schedule over a maximum of a three year period:
                                                       The phantom shares that were granted before the November 2015 amendment described below were not affected by the
   DRDGOLD Phantom Share Scheme (Amended November 2015)
  REMCO  approved  an  allocation  of  20,527,978  phantom  shares  which  is  driven  by  share  price  performance  and  individual performance, and is based on phantom share allocations. The vesting of any shares allocated is staggered over a five-year period commencing in the third year after the allocation is granted in line with King recommendations. The objectives of the revised scheme are to drive the longer-term strategies of DRDGOLD, to align participants’ interests with shareholders’ interest, to incentivise and motivate  participants,  to  attract  and  retain  scarce  human  resources  and  to  reward  superior  performance  by  the  Company  and participants. REMCO has the authority to amend in part or in its entirety or withdraw the long-term incentive scheme at any time.
 No phantom shares were granted during fiscal year 2017. 20,527,978 phantom shares were granted during fiscal year 2016,


ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
  7A. MAJOR SHAREHOLDERS
 
  ·  431,429,767 ordinary shares of no par value; and  ·  5,000,000 cumulative preference shares.
 
  government and there are no arrangements, the operation of which may at a subsequent date result in a change in control of us.
  ·
  ·
  ·
  ·
  
  by:
 ·  each of our directors and prescribed officers; and  ·  any person whom the directors are aware of as at September 30, 2017 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.
                            (1)
   *     Indicates share ownership of less than 1% of our outstanding ordinary shares.
 (1)
 Acquired 35,000,000 ordinary shares during the year ended June 30, 2015 as part of the roll-up of the stake of our broad based black
 economic empowerment (BBBEE) partners in EMO into DRDGOLD. At September 30, 2017, Khumo hedged 11,524,003 of these shares  and as a result is currently the record holder of, and retains voting interest in, 23,475,997 shares. Khumo retains beneficial interest in all 35,000,000 shares.
     No shareholder has voting rights which differ from the voting rights of any other shareholder. Unless indicated otherwise, the business address of the beneficial owner is: DRDGOLD Limited, 1 Sixty Jan Smuts Building, 2nd Floor - North Tower, 160 Jan Smuts Avenue, Rosebank, 2196, South Africa.


Randgold's registered address is Suite 25, Katherine & West Building, Corner of Katherine and West Streets, Sandown, Sandton, 2196.
  than six months. The terms of issue of the cumulative preference shares are that they carry the right, in priority to the Company's ordinary shares, to receive a dividend equal to 3% of the gross future revenue generated by the exploitation or the disposal of the Argonaut mineral rights acquired from Randgold in September 1997. Additionally, holders of cumulative preference shares may vote on resolutions which adversely affect their interests and on the disposal of all, or substantially all, of our assets or mineral rights. There is currently no active trading market for our cumulative preference shares. Holders of cumulative preference shares will only obtain their potential voting rights once the Argonaut Project becomes an operational gold mine, and dividends accrue to them. The prospecting rights have since expired and the Argonaut Project terminated. The development of the project is not expected to materialise and therefore no dividend is expected to be paid.
 7B. RELATED PARTY TRANSACTIONS
 
   
 7C. INTERESTS OF EXPERTS AND COUNSEL
 Not applicable.
 
 ITEM 8. FINANCIAL INFORMATION 8A. CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION
                  8B. SIGNIFICANT CHANGES
 
 Significant changes that have occurred since June 30, 2017, the date of the last audited financial statements included in this
 Annual Report, are discussed in the relevant notes to the financial statements under Item 18. Financial Statements.


ITEM 9. THE OFFER AND LISTING
  9A. OFFER AND LISTING DETAILS
 
  of our ordinary shares on the JSE and ADSs on the New York Stock Exchange.
       1
                                                               1
                                                                                                                                                                             30, 2017, nor have there been any trading suspensions with respect to our ADRs on the New York Stock Exchange since our listing on that market.


9B. PLAN OF DISTRIBUTION
 
   9C. MARKETS
 Nature of Trading Markets
  Stock Exchange (symbol: DRD). Our ordinary shares also trade on the Marche Libre on the Paris Bourse (symbol: DUR). The ordinary shares also trade on the over the counter markets in Berlin and Stuttgart and the Regulated Unofficial Market on the Frankfurt Stock Exchange. The ADRs are issued by The Bank of New York Mellon, as depositary. Each ADR represents one ADS and each ADS represents ten of our ordinary shares. Until July 23, 2007, each ADS represented one of our ordinary shares.
 9D. SELLING SHAREHOLDERS
 
   9E. DILUTION
 
   9F. EXPENSES OF THE ISSUE
 
  
 ITEM 10. ADDITIONAL INFORMATION
  10A. SHARE CAPITAL
 
   10B. MEMORANDUM OF INCORPORATION
 
  600,000,000), and 5,000,000 cumulative preference shares of R0.10 par value (as of September 30, 2017: 5,000,000). On this date, we had issued 431,429,767 ordinary shares (as of September 30, 2017: 431,429,767) and 5,000,000 cumulative preference shares (as of September 30, 2017: 5,000,000).
  Act of South Africa and the JSE Listings Requirements, all as in effect on September 30, 2017. 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.
  Memorandum of Incorporation, the main object and business of our company is mining and exploration for gold and other minerals.  Borrowing Powers
    payment or repayment of any such sums, or any other sum, as they think fit, whether by the creation and issue of securities, mortgage or charge upon all or any of the property or assets of the company. The directors shall procure that the aggregate principal amount at any one time outstanding in respect of monies so borrowed or raised by the company and all the subsidiaries for the time being of the company shall not exceed the aggregate amount at that time authorized to be borrowed or secured by the company or the subsidiaries for the time being of the company (as the case may be). Share Ownership Requirements


Voting by Directors
  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.
  before a vote may be called at any meeting of directors.
  financial interest in respect of a matter to be considered at a meeting of the board he or she must disclose the interest and its nature, any material information relating to the matter and thereafter leave the meeting immediately after making the disclosure. Such director must not take part in consideration of the matter. He is not to be regarded as being present for the purpose of determining whether a resolution has sufficient support to be adopted.
  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 executive directors is approved by the Remuneration and Nominations Committee, and the shareholders approve remuneration of non-executive directors.
  the context of the report’s ‘apply and explain’ principle.
  exercise proper care and skill in discharging their responsibilities. These common law duties have now been codified by the Companies Act. Age Restrictions
  Election of Directors
  of company (“elected director (s)”) and no appointment of a director by way of a written circulated shareholders resolution in terms of section 60 of the Companies Act shall be competent.
  directors usually make themselves available for re-election. An amendment to the MOI which also subjects executive directors to re-election by rotation was approved by shareholders at the 2014 annual general meeting. General Meetings
  of voting at general meetings, we shall issue a notice to shareholders convening a general meeting for a date not less than 15 days from the date of the notice. Directors may convene general meetings at any time.
  by giving 15 days advance written notice of that meeting. For any other general meeting of our shareholders, 15 days advance written notice is required.
  minutes after the time selected for the meeting, such meeting shall be postponed for one week. However the chairman has the discretion to extend the fifteen minutes for a reasonable period on certain grounds. The necessary quorum is three members present with sufficient voting powers in person or by proxy to exercise in aggregate 25% of the voting rights.


Voting Rights
  per person and on a poll have one vote for every share held. The holders of our cumulative preference shares are not entitled to vote at a general meeting unless any preference dividend is in arrears for more than six months at the date on which the notice convening the general meeting is posted to the shareholders. Additionally, holders of cumulative preference shares may vote on resolutions which adversely affect their interests and on resolutions regarding the disposal of all or substantially all of our assets or mineral rights. When entitled to vote, holders of our cumulative preference shares are entitled to one vote per person on a show of hands and that portion of the total votes which the aggregate amount of the nominal value of the shares held by the relevant shareholder bears to the aggregate amount of the nominal value of all shares issued by us.  Dividends
  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
  shares or securities convertible into our ordinary shares.  Winding-up
  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, 2017, no such dividends have been declared. Except for the preference dividend and as described in this Item our cumulative preference shares are not entitled to any other participation in the distribution of our surplus assets on winding-up.  Reduction of Capital
  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
  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
  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
  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. We also need to consider the solvency and liquidity requirements stated in the Companies Act of South Africa.


Directors’ power to vote compensation to themselves
  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
    lawfully claimed by such shareholder/s, subject to the Prescription Act, 1968 as amended or any other law which governs the law of prescription. Staggered director elections & cumulative voting
  provision is made for cumulative voting. Sinking fund provisions and liability to further capital calls
  subject shareholders to liability to further capital calls. Provision that would delay/prevent change of control
  setting out the terms thereof. They must prove that upon implementation of the amalgamation or merger each will satisfy the solvency and liquidity test. Companies involved in disposals, amalgamations or mergers, or schemes of arrangement must obtain a compliance certificate from the Takeover Regulation Panel, pass special resolutions and in some instances they must obtain an independent expert report.
 10C. MATERIAL CONTRACTS
 
  Limited ("Khumo") and DRDSA Empowerment Trust (the Trust) dated March 17, 2014.
  Subscription Agreement in respect of which DRDGOLD agreed to acquire all of the shares in and claims against EMO, held by Khumo, subject to the fulfilment of certain conditions. On the same day, the Trustees of the DRDSA Empowerment Trust and DRDGOLD entered into the Share Sale and Subscription Agreement in respect of which DRDGOLD agreed to acquire all of the shares in and claims against EMO held by the Trust.  In terms of the Agreement, Khumo acquired 35,000,000 new ordinary shares in DRDGOLD (“DRDGOLD Shares”).
  Agreement; in accordance with the provisions of the Mineral and Petroleum Resources Development Act, 28 of 2002 (“MPRDA”). Ministerial consent was granted in or around February 2015 in terms of which the Minister of Mineral Resources unequivocally confirmed that in respect of the group’s existing mineral interests, the direct ownership stake acquired by Khumo would translate into an effective 8.12% shareholding and 2.43% shareholding held by the DRDSA Empowerment Trust in DRDGOLD respectively; in terms of the Agreement, would be recognised as a 26% beneficial interest in the group, in compliance with the provisions of sections 2(d) and 2(f) of the MPRDA and may be reported as such. Pursuant to the Agreement, Khumo was restricted from disposing of or encumbering the DRDGOLD Shares for a period of 3 years until 10 April 2018 (“Lock-in Period”). Khumo sought approval from  shareholders  to  enter  into  hedging  arrangements  for  purposes  of  securing  the  value  of  the  DRDGOLD  Shares  subject  to compliance with the Lock-in Period.
  with a financial institution which would have resulted in a technical breach of the Lock-in Period terms. It was, however, always the Parties’ intention that Khumo would, during the Lock-in Period be capable of concluding such an arrangement provided that such hedging arrangement does not encroach upon the BEE status of the group’s existing mining and prospecting rights. DRDGOLD and Khumo procured the approvals necessary to ensure that the proposed hedging transaction would not have any negative impact on the standing of the group’s existing mining and prospecting rights and an addendum to the Agreement became effective on 10 March 2017, which allows for the hedging arrangement to be concluded (“Amendment”).


Transaction and which does not affect DRDGOLD financially or its existing  mining and prospecting rights, no approval of the Amendment is required.  This has been confirmed with the JSE Limited (“JSE”) pursuant to the JSE Listings Requirements. On the basis that the extenuating factors for the Amendment were clearly evidenced and supported, the JSE was satisfied that the further Amendment to did not need to be referred back to the shareholders. After the hedging arrangement has been concluded, Khumo will continue to hold a direct interest in and have voting rights attributable to 22 000 000 DRDGOLD shares, however, its beneficial interest shall continue to extend to all 35,000,000 of the DRDGOLD Shares until the expiry of the Lock-in Period. The DMR has approved the Amendment and confirmed that the Amendment will not have the effect of diluting the BEE status of the group and is in compliance with the provisions of the MPRDA.
 
 10D. EXCHANGE CONTROLS
 
  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
  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.
  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.
  Namibia, and the Kingdoms of Lesotho and Swaziland. Transactions between residents of the Common Monetary Area are not subject to these exchange control regulations.
  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.
  
  companies  are  not  permitted  to  maintain  foreign  bank  accounts  without  SARB  approval  and,  without  the  approval  of  SARB,  are generally not permitted to export capital from South Africa or hold foreign currency. In addition, South African companies are required to  obtain the approval of the  SARB prior to raising foreign funding  on the strength of their South African statements of financial position, which would permit recourse to South Africa in the event of defaults. Where 75% or more of a South African company's capital, voting power, power of control or earnings is directly or indirectly controlled by non-residents, such a corporation is designated an “affected person” by the SARB, and certain restrictions are placed on its ability to obtain local financial assistance. We are not, and have never been, designated an “affected person” by the SARB.
  the SARB, South African companies are generally required to repatriate to South Africa profits of foreign operations and are limited in their ability to utilize profits of one foreign business to finance operations of a different foreign business. South African companies establishing  subsidiaries,  branches,  offices  or  joint  ventures  abroad  are  generally  required  to  submit  financial  statements  on  these operations as well as progress reports to the SARB on an annual basis. As a result, a South African company's ability to raise and deploy capital outside the Common Monetary Area is restricted.


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:
 ·
 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;
 ·
 approved investments abroad and up to R500 million to finance approved new investments in African countries on an annual bases. Approval from the SARB is required in advance for investments in excess of R500 million. On application to the SARB, corporations are also allowed to use part of their local cash holdings to finance up to 10% of approved new foreign investments where the cost of these investments exceeds the current limits;
 ·
 predetermined period of time, as a prerequisite to allowing the expatriation of funds. If these requirements are not met, the SARB may instruct that the equity be disposed of. In our experience the SARB has taken a commercial view on this, and has on occasion extended the period of time for compliance; and
 ·
  
  to South African residents in respect of fixed and ascertained foreign exchange commitments covering the movement of goods.
  allowance. The balance of the emigrant's funds will be blocked and held under the control of an authorized dealer. These blocked funds may only be invested in:
 ·    blocked current, savings, interest bearing deposit accounts in the books of an authorized dealer in the banking sector;  ·    securities quoted on the JSE and financial instruments listed on the Bond Exchange of South Africa which are deposited with
 an  authorized  dealer  and  not  released  except  temporarily  for  switching  purposes,  without  the  approval  of  the  SARB. Authorized dealers must at all times be able to demonstrate that listed or quoted securities or financial instruments which are dematerialized or immobilized in a central securities depository are being held subject to the control of the authorized dealer concerned; or
 ·
 
  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
  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
  remittable.
  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


10E. TAXATION
 Material South African Income Tax Consequences
  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.
  do not pay tax in South Africa except in the following circumstances:  Income Tax and withholding tax on dividends
  within) South Africa. Interest earned by a non-resident on a debt instrument issued by a South African company will be regarded as being derived from a South African source but will be regarded as exempt from taxation in terms of Section 10(1)(i) of the South African Income Tax Act, 1962 (as amended), or the Income Tax Act. This exemption applies to so much of any interest and dividends (which are not otherwise exempt) received from a South African source not exceeding (a) R34,500 if the taxpayer is 65 years of age or older or (b) R23,800 if the taxpayer is younger than 65 years of age at the end of the relevant tax year.
    beneficial owners who are exempt from the dividend tax, which includes, resident companies receiving a dividend after the effective date, being April 1, 2012. The Convention between the United States of America and the Republic of South Africa for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income and Capital Gains, or the Tax Treaty, would limit the rate of this tax with respect to dividends paid on ordinary shares or 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 20% of the gross amount of the dividends in all other cases.
   Africa through a permanent establishment situated in South Africa, or performs in South Africa independent personal services from a fixed base situated in South Africa, and the dividends are attributable to such permanent establishment or fixed base.
    in the Group is subject, were 34% and 28%, respectively. The formula for determining the South African gold mining tax rate for fiscal years ended 2017 and 2016 is: Y = 34 – 170/X. Where Y is the percentage rate of tax payable and X is the ratio of taxable income, net of any qualifying capital expenditure that bears to mining income derived, expressed as a percentage.
  respect of a “hybrid debt instrument” is deemed to be a dividend in specie declared by the payor and received by the recipient which is exempt from income tax, as opposed to interest which is taxable. The terms of some intercompany loans cause the affected loans  to  be  deemed  as  “hybrid debt instruments”  and  the  interest  thereof  to  be  deemed  to  be  an  exempt  dividend.  This characterization of the affected loans as a “hybrid debt instrument” was not impacted by subsequent amendments to Section 8F of the Income Tax Act that became effective in fiscal year 2017.    United States Federal Income Tax Considerations
  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.
  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 considerations and does not address the effect of any state, local, or foreign tax laws that may apply, the alternative minimum tax, the Medicare tax or the application of the federal estate or gift tax.


income tax purposes:
 ·  a citizen or individual resident of the US;  ·  a corporation (or any entity treated as a corporation for US federal income tax purposes) created or organized under the laws
  ·  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.
 
  the tax treatment of a partner will generally depend on the status of the partner and on the activities of the partnership. Partners in partnerships holding any ordinary shares or ADSs are urged to consult their tax advisors.
  concerning the US federal income tax considerations applicable to their particular situations as well as any considerations to them arising under the tax laws of any foreign, state or local taxing jurisdiction. Ownership of Ordinary Shares or ADSs
  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.
  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.
  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.
  at a maximum US federal income tax rate applicable to capital gains. 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.
  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.
  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.”


Passive Foreign Investment Company
  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:
 ·
  ·
  ·
  ·
  
  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.
  the US Secretary of Treasury may require.
  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.
  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.
  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. 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. Disposition of Ordinary Shares or ADSs
  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 above, such gain or loss generally will be capital gain or loss and will be long-term capital gain or loss if the US holder has held the ordinary shares or ADSs for more than one year. The deductibility of capital losses is subject to limitations. Gain or loss recognized by a US holder on the taxable disposition of ordinary shares or ADSs generally will be treated as US-source gain or loss for US foreign tax credit purposes.
  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.
  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.  Information Reporting and Backup Withholding
  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 identification number, in the required manner. Generally, individuals are not exempt recipients, whereas corporations and certain other entities generally are exempt recipients. The backup withholding tax rate is currently 28%. Payments made with respect to our ordinary shares or ADSs to a US holder must be reported to the Internal Revenue Service, unless the US holder is an exempt recipient or otherwise establishes an exemption. Any amount withheld from a payment to a US holder under the backup withholding rules is refundable or allowable as a credit against the holder's US federal income tax, provided that the required information is furnished to the Internal Revenue Service.  Information with respect to Foreign Financial Assets
  ordinary shares or ADSs, subject to certain exceptions (including an exception for assets held in accounts maintained by certain financial institutions, although the account itself may be reportable if held at a non-US financial institution). US holders should consult their tax advisers regarding the effect, if any, of this reporting requirement on their acquisition, ownership and disposition of ordinary shares or ADSs. US holders should consult their tax advisors regarding application of the information reporting and backup withholding rules.
 10F. DIVIDENDS AND PAYING AGENTS
 
 Not applicable
 10G. STATEMENT BY EXPERTS
 
   10H. DOCUMENTS ON DISPLAY
 
  DRDGOLD Limited, P.O. Box 390, Maraisburg, Johannesburg, South Africa 1700. Attn: Group Company Secretary. Tel No. +27-11-470-2600. A  copy  of each report  submitted in accordance  with  applicable United  States law is available for  public review at  our principal executive offices at DRDGOLD Limited, 1 Sixty Jan Smuts Building, 2nd Floor - North Tower, 160 Jan Smuts Avenue, Rosebank, 2196, South Africa.


10I. SUBSIDIARY INFORMATION
 
   ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 General
    Refer to Item 18. ‘‘Financial Statements - Note 24 - Financial instruments’’ of the consolidated financial statements for a qualitative and quantitative discussion of our exposure to these market risks. Commodity price risk
  to pay dividends and undertake capital expenditures, and the market price of our ordinary shares or ADSs. Historically, rand gold prices have fluctuated widely and are affected by numerous industry factors over which we have no control. The aggregate effect of these factors on the rand gold price is impossible for us to predict. The rand price of gold may not remain at a level allowing us to economically exploit our reserves. It is our policy not to hedge this commodity price risk.  Concentration of credit risk
   .
    The Group manages its exposure to credit risk on other receivables by dealing with a number of counterparties, ensuring that these counterparties  are  of  good  credit  standing  and  transacting  on  a  secured  or cash  basis  where  considered  required.  Receivables  are regularly monitored and assessed for recoverability. Foreign currency risk
  rands. We are thus exposed to fluctuations in the US dollar/rand exchange rate. Foreign exchange fluctuations affect the cash flow that we will realize from our operations as gold is sold in US dollars, while production costs are incurred primarily in rands. Our results are positively affected when the US dollar strengthens against the rand and adversely affected when the US dollar weakens against the rand.  Our  cash  and  cash  equivalent  balances  are  held  in  US  dollars  and  rands.  Holdings  denominated  in  other  currencies  are insignificant. Long-term debt
                                           Based on our fiscal year 2017 financial results, a hypothetical 100 basis points (increase)/decrease in interest rate activity would (increase)/decrease our interest expense by R0.2 million.
 
 ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
  12A. DEBT SECURITIES


12B. WARRANTS AND RIGHTS
 
   12C. OTHER SECURITIES
 
   12D. AMERICAN DEPOSITARY SHARES
 Depositary Fees and Charges
  the New York Stock Exchange, or NYSE under the symbol “DRD” (until December 29, 2011 our ADSs were traded on the Nasdaq Capital Market under the symbol “DROOY”). The ADSs are evidenced by American Depository Receipts, or ADRs, issued by The Bank  of New York  Mellon, as Depository  under the Amended and  Restated  Deposit  Agreement dated  as  of August  12, 1996, as amended and restated as of October 2, 1996, as further amended and restated as of August 6, 1998, as further amended and restated July 23, 2007, among DRDGOLD Limited, The Bank of New York Mellon and owners and beneficial owners of ADRs from time to time. ADR holders may have to pay the following service fees to the Depositary:
   Issuance  of  ADSs,  including  issuances  resulting  from  a  distribution  of ordinary shares or rights ..............................................................................
  1
  Cancellation  of  ADSs  for  the  purpose  of  withdrawal,  including  if  the Deposit Agreement terminates .....................................................................
  1
    Distribution  of  securities  distributed  to  holders  of  deposited  securities which are distributed by the Depositary to ADS registered holders
  In addition, ADR holders are responsible for certain fees and expenses incurred by the Depositary on their behalf including (1) taxes and other governmental charges, (2) such registration fees as may from time to time be in effect for the registration of transfers of ordinary shares generally on the share register and applicable to transfers of ordinary shares to the name of the Depositary or its nominee or the Custodian or its nominee on the making of deposits or withdrawals, (3) such cable, telex and facsimile transmission expenses as are expressly provided in the Deposit Agreement, and (4) such expenses as are incurred by the Depositary in the conversion of foreign currency to U.S. Dollars.
  for the purpose of withdrawal or from intermediaries acting for them. The Depositary, collects fees for making distributions to investors by deducting those fees from the amounts distributed or by selling a portion of distributable property to pay the fees. The Depositary may collect its annual fee for depositary services by deductions from cash distributions or by directly billing investors or by charging the book-entry system accounts of participants acting for them. The Depositary may generally refuse to provide fee-attracting services until its fees for those services are paid.  Depositary Payments
 The Bank of New York Mellon, as Depositary, has agreed to reimburse DRDGOLD an annual amount of $75 000 mainly
 consisting of accumulated contributions towards the Company’s investor relations activities (including investor meetings, conferences and fees of investor relations service vendors). After the deduction of other fees, the annual reimbursement for the year ended June 30, 2017  amounts  to  approximately  $43,400.  DRDGOLD  is  also  entitled  to  a  25%  share  of  the  dividend  fees  which  amounts  to approximately $84,610 for the years ended June 30, 2015 and June 30, 2016.
 
 
 
 1
 These fees are typically paid to the Depositary by the brokers on behalf of their clients receiving the newly-issued ADSs from the Depositary or
 delivering the ADSs to the Depositary for cancellation. The brokers in turn charge these transaction fees to their clients.


PART II
 ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
 
  material defaults with respect to any indebtedness of ours.
 ITEM 14.  MATERIAL  MODIFICATIONS  TO  THE  RIGHTS  OF  SECURITY  HOLDERS  AND  USE  OF PROCEEDS
 
   ITEM 15. CONTROLS AND PROCEDURES
  15A. Disclosure Controls and Procedures
   has evaluated the effectiveness of our disclosure controls and procedures (as this term is defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act). Our management, including the Chief Executive Officer and Chief Financial Officer, concluded that our disclosure controls and procedures were effective as of June 30, 2017.
  disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the applicable rules and forms and that such information required to be disclosed by us in the reports we file or submit under the Securities Exchange Act is accumulated and communicated to our management, including  our  Chief Executive Officer and  Chief  Financial  Officer, as appropriate  to allow timely  decisions regarding required disclosures.
  include the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, any such system can only provide reasonable assurance of achieving the desired control objectives.
  15B. Management’s Annual Report on Internal Control Over Financial Reporting
 Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal
 control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Securities Exchange Act of 1934 as a process designed by, or under the supervision of, our Chief Executive Officer and Chief Financial Officer and effected by our board,  management and  other personnel to  provide reasonable assurance regarding  the reliability  of financial  reporting  and the preparation of financial statements for external purposes in accordance with IFRS. Under Section 404 of the Sarbanes Oxley Act of 2002, management is required to assess our internal controls surrounding the financial reporting process as at the end of each fiscal year.  Based  on  that  assessment,  management  is  to  determine  whether  or  not  our  internal  controls  over  financial  reporting  are effective.
 Internal control over financial reporting includes those policies and procedures that:
 ·
  ·
 in accordance with IFRS, and that our receipts and expenditures are being made only in accordance with authorizations of our management and board; and
 ·
  Because  of  its  inherent  limitations,  internal  control  over  financial  reporting  may  not  prevent  or  detect  misstatements.
 Instead, it must be noted that even those systems that management deems to be effective can only provide reasonable assurance with respect to the preparation and presentation of our financial statements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or the degree of compliance with the policies and procedures.
 Our management assessed the effectiveness of our internal control over financial reporting as of June 30, 2017. In making
 this assessment, our management used the criteria set forth by the Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on our assessment and those criteria, our management concluded that as of June 30, 2017 our internal control over financial reporting was effective.


15C. Independent Auditor’s Attestation Report
 The effectiveness of internal control over financial reporting as of June 30, 2017 was audited by KPMG Inc., independent
 registered public accounting firm, as stated in their report on page F-1 of this Form 20-F.
 15D. Changes in Internal Control Over Financial Reporting
 Changes  that  have  materially  affected,  or  are  reasonably  likely  to  materially  affect,  our  internal  control  over  financial
 reporting during the period covered by the annual report, need to be identified and reported as required by paragraph (d) of Rule 13a-15.
 During the year ended June 30, 2017, there have not been any changes in our internal control over financial reporting that
  
  ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT
 
   committee financial expert within the meaning of the Sarbanes-Oxley Act, in accordance with the Rules of the New York Stock Exchange, or NYSE, and rules promulgated by the SEC and independent both under the New York Stock Exchange Rules and the South African Johannesburg Stock Exchange Rules. The board is satisfied that the skills, experience and attributes of the members of  the  audit  and  risk  committee  are  sufficient  to  enable  those  members  to  discharge  the  responsibilities  of  the  audit  and  risk committee.
 
 ITEM 16B. CODE OF ETHICS
 
  the Chief Executive Officer, Chief Financial Officer, Chief Operating Officer and the Financial Director at our mining operation as well as all other employees. The Code of Ethics was last updated on February 9, 2012. The Code of Ethics and Conduct can be accessed on the Company’s website at www.drdgold.com.
 
 ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES
 
    
    
  
  provide, include the company audit; statutory audits; comfort letters and consents; attest services; and assistance with and review of documents filed with the SEC.
 
                  
  
 
   
  on specified items contained in our Integrated Report for fiscal year 2016. The all other fees paid during fiscal year 2016 consist of fees invoiced with respect to limited assurance provided by KPMG on specified items contained in our Integrated Report for fiscal year  2015.  Subsequent to June 30, 2017 KPMG was  engaged to provide limited assurance  on specified  items contained in  our Integrated Report for fiscal year 2017 that was billed during fiscal year 2018.
 
   the external auditors as well as the remuneration and terms of engagement of the external auditors. The committee pre-approves, and has pre-approved, all non-audit services provided by the external auditors. The Audit and Risk Committee considered all of the fees mentioned above and determined that such fees are compatible with maintaining KPMG Inc.’s independence.


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
 
  NYSE.  Under  section  303A.11  of  the  NYSE  Listing  Standards,  a  foreign  private  issuer  such  as  us  may  follow  its  home  country corporate governance practices in lieu of certain of the NYSE Listing Standards on corporate governance. The following paragraphs summarize the significant differences between these various requirements and how it is implemented by DRDGOLD:  Shareholder meeting quorum requirements
 Section 310.00 of the NYSE Listing Standards provides that the quorum required for any meeting of holders of common stock
 should be sufficiently high to insure a representative vote. Consistent with the practice of companies incorporated in South Africa, our Memorandum of Incorporation requires a quorum of three members present with sufficient voting powers in person or by proxy to exercise in aggregate 25% of the voting rights and we have elected to follow our home country rule.
 ITEM 16H. MINE SAFETY DISCLOSURES


PART III
 
 ITEM 17. FINANCIAL STATEMENTS
 
   ITEM 18. FINANCIAL STATEMENTS


Report of Independent Registered Public Accounting Firm
  We have audited the accompanying consolidated statements of financial position of DRDGOLD Limited and subsidiaries as of June30, 2017 and 2016, and the related consolidated statements of profit or loss and other comprehensive income, changes in equity, andcash flows for each of the years in the three-year period ended June 30, 2017. We also have audited DRDGOLD Limited’s internalcontrol over financial reporting as of June 30, 2017, based on criteria established in Internal Control – Integrated Framework (2013)issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). DRDGOLD Limited’s management isresponsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for itsassessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s AnnualReport on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on these consolidated financialstatements and an opinion on the DRDGOLD’s internal control over financial reporting based on our audits.We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the consolidated financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
 A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability offinancial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accountingprinciples. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to themaintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of thecompany; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statementsin accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made onlyin accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effecton the financial statements.
 Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projectionsof any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes inconditions, or that the degree of compliance with the policies or procedures may deteriorate.
 In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position ofDRDGOLD Limited and its subsidiaries as of June 30, 2017 and 2016, and the results of their operations and their cash flows for eachof the years in the three-year period ended June 30, 2017, in conformity with International Financial Reporting Standards as issued bythe International Accounting Standards Board. Also in our opinion, DRDGOLD Limited maintained, in all material respects, effectiveinternal control over financial reporting as of June 30, 2017, based on criteria established in Internal Control – Integrated Framework(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
 KPMG IncSecunda, Republic of South Africa October 31, 2017


CONSOLIDATED STATEMENT OF PROFIT OR LOSSAND OTHER COMPREHENSIVE INCOME
 for the year ended 30 June 2017
 Amounts in R million
 2017
 2016
 2015
 Revenue
 2
 
 2,339.9
 
 2,433.1
 
 2,105.3
 
 Cost of sales
 3.1
 
 (2,307.9)
 
 (2,236.8)
 
 (1,946.3)
 
 Gross profit from operating activities
 32.0
 
 196.3
 
 159.0
 
 Other income
 3.2
 
 12.9
 
 10.5
 
 13.2
 
 Administration expenses and general costs
 (69.4)
 
 (87.2)
 
 (69.4)
 
 Impairments
 -
 
 -
 
 (7.9)
 
 Results from operating activities
 (24.5)
 
 119.6
 
 94.9
 
 Finance income
 4
 
 40.0
 
 36.8
 
 51.5
 
 Finance expense
 5
 
 (52.2)
 
 (47.6)
 
 (49.6)
 
 (Loss)/profit before tax
 (36.7)
 
 108.8
 
 96.8
 
 Income tax
 15.1
 
 50.4
 
 (46.9)
 
 (28.6)
 
 Profit for the year
 13.7
 
 61.9
 
 68.2
 
 Attributable to:Equity owners of the parent
 13.7
 
 61.9
 
 67.8
 
 Non-controlling interest
 -
 
 -
 
 0.4
 
 Profit for the year
 13.7
 
 61.9
 
 68.2
 
 Other comprehensive incomeItems that are or may be reclassified to profit or loss, net of tax
 Net fair value adjustment on available-for-sale investments
 (0.3)
 
 4.4
 
 (0.8)
 
 Fair value adjustment on available-for-sale investments
 (0.3)
 
 4.4
 
 19.1
 
 Fair value adjustment on available-for-sale investment reclassified to profit or loss
 4
 
 -
 -
 (19.9)
 Foreign exchange translation reserve reclassified to profit or loss
 4
 
 -
 
 -
 
 (5.9)
 
 Items that will never be reclassified to profit or loss, net of taxActuarial loss on the revaluation of post-retirement medical benefits
 -
 
 -
 
 (0.5)
 
 Total other comprehensive income for the year
 (0.3)
 
 4.4
 
 (7.2)
 
 Total comprehensive income for the year
 13.4
 
 66.3
 
 61.0
 
 Attributable to:Equity owners of the parent
 13.4
 
 66.3
 
 60.6
 
 Non-controlling interest
 -
 
 -
 
 0.4
 
 Total comprehensive income for the year
 13.4
 
 66.3
 
 61.0
 
 Earnings per share attributable to equity owners of the parent
 Basic earnings per share (SA cents per share)
 6
 
 3.2
 
 14.7
 
 17.4
 
 Diluted earnings per share (SA cents per share)
 6
 
 3.2
 
 14.7
 
 17.4
 
 The accompanying notes are an integral part of these consolidated financial statements.
 Note
 F-2


CONSOLIDATED STATEMENT OF FINANCIAL POSITION
 at 30 June 2017
 Amounts in R million
 Note
 2017
 
 2016
 
 ASSETS
                                                                             EQUITY AND LIABILITIES
 Equity attributable to the owners of the parentEquity attributable to the owners of the parent


CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
 for the year ended 30 June 2017
 
 Equity
 Available
 attributable
 for sale
 
 to the
 Non-
 Share and other Retained owners of controlling
 Total
 Amounts in R million
 Note
 capital
 reserves
 earnings the parent
 interest
 equity
              Total comprehensive incomeProfit for the year
                  Transactions with the owners of the parentDividend on ordinary share capital
                                  Share option reserve transferred to retained earnings
                  Total comprehensive incomeProfit for the year
                Transactions with the owners of the parentDividend on ordinary share capital
                Treasury shares acquired through subsidiary
                    Total comprehensive incomeProfit for the year
                Transactions with the owners of the parentDividend on ordinary share capital
         Available for sale and other reserves transferred to retained earnings


CONSOLIDATED STATEMENT OF CASH FLOWS
 for the year ended 30 June 2017
 Amounts in R million
 Note
 2017
 2016
 2015
 CASH FLOWS FROM OPERATING ACTIVITIESCash received from sales of precious metals
                                                   CASH FLOWS FROM INVESTING ACTIVITIESAcquisition of property, plant and equipment
                                            CASH FLOWS FROM FINANCING ACTIVITIESRepayments of loans and borrowings


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 for the year ended 30 June 2017
 1
 ACCOUNTING POLICIES
                 NOTE 7NOTE 8NOTE 15
 NOTE 22 ASSETS AND LIABILITIES CLASSIFIED AS HELD FOR SALENOTE 23 CONTINGENT LIABILITIES
  Basis of consolidationSubsidiaries
   Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights to,variable returns from its involvement with the entity and has the ability to affect those returns through its power over theentity. The financial statements of subsidiaries are included in the consolidated financial statements from the date thatcontrol commences until the date that control ceases.
 The DRDGOLD Group is primarily involved in the retreatment of surface gold. The consolidated financial statementscomprise the company and its subsidiaries who are all wholly owned and have only South African operations(collectively the “Group” and individually “Group Companies”). DRDGOLD Limited is domiciled in South Africa with aregistration number of 1895/000926/06. The registered address of the company is 1 Sixty Jan Smuts Building, 2ndFloor - North Tower, 160 Jan Smuts Avenue, Rosebank, 2196.
 Changes in the Group’s interest in a subsidiary which do not lead to loss of control are accounted for as equitytransactions with equity owners in their capacity as equity owners and no profit or loss is recognised.
 NCI are measured at their proportionate share of the acquirer’s identifiable net assets at the acquisition date.Subsequently, the carrying amount of non-controlling interest is the amount of the interest at initial recognition plus thenon-controlling interest’s subsequent share of changes in equity.
 Information about assumptions and estimates in applying accounting policies that have the most significant effect onthe amounts recognised in the consolidated financial statements are included in the notes:
 Information about significant judgements in applying accounting policies that have the most significant effect on theamounts recognised in the consolidated financial statements are included in the notes:
  Accounting assumptions, estimates and judgements are reviewed on an ongoing basis. Revisions to reported amountsare recognised in the period in which the revision is made and in any future periods affected. Actual results may differfrom these estimates.
 Intra-group balances, transactions and any unrealised gains and losses or income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements.
   The consolidated financial statements have been prepared in accordance with International Financial ReportingStandards (IFRS) and its interpretations adopted by the International Accounting Standards Board (IASB).
  The Group's functional and reporting currency is South African rand due to all of the Group's operations being located inSouth Africa. The amounts in these consolidated financial statements are rounded to the nearest hundred thousandunless stated otherwise. Significant exchange rates applied during the year are set out in the table below:
  The preparation of the consolidated financial statements requires management to make accounting assumptions,estimates and judgements that affect the application of the Group's accounting policies and reported amounts of assetsand liabilities, income and expenses.


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 continued
 for the year ended 30 June 2017
 1
 ACCOUNTING POLICIES
 continued
 • Related party disclosure previously presented in a separate note have been placed within the notes to which theyrelate. Note 25 summarises the related party disclosure that has been included throughout the consolidated financialstatements.
 • With effect from 1 July 2016, the accumulated available for sale and other reserves, comprising asset revaluationreserves, were transferred to retained earnings and subsequent changes in the fair value of available for sale financialinstruments are recognised directly in retained earnings.
 • Consolidated statement of profit or loss and other comprehensive income, consolidated statement of financial positionand consolidated statement of changes in equity: Certain line items disclosure were rationalised to focus on materialinformation and certain line items were renamed or added where such presentation facilitate improved presentation ofrelevant financial information.
 • The notes to the consolidated financial statements are presented in an order that gives prominence to the areas ofour activities that the Group considers to be the most relevant to understand our financial performance and position.This new grouping has been detailed on the index to these consolidated financial statements.
 In applying materiality to financial statement disclosures, we consider both the amount and nature of each item. Themain changes to the presentation of the consolidated financial statements and notes thereon in 2017 are as followsand were made retrospectively for all periods presented in order to facilitate improve comparability:
 In order to facilitate improved reading of the consolidated financial statements, DRDGOLD has made various changesto the presentation of the consolidated financial statements and notes to the consolidated financial statements to giveprominence to material financial statement disclosures.
 • Accounting policies previously presented in Note 1 as a single note, have in 2017 been placed within the relevantnotes to the consolidated financial statements, where possible. Changes were made in the wording of these policies tomore clearly set out the accounting policies relevant to the Group and do not represent changes in accounting policies.
 • Results from operating activities, operating lease commitments, liability for post-retirement medical benefits andfinance lease obligations: various disclosures were rationalised to focus on material financial information.
 • Information about significant judgements, assumptions and estimation uncertainties previously presented in Note 1 asa single note were placed within the relevant notes alongside the significant accounting policy to which they relate.
 IAS 1 Disclosure Initiative: Changes to the presentation of the consolidated financial statements and notes tothe consolidated financial statements
 • Financial instrument disclosure previously presented in a separate note have been placed within the notes to whichthey relate. Note 24 summarises the financial instrument disclosure that has been included throughout the consolidatedfinancial statements.


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 continued
 for the year ended 30 June 2017
 1
 ACCOUNTING POLICIES
 continued
      Measurement of cash-settled share-based payments – There is currently no guidance in IFRS 2 on how to measure thefair value of the liability in a cash-settled share based payment. The amendments clarify that a cash-settled share-based payment is measured using the same approach as for equity-settled share-based payments – i.e. the modifiedgrant date method. Therefore, in measuring the liability, market and non-vesting conditions are taken into account inmeasuring its fair value and the number of awards to receive cash is adjusted to reflect the best estimate of thoseexpected to vest as a result of satisfying service and any non-market performance conditions.
 This standard will include changes in the measurement bases of the financial assets to amortised cost and fair valuethrough other comprehensive income ("OCI"). Even though these measurement categories are similar to IAS 39, thecriteria for classification into these categories are different. In addition, the IFRS 9 impairment model has been changedfrom an “incurred loss” model from IAS 39 to an “expected credit loss” model.A preliminary assessment indicated that IFRS 9 will not have a significant impact on the Group due to the short termnature of financial assets measured at amortised cost and the insignificant movements related to available-for-salefinancial assets. The final assessment of the impact of IFRS 9 will be finalised in due course.
 At the date of authorisation of these consolidated financial statements, the following relevant standards, amendmentsto standards and interpretations that may be applicable to the business of the Group were in issue but not yet effectiveand may therefore have an impact on future consolidated financial statements. These new standards, amendments tostandards and interpretations will be adopted at their effective dates.
 The standard sets out the principles for the recognition, measurement, presentation and disclosure of leases for bothparties to a contract, i.e. the customer (‘lessee’) and the supplier (‘lessor’). IFRS 16 replaces the previous leasesStandard, IAS 17 Leases, and related Interpretations. IFRS 16 has one model for lessees which will result in almost allleases being included in the Statement of Financial position. No significant changes have been included for lessors.The assessment of the impact of this new accounting standard requires an extensive assessment of the leases of theGroup which is ongoing. The total impact of this new accounting standard can therefore not be quantified with certaintyat this stage.
 IAS 12 Income taxes amendments (Recognition of deferred tax assets for unrealised losses) (Effective date 1 January 2017)The amendments provide additional guidance on the existence of deductible temporary differences, which dependsolely on a comparison of the carrying amount of an asset and its tax base at the end of the reporting period, and is notaffected by possible future changes in the carrying amount or expected manner of recovery of the asset.
 The amendments also provide additional guidance on the methods used to calculate future taxable profit to establishwhether a deferred tax asset can be recognised, such as the exclusion of tax deductions resulting from the reversal ofdeductible temporary differences.
 The standard contains a single model that applies to contracts with customers and two approaches to recognisingrevenue: at a point in time or over time. The model features a contract-based five-step analysis of transactions todetermine whether, how much and when revenue is recognised.A preliminary assessment indicated that IFRS 15 will not have a significant impact on the Group due to the short termnature of the revenue cycle. The final assessment of the impact of IFRS 15 will be finalised in due course.
 A preliminary assessment indicated that IFRS 2 will not have a significant impact on the Group as market and non-vesting conditions are being taken into account in measuring its fair value and the number of awards to receive cash isalready adjusted to reflect the best estimate of those expected to vest as a result of satisfying service and any non-market performance conditions. The final assessment of the impact of IFRS 2 will be finalised in due course.
 The Group includes entities that are not expected to generate recurring taxable income, and have unrecogniseddeferred tax assets. Some of these entities were establised in excess of a hundred years ago and own land that iscarried at historical cost, but may have value in excess of its carrying value that could result in a deferred tax assetunder the amended accounting standard. The impact of this amended accounting standard has not been quantified atthis stage due to the significant assumptions, estimates and judgement required to estimate the potential future taxableprofits.
 Guidance is provided where an entity may assume that it will recover an asset for more than its carrying amount,provided that there is sufficient evidence that it is probable that the entity will achieve this.


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 continued
  2
 REVENUE
 ACCOUNTING POLICIES
 Amounts in R million
 2017
 2016
 2015
 Gold revenue
 2,336.1
 
 2,429.7
 
 2,103.0
 
 Silver revenue
 3.8
 
 3.4
 
 2.3
 
 Total revenue
 2,339.9
 
 2,433.1
 
 2,105.3
 
 MARKET RISK
 Amounts in R million
 2017
 2016
 2015
 10% increase in the Rand gold price
 234.0
 
 243.3
 
 210.5
 
 10% decrease in the Rand gold price
 (234.0)
 
 (243.3)
 
 (210.5)
 
 Commodity price sensitivity
 The Group's profitability and the cash flows are primarily affected by changes in the market price of gold which is soldin US Dollar and then converted to Rand. The Group does not enter into forward sales of gold production, derivatives orother hedging arrangements to establish a price in advance for the sale of future gold production.
 Revenue comprise the sale of gold bullion and silver bullion (produced as a by-product).
 The significant risks and rewards of ownership have been transferred when Rand Refinery Limited (“Rand Refinery“),acting as an agent for the sale of all gold produced by the Group, delivers the gold to the buyer and the sales price isfixed, as evidenced by the certificate of sale.
 Rand Refinery performs the final refinement of all gold produced. In exchange for this service, Rand Refinery receives avariable refining fee plus fixed marketing and administration fees which is included in operating costs.
 Combined impact of both US Dollar price of gold and South African Rand/US Dollar exchange rate
 Revenue is recognised to the extent that it is probable that economic benefits will flow to the Group and the amount ofrevenue can be reliably measured. Revenue is stated at the fair value of the consideration received or receivable, whichis based on the afternoon London Bullion Market fixing price on the date the significant risks and rewards of ownershiphave been transferred to the buyer.
 A change of 10% in the average Rand gold price received during the financial year would have increased/(decreased)equity and profit/(loss) by the amounts shown below. This analysis assumes that all other variables remain constantand specifically excludes the impact on income tax.
 F-9


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 continued
 for the year ended 30 June 2017
 3
 RESULTS FROM OPERATING ACTIVITIES
   Amounts in R million
 2017
 2016
 2015
 Cost of sales
 (2,307.9)
 
 (2,236.8)
 
 (1,946.3)
 
 Operating costs (a)
 (2,109.3)
 
 (2,030.2)
 
 (1,786.9)
 
 Depreciation
 7
 (179.8)
 
 (180.2)
 
 (193.3)
 
 Retrenchment costs (b)
 (23.0)
 
 -
 
 (7.1)
 
 Change in estimate of environmental rehabilitation
 8 , 22
 (0.6)
 
 (19.3)
 
 20.4
 
 Movement in gold in process and finished stock
 4.8
 
 (7.1)
 
 20.6
 
 (a) Operating costsThe most significant components of operating costs include:
 Materials
 (783.9)
 
 (719.5)
 
 (608.5)
 
 Labour including short term incentives, excluding retrenchment costs
 (351.0)
 
 (362.1)
 
 (325.9)
 
 Electricity
 (344.2)
 
 (325.4)
 
 (290.4)
 
 Specialist service providers
 (299.7)
 
 (282.4)
 
 (267.0)
 
 Water
 (71.1)
 
 (82.1)
 
 (54.2)
 
 (b) Retrenchment costs
 (23.0)
 
 -
 
 (7.1)
 
   ACCOUNTING POLICIES
 Amounts in R million
 2017
 2016
 2015
 Profit on disposal of property, plant and equipment
 12.9
 
 10.5
 
 13.2
 
 12.9
 
 10.5
 
 13.2
 
 Note
 The final clean up and closure of various sites in the Crown complex during the year ended 30 June 2017 resulted in the retrenchment costs incurred. All retrenchments were concluded and settled at reporting date.
 Other income is generally income earned from transactions outside the course of the Group’s ordinary activities andmay include gains or losses on disposal of property, plant and equipment.
 Income is recognised where it is probable that the economic benefits associated with a transaction will flow to theGroup and they can be reliably measured.
 F-10


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 continued
  4
 FINANCE INCOME
 Amounts in R million
 2017
 2016
 2015
 Interest on loans and receivables
 10
 23.6
 
 22.3
 
 14.4
 
 Growth in environmental rehabilitation trust funds
 9 , 22
 7.5
 
 6.5
 
 5.5
 
 Growth in reimbursive right
 9
 8.9
 
 8.0
 
 5.8
 
 Fair value adjustment on available-for-sale investments reclassified to profit or loss
 -
 
 -
 
 19.9
 
 Profit on disposal of equity accounted investment
 -
 
 -
 
 5.9
 
 40.0
 
 36.8
 
 51.5
 
 5
 FINANCE EXPENSE
 Amounts in R million
 2017
 2016
 2015
 Interest on financial liabilities measured at amortised cost
 (3.7)
 
 (4.4)
 
 (10.6)
 
 Unwinding of provision for environmental rehabilitation
 8 , 22
 (46.5)
 
 (43.0)
 
 (39.0)
 
 Other finance expenses
 (2.0)
 
 (0.2)
 
 -
 
 (52.2)
 
 (47.6)
 
 (49.6)
 
 6
 EARNINGS PER SHARE
 Amounts in R million
 2017
 2016
 2015
 The calculation of earnings per ordinary share is based on the following:Basic and dilutited earnings attributable to equity owners of the parent
 13.7
 
 61.9
 
 67.8
 
 Number of shares
 2017
 2016
 2015
 Reconciliation of weighted average number of ordinary shares to diluted weighted average number of ordinary sharesWeighted average number of ordinary shares in issue
 422,068,696
 
 422,157,987
 
 389,699,441
 
 Number of staff options (1)
 -
 
 34,075
 
 -
 
 Diluted weighted average number of ordinary shares
 422,068,696
 
 422,192,062
 
 389,699,441
 
 SA cents per ordinary share
 2017
 2016
 2015
 Basic earnings per share
 3.2
 
 14.7
 
 17.4
 
 Diluted earnings per share
 3.2
 
 14.7
 
 17.4
 
 ACCOUNTING POLICIES
 Finance expenses comprise interest payable on financial instruments measured at amortised cost calculated using the effective interest method, unwinding of the provision for environmental rehabilitation and interest on finance leases.
 ACCOUNTING POLICIES
 Finance income includes interest received, growth in the environmental rehabilitation obligation funds and other profitsand losses arising on disposal of investments.
 (1) All staff options have lapsed at 30 June 2017 and therefore have no dilutive effect. At 30 June 2015, 0.8 millionoptions were excluded from the diluted weighted average number of ordinary shares calculation as their effect wouldhave been anti-dilutive.
 ACCOUNTING POLICIES
 Note
 Note
 Earnings per share is calculated based on the net profit or loss after tax for the year attributable to ordinaryshareholders of the company, divided by the weighted average number of ordinary shares in issue during the year.Diluted earnings or loss per share is presented when the inclusion of ordinary shares that may be issued in the futurehas a dilutive effect on earnings or loss per share.
 F-11


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 continued
  7
 PROPERTY, PLANT AND EQUIPMENT
 SIGNIFICANT ACCOUNTING ASSUMPTIONS AND ESTIMATES
 Impairment of property, plant and equipment
 Depreciation
 Mineral reserves and resources estimates
 • the carrying value of deferred tax assets and liabilities may change due to changes in estimates of the likely recoveryof the tax benefits and charges.
 Sensitivity analysis
 These assumptions and estimates include the market capitalisation of the Group, mineral reserves and resourceestimates, production estimates, spot and future gold prices, foreign currency exchange rates, discount rates, estimatesof costs to produce and future capital expenditure in determining the recoverable amount.
 Mineral reserves and resource estimates determined by management are reviewed by an independent mineralresources expert.
 Changes in reported mineral reserves and resources may affect the Group’s life-of-mine plan, financial results andfinancial position in a number of ways including the following:• asset carrying values may be affected due to changes in estimated future cash flows;• depreciation charged in profit or loss may change where such charges are determined by the units-of-productionmethod, or where the useful lives of assets change;
 At year-end, the market capitalisation of the Group was higher than its net asset value. The decline in the rand goldprice was however considered as an impairment indicator. The Group has only one cash generating unit and calculated a recoverable amount based on updated life-of-mine plans, a gold price of R565 000 per kilogram in year one escalating at an average of approximately 5.9% a year over thetwelve-year life of mine, and a weighted average cost of capital of 12.4%.
 The recoverable amount of the cash-generating-unit is determined using discounted future cash flows based on the life-of-mine plan. These calculations require the use of assumptions and estimates and are inherently uncertain and couldchange materially over time.
 In order to calculate mineral reserves and resources, estimates and assumptions are required about a range ofgeological, technical and economic factors, including but not limited to quantities, grades, production techniques,recovery rates, production costs, transport costs, commodity demand, commodity prices and exchange rates.Estimating the quantity and/or grade of mineral reserves and resources requires the size, shape and depth ofreclamation sites to be determined by analysing geological data such as the logging and assaying of drill samples. Thisprocess may require complex and difficult geological judgements and calculations to interpret the data.
 The Group is required to determine and report mineral reserves and resources in accordance with the South AfricanCode for the Reporting of Exploration Results, Mineral Resources and Mineral Reserves (SAMREC Code).
 Because the assumptions used to estimate mineral reserves and resources change from period to period and becauseadditional geological data is generated during the course of operations, estimates of mineral reserves and resourcesmay change from period to period.
 • decommissioning, site restoration and environmental provisions may change where changes in estimated mineralreserves and resources affect expectations about the timing or cost of these activities; and
 The carrying amount of the CGU excludes exploration assets of the Group as no impairment indicators relating to theseassets were identified in accordance with IFRS 6 Exploration for and Evaluation of Mineral Resources.
 The Group would begin impairment of the mining assets if the discount rate were to increase from 12.4% to 20.5%, or a2.1% decrease in budgeted gold production or Rand gold price over the remaining life of the operation. The abovesensitivities do not include a positive terminal value, relating to the disposal of any assets at the end of the useful life.
 The calculation of the units-of-production rate of depreciation could be affected if actual production in the future variessignificantly from current forecast production. This would generally arise when there are significant changes in any ofthe factors or assumptions used in estimating mineral reserves and resources. These factors could include: • changes in mineral reserves and resources;• the grade of mineral reserves and resources may vary from time to time;• differences between actual commodity prices and commodity price assumptions;• unforeseen operational issues at mine sites including planned extraction efficiencies; and• changes in capital, operating, mining processing and reclamation costs, discount rates and foreign exchange rates.
 F-12


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 continued
 for the year ended 30 June 2017
 7
 PROPERTY, PLANT AND EQUIPMENT
 continued
    ImpairmentNon-financial assets
    Upon initial recognition, the leased asset and liability are measured at amounts equal to the lower of the fair value of theleased asset and the present value of the minimum lease payments. Subsequent to initial recognition, the asset isaccounted for in the same manner as owned property, plant and equipment.
 Minimum lease payments are apportioned between the finance charge and the reduction of the outstanding liability. Thefinance charge is allocated to each period during the lease term so as to produce a constant periodic rate of interest onthe remaining balance of the liability.
 Exploration assets are assessed for impairment if facts and circumstances suggest that the carrying amount exceedsthe recoverable amount. When a license is relinquished or a project is abandoned, the related costs are recognised inprofit or loss immediately.
 The current estimated useful lives for mine property and development, as well as mine plant facilities and equipment arebased on the life-of-mine of each site, currently between two (2016: six) and 12 (2016: 10) years.
 The carrying amounts of property, plant and equipment are reviewed at each reporting date to determine whether thereis any indication of impairment, or whenever events or changes in circumstances indicate that the carrying amount maynot be recoverable. If any such indication exists, the asset’s recoverable amount is estimated.For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separatelyidentifiable cash flows (CGUs). Each metallurgical plant or combination of plants that, together with its depositionfacility, is capable of operating independently is considered to be a CGU.The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. Inassessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discountrate that reflects current market assessments of the time value of money and the risks specific to the asset.
 Property, plant and equipment comprise mine plant facilities and equipment, mine property and development (includingmineral rights) and exploration assets. These assets are initially measured at cost, where after they are measured atcost less accumulated depreciation and accumulated impairment losses.Cost includes expenditure that is directly attributable to the acquisition or construction of the asset, as well as the costsof dismantling and removing an asset and restoring the site on which it is located. Subsequent costs are included in theasset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that futureeconomic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably.Exploration and evaluation costs are capitalised as exploration assets on a project-by-project basis, pendingdetermination of the technical feasibility and commercial viability of the project.
 Depreciation of mine plant facilities and equipment, as well as mining property and development (including mineralrights) are calculated using the units of production method which is based on the life-of-mine of each site.The life-of-mine is primarily based on proved and probable mineral reserves and may include some resources. Itreflects the estimated quantities of economically recoverable gold that can be recovered from reclamation sites basedon the gold price estimated at the end of the financial year. Changes in the life-of-mine will impact depreciation on aprospective basis. The life-of-mine is prepared using a methodology that takes account of current information to assessthe economically recoverable gold from specific reclamation sites and includes the consideration of historicalexperience.The depreciation method, estimated useful lives and residual values are reassessed annually and adjusted ifappropriate. Any changes to useful lives may affect prospective depreciation rates and asset carrying values.


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 continued
 for the year ended 30 June 2017
 7
 PROPERTY, PLANT AND EQUIPMENT
 continued
             30 June 2017Cost
                                               Transfers between classes of property, plant and equipment
                                                              Transfers between classes of property, plant and equipment
                  30 June 2016Cost
                                                                                                                     • Depreciation expense increased for the Crown assets due to the decision taken by management to perform final cleanup and closure of various sites that previously formed part of the Crown operations. The depreciation of the carryingvalue of these assets have therefore been accelerated. These assets are carried at scrap value at reporting date.• The net increase in the expected units-of-production in Ergo’s life of mine due to the mineral reserve conversioneffective on 1 January 2017 resulted in a net decrease in the depreciation charge amounting to R13.9 million.
  Ergo leases temporary power generation equipment with a carrying value of R16.8 million (2016: R19.2 million) fromAggreko Energy Rental Proprietary Limited under a finance lease with an outstanding balance of R16.8 million (2016:R19.2 million) and an effective interest rate of 17.9%. The finance lease is repayable R2.8 million in 2018, R3.2 millionin 2019 and R10.8 million in 2020, the latter including R9.9 million for the option to acquire the leased equipment at theend of the lease term. Interest is payable R2.5 million in 2018, R2.0 million in 2019 and R0.4 million in 2020.
 • The decrease in the expected units-of-production in Ergo’s life of mine that become effective on 1 July 2017 isexpected to result in an increase in the annual depreciation charge recognised amounting to R16.8 million.


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 continued
 for the year ended 30 June 2017
 8
 PROVISION FOR ENVIRONMENTAL REHABILITATION
                          Change in estimate of environmental rehabilitation recognised to decommissioning asset (a)
                                                         The present value of environmental rehabilitation costs relating to activities after production commenced (restorationliabilities) as well as changes therein are expensed as incurred and presented as operating costs. Cash costs incurredto rehabilitate these disturbances are presented as operating activities in the statement of cash flows.
  Estimates of future environmental rehabilitation costs are determined with the assistance of an independent expert andare based on the Group’s environmental management plans which are developed in accordance with regulatoryrequirements, the life-of-mine plan and the planned method of rehabilitation which is influenced by developments intrends and technology.An average discount rate of 8.8% (2016: 8.8%), average inflation rate of 5.9% (2016: 6.3%) and the discount periods asper the expected life-of-mine were used in the calculation of the estimated net present value of the rehabilitation liability.
 The present value of dismantling and removing the asset created before production commenced (decommissioningliabilities) are capitalised to property, plant and equipment against an increase in the rehabilitation provision. If adecrease in the liability exceeds the carrying amount of the asset, the excess is recognised in profit or loss. If the assetvalue is increased and there is an indication that the revised carrying value is not recoverable, an impairment test isperformed in accordance with the accounting policy dealing with impairments of property, plant and equipment. Overtime, the liability is increased to reflect an interest element, and the capitalised cost is depreciated over the life of therelated asset. Cash costs incurred to rehabilitate these disturbances are charged to the provision and are presented asinvesting activities in the statement of cash flows.
 Annual changes in the provision consist of financing expenses relating to the change in the present value of theprovision and inflationary increases in the provision, as well as changes in estimates.
 The decrease is mostly attributable to changes in estimates relating to the method of rehabilitating reclamation sitesand the change in the life-of-mine plan, specifically the Crown sites.
 The Group also performs ongoing environmental rehabilitation arising from its current activities concurrently withproduction. These costs do not represent a reduction of the above liability and are expensed as operating costs.
 The net present value of the estimated rehabilitation cost as at reporting date is provided for in full. These estimates arereviewed annually and are discounted using a pre-tax risk-free rate that is adjusted to reflect the current marketassessments of the time value of money and the risks specific to the obligation.
 The Group estimates that, based on current environmental and regulatory requirements, the total undiscountedrehabilitation cost is approximately R639.5 million (2016: R630.7 million).


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 continued
  9
 INVESTMENTS IN REHABILITATION OBLIGATION FUNDS
 ACCOUNTING POLICIES
 Cash and cash equivalents in environmental rehabilitation trust funds
 Reimbursive right for environmental rehabilitation guarantees
 Funding of environmental rehabilitation activities (refer note 8)
 Amounts in R million
 Note
 2017
 2016
 Cash and cash equivalents in environmental rehabilitation trust funds
 110.5
 
 93.8
 
 Opening balance
 93.8
 
 87.9
 
 Transferred from non-current assets held-for-sale
 22
 
 9.9
 
 -
 
 Growth
 4
 
 6.8
 
 5.9
 
 Reimbursive right for environmental rehabilitation guarantees
 117.2
 
 108.3
 
 Opening balance
 108.3
 
 100.3
 
 Growth
 4
 
 8.9
 
 8.0
 
 227.7
 
 202.1
 
 CREDIT RISK
 MARKET RISK
 Interest rate risk
 Amounts in R million
 2017
 2016
 100bp increase
 1.1
 
 0.9
 
 100bp (decrease)
 (1.1)
 
 (0.9)
 
 FAIR VALUE OF FINANCIAL INSTRUMENTS
 Ongoing rehabilitation expenditure and environmental rehabilitation payments to reduce the environmental rehabilitationobligations are mostly funded by cash generated from operations. In addition, contributions have been made to anenvironmental rehabilitation trust and a cell captive for the sole use of future environmental rehabilitation payments.
 Guardrisk Insurance Company Limited ("Guardrisk") issued guarantees amounting to R427.3 million (2016: R427.2million) to the Department of Mineral Resources ("DMR") on behalf of DRDGOLD related to the environmentalobligations. The funds in the cell captive serves as collateral for these guarantees.
 The fair value of the cash and cash equivalents in the environmental rehabilitation trust funds approximate their carrying value due to their short-term maturities.
 A change of 100 basis points (bp) in interest rates at the reporting date would have increased/(decreased) equity andprofit/(loss) by the amounts shown below. This analysis assumes that all other variables, in particular the balance of thefunds, remain constant. The analysis excludes income tax.
 Cash and cash equivalents in environmental rehabilitation trust funds comprise low-risk, interest-bearing cash and cashequivalents and are non-derivative financial assets categorised as loans and receivables.
 Funds held in the cell captive that secure the environmental rehabilitation guarantees issued are recognised as a rightto receive a reimbursement and is measured at the lower of the amount of the consolidated environmental rehabilitationliability recognised and the consolidated fair value of the fund assets.
 The Group manages its exposure to credit risk by diversifying these investments across a number of major financialinstitutions, as well as investing funds in low-risk, interest-bearing cash and cash equivalents.
 Changes in the carrying value of the fund assets, other than those resulting from contributions and payments, arerecognised in finance income.
 The Group is exposed to credit risk on the total carrying value of the investments held in the environmentalrehabilitation trust funds.
 F-16


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 continued
  10
 CASH AND CASH EQUIVALENTS
 ACCOUNTING POLICIES
 Amounts in R million
 Note
 2017
 2016
 Bank balances
 151.1
 
 99.7
 
 Call deposits
 102.6
 
 252.1
 
 253.7
 
 351.8
 
 Included in cash and cash equivalents is restricted cash relating to: - Cash (including interest) held in escrow relating to the electricity tariff dispute with Ekurhuleni Metropolitan Municipality
 23
 
 92.7
 
 47.7
 
 - Guarantees
 16.1
 
 15.2
 
 Interest relating to cash and cash equivalents
 4
 
 23.6
 
 22.3
 
 An overdraft facility of R100 million is available to the Group.
 CREDIT RISK
 MARKET RISK
 Interest rate risk
 Amounts in R million
 2017
 2016
 100bp increase
 2.5
 
 3.5
 
 100bp (decrease)
 (2.5)
 
 (3.5)
 
 Foreign currency risk
 Figures in USD million
 2017
 2016
 Foreign denominated cash at 30 June
 -
 
 2.3
 
 FAIR VALUE OF FINANCIAL INSTRUMENTS
 Cash and cash equivalentsThe fair value of cash and cash equivalents approximate their carrying value due to their short-term maturities.
 Cash and cash equivalents are non-derivative financial assets categorised as loans and receivables and comprise cashon hand, demand deposits, and highly liquid investments which are readily convertible to known amounts of cash andsubject to insignificant risk of changes in value.Cash and cash equivalents are initially measured at fair value. Subsequent to initial recognition, cash and cashequivalents are measured at amortised cost, which is equivalent to their fair value.
 US Dollars received on settlement of the trade debtors are exposed to fluctuations in the US Dollar/South African Randexchange rate until it is converted to South African Rands. US Dollars not converted to South African Rands at reporting date are as follows:
 The Group manages its exposure to credit risk by investing cash and cash equivalents across a number of majorfinancial institutions, considering the credit ratings of these financial institutions.
 The Group is exposed to credit risk on the total carrying value of its cash and cash equivalents.
 A change of 100 basis points (bp) in interest rates at the reporting date would have increased/(decreased) equity andprofit/(loss) by the amounts shown below. This analysis assumes that all other variables, in particular the cash balanceand foreign currency rates, remain constant. The analysis excludes income tax.
 Foreign denominated cash is held in a foreign currency bank account accruing negligible interest and is usuallyconverted to South African Rand on the day of receipt. Foreign cash is therefore not exposed to interest rate risk.
 F-17


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 continued
  11
 CASH GENERATED BY OPERATIONS
 Amounts in R million
 2017
 2016
 2015
 (Loss)/profit before tax
 (36.7)
 
 108.8
 
 96.8
 
 Adjusted forDepreciation
 7
 179.8
 
 180.2
 
 193.3
 
 Impairments
 -
 
 -
 
 6.7
 
 Profit on disposal of property, plant and equipment
 3.2
 (12.9)
 
 (10.5)
 
 (13.2)
 
 Change in estimate of environmental rehabilitation
 8
 
 , 22
 0.6
 
 19.3
 
 (20.4)
 
 Environmental rehabilitation payments
 8
 
 , 22
 (7.9)
 
 (11.2)
 
 -
 
 Movement in gold in process and finished stock
 3.1
 (4.8)
 
 7.1
 
 (20.6)
 
 Increase in long term incentive liability
 16
 10.0
 
 29.9
 
 1.8
 
 Reversal of accrual
 -
 
 (22.7)
 
 -
 
 Finance income
 4
 (40.0)
 
 (36.8)
 
 (51.5)
 
 Finance expense
 5
 52.2
 
 47.6
 
 49.6
 
 Other non-cash items
 (1.0)
 
 4.6
 
 0.3
 
 Operating cash flows before working capital changes
 139.3
 
 316.3
 
 242.8
 
 Working capital changes
 (117.8)
 
 81.9
 
 42.4
 
 Change in trade and other receivables
 (57.6)
 
 33.7
 
 1.9
 
 Change in inventories
 (14.8)
 
 1.0
 
 (1.0)
 
 Change in trade and other payables
 (45.4)
 
 47.2
 
 41.5
 
 Cash generated by operations
 21.5
 
 398.2
 
 285.2
 
 12
 TRADE AND OTHER RECEIVABLES
 ACCOUNTING POLICIES
 Amounts in R million
 2017
 2016
 Trade receivables
 34.5
 
 -
 
 Value Added Tax
 50.8
 
 23.6
 
 Other receivables
 38.7
 
 54.0
 
 Allowance for impairment
 (9.7)
 
 (11.1)
 
 114.3
 
 66.5
 
 CREDIT RISK
 Note
 The Group derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or ittransfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks andrewards of ownership of the financial asset are transferred, or it neither transfers nor retains substantially all of the risksand rewards of ownership and does not retain control over the transferred asset. Any interest in such derecognisedfinancial assets that is created or retained by the Group is recognised as a separate asset or liability.
 These assets are initially measured at fair value plus directly attributable transaction costs. Subsequent to initialrecognition, they are measured at amortised cost using the effective interest method.
 The Group is exposed to credit risk on the total carrying value of its trade receivables and other receivables.
 The Group manages its exposure to credit risk on trade receivables by maintaining a short term cycle to settlement of2 working days. The Group manages its exposure to credit risk on other receivables by dealing with a number ofcounterparties, ensuring that these counterparties are of good credit standing and transacting on a secured or cashbasis where considered necessary. Receivables are regularly monitored and assessed for recoverability.
 Trade receivables relate to gold sold on the bullion market by Rand Refinery in its capacity as an agent. Settlement is received two working days from gold sold date.
 Trade and other receivables, excluding Value Added Tax, are non-derivative financial assets categorised as loans andreceivables.
 F-18


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 continued
 for the year ended 30 June 2017
 12
 TRADE AND OTHER RECEIVABLES
 continued
                                                           FAIR VALUE OF FINANCIAL INSTRUMENTSThe fair value of trade and other receivables approximate their carrying value due to their short-term maturities.
   Gold sales, and thus trade receivables, are denominated in US Dollars and are therefore exposed to fluctuations in theUS Dollar/South African Rand exchange rate. All foreign currency transactions are entered into at spot rates and nohedges are entered into.
 A 10% strengthening of the Rand against the US Dollar at 30 June would have increased/(decreased) equity andprofit/(loss) by the amounts shown below. This analysis assumes that all other variables remain constant.
  Management believes that the unimpaired amounts that are past due by more than 30 days are still collectible in full,based on historical payment behaviour. Impairments were raised due to the uncertainty around the recoverability andtiming of the expected cash flows.


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 continued
  13
 TRADE AND OTHER PAYABLES
 ACCOUNTING POLICIES
 Amounts in R million
 Note
 2017
 2016
 Trade payables
 130.4
 
 167.9
 
 Other creditors and accruals
 70.5
 
 58.0
 
 Accrued leave pay
 30.8
 
 29.0
 
 Provision for performance based incentives
 2.2
 
 27.1
 
 Payroll accruals
 17.9
 
 6.9
 
 251.8
 
 288.9
 
 Interest relating to trade and other payables included in profit or loss
 5
 
 (0.8)
 
 (1.1)
 
 LIQUIDITY RISK
 FAIR VALUE OF FINANCIAL INSTRUMENTS
 14
 INVENTORIES
 ACCOUNTING POLICIES
 Amounts in R million
 Note
 2017
 2016
 Consumable stores
 101.9
 
 87.1
 
 Gold in process
 55.1
 
 48.8
 
 Finished stock - Gold Bullion
 23.3
 
 24.8
 
 Total inventories
 180.3
 
 160.7
 
 Inventory carried at net realisable value includes:Gold in process
 45.3
 
 -
 
 Finished stock - Gold Bullion
 19.3
 
 -
 
 Write down to net realisable value included in movement in gold in process and finished stock
 10.2
 
 -
 
 These liabilities are initially measured at fair value plus directly attributable transaction costs. Subsequent to initialrecognition, they are measured at amortised cost using the effective interest method. The Group derecognises afinancial liability when its contractual rights are discharged, or cancelled or expire.
 The fair value of trade payables and other creditor and accruals approximate their carrying value due to their short-termmaturities.
 Trade and other payables, excluding payroll accruals, accrued leave pay and provision for performance basedincentives, are non-derivative financial liabilities categorised as financial liabilities measured at amortised cost.
 Trade payables and other creditors and accruals are all expected to be settled within 12 months from reporting date.
 Gold bullion is stated at the lower of cost and net realisable value. Selling and general administration costs are excludedfrom inventory valuation.
 Net realisable value is the estimated selling price in the ordinary course of business, less the estimated cost ofcompletion and selling expenses.
 Gold in process is stated at the lower of cost and net realisable value. Costs are assigned to gold in process on aweighted average cost basis. Costs comprise all costs incurred to the stage immediately prior to smelting, includingcosts of extraction and processing as they are reliably measurable at that point.
 Consumable stores are stated at cost less allowances for obsolescence. Cost of consumables is based on the weightedaverage cost principle and includes expenditure incurred in acquiring inventories and bringing them to their existinglocation and condition.
 F-20


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 continued
 for the year ended 30 June 2017
 15
 INCOME TAX
 SIGNIFICANT ACCOUNTING ASSUMPTIONS AND ESTIMATES
 ACCOUNTING POLICIES
 Current tax
 Deferred tax
  All mining capital expenditure is deducted in the year it is incurred to the extent that it does not result in an assessedloss. Capital expenditure not deducted from mining income is carried forward as unutilised capital allowances to bededucted from future mining income.
 Tax on gold mining income is determined based on a formula: Y = 34 - 170/X where Y is the percentage rate of taxpayable and X is the ratio of taxable income, net of any qualifying capital expenditure that bears to gold mining incomederived, expressed as a percentage. Non-mining income, which consists primarily of interest accrued, is taxed at astandard rate of 28%.
 The deferred tax liability is calculated by applying a forecast weighted average tax rate that is based on a prescribedformula. The calculation of the forecast weighted average tax rate requires the use of assumptions and estimates andare inherently uncertain and could change materially over time. These assumptions and estimates include expectedfuture profitability and timing of the reversal of the temporary differences.
 Current tax is recognised in profit or loss except to the extent that it relates to items recognised directly in equity or OCI.The current tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the reporting date.
 Deferred tax is recognised in respect of temporary differences between the carrying amounts and the tax bases ofassets and liabilities. Deferred tax is not recognised on the initial recognition of assets or liabilities in a transaction thatis not a business combination and that affects neither accounting nor taxable profit.
 Deferred tax assets relating to unutilised tax losses and unutilised capital allowances are recognised to the extent that itis probable that future taxable profits will be available against which the unutilised tax losses and unutilised capitalallowances can be utilised. The recoverability of these assets is reviewed at each reporting date and adjusted ifrecovery is no longer probable.
 A 100 basis points increase in the effective tax rate will result in an increase in the net deferred tax liability at 30 June2017 of approximately R7.4 million (2016: R8.1 million; 2015: R7.3 million).
 Due to the forecast weighted average tax rate being based on a prescribed formula that increase the effective tax ratewith an increase in forecast future profitability, and vice versa, the tax rate can vary significantly year on year and canmove contrary to current period financial performance.
 The assessment of the probability that future taxable profits will be available against which the tax losses andunredeemed capital expenditure can be utilised requires the use of assumptions and estimates and are inherentlyuncertain and could change materially over time.
 Management periodically evaluates positions taken where tax regulations are subject to interpretation. This includes the treatment of Ergo as a single mining operation pursuant to the relevant ring-fencing legislation.
 Income tax expense comprises current and deferred tax. Each company is taxed as a separate entity and tax is not set-off between the companies.
 F-21


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 continued
 for the year ended 30 June 2017
 15
 INCOME TAX
 continued
  continued
 Amounts in R million
 2017
 2016
 2015
 Mining tax
 54.2
 
 (46.9)
 
 (31.8)
 
 Non-mining tax
 (3.8)
 
 -
 
 3.2
 
 50.4
 
 (46.9)
 
 (28.6)
 
 Comprising:Current tax  - current year
 (1.9)
 
 (0.5)
 
 (1.2)
 
 Current tax  - prior year
 -
 
 (5.1)
 
 4.4
 
 Deferred tax  - current year
 53.4
 
 (42.1)
 
 (28.8)
 
 Deferred tax  - prior year
 (1.1)
 
 0.8
 
 (3.0)
 
 50.4
 
 (46.9)
 
 (28.6)
 
 Tax reconciliationMajor items causing the Group's income tax expense to differ from the statutory rate were:
 Tax on net loss/(profit) before tax at the South African corporate tax rate of 28%
 10.3
 
 (30.5)
 
 (27.1)
 
 Rate adjustment to reflect the actual realised company tax rates
 (7.9)
 
 4.4
 
 8.6
 
 Deferred tax rate adjustment (a)
 37.5
 
 (21.7)
 
 (10.0)
 
 Exempt income and other non-taxable income
 5.4
 
 -
 
 8.4
 
 Utilisation of tax losses for which deferred tax assets were previously unrecognised (b)
 5.9
 7.5
 -
 
 Current year tax losses for which no deferred tax was recognised
 (2.0)
 
 -
 
 (11.0)
 
 Over/(under) provided in prior periods
 1.1
 
 (4.3)
 
 1.4
 
 Other differences
 0.1
 
 (2.3)
 
 1.1
 
 Income tax
 50.4
 
 (46.9)
 
 (28.6)
 
 Estimated, unrecognised assessed tax losses at year-end (available to reduce future taxable income)
 133.8
 146.9
 165.4
 Estimated, unrecognised unredeemed capital expenditure at year-end (available for deduction against future mining income)
 1,236.9
 1,208.7
 1,469.6
 Estimated, unrecognised capital losses at year-end (available to reduce future capital gains)
 1,451.7
 1,452.4
 1,452.4
 (a) Deferred tax rate adjustment
 (b) Utilisation of tax losses for which deferred tax assets were previously unrecognisedGroup entities that are not expected to generate recurring taxable income, and therefore have unrecognised deferredtax assets, generated taxable income during the year ended 30 June 2017 resulting in the utilisation of unrecognisedlosses.
 The forecast weighted average deferred tax rate decreased from 23.1% to 18.6% as a result of a decrease in forecastprofitability of Ergo (2016: increased from 20.1% to 23.1% due to the impact of the higher forecast gold price).
 F-22


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 continued
 for the year ended 30 June 2017
 15
 INCOME TAX
 continued
  Amounts in R million
 2017
 2016
 Deferred tax assetProvisions
 5.0
 
 6.8
 
 5.0
 
 6.8
 
 Deferred tax liabilityProperty, plant and equipment
 (223.8)
 
 (306.9)
 
 Provisions, including rehabilitation provision
 80.2
 
 107.8
 
 Other temporary differences (1)
 3.1
 
 4.4
 
 (140.5)
 
 (194.7)
 
 Net deferred mining and income tax liability
 (135.5)
 
 (187.9)
 
 Movement in the net deferred tax liability is as follows:
 Amounts in R million
 2017
 2016
 Opening balance
 (187.9)
 
 (146.6)
 
 Recognised in profit or loss
 52.4
 
 (41.3)
 
 Property, plant and equipment
 83.1
 
 (72.2)
 
 Provisions, including rehabilitation provision
 (29.4)
 
 30.7
 
 Other temporary differences (1)
 (1.3)
 
 0.2
 
 Closing balance
 (135.5)
 
 (187.9)
 
 (1) Includes the temporary differences on the finance lease obligation.
 Deferred tax assets have not been recognised in respect of the following:
 Amounts in R million
 2017
 2016
 Tax losses
 20.5
 
 28.5
 
 Unredeemed capital expenditure
 272.9
 
 272.9
 
 Capital losses
 325.2
 
 271.1
 
 Deferred tax assets and liabilities relate to the following:
 Deferred tax assets have not been recognised for Group entities that are not expected to generate future taxable profitsagainst which the tax losses and unredeemed capital expenditure can be utilised.
 F-23


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 continued
 for the year ended 30 June 2017
 16
 EMPLOYEE BENEFITS
 ACCOUNTING POLICIES
 Cash-settled share-based payments
 Post-retirement medical benefit
 Amounts in R million
 Note
 2017
 2016
 Liability for long term incentive scheme
 16.1
 
 30.7
 
 30.3
 
 Liability for post-retirement medical benefits
 8.3
 
 7.9
 
 39.0
 
 38.2
 
  Amounts in R million
 Note
 2017
 2016
 Opening balance
 30.3
 
 4.3
 
 Increase in long term incentive liability
 11
 
 10.0
 
 29.9
 
 Vested and paid*
 (9.6)
 
 (3.9)
 
 Total liability for long term incentive scheme
 30.7
 
 30.3
 
 Weighted
 Weighted
 average
 average
 price
 price
 Shares
 per share
 Shares
 per share
 Number
 R
 Number
 R
 Opening balance
 23 169 191
 
 4 525 650
 
 Granted
 -
 
 -
 
 20 527 978
 
 2.26
 
 Vested and paid*
 (1 502 747)
 
 6.39
 
 (1 858 491)
 
 2.09
 
 Forfeited/lapsed
 ( 521 910)
 
 ( 25 946)
 
 Closing balance
 21 144 534
 
 23 169 191
 
 Ageing of outstanding phantom shares:
 30 June 2018 30 June 2019 30 June 2020 30 June 2021
 Total
 Granted October 2014*
 955 067
 
 955 067
 
 Granted November 2015
 4,037,893
 
 6,056,840
 
 10,094,734
 
 20 189 467
 
 * Granted before amendment
 955 067
 
 4 037 893
 
 6 056 840
 
 10 094 734
 
 21 144 534
 
 2017
 2016
 Grant date
 7 day VWAP of the DRDGOLD Limited share
 4.23
 
 8.03
 
 2.26
 
 Forward dividend yield
 0.7%
 2.6%
 4.3%
 Cash-settled share-based payments are measured at fair value and remeasured at each reporting date to reflect thepotential outflow of cash resources to settle the liability, with a corresponding adjustment in profit or loss. Vestingassumptions for non-market conditions are reviewed at each reporting date to ensure they reflect current expectations.
 The fair value of the liability for the long term incentive scheme is mostly influenced by the DRDGOLD Limited shareprice. Other inputs influencing the fair value are the forward dividend yield and estimates of staff retention andperformance conditions. The inputs most significantly influencing the measurement of the fair values are as follows:
 Fair value
 The Group's net obligation in respect of long term employee benefits is the amount of future benefit that employeeshave earned in return for their service in the current and prior periods. That benefit is discounted to determine thepresent value. Remeasurements are recognised in profit or loss in the period in which they arise.
 2017
 2016
 The terms of the November 2015 grant made under the DRDGOLD Group's amended long term incentive scheme are:• The scheme has a finite term of 5 years and thus no top-up awards are made when the shares vest;• The phantom shares are issued at a zero exercise price and will vest after 3 years (20%), 4 years (30%) and 5 years (50%) respectively subject to individual service and performance conditions being met; and• The phantom shares will be settled at the 7 day volume weighted average price ("VWAP") of the DRDGOLD share.
 Reconciliation of outstanding phantom shares
 F-24


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 continued
 for the year ended 30 June 2017
 16
 EMPLOYEE BENEFITS
 continued
    Amounts in R million
 2017
 2016
 2015
 Short-term benefits- Board fees paid
 5.0
 
 3.7
 
 3.8
 
 - Salaries paid
 52.9
 
 51.5
 
 54.5
 
 - Incentives relating to this cycle
 -
 
 33.8
 
 17.8
 
 - Pre-tax gain on share option exercised
 -
 
 1.7
 
 -
 
 - Retrenchment payments
 -
 
 -
 
 7.2
 
 57.9
 
 90.7
 
 83.3
 
 Long-term benefits- Long term incentive expense
 10.0
 
 29.9
 
 1.8
 
 - Contributions to post-retirement medical benefit
 0.4
 
 0.3
 
 0.3
 
 10.4
 
 30.2
 
 2.1
 
 17
 CAPITAL MANAGEMENT
 Lease arrangements that are not in the legal form of a finance lease, but is accounted for as such based on its termsand conditions, are not considered to be debt.
 The Group will consider the appropriate capital management strategy for specific growth projects as and when required.
 The Group has no external debt in line with its aim for the existing operations to remain unleveraged. All fundingrequirements during the past financial year have been financed by existing cash resources and cash generated fromoperations.
 The primary objective of managing the Group's capital is to ensure that there is sufficient capital available to support thefunding requirements of the Group, including capital expenditure, in a way that optimises the cost of capital, ensuresthat the Group remains in a sound financial position and matches the Group's strategy.
 None of the directors, officers or major shareholders of DRDGOLD or, to the knowledge of DRDGOLD’s management,their families, had any interest, direct or indirect, in any transaction during the year ended 30 June 2017 or thepreceding financial years, or in any proposed transaction which has affected or will materially affect DRDGOLD or itssubsidiaries. None of the directors or officers of DRDGOLD or any associate of such director or officer is currently orhas been at any time during the past financial year materially indebted to DRDGOLD.
 F-25


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 continued
 for the year ended 30 June 2017
 18
 EQUITY OF THE OWNERS OF THE PARENT
         Authorised share capital600 000 000 (2016 and 2015: 600 000 000) ordinary shares of no par value5 000 000 (2016 and 2015: 5 000 000) cumulative preference shares of 10 cents each
       Issued share capital431 429 767 (2016: 431 429 767; 2015: 430 883 767) ordinary shares of no par value (a)
       9 361 071 (2016: 9 361 071; 2015: 6 155 559) treasury shares held within the Group (b)
       5 000 000 (2016 and 2015: 5 000 000) cumulative preference shares of 10 cents each
             Dividends (c)Dividends paid during the year net of treasury shares:
                                      After 30 June 2017, a dividend of 5 cents per qualifying share (R21.1 million) was approved by the directors as a finaldividend for 2017. The dividend has not been provided for and does not have any tax impact on the company.
 In terms of an ordinary resolution passed at the previous annual general meeting, the remaining unissued ordinaryshares in the company are under the control of the directors until the next general meeting.
  Dividends are recognised as a liability on the date on which they are declared which is the date when the shareholders’right to the dividends vest.
 Ordinary shares and the cumulative preference shares are classified as equity. Incremental costs directly attributable tothe issue of ordinary shares are recognised as a deduction from equity, net of any tax effect.
 When shares recognised as equity are repurchased, the amount of the consideration paid, which includes directlyattributable costs is recognised as a deduction from equity. Repurchased shares are classified as treasury shares andare presented as a deduction from share capital.
  No shares were issued during the year ended 30 June 2017 (2016: 546 000 shares were issued relating to shareoptions exercised under the DRDGOLD (1996) share scheme, 2015: nil).
 (b) Treasury sharesShares in DRDGOLD Limited are held in treasury by Ergo Mining Operations Proprietary Limited ("EMO").


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 continued
  19
 OPERATING SEGMENTS
 ACCOUNTING POLICIES
 Other
 2017
 reconciling
 Amounts in R million
 Ergo
 items
 Total
 Financial performanceRevenue
 2,339.9
 
 -
 
 2,339.9
 
 Cash operating costs
 (2,087.9)
 
 -
 
 (2,087.9)
 
 Movement in gold in process
 4.8
 
 -
 
 4.8
 
 Operating profit
 256.8
 
 -
 
 256.8
 
 Interest income
 6.8
 
 16.8
 
 23.6
 
 Interest expense
 (3.3)
 
 (2.4)
 
 (5.7)
 
 Retrenchment costs
 (23.0)
 
 -
 
 (23.0)
 
 Administration expenses and general costs
 (4.5)
 
 (64.9)
 
 (69.4)
 
 Current tax
 (1.9)
 
 -
 
 (1.9)
 
 Working profit/(loss) before capital expenditure
 230.9
 
 (50.5)
 
 180.4
 
 Additions to property, plant and equipment
 (116.2)
 
 (0.1)
 
 (116.3)
 
 Additions to listed investments
 -
 
 (0.1)
 
 (0.1)
 
 Working profit/(loss) after capital expenditure
 114.7
 
 (50.7)
 
 64.0
 
 Reconciliation of profit/(loss) for the yearWorking profit/(loss) before capital expenditure
 230.9
 
 (50.5)
 
 180.4
 
 Depreciation
 (179.7)
 
 (0.1)
 
 (179.8)
 
 Movement in provision for environmental rehabilitation
 (0.6)
 
 -
 
 (0.6)
 
 Growth in environmental rehabilitation trust funds and reimbursive right
 10.9
 
 5.5
 
 16.4
 
 Profit on disposal of property, plant and equipment
 0.2
 
 12.7
 
 12.9
 
 Unwinding of provision for environmental rehabilitation
 (45.3)
 
 (1.2)
 
 (46.5)
 
 Ongoing rehabilitation expenditure
 (22.4)
 
 -
 
 (22.4)
 
 Net other operating (costs)/income
 (30.3)
 
 31.3
 
 1.0
 
 Deferred tax
 54.2
 
 (1.9)
 
 52.3
 
 Profit/(loss) for the year
 17.9
 
 (4.2)
 
 13.7
 
 Statement of cash flowsCash flows from operating activities
 32.5
 
 19.1
 
 51.6
 
 Cash flows from investing activities
 (116.6)
 
 19.9
 
 (96.7)
 
 Cash flows from financing activities
 (2.4)
 
 (50.6)
 
 (53.0)
 
 Operating segments are reported in a manner consistent with internal reports that the Group’s chief operating decisionmaker (CODM) reviews regularly in allocating resources and assessing performance of operating segments. TheCODM has been identified as the Group’s Executive Committee.The Group has one revenue stream, the sale of gold. To identify operating segments, management reviewed variousfactors, including operational structure and mining infrastructure. It was determined that an operating segment consistsof a single or multiple metallurgical plants that, together with its deposition facility, is capable of operatingindependently.
 Corporate office and other reconciling items (collectively referred to as "Other reconciling items") are taken intoconsideration in the strategic decision-making process of the CODM and are therefore included in the disclosure here,even though they do not earn revenue. They do not represent a separate segment.
 Ergo is a surface retreatment operation and treats old slime and sand dumps to the south of Johannesburg’s centralbusiness district as well as the East and Central Rand goldfields. The operation comprises four plants. The Ergo andKnights plants continue to operate as metallurgical plants. The City Deep plant continues to operate as a pump/millingstation feeding the metallurgical plants. The Crown plant operated as a pump/milling station feeding the metallurgicalplants until March 2017 when it ceased all operations.
 When assessing profitability, the CODM considers, inter alia, the revenue and production costs of each segment. Thenet of these amounts is the operating profit or loss. Therefore, operating profit has been disclosed in the segment reportas the primary measure of profit or loss. The CODM also considered other costs that, in addition to the operating profitor loss, result in the working profit or loss.
 F-27


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 continued
 for the year ended 30 June 2017
 19
 OPERATING SEGMENTS
 continued
        Financial performanceRevenue
                                                                                    Reconciliation of profit/(loss) for the yearWorking profit/(loss) before capital expenditure
                                                                      Statement of cash flowsCash flows from operating activities


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 continued
 for the year ended 30 June 2017
 19
 OPERATING SEGMENTS
 continued
        Financial performanceRevenue
                                                                                           Reconciliation of profit/(loss) for the yearWorking profit/(loss) before capital expenditure
                            Fair value adjustment on available-for-sale investment reclassified to profit or loss
                                                         Statement of cash flowsCash flows from operating activities
                     20
 INTEREST IN SUBSIDIARIES
  Significant subsidiaries of the Group are those subsidiaries with the most significant contribution to the Group's profit orloss or assets.
 Ergo Mining Proprietary Limited is the only significant subsidiary of the Group. It is primarily involved in the retreatmentof surface gold and all of its operations are based in South Africa. Ergo Mining Proprietary Limited is a wholly ownedsubsidiary and is incorporated in South Africa.


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 continued
  21
 INVESTMENTS IN OTHER ENTITIES
 ACCOUNTING POLICIES
 Amounts in R million
 Shares held   % held
 2017
 2016
 Listed investments (Fair value hierarchy Level 1):
 8.6
 
 8.9
 
 West Wits Mining Limited ("WWM")
 47 812 500
 
 10.5%
 8.6
 
 8.9
 
 Unlisted investments (Fair value hierarchy Level 3):
 0.2
 
 0.1
 
 Rand Refinery Proprietary Limited ("Rand Refinery") (a)
 44 438
 
 11.0%
 -
 
 -
 
 Guardrisk Insurance Company Limited (Cell Captive A170) ^
 20
 
 #
 0.1
 
 0.1
 
 Chamber of Mines Building Company Proprietary Limited
 30 160
 
 3.0%
 0.1
 
 *
 Rand Mutual Assurance Company Limited
 1
 
 #
 -
 
 -
 
 8.8
 
 9.0
 
 Fair value adjustment on available for sale financial assets recognised in OCI
 (0.3)                 4.4
 #
 Represents a less than 1% shareholding.
 (a) Rand Refinery
 MARKET RISK
 Other market price risk
 FAIR VALUE OF FINANCIAL INSTRUMENTS
 The valuations are based on either the net asset values of these companies, or the consideration of unobservablefinancial information which is compared to information available in the market regarding other market participants' viewon the value of the company and constitute level 3 instruments on the fair value hierarchy.
 Equity price risk arises from changes in quoted market prices of listed investments as well as changes in the fair valueof unlisted investments due to changes in the underlying net asset values.
 The fair value of listed investments are determined by reference to published price quotations from recognisedsecurities exchanges and constitute level 1 instruments on the fair value hierarchy.
 Unlisted investments
 The Group’s listed and unlisted investments in equity securities are classified as available-for-sale financial assets.
 ^ Class A 170 shares are held in Guardrisk Insurance Company Limited that entitles the holder to 100% of the residualnet equity of the Cell Captive A 170 after settlement of the reimbursive right.
 Listed investments
 The irrevocable, subordinated loan facility that was extended to Rand Refinery by its major shareholders was convertedto redeemable preference shares on 5 June 2017. DRDGOLD's interest in Rand Refinery has therefore not been dilutedas a result of the conversion, but the redeemable preference shares remain a significant commitment on the futurecash flows of Rand Refinery.
 The estimated fair value of the investment in Rand Refinery shares remains de minimis due to the uncertaintyregarding Rand Refinery's future free cash flows and the lack of marketability of the shares held.
 * Represents a less than R0.1 million carrying value.
 These assets are initially recognised at fair value plus any directly attributable transaction costs. Subsequent to initialrecognition they are measured at fair value and changes therein, other than impairment losses, are recognised in OCI.
 F-30


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 continued
 for the year ended 30 June 2017
 22
 ASSETS AND LIABILITIES CLASSIFIED AS HELD FOR SALE
       Assets held for saleProperty, plant and equipment*
                                                   Liabilities held for saleProvisions
                                           In line with the Group’s strategy to exit underground mining operations, management committed to a plan to sell certainof the underground mining and prospecting rights held by East Rand Proprietary Mines Limited ("ERPM") including therelated liabilities late during the financial year ended 30 June 2014. Since that date, these assets and liabilities havebeen presented as a disposal Group held for sale from that date due to a sale being expected within 12 months.All regulatory approvals required for this disposal have been obtained, with the exception of the approval required underSection 11 of the Mineral and Petroleum Resource Development Act (Section 11 Approval) as a result of circumstancesbeyond ERPM’s control.
 Based on recent regulatory developments in the South African mining industry negatively impacting sentiment andimpeding growth and expansion in the South African mining industry, management believes that the probability ofobtaining the Section 11 Approval is no longer “highly probable” as defined for the purpose of presenting the assets andliabilities sold as a disposal Group held for sale. These assets and liabilities have therefore been reclassified based ontheir underlying nature.
 Non-current assets that cease to be classified as held for sale is measured at the lower of its carrying amount beforethe asset (or disposal group) was classified as held for sale, adjusted for any depreciation that would have beenrecognised had the asset (or disposal group) not been classified as held for sale, and its recoverable amount at thedate of the subsequent decision not to sell.
 Non-current assets, or disposal groups, cease to be classified as held for sale if it is not highly probable that they will berecovered primarily through sale rather than continuing use.
 The assessment of whether the disposal is highly probable require the exercise of significant judgement and estimatesof the outcome of future events that are not wholly within the control of the Group.
 A property with a carrying value of R5 million was classified as held for sale based on a sales agreement entered duringJune 2016. The disposal for R18 million was concluded during the current financial year.
 DRDGOLD and the purchaser also concluded the restructure of the payment terms requested by the purchaser duringthe current financial year.
 Management remains committed to the disposal and will continue to pursue its rights under the disposal agreement andthe ultimate conclusion of the transaction.
 Non-current assets, or disposal groups comprising non-current asset and liabilities, are classified as held for sale if it ishighly probable that they will be recovered primarily through sale rather than continuing use.Such assets, or disposal groups are measured at the lower of their carrying amount and fair value less cost to sell.Impairment losses on initial application as held for sale and subsequent gains and losses on re-measurement arerecognised in profit or loss.


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 continued
 for the year ended 30 June 2017
 23
 CONTINGENT LIABILITIES
   Occupational Lung Diseases
 In light of the above there is inadequate information to determine if a sufficient legal and factual basis exists to establish liability, and to quantify such potential liability.
 In January 2013, DRDGOLD, ERPM (“DRDGOLD Respondents”) and 23 other mining companies (“OtherRespondents”) (collectively referred to as "Respondents") were served with a court application issued in the High Courtof South Africa (“Court") for a class certification (“Certification Application”) on behalf of former mineworkers anddependants of deceased mineworkers (“Applicants”). In the application the Applicants allege that the Respondentsconducted underground mining operations in a negligent and complicit manner causing the former mineworkers tocontract occupational lung diseases. The Applicants have as yet not quantified the amounts which they are demandingfrom the Respondents in damages.
 On 13 May 2016, the Court granted an order for, inter alia (1) certification of two industry-wide classes: a silicosis classand a tuberculosis class, both of which cover current and former underground mineworkers who have contracted therespective diseases (or the dependants of mineworkers who died of those diseases); and (2) that the common law bedeveloped to provide that in instances where a claimant claiming general damages passed away, the claim for generaldamages will be transmitted to the estate of the deceased claimant.
 The DRDGOLD Respondents served a notice of appeal against the aforementioned findings on 22 July 2016, and 27September 2016 respectively. The appeal has been set down for hearing from 19 to 23 March 2018.
 The Respondent companies formed a Working Group consisting of representatives from each company to considerand discuss issues pertaining to the action.
 DRDGOLD withdrew from the Working Group in January 2016. The remaining members of the Working Group havesince indicated that they would be seeking a possible settlement of the class action and have all raised accountingprovisions at 30 June 2017 due to progress made by the Working Group towards settlement of the claims.
 DRDGOLD took the view that it is too early to consider settlement of the matter, mainly for the following reasons: • the Applicants have as yet not issued and served a summons (claim) in the matter; • there is no indication of the number of potential claimants that may join the class action against the DRDGOLDrespondents;• many principles upon which legal responsibility is founded, are required to be substantially developed by the trial court(and possibly subsequent courts of appeal) to establish liability on the bases alleged by the applicants.
 A contingent liability is a possible obligation arising from past events and whose existence will be confirmed only byoccurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Group. Acontingent liability may also be a present obligation arising from past events but is not recognised on the basis that anoutflow of economic resources to settle the obligation is not viewed as probable, or the amount of the obligation cannotbe reliably measured.When the Group has a present obligation, an outflow of economic resources is assessed as probable and the Groupcan reliably measure the obligation, a provision is recognised.
 Litigation and other judicial proceedings inherently entail complex legal issues that are subject to uncertainties andcomplexities and are subject to interpretation.
 The assessment of whether an obligating event results in a liability or a contingent liability require the exercise ofsignificant judgement of the outcome of future events that are not wholly within the control of the Group.


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 continued
 for the year ended 30 June 2017
 23
 CONTINGENT LIABILITIES
 continued
  Main Application
 Urgent Application
  DRDGOLD, through its participation in the Western Utilities Corporation initiative, provided the government with asolution for a sustainable long-term solution to AMD. This solution would have been at no cost to the mines andgovernment. In view of the limitation of current information for the accurate estimation of a potential liability, no reliableestimate can be made for the possible obligation.
 While the heads of agreement should not be seen as an unqualified endorsement of the state’s AMD solution, and donot affect our right to either challenge future directives or to implement our own initiatives should it become necessary,it is an encouraging development. Through this agreement, Ergo also secured the right to purchase up to 30 MegaLitres ("Ml") of partially treated AMD from TCTA at cost, in order to reduce Ergo’s reliance on potable water for miningand processing purposes.
 The flooding of the western and central basins have the potential to cause pollution due to Acid Mine Drainage (“AMD”)contaminating the ground water. The government has appointed Trans-Caledon Tunnel Authority (“TCTA”) to constructa partial treatment plant to prevent the ground water being contaminated. TCTA completed the construction of theneutralisation plant for the Central Basin and commenced treatment during July 2014. As part of the heads ofagreement signed in December 2012 between EMO, Ergo, ERPM and TCTA, sludge emanating from this plant sinceAugust 2014 has been co-disposed onto the Brakpan Tailings Storage facility. Partially treated water has beendischarged by TCTA into the Elsburg Spruit.
 Mine residue deposits may have a potential pollution impact on ground water through seepage. The Group has takencertain preventative actions as well as remedial actions in an attempt to minimise the Group’s exposure andenvironmental contamination.
 Subsequent to Ergo electing to pay the surcharge levied by the Municipality into the trust account of its attorneys, theMunicipality, on 25 May 2015 threatened to terminate the electricity supply at the Substation in terms of the provisionsof the By-Laws described above. The Municipality was, furthermore, contending that Ergo was allegedly in arrears of itsaccount and was seeking to employ its debt collection and credit control measures in relation to the alleged arrears.Ergo proceeded to launch an urgent application at the South Gauteng High Court, Johannesburg, to interdict theMunicipality from terminating the electricity supply at the Substation. On 3 May 2016, the Court found in favour of Ergoand interdicted and prohibited the Municipality from terminating or otherwise interfering with the supply of electricity atthe Substation. The Municipality subsequently, and ultimately, petitioned the Supreme Court of Appeal ("SCA") forleave to appeal against the judgment. The appeal hearing was heard by the full bench of the South Gauteng HighCourt, Johannesburg on 20 and 21 June 2017. Judgment in respect thereof was handed down on 29 August 2017 andthe full bench found in favour of the Municipality. Ergo filed its petition for leave to appeal to the SCA on 26 September2017.
 In December 2014, an application (in the Court) was filed and served on, inter alia , the Ekurhuleni MetropolitanMunicipality ("Municipality") and Eskom Holdings SOC Limited ("Eskom") in terms of which Ergo contends, amongstother things, that the Municipality does not “supply” electricity to Ergo from a “supply main” as contemplated in theMunicipality’s Electricity By-Laws of 2002 ("Main Application"). The Municipality is not licensed to supply electricity toErgo in terms of the Municipality’s Temporary Distribution Licence. The Municipality is not entitled to render tax invoicesto Ergo for the supply and consumption of electricity from the substation. The Municipality is furthermore not competentto add a surcharge or premium of approximately 40% (forty percent) of the rate at which Eskom ordinarily charges Ergoon its Megaflex rate. Ergo is not indebted to the Municipality for the supply and consumption of electricity and is notobliged to tender payment for any amounts claimed in the invoices rendered by the Municipality in excess of its actualconsumption therefore as determined by Eskom on a monthly basis. The Municipality is indebted to Ergo in the amountof approximately R43 million in respect of the surcharges and premiums that were erroneously paid to the Municipalityin the bona fide and reasonable belief that the Municipality was competent to supply electricity to it. The hearing inrespect of the Main Application has been set down for hearing on 5 December 2018.
 Subsequent to December 2014 up to 30 June 2017, the Municipality has invoiced Ergo for approximately R91.8 millionin surcharges of which R86.1 million has been paid into an attorney's trust account at 30 June 2017 pending the finaldetermination of the Main Application. This amount paid into the attorneys’ trust account represents the differencebetween the Megaflex tariff and the surcharge levied by the Municipality.
 F-33


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 continued
 for the year ended 30 June 2017
 24
 FINANCIAL INSTRUMENTS
     NOTE 10 CASH AND CASH EQUIVALENTSNOTE 12 TRADE AND OTHER RECEIVABLES
         The Group’s financial instruments do not represent a concentration of credit risk due to the exposure to credit risk beingmanaged as disclosed in the follwing notes:
 Fluctuations in interest rates impact on the value of short-term cash investments and financing activities, giving rise tointerest rate risk. In the ordinary course of business, the Group receives cash from its operations and is obliged to fundworking capital and capital expenditure requirements. This cash is managed to ensure surplus funds are invested in amanner to achieve maximum returns while minimising risks. Lower interest rates result in lower returns on investmentsand deposits and also may have the effect of making it less expensive to borrow funds at then current rates.Conversely, higher interest rates result in higher interest payments on loans and overdrafts.Additional disclosures are included in the following notes:
 Market risk is the risk that changes in market prices, such as commodity prices, foreign exchange rates, interest ratesand equity prices will affect the consolidated profit or loss or the value of its financial instruments. The objective ofmarket risk management is to manage and control market risk exposures within acceptable parameters, whileoptimising returns.
   Other market riskAdditional disclosures are included in the following note:
 Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet itscontractual obligations, and arises principally from the Group’s receivables from customers and investment securities.
 The Group has exposure to credit risk, liquidity risks, as well as other market risks from its use of financial instruments.This note presents information about the Group’s exposure to each of the above risks, the Group’s objectives andpolicies and processes for measuring and managing risk. The Group’s management of capital is disclosed in note 17.This note must be read with the quantitative disclosures included throughout these consolidated financial statements.
 The board of directors (“Board”) has overall responsibility for the establishment and oversight of the Group’s riskmanagement framework. The Board has established the Audit and Risk Committee, which is responsible for developingand monitoring the Group’s risk management policies. The committee reports regularly to the Board on its activities.
 The Group’s risk management policies are established to identify and analyse the risks faced by the Group, to setappropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies andsystems are reviewed regularly to reflect changes to market conditions and the Group’s activities. The Group, throughits training and management standards and procedures, aims to develop a disciplined and constructive controlenvironment in which all employees understand their roles and obligations.
 The Audit and Risk Committee oversees how management monitors compliance with the Group’s risk managementpolicies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced bythe Group. The Audit and Risk Committee is assisted in its oversight role by the internal audit function. The internalaudit function undertakes both regular and ad hoc reviews of risk management controls and procedures, the results ofwhich are reported to the Audit and Risk Committee.


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 continued
 for the year ended 30 June 2017
 24
 FINANCIAL INSTRUMENTS
 continued
          25
 RELATED PARTIES
 NOTE 16.2 RELATED PARTY TRANSACTIONSNOTE 20
    26
 SUBSEQUENT EVENTS
 There were no significant subsequent events between the year-end reporting date of 30 June 2017 and the date ofissue of these financial statements other than included in the preceding notes to the consolidated financial statements.
 The Group enters into transactions denominated in foreign currencies, such as gold sales denominated in US dollar, inthe ordinary course of business. This exposes the Group to fluctuations in foreign currency exchange rates.
 Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’sapproach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet itsliabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or riskingdamage to the Group’s reputation.
 The Group ensures that it has sufficient cash on demand to meet expected operational expenses, including theservicing of financial obligations; this excludes the potential impact of extreme circumstances that cannot reasonably bepredicted, such as natural disasters.Additional disclosures are included in the following note:


ITEM 19. EXHIBITS
 
    (1)
    (7)
  Articles of Association of DRDGOLD Limited, as amended on November 8, 2002.
  (1)
    (2)
    (13)
  Memorandum of Incorporation, as amended on November 30, 2012.
  (1)
    (5)
  Indenture between DRDGOLD Limited, as Issuer, and The Bank of New York Mellon, as Trustee, dated November 12, 2002.
  (3)
  Deposit Agreement among DRDGOLD Limited, The Bank of New York Mellon as Depositary, and owners and holders of American Depositary Receipts, dated as of August 12, 1996, as amended and restated as of October 2, 1996, as further amended and restated as of August 6, 1998, as further amended and restated July 23, 2007.
  (4)
    (4)
    (5)
  Agreement between DRDGOLD Limited and Rand Refinery Limited, dated October 12, 2001.
  (6)
  Term Sheet concluded between DRDGOLD Limited and Khumo Bathong Holdings Proprietary Limited (KBH), dated July 6, 2005.
  (6)
  Option Agreement entered into by and between DRDGOLD Limited and M5 Developments Proprietary Limited, dated July 21, 2005.
  (7)
  Subscription Agreement between DRDGOLD Limited and DRDGOLD South African Operations Proprietary Limited, dated November 9, 2005.
  (7)
  Share Sale Agreement between Crown Consolidated Gold Recoveries Limited and DRDGOLD South African Operations Proprietary Limited, dated November 14, 2005.
  (7)
  Subscription Agreement between DRDGOLD South African Operations Proprietary Limited and Khumo Gold SPV Proprietary Limited, dated November 18, 2005.
  (7)
  Subscription Agreement between DRDGOLD Limited and Khumo Gold SPV Proprietary Limited, dated November 18, 2005.
  (7)
  Cession Agreement between DRDGOLD Limited and Khumo Gold SPV Proprietary Limited and Khumo Bathong Holdings Proprietary Limited, dated November 18, 2005.
  (7)
  Option Agreement between DRDGOLD Limited and Khumo Gold SPV Proprietary Limited and DRDGOLD South African Operations Proprietary Limited, dated November 18, 2005.
  (7)
  Offer of Class A Preference Share between Khumo Gold SPV Proprietary Limited and East Rand Proprietary Mines Limited, dated November 18, 2005.
  (7)
  Offer of Class A Preference Share between Khumo Gold SPV Proprietary Limited and Blyvooruitzicht Gold Mining Company Limited, dated November 18, 2005.
  (7)
  Offer of Class A Preference Share between Khumo Gold SPV Proprietary Limited and Crown Gold Recoveries Proprietary Limited, dated November 18, 2005.
  (7)
  Shareholders’ Agreement between DRDGOLD Limited and Khumo Gold SPV Proprietary Limited and DRDGOLD South African Operations Proprietary Limited, dated November 24, 2005.
  (8)
  Option Exercise Agreement between DRDGOLD Limited, Khumo Gold SPV Proprietary Limited and the Trustees for the time being of the DRDSA Empowerment Trust dated October 10, 2006.
  (8)
  Class B Preference Share Subscription Agreement between DRDGOLD Limited and Khumo Gold SPV Proprietary Limited dated October 24, 2006.
  (8)
  Three Class B Preference Share Subscription Agreements between Khumo Gold SPV Proprietary Limited and Blyvooruitzicht Gold Mining Company Limited, Crown Gold Recoveries Proprietary Limited and East Rand Proprietary Mines Limited, dated October 24, 2006.
  (8)
  Three Class C Preference Share Subscription Agreements between the Trustees for the time being of the DRDSA Empowerment Trust and Blyvooruitzicht Gold Mining Company Limited, Crown Gold Recoveries Proprietary Limited and East Rand Proprietary Mines Limited, dated October 24, 2006.
  (9)
  Third Addendum to Memorandum of Agreement between AngloGold Ashanti Limited (“AGA”), Ergo Mining Proprietary Limited  (formerly called Friedshelf 849 Proprietary Limited) (“Ergo”), DRDGOLD South African Operations Proprietary (“DRDGOLD SA”) Mintails South Africa Proprietary Limited dated November 14, 2007.
  (9)
  Fifth Addendum to Memorandum of Agreement between AngloGold Ashanti Limited (“AGA”), Ergo Mining Proprietary Limited  (formerly called Friedshelf 849 Proprietary Limited (“Ergo”), DRDGOLD South African Operations Proprietary (“DRDGOLD SA”) Mintails South Africa Proprietary Limited dated May 22, 2008.
  (9)
  Mining User Contract between Crown Gold Recoveries Proprietary Limited (“Crown”), East Rand Proprietary Mines Limited (“ERPM”), Elsburg Gold Mining Joint Venture (“Elsburg JV”), Ergo Mining Proprietary Limited (“Ergo”), Ergo Uranium Proprietary Limited (“Ergo Uranium”) and Mogale Gold Proprietary Limited (“Mogale Gold”) dated August 15, 2008
  (9)
  Ergo Uranium Sale Agreement of Brakpan Plants to Ergo Mining between Ergo Uranium Proprietary Limited (“Ergo Uranium”) and Ergo Mining Proprietary Limited (“Ergo”) dated August 15, 2008.
  (9)
  Ergo Mining Shareholders’ Agreement between Crown Gold Recoveries Proprietary Limited (“Crown”) and Ergo Uranium Proprietary Limited (“Ergo Uranium”) dated August 15, 2008.


(9)
  Elsburg Gold Mining Joint Venture (“Elsburg JV”) Agreement between East Rand Proprietary Mines Limited (“ERPM”) and Mogale Gold Proprietary Limited (“Mogale Gold”) dated August 15, 2008.
  (9)
  Mogale Sale of Part Venture Interest in the Elsburg Gold Mining Joint Venture (“Elsburg JV”) between East Rand Proprietary Mines Limited (“ERPM”) and Mogale Gold Proprietary Limited (“Mogale Gold”) dated September 29, 2008.
  (10)
  Heads of Agreement entered into by Mintails Limited, Mogale Gold Proprietary Limited (“Mogale Gold”), Ergo Mining Proprietary Limited (“Ergo Joint Venture”), DRDGOLD Limited (“DRDGOLD”) and East Rand Proprietary Mines Limited (“ERPM”), dated December 8, 2008.
  (10)
  Loan Facility entered into by Mintails South Africa Proprietary Limited (“Borrower”), DRDGOLD Limited (“Lender”), Mintails Limited (“Borrower’s Guarantor”), Mogale Gold Proprietary Limited (Mogale Gold”) Ergo Uranium Proprietary Limited (“Ergo Uranium”) dated December 8, 2008.
  (10)
  Subscription and shareholders’ Agreement entered into by Mintails SA Proprietary Limited (“Mintails SA”), Witfontein Mining Proprietary Limited (“Witfontein”) and Argonaut Financial Services Proprietary Limited (“Argonaut”) dated December 9, 2008.
  (10)
 
  (11)
 4.33
 (11)
 4.34
 (11)
  Facility Agreement between Investec Bank limited (“the Lender”) and DRDGOLD Limited (“the Borrower”) dated March 31, 2009.Final Heads of Agreement between Chizim Investments (Pvt) Limited (“Chizim”) and DRDGOLD Limited (“DRDGOLD”) dated December 9, 2009. Memorandum of Agreement between Ergo Uranium Proprietary Limited (“Ergo Uranium”) and East RandProprietary Mines Limited (“ERPM”) dated January 21, 2010.Heads of Agreement between East Rand Proprietary Mines Limited (“ERPM”) and Aurora Empowerment System Proprietary Limited (“Aurora”) dated January 22, 2010.
  (11)
  Domestic Medium Term Note Programme (“Programme”) entered into by DRDGOLD South African Operations Proprietary Limited (“Issuer”) and DRDGOLD Limited (“guarantor’) dated September 30 2010.
  (12)
  Domestic Medium Term Note ) and High Yield Programme (“DMTN Programme”)  Agreement entered into by DRDGOLD  Limited (“Issuer”)  Crown Gold Recoveries Proprietary Limited  (“Crown Gold”), East Rand Proprietary Mines Limited (“ERPM”), Ergo Mining Operations Proprietary Limited (“EMO”) )and  ABSA Bank  Limited (“ABSA”) ) dated  June 30, 2012.
  (12)
  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.
  (12)
  Sale of Interest Agreement between DRDGOLD Limited (“DRDGOLD”) and Ergo Mining Proprietary Limited (“Ergo”) dated June 29, 2012.
  (13)
  Heads of Agreement entered into by Trans-Caledon Tunnel Authority (“TCTA’), Ergo Mining Operations Proprietary Limited (“EMO”), East Rand Proprietary Mines Limited (“ERPM”) and Crown Gold Recoveries Proprietary Limited (“CGR”) (collectively CGR, EMO and ERPM are called “the Ergo Group”) dated November 28, 2012.
  (14)
  Share Sale and Subscription Agreement between DRDGOLD Limited ("DRDGOLD") and Khumo Gold SPV Proprietary Limited ("Khumo") dated March 17, 2014.
  (14)
  Share Sale and Subscription Agreement between DRDGOLD Limited ("DRDGOLD") and DRDSA Empowerment Trust (the Trust) dated March 17, 2014.
  (15)
  Settlement Agreement between DRDGOLD Limited ("DRDGOLD") and VMR Gold Investments 02 Proprietary
 Limited ("VMR Gold") dated May 28, 2015.
  (15)
  List of Subsidiaries.
  (13)
  Code of Ethics, as amended February 9, 2012.
  (17)
    (17)
    (17)
    (17)
    (1)
  (2)
  (3)
  
  (4)
  (5)
  (6)
  (7)
  (8)
  (9)
  (10)
  (11)
  (12)
  (13)
  (14)


(15)
  (16)
  (17)
  
 **SIGNATURES**
 
  authorized the undersigned to sign this annual report on its behalf.
          D.J. Pretorius Chief Executive Officer
   A.J. Davel Chief Financial Officer