As filed with the Securities and Exchange Commission on October 28, 2011
 UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
  FORM 20-F
 
 
 
 REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
 OR
    
 ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 OR
 
 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 OR
 
 SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT 1934
 For the fiscal year ended June 30, 2011
 Commission file number 0-28800
  DRDGOLD LIMITED
   REPUBLIC OF SOUTH AFRICA
   50 CONSTANTIA BOULEVARD, CONSTANTIA KLOOF EXT 28, ROODEPOORT, 1709, SOUTH AFRICA
      Title of each class:
 Name of each exchange on which registered:
       None
  None
  period covered by the annual report.  As of June 30, 2011 the Registrant had outstanding 384,884,379 ordinary shares, of no par value.          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.     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      .


TABLE OF CONTENTS
 
 
 
 
 
 Page
 PART I


TABLE  OF  CONTENTS
  PART II
 ITEM 13.
 DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES ............................................................
 111
 ITEM 14.
 MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS .
 111
 ITEM 15.
 CONTROLS AND PROCEDURES ...............................................................................................................
 111
 ITEM 16A.
 AUDIT COMMITTEE FINANCIAL EXPERT
  .............................................................................................
 112
 ITEM 16B.
 CODE OF ETHICS .......................................................................................................................................
 112
 ITEM 16C.
 PRINCIPAL ACCOUNTANT FEES AND SERVICES..................................................................................
 112
 ITEM 16D.
 EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES .....................................
 113
 ITEM 16E.
 PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS ................
 113
 ITEM 16F
 CHANGE IN REGISTRANT'S CERTIFYING ACCOUNTANT....................................................................
 113
 ITEM 16G.
 CORPORATE GOVERNANCE ....................................................................................................................
 113
 
 
 
 PART III
 ITEM 17.
 FINANCIAL STATEMENTS .......................................................................................................................
 115
 ITEM 18.
 FINANCIAL STATEMENTS .......................................................................................................................
 F-pages
 ITEM 19.
 EXHIBITS....................................................................................................................................................
 116


1
 
 Preparation of Financial Information
 
  Accordingly, our books of account are maintained in South African Rand. Our financial statements included in our corporate filings in South Africa were prepared in accordance with International Financial Reporting Standards (IFRS), as approved by the International Accounting Standards Board (IASB) for the financial years ended June 30, 2009, 2010 and 2011. All references to “dollars” or “$” herein are to United States Dollars, references to “rand” or “R” are to South African Rands and references to “A$” are to Australian Dollars.
  with the U.S. Securities and Exchange Commission (“SEC”) in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”). On December 21, 2007, the SEC adopted rules allowing foreign private issuers that file Annual Reports on Form 20-F to file financial statements with the SEC in accordance with IFRS as issued by the IASB without reconciliation to U.S. GAAP. As per these new rules, we changed our basis of presentation and included in this Annual Report our consolidated financial statements prepared in accordance with IFRS as issued by the IASB. All financial information, except as otherwise noted, are stated in accordance with IFRS as issued by the IASB.
  Form 20-F contains translations of certain rand amounts into dollars at specified rates. These rand amounts do not represent actual dollar amounts, nor could they necessarily have been converted into dollars at the rates indicated. Unless otherwise indicated, rand amounts have been translated into dollars at the rate of R7.90 per $1.00, which was the noon buying rate in New York City on September 30, 2011.
  costs per kilogram” and “total costs per kilogram” which have been determined using industry guidelines promulgated by the Gold Institute. An investor should not consider these items in isolation or as alternatives to cash and cash equivalents, operating costs, profit/(loss) attributable to equity owners of the parent, profit/(loss) before taxation and other items or any other measure of financial performance presented in accordance with IFRS or as an indicator of our performance. While the Gold Institute has provided definitions for the calculation of cash costs, the calculation of cash costs per kilogram, total costs and total costs per kilogram may vary significantly among gold mining companies, and these definitions by themselves do not necessarily provide a basis for comparison with other gold mining companies. See “Glossary of Terms and Explanations” and Item 5A.: “Operating Results - Cash costs and total costs per kilogram- Reconciliation of cash costs per kilogram, total costs and total costs per kilogram.”
 DRDGOLD Limited
 
  “the Group” refer to the Company and its subsidiaries, associates and joint ventures, as appropriate in the context.
 Special Note Regarding Forward-Looking Statements
 
  regarding future events or other future financial performance and information relating to us that are based on the beliefs of our management, as well as assumptions made by and information currently available to our management. Some of these forward-looking statements include phrases such as “anticipates,” “believes,” “could,” “estimates,” “expects,” “intends,” “may,” “should,” or “will continue,” or similar expressions or the negatives thereof or other variations on these expressions, or similar terminology, or discussions of strategy, plans or intentions. These statements also include descriptions in connection with, among other things:
  
  assumptions. Many factors could cause our actual results, performance or achievements to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements, including, among others:


2
 
 
  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.
 
   hereof. We do not undertake any obligation to update publicly or release any revisions to these forward-looking statements to reflect events or circumstances after the date of this Annual Report or to reflect the occurrence of unanticipated events.
 
 Imperial units of measure and metric equivalents
 
   
 Metric  Imperial  Imperial  Metric
                                            
 Glossary of Terms and Explanations
 
 Adularia .........................................  A transparent or translucent variety of common feldspar. Archaean........................................  A period of the geological time scale between 2.5 and 4.6 billion years ago, the earliest part of the
  Assaying ........................................  The chemical testing process of rock samples to determine mineral content. Auriferous ......................................  Containing  gold. Bonanza  ........................................  Unexpected high-grade occurrences. Care and maintenance .....................  Cease active mining activity at a shaft, but continue to incur costs to ensure that the Ore Reserves
  
 contractor and other related costs, inventory costs and electricity costs. Cash costs per kilogram are calculated by dividing cash costs by kilograms of gold produced. Cash costs per kilogram have been calculated on a consistent basis for all periods presented. This is a non-IFRS financial measure and should not be considered a substitute measure of costs and expenses reported by us in accordance with IFRS.
 
  Conglomerate .................................  A coarse-grained sedimentary rock consisting of rounded or sub-rounded pebbles. Cut-and-fill ....................................  A mining method in which a slice of rock is removed after blasting and replaced with a slice of
  
   
  
 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.
 
  Diorite ...........................................  An igneous rock formed by the solidification of molten material.


3
 
 Electrowinning ...............................  The process of recovering metal from ore by means of electro-chemical processes. Grade .............................................  The amount of gold contained within auriferous material generally expressed in ounces per ton or
  g/t ..................................................  Grams per ton. Horizon..........................................  A plane indicating a particular position in a stratigraphic sequence. This may be a theoretical
  Igneous rock...................................  Rock which is magmatic in origin. Intrusive .........................................  Rock which while molten, penetrated into or between other rocks, but solidified before reaching
  Life of mine ...................................  Projected life of a mining operation based on the Proven and Probable Ore Reserves. Metallurgical plant..........................  A processing plant (mill) erected to treat ore and extract the contained gold. Mine call factor ..............................  This is the gold content recovered expressed as a percentage of the gold content called. Mill ...............................................  Material passed through the metallurgical plant for processing. Mt .................................................  Million tons. Opening up ....................................  The potential that previously abandoned shafts and mining or developed areas, have to be
  
  Ore Reserves ..................................  Attributable total ore reserves of subsidiaries. Pay-limit ........................................  The minimum in-situ grade of ore blocks for which cash costs, including all overhead costs, are
  
  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.
 
 that used for Proven Ore Reserves, but the sites for inspection, sampling, and measurement are farther apart or are otherwise less adequately spaced. The degree of assurance, although lower than that for Proven Ore Reserves, is high enough to assume continuity between points of observation.
 oz/t ................................................  Ounces per ton. Reef ...............................................  A gold-bearing sedimentary horizon, normally a conglomerate band that may contain economic
  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
  
  
 shaft is also used for ventilation and as an auxiliary exit. It is equipped with a hoist system that lowers and raises a cage in the shaft, transporting equipment, personnel, materials, ore and waste. A shaft generally has more than one compartment.
 
 make room for subsequent mining activities. Most of the blasted ore is left to accumulate in the stope and is drawn after the stope is completely mined.
 
  Sloughing ......................................  The localized failure of part of the slimes dam wall caused by a build up of water within the dam. Stope .............................................  Underground production working area on the Ore Horizon. Stoping ..........................................  Is the removal of the wanted ore from an underground mine leaving behind an open space known
 as a stope. Stoping is used when the country rock is sufficiently strong not to cave into the stope, although in most cases artificial support is also provided.


4
 
 
 reserves of gold-bearing material in-situ or quantities of ore and waste material mined, transported or milled.
   
 between revenues from gold bullion and profits or losses before taxation. Total costs per kilogram are calculated by dividing total costs by kilograms of gold produced. Total costs per kilogram have been calculated on a consistent basis for all periods presented. This is a non-IFRS financial measure and should not be considered a substitute measure of costs and expenses reported by us in accordance with IFRS.
 Tpm ...............................................  Tonne  per  month. Up-dip mining ................................  A mining method in which the drilled and blasted ore gravitates into slushers or gullies leaving
  Waste rock .....................................  Non-auriferous rock. Yield..............................................  The amount of recovered gold from production generally expressed in ounces or grams per tonne


5
 
 PART I
 
 ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
 Not
  ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE
 Not
 ITEM 3. KEY INFORMATION
  3A. SELECTED FINANCIAL DATA
 
  2011, 2010 and 2009 are derived from our consolidated financial statements set forth elsewhere in this Annual Report, which have been prepared in accordance with IFRS, as issued by the IASB. These consolidated financial statements have been audited by KPMG Inc. as at June 30, 2011, 2010 and 2009 and for the years ended June 30, 2011, 2010 and 2009. Prior to fiscal year ended June 30, 2008, our annual financial statements (translated into dollars) were prepared and filed with the SEC in accordance with U.S. GAAP. On December 21, 2007, the SEC, adopted rules allowing foreign private issuers that file Annual Reports on Form 20-F  to file with the SEC financial statements in accordance with IFRS as issued by the IASB without reconciliation to U.S. GAAP. As per these new rules, we changed our basis of presentation and have included in this Annual Report our consolidated financial statements prepared in accordance with IFRS as issued by the IASB. The selected consolidated financial data as at June 30, 2007 and 2008, for the years ended June 30, 2007 and 2008 are 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 thousands, except share, per share and ounce data)
 
 
 Year ended June 30,
 
 2011
 1
 
 2011
 2010
 2009
 2008
 2
 
 2007
 2
 
 $’000  R’000  R’000  R’000  R’000  R’000
 Profit or loss Data
 
 
 
 
 
 
 
   
                          equity owners of the parent from continuing
    
         Per Share Data
                    
                                   
                Statement of financial position Data
         
      
      
  
 Month
 
 2011  2011  2011  2011  2011  2011
 
 
 September  August  July  June  May  April
 Exchange Rate Data
 
 
 
 
 
 
 
  
  
  
  
 1
 2
 
 Translations into Dollars in this table are for convenience only and are computed at the noon buying rate in New York City at September 30,
 2011 of R7.90 per $1.00. You should not view such translations as a representation that such amounts represent actual Dollar amounts.  Comparatives have been restated for the reclassification of the Australasian operations as discontinued operations. The discontinued operations relate to the Porgera Joint Venture (disposed on August 17, 2007), Emperor (disposed on October 22, 2007) and Netgold (disposed on March 13, 2008).


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.
   
 
 
 
 Risks related to our business and operations
 Changes in the market price for gold, which in the past has fluctuated widely, and exchange rate fluctuations affect the
 profitability of our operations and the cash flows generated by those operations.
    been and could be materially harmed in the future by an appreciation in the value of the rand. Due to the marginal nature of our underground mine any sustained decline in the market price of gold, below the cost of production, could result in the closure of our underground mine which would result in significant costs and expenditure, for example, incurring retrenchment costs earlier than expected, that would negatively and adversely affect our business, operating results and financial condition.
 
   rate movements of the rand. We sell our gold and trade our foreign currency at the spot price in the market on the date of trade. If the dollar gold price should fall and the regional functional currencies should strengthen against the dollar, resulting in revenue below our cost of production and remain at such levels for any sustained period, we may experience losses and may be forced to curtail or suspend some or all of our operations. In addition, we might not be able to recover any losses we may incur during that period or maintain adequate gold reserves for future exploitation.
  2009 the rand strengthened against the dollar by 10.8%, 2.9% and 1.0% respectively (based on exchange rates at June 30 of each year). From December 2001, when it reached R13.44 = $1.00, the rand has appreciated by 49.2% against the dollar to R6.83= $1.00 at June 30, 2011 (based on closing rates). At September 30, 2011 the rand traded at R7.90 = $1.00, a 15.7% weakening relative to the Dollar from June 30, 2011.
  our profitability. In fiscal 2011, 2010 and 2009 100% of production was from our South African mines providing significant exposure to the strengthening of the rand and a decrease in profitability. If the rand were to continue to appreciate against the dollar, our operations could experience a reduction in cash flow and profitability and this would negatively and adversely affect our business, operating results and financial condition.
 Inflation may have a material adverse effect on our results of operations.
   which we sell the gold we produce, it is possible that significantly higher future inflation in South Africa may result in an increase in our future operational costs in rand, without a concurrent devaluation of the rand against the dollar or an increase in the dollar price of gold. This could have a material adverse effect upon our results of operations and our financial condition. Significantly higher and sustained inflation in the future, with a consequent increase in operational costs, could result in operations being discontinued or reduced or rationalized at higher cost mines.


8
 
  We have incurred losses in the past as well as in the current year and may incur losses in the future
 
  2010 and 2009, respectively. The loss in fiscal 2011 related to an impairment of R546.6 million against the property, plant and equipment of Blyvooruitzicht Gold Mining Company Limited, or Blyvoor, due to the uncertainties surrounding the business rescue proceedings they are undergoing and other factors.
  not hedge. Blyvoor’s underground mine is also regarded as an older, higher cost and lower grade gold producer. In addition, our ability to identify Ore Reserves that have reasonable prospects for economic extraction while maintaining sufficient controls on production and other costs, will have a material influence on the future viability of our operations.
 We may not be able to meet our cash requirements because of a number of factors, many of which are beyond our
 control.
  volumes, recovered grades, costs and seismicity. If we are unable to meet our cash requirements out of cash flows generated from our operations, we would need to fund our cash requirements from alternative financing and we cannot guarantee that any such financing would be on acceptable terms, or would be permitted under the terms of our existing financing arrangements, or would be available at any terms. In the absence of sufficient cash flows or adequate financing, our ability to respond to changing business and economic conditions, make future acquisitions, react to adverse operating results, meet our debt service obligations and fund required capital expenditures or increased working capital requirements may be adversely affected.
 The failure to discover or acquire new Ore Reserves could negatively affect our cash flow, results of operations and
 financial condition.
  and acquisition efforts in the regions in which we operate and any new regions that we identify for future growth opportunities. Our Ore Reserves for fiscal 2011 increased by 5% due to the higher rand gold price used in the Ore Reserve calculation. Our Ore Reserves for fiscal 2010 increased by 15% as a result of the higher rand gold price used in the Ore Reserve calculation together with the expected increase in Crown’s deposition capacity as a consequence of the construction of the Crown/Ergo pipeline linking Crown Gold Recoveries (Pty) Limited, or Crown, to Ergo’s Brakpan deposition site. Ergo collectively refers to Ergo Mining (Pty) Limited, or the Ergo JV, and ErgoGold. Our Ore Reserves for fiscal 2009 increased by 16%, primarily due to the inclusion of the Elsburg tailings owned by East Rand Proprietary Mines Limited, or ERPM. Mining higher grade reserves in our underground mine is likely to be more difficult in the future, due to the age of this mine and safety concerns, and could result in increased production costs and reduced profitability. We are currently also conducting exploration activities in Zimbabwe. We can make no assurances that any new or ongoing exploration programs will result in new mineral producing operations that will sustain or increase our Ore Reserves. A failure to discover or acquire new Ore Reserves in sufficient quantities to maintain or grow the current level of our reserves will negatively affect our future cash flow, results of operations and financial condition.
  We may need to improve our internal controls over financial reporting and our independent auditors may not be able to
 attest to their effectiveness because of inherent limitations.
  to the effectiveness of these controls, as required by Section 404 of the United States Sarbanes-Oxley Act of 2002. Management has determined that these controls are effective for the 2011, 2010 and 2009 fiscal years respectively and did not identify any material weaknesses within our internal controls surrounding the financial reporting process. These internal controls over financial reporting may not be sufficient to prevent significant deficiencies or material weaknesses in the future, and we may also identify other conditions that could result in significant deficiencies or material weaknesses. In this event, we could experience a negative reaction in the financial markets and incur additional costs in improving the condition of our internal controls. For a detailed discussion of controls and procedures, see Item 15.: “Controls and Procedures.”


9
 
 
 Increased production costs could have an adverse effect
 
 on our results of operations.
 
  provide for an increase in our production costs. Production costs are affected by, among other things:
 
 
 
 
 
 
 
 
 
 
 
   based products. The production costs incurred at our operations have, and could in the future, increase at rates in excess of our annual expected inflationary increase and result in the restructuring of these operations at substantial cost. The majority of our South African labor force is unionized and their wage increase demands are usually above the then prevailing rates of inflation. As at September 30, 2011, we were still engaged in wage negotiations at all of our operations for the fiscal 2012 and 2013 wage increases. In October 2011, Blyvoor signed a three-year wage settlement agreement with the National Union of Mineworkers (NUM) and the United Association of South Africa (UASA). In terms of the settlement, employees in Categories 4 and 5 miners would receive a 7% increase and employees in Categories 6 - 8, miners, artisans and officials would receive a 6% increase in each year, with the third year being the greater of these percentages or CPI as at 1 July 2013. In addition, employees in both recognition units will participate in a gold price/profit linked profit share bonus scheme, in terms of which their overall increases can rise to a total of 15%. In addition, in the past, we have been impacted by large price increases imposed by our South African steel suppliers and parastatal entities which supply us with electricity and water. These, combined with the increases in labor costs, could result in our costs of production increasing above the gold price received. Discussions with steel suppliers and parastatal entities to moderate price increases have been unsuccessful in the past.
  general increase in the cost of crude oil in global markets. During fiscal 2010, the average brent crude oil price was approximately $75 per barrel and in fiscal 2011, the average brent crude oil price was approximately $97 per barrel. In the event that crude oil prices continue increasing, this could have a significant impact on our production costs.
  stringent cost controls such as comparing whether actual costs stay within budget parameters, may not be sufficient to offset the increases imposed on our operations and could negatively affect our business, operating results and financial condition.
 Our operations are subject to extensive environmental regulations which could impose significant costs and liabilities.
 
  various state, provincial and local laws, which regulate air and water quality, hazardous waste management and environmental rehabilitation and reclamation. Our mining and related activities impact the environment, including land, habitat, streams and environment near the mining sites. Delays in obtaining, or failures to obtain government permits and approvals may adversely impact our operations. In addition, the regulatory environment in which we operate could change in ways that could substantially increase costs to achieve compliance, therefore having a material adverse effect on our profitability.
  have estimated our aggregate Group Rehabilitation, Reclamation and Closure cost provision at R490.2 million included on our statement of financial position as at June 30, 2011. However, the ultimate amount of rehabilitation costs may in the future exceed the current estimates due to influences beyond our control, such as changing legislation, higher than expected cost increases, or unidentified rehabilitation costs. We have funded these environmental rehabilitation costs by making contributions over the life of the mine to environmental trust funds established for our operations. If any of the operations are prematurely closed, the rehabilitation funds may be insufficient to meet all the rehabilitation obligations of those operations. The closure of mining operations, without sufficient financial provision for the funding of rehabilitation liabilities, or unacceptable damage to the environment, including pollution or environmental degradation, may expose us and our directors to litigation and potentially significant liabilities.


10
 
 Seismicity and other natural disasters could impact the going concern of our operations.
 
  ability to continue production. Seismic activity has had, and may continue to have, a harmful effect on our business, operating results and financial condition. For example, on May 29, 2009, the Blyvoor operations suffered the effects of a seismic event which knocked out a number of its high grade panels in the 38/29 section at No. 5 Shaft. This resulted in gold production being approximately 151kg lower than expected for the four month period ended October 31, 2009 (this excludes the impact of the strike action by our NUM employees during the months of September and October 2009).
 Flooding at our operations may cause us to incur liabilities for environmental damage.
 
  controlled, water from underground mining areas could potentially rise to the surface or decant into surrounding underground mining areas or natural underground water sources. Due to the withdrawal of government pumping subsidies at Durban Deep and West Wits, we have ceased active pumping of underground water at these mines. We also stopped pumping of underground water at our ERPM underground operation on August 20, 2009. Progressive flooding where these operations and operations from other mining companies are located could eventually cause the discharge of polluted water to the surface and to local water sources.
    underground water levels not reach a natural subterranean equilibrium, and in the event that underground water rises to the surface, we may face, together with all other mining companies in those areas, claims relating to environmental damage as a result of pollution of ground water, streams and wetlands. These claims may have a material adverse effect on our business, operating results and financial condition.
 We have ageing assets, which exposes us to greater risk of our infrastructure failing, higher maintenance costs and
 potentially greater health, safety and environmental liabilities.
 Some of our assets, especially at our underground mine, are mature assets, which we acquired after they had reached the end
 of the planned production cycle under their previous owners, and our strategy has been to revive these assets through specialist planning and mining techniques. The ageing infrastructure and installations typical of these operations require constant maintenance and continuing capital expenditure. This materially increases our operational expenditure. In addition, the technology applied in many of our installations was not regularly updated by the previous owners and accordingly has become obsolete compared to the technology used in more modern mines. As a result, the risk of technology failure is high, and the maintenance of these installations, costly. Due to the nature of the business and because our marginal underground mine predominantly comprises of aged infrastructures, we inherently run the risk of exposure to greater health, safety and environmental liabilities which we closely monitor, but are unable to fully mitigate.
 
 
 Limited tailings dam capacity at Crown exposes us to greater risk of financial loss due to lower production and health,
 safety and environmental liabilities.
 Our ageing tailings facilities at Crown are exposed to numerous risks and events, the occurrence of which may result in the
 failure or breach of such a facility. These may include sabotage, failure by our employees to adhere to the codes of practice and natural disasters such as excessive rainfall and seismicity. In the event that we are limited on how much treated ore, sand or slime we can deposit at Crown’s deposition sites and deposition capacity created by the Ergo/Crown pipeline project, we could be forced to stop or limit operations, the dams could overflow and the health and safety of our employees and communities living around these dams could be jeopardized. In the event that this occurs, our Crown operations will be adversely affected and this in turn could have a material adverse effect on our business, operating results and financial condition.
 Ergo also have tailings facilities that are exposed to the same risks as described above.Due to the nature of our business, our Operations face extensive health and safety risks. Regrettably one person died in a work-related incident during fiscal 2011, compared to two fatalities in fiscal 2010. The
 employee succumbed to suspected heat stroke during a reconnaissance exercise at Blyvoor's No. 5 shaft and died in hospital the next day. On September 20, 2011, Blyvoor had a seismic event at their No 5 shaft where five people had been injured. 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. While seismic monitoring continues to be an invaluable tool in the management of seismicity, there is still a risk of seismic induced fatalities occurring which we may not be able to prevent. These incidents could lead to mine operations being halted and that will increase our unit production costs, due to loss of production. This could have a material adverse effect on our business, operating results and financial condition.


11
 
 
 Events may occur for which we are not insured which could affect our cash flows and profitability.
 
  are unable to insure, including those in respect of past mining activities. Our existing property, business interruption and other insurance contains certain exclusions and limitations on coverage. We have insured property, including loss of profits due to business interruption in the amount of about R8.2 billion. Claims for each and every event are limited by the insurers to R500 million. Business interruption is only covered from the time the loss actually occurs and is subject to time and amount deductibles that vary between categories. General liability, fidelity, directors and officers, and other insurance cover are also in place.
  industrial or pollution related accidents, for which coverage is not available. If we are required to meet the costs of claims which exceed our insurance coverage, our costs may increase which could have a material adverse effect on our business, operating results and financial condition.
 If we are unable to attract and retain key personnel our business may be harmed.
 
  technical personnel including our Chief Executive Officer and our Chief Financial Officer. In addition, we compete with mining and other companies on a global basis to attract and retain key human resources at all levels with appropriate technical skills and operating and managerial experience necessary to operate the business. Factors critical to retaining our present staff and attracting additional highly qualified personnel include our ability to provide these individuals with competitive compensation arrangements, equity participation and other benefits. If we are not successful in retaining or attracting highly qualified individuals in key management positions, our business may be harmed. We do not maintain “key man” life insurance policies on any members of our executive team. The loss of any of our key personnel could delay the execution of our business plans, which may result in decreased production, increased costs and decreased profitability.
 The Crown/Ergo pipeline is a start-up project and forecasts may not be achieved.
   December 2011. The pipeline will provide two of Crown’s plants with access to Ergo’s Brakpan deposition site, allowing Crown to restore its maximum deposition capacity to 600 000tpm. Crown’s deposition capacity was reduced to 400 000tpm in fiscal 2009 due to capacity constraints at its deposition site. Restored deposition capacity allowed Crown to account for new Ore Reserves on the Western and Central Witwatersrand, thus increasing production and extending its life-of-mine. The Crown/Ergo pipeline project is exposed to numerous risks associated with similar projects, including delays in completion, total abandonment of the project, higher operating costs or lower production than forecasted which could have a material adverse effect on our business, operating results and financial condition.
 Blyvoor is under business rescue proceedings and the outcome of these proceedings could negatively affect our
 business, results of operations and financial condition.
    subsidiary, Blyvoor, and on July 7, 2011, the Registrar of Companies agreed to appoint the nominated business rescue practitioner to produce a business rescue plan for Blyvoor. The decision followed the promulgation of the new Companies Act of South Africa, effective from May 1, 2011, which requires directors of parent companies to seek the consent of the parent company shareholders and then to consider the effects on the solvency and liquidity of the parent company as conditions precedent to the provision of financial assistance to subsidiaries. Blyvoor’s production had been trending down in the last quarter of fiscal 2011, as a result of a drop in grade, public holiday interruptions and seismicity-related work stoppages, while costs had increased mainly because of higher electricity charges, and particularly power utility Eskom’s winter tariff which had added R11.0 million a month to overhead costs.  On July 29, 2011, DRDGOLD's shareholders approved the appointment of a business rescue practitioner for Blyvoor. The practitioner has been granted extension until November 1, 2011, to publish a business rescue plan and until December 2, 2011, for 
 the business rescue process in terms of section 132(3) of the Companies Act, 2008.  Further extension may however be granted. Should 
 the outcome of the business rescue proceedings not have a successful  impact on the sustainability of Blyvoor, then our business, financial 
 condition and results of operations could be materially, adversely  affected.


12
 
 
 We may need to improve our cyber security controls which our cyber security strategy, internal controls over cyber
 security and our independent auditors may not be able to attest to their effectiveness because of inherent limitations.
  and recovery of data in the event of cyber security breaches. Our internal auditors also perform regular effectiveness of control reviews and an annual external review of the effectiveness of our network security is also performed. Management has determined that these controls are effective for the 2011, 2010 and 2009 fiscal years respectively and did not identify any material weaknesses within our internal controls surrounding cyber security. These internal controls over cyber security may not be sufficient to prevent significant deficiencies or material weaknesses in the future, and we may also identify other conditions that could result in significant deficiencies or material weaknesses. In this event, we could experience the corruption or loss of data, misappropriation of assets or sensitive information or operational disruption and incur additional costs to replace assets and improving our internal controls.
 To the extent that we seek to expand and grow through acquisitions we may experience difficulty in managing these
 acquisitions and integrating them with our existing operations.
  From time to time we consider the acquisition of mining assets including ore reserves, development properties, operating mines or mining companies. Our expansion through acquisitions of new gold mining operations involves a number of risks including:
 
 feasibility of the target assets. These analyses are based on a variety of factors including historical operating results,  estimates of and assumptions about future reserves, cash and other operating costs, metal prices and projected economic  returns and evaluations of existing or potential liabilities associated with the property and its operations. Other than  historical operating results, all of these parameters could differ significantly from the estimates and assumptions used in  the evaluation process, which could result in an incorrect evaluation of the quality of the assets to be acquired;                  an acquisition.


13
 
 Risks related to the gold mining industry
 A change in the price of gold, which in the past has fluctuated widely, is beyond our control.
    
 
  period
 Current economic conditions may adversely affect the profitability of the Group’s operations.
   future economic environment is likely to be less favorable than that of recent years. Since September 2008, the global financial system has experienced difficult credit and liquidity conditions and disruptions resulting in major financial institutions consolidating or going out of business, tightened credit markets, reduced liquidity, and extreme volatility in fixed income, credit, currency and equity markets. These conditions may adversely affect the Group’s business. For example, tightening credit conditions may make it more difficult for the Group to obtain financing on commercially acceptable terms or make it more likely that one or more of our key suppliers may become insolvent and lead to a supply chain breakdown.  In addition, general economic indicators have deteriorated, including declining consumer sentiment, increased unemployment, declining economic growth and uncertainty regarding corporate earnings. To the extent the current economic downturn worsens or the economic environment in which the Group operates does not recover, the Group could experience a material adverse effect on its business, results of operations and financial condition.
 The exploration of mineral properties is highly speculative in nature, involves substantial expenditures, and is frequently
 unproductive.
    have been halted since October 2008 and a decision was reached at the end of August 2009 to suspend underground production at ERPM. Our future growth and profitability will depend, in part, on our ability to identify and acquire additional mineral rights, and on the costs and results of our continued exploration and development programs. Gold mining companies may undertake exploration activities to discover gold mineralization, which in turn may give rise to new gold bearing ore bodies. Exploration is highly speculative in nature and requires substantial expenditure for drilling, sampling and analysis of ore bodies in order to quantify the extent of the gold reserve. Many exploration programs, including some of ours, do not result in the discovery of mineralization and any mineralization discovered may not be of sufficient quantity or quality to be mined profitably. If we discover a viable deposit, it usually takes several years from the initial phases of exploration until production is possible.
    professional geologists, geophysicists, and engineers for estimates in determining whether to commence or continue mining. These estimates generally rely on scientific and economic assumptions, which in some instances may not be correct, and could result in the expenditure of substantial amounts of money on a deposit before it can be determined with any degree of accuracy whether or not the deposit contains economically recoverable mineralization. Uncertainties as to the metallurgical recovery of any gold discovered may not warrant mining on the basis of available technology. As a result of these uncertainties, we may not successfully acquire additional mineral rights, or identify new Proven and Probable Ore Reserves in sufficient quantities to justify commercial operations in any of our mines. Our mineral exploration rights may also not contain commercially exploitable reserves of gold. The costs incurred on unsuccessful exploration activities are, as a result, not likely to be recovered and we could incur a write-down on our investment in that interest or the irrecoverable loss of funds spent.


14
 
  There is uncertainty with our Ore Reserve estimates.
 
  stated and are reported in accordance with the requirements of Industry Guide 7 of the SEC. These estimates may be imprecise and may not reflect actual reserves or future production.
  examinations, reserve estimates may have to be adjusted and mining plans may have to be altered in a way that might ultimately cause our results of operations and financial condition to decline. Moreover, if the price of gold declines, or stabilizes at a price that is lower than recent levels, or if our production costs, and in particular our labor, water, steel and electricity costs, increase or recovery rates decrease, it may become uneconomical to recover Ore Reserves containing relatively lower grades of mineralization. Under these circumstances, we would be required to re-evaluate our Ore Reserves. Short-term operating factors relating to the Ore Reserves, such as the need for sequential development of ore bodies and the processing of new or different grades, may increase our production costs and decrease our profitability during any given period. These factors have and could result in reductions in our Ore Reserve estimates, which could in turn adversely impact upon the total value of our mining asset base and our business, operating results and financial condition.
 Gold mining is susceptible to numerous events that could have an adverse impact on a gold mining business.
 
  rock dumps and tailings dams. These operations are exposed to numerous risks and events, the occurrence of which may result in the death of, or personal injury to, employees, the loss of mining equipment, damage to or destruction of mineral properties or production facilities, monetary losses, delays in production, environmental damage, loss of the license to mine and potential legal claims. The risks and events associated with the business of gold mining include, but are not limited to:
 •  a decrease in labor productivity due to labor disruptions, work stoppages, disease, slowdowns or labor strikes.
  significant risks and hazards not associated with open pit or surface rock dump and tailings dam retreatment operations. These risks and hazards include underground fires, encountering unexpected geological formations, unanticipated ground and water conditions, fall-of-ground accidents and seismic activity. The level of seismic activity in a deep level gold mine varies based on the rock formation and geological structures in the mine. The occurrence of any of these hazards could delay production, increase production costs and may result in significant legal claims. Risks related to doing business in South Africa
 Political or economic instability in South Africa may reduce our production and profitability.
 
  could reduce our production and profitability. Large parts of the South African population are unemployed and do not have access to adequate education, health care, housing and other services, including water and electricity. Government policies aimed at alleviating and redressing the disadvantages suffered by the majority of citizens under previous governments may increase our costs and reduce our profitability. In recent years, South Africa has experienced high levels of crime. These problems have impeded fixed inward investment into South Africa and have prompted emigration of skilled workers. As a result, we may have difficulties attracting and retaining qualified employees.


15
 
   high by comparison with developed countries, and foreign currency reserves have been low relative to other emerging market countries. In the late 1980s and early 1990s, inflation in South Africa reached highs of 20.6%. This increase in inflation resulted in considerable year on year increases in operational costs. The inflation rate in South Africa still remains relatively high compared to first world countries. As of June 2011, the Consumer Price Inflation Index, or CPI, stood at 5.3%, up from 4.2% in June 2010, and down from 6.9% in June 2009. The relatively high inflation rate continued at 5.7% as at September 30, 2011. Continuing high levels of inflation in South Africa for prolonged periods, without a concurrent devaluation of the rand or increase in the price of gold, could result in an increase in our costs which could reduce our profitability. In January 2009, the South African Reserve Bank changed the way inflation is measured by expanding the range of consumer goods used and changing the benchmark measure from CPIX (CPI minus mortgage costs) to CPI. Mortgage costs have been replaced by owners’ equivalent rental (OER) to capture housing costs, making CPIX redundant. The closest measure to CPIX is CPI minus OER.
 Power stoppages or increases in the cost of power could negatively affect our results and financial condition.
 
  As a result of a substantial increasing demand and insufficient generating capacity, Eskom has warned that the country could face significant disruptions in electrical power supply in the foreseeable future. The available generating capacity of electricity was constrained mainly as a result of unplanned maintenance at some of Eskom’s power stations, insufficient supply of coal to the coal fired plants and skills shortages. On January 25, 2008, Eskom announced that they could no longer guarantee the supply of electricity to the South African mining industry. Eskom subsequently cut off power supply to the mining industry for five days in fiscal 2008 and a number of power outages followed over several months thereafter. Eskom did manage to contain electricity stoppages but the fact remains that the country’s current reserve capacity is insufficient and the risk of electricity stoppages is expected to continue through 2013. Apart from the five-day closure, our production has not been affected, however further power supply stoppages or power cost increases could have an adverse effect on our operating results and financial condition. Eskom have indicated that they do not have sufficient funding required for planned infrastructure development, and have imposed the following average tariff increases: from July 1, 2009 an average tariff increase of 31.3%, from April 1, 2010 an average tariff increase of 24.8%, from April 1, 2011 an average tariff increase of 25.8% and from April 1, 2012 an average tariff increase of 25.9%.  These increases have had an adverse affect on our production costs particularly at our Blyvoor operation and could have a material adverse effect on our business, operating results and financial condition.
 AIDS poses risks to us in terms of productivity and costs.
 
  and is exacerbated in the presence of HIV/AIDS, represents a very serious health care challenge in the mining industry. Human Immunodeficiency Virus, or HIV, is the virus that causes AIDS and South Africa has one of the highest HIV infection rates in the world. It is estimated that approximately 30% - 35% of the mining industry workforce in South Africa are HIV positive. The exact extent to which our mining workforce within South Africa is infected with HIV/AIDS is unknown at this stage. The existence of the disease poses a risk to us in terms of the potential reduction in productivity and increase in health and safety costs brought about by the Company’s social responsibility.
 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 at our occupational health centers and continue to improve preventive occupational hygiene initiatives. If the costs associated with providing such occupational health services increase significantly, such increase could have an adverse effect on the results of our operations and our financial condition.
 Increased theft at our work sites, particularly of copper, may result in greater risks to employees or interruptions in
 production.
 
   commodity has resulted in the increased theft of copper cable. All of 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.


16
 
 Possible scarcity of water may negatively affect our results and financial condition.
 
  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 all of our operations, which require water to operate. In particular 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, would be adversely impacted. In addition, as our gold plants and piping infrastructure were designed to carry certain minimum throughputs, any reductions in the volumes of available water may require us to adjust production at these operations. We are currently considering a project which envisages the pumping of underground water at ERPM for use by our surface retreatment operations.
 
 
 Government policies in South Africa may adversely impact our operations and profits.
 
 
 
 Government Regulation
 
   government’s administrative bodies. These involve directives in respect of health and safety, the mining and exploration of minerals, and managing the impact of mining operations on the environment. A variety of permits and authorities are required to mine lawfully, and the government enforces its regulations through the various government departments. The formulation or implementation of government policies may be unpredictable on certain issues, including changes in laws relating to mineral rights, ownership of mining assets and the rights to prospect and mine and in extreme cases, nationalization.
  team to investigate the feasibility of, and potential policies for, nationalization of the mining industry. The results from this task force investigation are only expected after the ANC conference during 2012. Should any of our mines be nationalized it will adversely affect our operations and our shareholders’ investment in our Company.
 
 
 The Mineral and Petroleum Resources Development Act, 2002
 
   places all mineral and petroleum resources under the custodianship of the state. Private title and ownership in minerals, or the “old order rights,” are to be converted to “new order rights,” essentially the right to mine.
 
   The area covered by the new order rights may be reduced by the Department of Mineral Resources, or DMR, if it finds that the prospecting or mining work program submitted by an applicant does not substantiate the need to retain the area covered by the old order rights. The duration of the new order rights will no longer be perpetual but rather, in the case of new order mining rights, for a maximum of 30 years with renewals of up to 30 years each and, in the case of prospecting rights, up to five years with one renewal of up to three years. In addition, the new order rights will only be transferable subject to the approval of the Minister of Mineral Resources. Mining or prospecting must commence within one year or 120 days, respectively, of the mining right or prospecting right becoming effective, and must be conducted continuously and actively thereafter. The new rights can be suspended or cancelled by the Minister of Mineral Resources in the event of a breach or, in the case of mining rights, non-optimal mining in accordance with the mining work program.
 
   lodged applications to convert all of our old order rights, however, to the extent that we are unable to convert some of our old order rights to new order rights, and that the exclusive rights to minerals we enjoyed under the previous statutory regime are diminished, the operations of the MPRD Act may result in significant adjustments to our property ownership structure, which in turn could have a material adverse effect on the underlying value of our operations. In addition, to the extent that we are unable to convert some of our old order rights, we may have a claim for compensation based on expropriation. It is not possible to forecast with any degree of certainty whether a claim will be enforceable against the DMR, and if enforceable, the level of compensation we will receive, if any. As at September 30, 2011, a substantial portion of our old order mining rights are yet to be converted into new order mining rights. The MPRD Act states that the conversions must be granted by the minister if all requirements are completed but it does not stipulate any time frame. The MPRD Act also provides for holders of old order rights to continue to operate under the terms and conditions of such rights until conversions under the MPRD Act have been completed. See Item 4B. “Business Overview”.


17
 
 
 Mining royalties and other taxation reform
 
  in the South African Government Gazette on November 24, 2008. The Mineral and Petroleum Resources Royalty Act (Administration), No.29 of 2008, published on November 26, 2008, became effective from March 1, 2010. These acts provide for the payment of a royalty, calculated through a royalty rate formula (using rates of between 0.5% and 5.0%) applied against gross revenue per year, payable half yearly with a third and final payment thereafter. The royalty is tax deductible and the cost after tax amounts to a rate of between 0.33% and 3.3% at the prevailing marginal tax rates applicable to the group. The royalty is payable on old unconverted mining rights and new converted mining rights. Introduction of further revenue based royalties or any adverse future tax reforms would have an adverse effect on the business, operating results and financial condition of our operations.
  (currently 10%) with a 10% withholding tax on dividends and other distributions payable to shareholders. Although this may reduce the tax payable by the company or our subsidiaries, the withholding tax could reduce the amount of dividends or other distributions received by its shareholders. The proposal was expected to be implemented in 2010, but its implementation has been delayed to April 1, 2012.
 Climate change
 
  greenhouse gas, or GHG, emissions. The United Nations Framework Convention on Climate Change is the main global response to climate change. The associated Kyoto Protocol is an international agreement that classifies countries by their level of industrialization and commits certain countries to GHG emission reduction targets. Although South Africa is not one of the developing countries identified, it ranked among the top 20 countries measured by absolute carbon dioxide emissions. During the 2009 Copenhagen climate change negotiations, South Africa voluntarily announced that it would act to reduce domestic GHG emissions by 34% by 2020 and 42% by 2025, subject to the availability of adequate financial, technological and other support. The two main economic policy instruments available for setting a price on carbon and curbing GHG emissions are carbon taxation and emissions trading schemes. In a discussions paper on carbon taxation by the South African Government released in December 2010 different methods of carbon taxation were discussed. Should these methods be implemented, they might have a direct or indirect negative cost impact on our operations which could have an adverse effect on the business, operating results and financial condition of our operations.
   The Broad Based Socio-Economic Empowerment Charter
 
  (effective from May 1, 2004), established certain numerical goals and timeframes to transform equity participation in the mining industry in South Africa. The goals set by the Mining Charter include that each mining company must achieve 15 percent ownership by historically disadvantaged South Africans, or HDSA, of its South African mining assets within five years and 26 percent ownership within ten years from May 1, 2004. This is to be achieved by, among other methods, the sale of assets to historically disadvantaged persons on a willing seller/willing buyer basis at market value.
  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.
  evaluating the commitments of each company to the different facets of promoting the objectives of the Mining Charter. Failure on our part to comply with the requirements of the Mining Charter and the “scorecard” could subject us to negative consequences. We may incur expenses in giving additional effect to the Mining Charter and the “scorecard”, including costs which we may incur in facilitating the financing of initiatives towards ownership by historically disadvantaged persons. There is also no guarantee that any steps we might take to comply with the Mining Charter would ensure that we could successfully acquire new order mining rights in place of our existing rights. In addition, the terms of such new order rights may not be as favorable to us as the terms applicable to our existing rights. We run the risk of losing our mining rights if we do not comply with the requirements stipulated in the Mining Charter. This could have an adverse affect on our business, operating results and financial condition.


18
 
 Land claims
 
  Land Rights Act, 1994 (as amended), or Land Rights Act. Under the Land Rights Act, any person who was dispossessed of rights to land in South Africa as a result of past racially discriminatory laws or practices is granted certain remedies, including the restoration of the land. The initial deadline for such claims was December 31, 1998. We have not been notified of any land claims, but it is possible that administrative delays in the processing of claims could have delayed such notification. Any claims of which we are notified in the future could have a material adverse effect on our right to the properties to which the claims relate and prevent us using that land and exploiting any Ore Reserves located there. This could have an adverse affect on our business, operating results and financial condition.
 Since our South African labor force has substantial trade union participation, we face the risk of disruption from labor
 disputes and new South African labor laws.
  June 30, 2011, we employ and contract 6,875 people, of whom approximately 86% are members of trade unions or employee associations. We have entered into various agreements regulating wages and working conditions at our mines. Unreasonable wage demands could increase production costs to levels where our operations are no longer profitable. This could lead to accelerated mine closures and labor disruptions. In addition, we are subject to strikes by workers from time to time, which result in disruptions to our mining operations. For example, from September 15, 2009 until October 11, 2009, a strike by members of the NUM union in connection with a dispute over new wage agreements resulted in an average daily gold production loss of 320 ounces, almost entirely from Blyvoor’s deep-level underground mining operations.
  that provide for mandatory compensation in the event of termination of employment for operational reasons and that impose large monetary penalties for non-compliance with the administrative and reporting requirements of affirmative action policies could result in significant costs to us. In addition, future South African legislation and regulations relating to labor may further increase our costs or alter our relationship with our employees. Labor cost increases could have an adverse effect on our business, operating results and financial condition.
 Labor unrest and xenophobia could affect production.
 
  some labor unrest during which several striking contract workers were wounded and two workers were killed by employees of a private security company. Furthermore, during fiscal 2008, South Africa fell victim to a slew of xenophobic attacks when a series of riots started in the township of Alexandra. This violence of locals attacking migrants from other African countries had a direct impact on our operations at ERPM. Three employees died and attendance was down at the operation for several days. Although these attacks have been contained, the challenge for the South African Government is to come up with a long-term and judicious immigration policy.
 A repeat of such events could have an adverse effect on our business, operating results and financial condition.
 
 Our financial flexibility could be materially constrained by South African currency restrictions.
 
  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:
 
 
  how it will further relax or abolish exchange control measures in the future. For further information see Item 10D.: “Exchange Controls.”


19
 
 Risks related to ownership of our ordinary shares or ADSs
 Your ability to sell a substantial number of ordinary shares may be restricted by the limited liquidity of ordinary
 shares traded on JSE Limited, or JSE.
  Capital Market, or Nasdaq. On a historical basis, the trading volumes and liquidity of shares listed on the JSE have been low in comparison with the Nasdaq. For the 12 months ended June 30, 2011, only 33% of our ordinary shares publicly traded were traded on the JSE. The limited liquidity of the ordinary shares traded on the JSE could limit your ability to sell a substantial number of ordinary shares on the JSE in a timely manner, especially by means of a large block trade.
 Sales of large volumes of our ordinary shares or ADSs or the perception that these sales may occur, could adversely
 affect the prevailing market price of such securities.
  our stockholders, or there is the perception in the marketplace that such sales could occur. Current holders of our ordinary shares or ADSs may decide to sell them at any time. Sales of our ordinary shares or ADSs, if substantial, or the perception that these sales may occur to be substantial, could exert downward pressure on the prevailing market prices for our ordinary shares or ADSs, causing their market prices to decline. Trading activity of hedge funds and the ability to borrow script in the market place will increase trading volumes and may place our share price under pressure.
 Your rights as a shareholder are governed by South African law, which differs in material respects from the rights of
 shareholders under the laws of other jurisdictions.
  rights of holders of our ordinary shares, and therefore many of the rights of our ADS holders, are governed by our memorandum and articles of association and by South African law. These rights differ in material respects from the rights of shareholders in companies incorporated elsewhere, such as in the United States. In particular, South African law significantly limits the circumstances under which shareholders of South African companies may institute litigation on behalf of a company.
  We may be subject to an increase in compliance costs with our continued efforts to increase the transparency of our
 reporting requirements and changing corporate governance initiatives.
 As a result of our listings on Nasdaq and JSE, we are required to comply with new and changing reporting requirements
 that have over recent years emphasized an increase in the transparency of public disclosure. The associated regulatory standards set forth by the exchanges’ governing bodies may change over time and may be subject to interpretation. As a result we may not execute the application of these standards properly and will congruently experience an increase in the cost of our compliance efforts. For example, management’s required assessment of our internal controls over the financial reporting process stipulated by Section 404 of the Sarbanes-Oxley Act of 2002 commands the need for resources from management in addition to our external auditors who are required to attest to our internal control over financial reporting. Maintaining high standards of corporate governance and public disclosure is highly prioritized in our organization and with our continued efforts to comply with these laws currently effective and any future legislative introductions or changes, we will continue to incur the related costs.
 It may not be possible for you to effect service of legal process, enforce judgments of courts outside of South Africa or
 bring actions based on securities laws of jurisdictions other than South Africa against us or against members of our board.
 Our Company, certain members of our board of directors and executive officers are residents of South Africa. In
 addition, our cash producing assets are located outside the United States and a major portion of the assets of members of our board of directors and executive officers are either wholly or substantially located outside the United States. As a result, it may not be possible for you to effect service of legal process, within the United States or elsewhere outside South Africa, upon most of our directors or officers, including matters arising under United States federal securities laws or applicable United States state securities laws.


20
 
   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:
 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;
 
  whom the compensation is awarded. Although the award of punitive damages is generally unknown to the South African legal system that does not mean that such awards are necessarily contrary to public policy. Whether a judgment was contrary to public policy depends on the facts of each case. Exorbitant, unconscionable, or excessive awards will generally be contrary to public policy. South African courts cannot enter into the merits of a foreign judgment and cannot act as a court of appeal or review over the foreign court. South African courts will usually implement their own procedural laws and, where an action based on an international contract is brought before a South African court, the capacity of the parties to the contract will usually be determined in accordance with South African law. It is doubtful whether an original action based on United States federal securities laws may be brought before South African courts. A plaintiff who is not resident in South Africa may be required to provide security for costs in the event of proceedings being initiated in South Africa. Furthermore, the Rules of the High Court of South Africa require that documents executed outside South Africa must be authenticated for the purpose of use in South African courts. It is not possible therefore for an investor to seek to impose criminal liability on us in a South African court arising from a violation of United States federal securities laws.


21
 
 ITEM 4. INFORMATION ON THE COMPANY
  4A. HISTORY AND DEVELOPMENT OF THE COMPANY
 Introduction
  exploration, extraction, processing and smelting. Our black economic empowerment partners are Khumo Gold SPV (Pty) Limited, or Khumo Gold and an employee trust (known as the DRDSA Empowerment Trust), which hold 20% and 6% respectively in our operating subsidiaries, Ergo Mining Operations (Pty) Limited, or Ergo Mining Operations, previously known as DRDGOLD South African Operations (Pty) Limited, or DRDGOLD SA, and Blyvooruitzicht Gold Mining Company Limited, or Blyvoor. We have a 74% interest in Ergo Mining Operations and Blyvoor.
  Limited, or the Ergo JV, and East Rand Proprietary Mines Limited, or ERPM. Ergo Mining Operations also owns 65% of ErgoGold (unincorporated entity), with DRDGOLD holding the remaining 35%. The Ergo JV and ErgoGold are collectively referred to as Ergo.
  Zimbabwe’s Greenstone Belt.
  our shares were listed on the JSE in that same year. In 1898, our milling operations commenced with 30 stamp mills and in that year we treated 38,728 tons of ore and produced 22,958 ounces of gold. On December 3, 2004, the company changed its name from Durban Roodepoort Deep, Limited to DRDGOLD Limited. Our operations have focused on South Africa's West Witwatersrand Basin, which has been a gold producing region for over 100 years.
  Libre on the Paris Bourse, the Brussels Bourse in the form of International Depository Receipts, the Over The Counter, or OTC, market in Berlin and Stuttgart and the Regulated Unofficial Market on the Frankfurt Stock Exchange.
  st
  Constantia Kloof Ext. 28, Roodepoort, South Africa. The postal address is P.O. Box 390, Maraisburg 1700, South Africa. Our telephone number is (+27 11) 470-2600 and our facsimile number is (+27 11) 470-2618. We are registered under the South African Companies Act, 1973 (as amended) under registration number 1895/000926/06. The South African Companies Act, 1973 has been superseded by the South African Companies Act 71, 2008 which had been promulgated as from May 1, 2011. For our ADSs, The Bank of New York, at 101 Barclay Street, New York, NY 10286, United States, has been appointed as agent. South Africa
 Blyvoor   underground operating mine located within the Witwatersrand Basin, exploiting gently to moderately dipping gold bearing  quartz pebble conglomerates in addition to certain surface sources.  Crown   Witwatersrand Basin, exploits various surface sources, including sand and slime tailings deposited as part of previous  mining operations.
 ERPM   Extension 1 and 2 exploration tenements, was acquired on October 10, 2002. Underground mining at ERPM was halted in  October 2008.  Ergo   contained in the Elsburg Tailings Complex for gold. In the longer term, Ergo’s network of surface rights provide access to a  further 600Mt of surface tailings deposited across the western, central and eastern Witwatersrand. As a second-phase  development, in conjunction with a new pipeline linking Ergo with Crown, the Ergo plant’s second carbon-in-leach (CIL)  circuit is being refurbished to increase capacity from 1.2Mtpm to 1.8Mtpm. Ergo is licensed to produce uranium and  sulphuric acid, and a feasibility study to assess the potential of these by-products from the Ergo resource is ongoing.
 Zimbabwe
 Chizim Gold   Investments (Pvt) Limited, or Chizim Investments, to conduct feasibility studies on certain gold exploration tenements in  Zimbabwe’s Greenstone Belt extending over an area of more than 21,000 hectares.


22
 
 Important Events in Our Development Generally and in the Current Year Funding raised for the Crown/Ergo pipeline project
  Medium Term Note Programme, or DMTN Programme, under which it may from time to time issue notes. Ergo Mining Operations successfully issued R108 million under the DMTN Programme and the different notes issued mature 12 and 24 months from the date of issue and bear interest at the three month Johannesburg Inter-bank Acceptance Rate plus a margin ranging from 4% to 5% per annum.
  The new 50-kilometre pipeline, which is currently under construction and scheduled for completion by December 2011, will link two of Crown's plants with Ergo. This will provide Crown with increased tailings deposition capacity, which has been a constraint in recent times, and thus the potential to extend Crown’s life by bringing to account potential additional surface tailings reserves on the western and central Witwatersrand.
  capacity from 1.2Mtpm to 1.8Mtpm.  Restructuring of separate surface treatment and underground mining interests
    surface retreatment and underground operations. In terms of this restructuring operating subsidiary DRDGOLD SA, changed its name to Ergo Mining Operations. Ergo Mining Operations controls Ergo, Crown and ERPM, which are all surface retreatment operations. In addition, Blyvoor, primarily an underground mining operation previously held 100% by DRDGOLD SA, is now directly held by DRDGOLD (74%), Khumo Gold (20%) and the DRDSA Empowerment Trust (6%). Due to the fundamental differences between our surface and underground operations, the Company can maximize shareholder value through the development of separate investment opportunities. Anglogold Ashanti offer to sell Savuka mining area to Blyvoor
  was subject to the finalization of a definitive agreement. The AngloGold Ashanti offer involves the sale to Blyvoor of some 390 000 square meters of its neighboring Savuka mining area for R35 million. The area is not within AngloGold Ashanti’s current mine planning. Pending the necessary regulatory approvals and subject to the finalization of a binding agreement, Blyvoor will mine the area under contract. Gold exploration project in Zimbabwe
  called Chizim Gold to explore certain gold exploration tenements in Zimbabwe’s Greenstone Belt, extending over an area of more than 21,000 hectares. Chizim Investments had the necessary mining leases for prospecting and mining and transferred these mining leases to Chizim Gold in exchange for a 50% stake in Chizim Gold. Ergo (includes the Ergo JV and ErgoGold)
  Limited, or Mintails SA, on September 29, 2008. This resulted in Ergo Mining Operations, which holds its interest through its subsidiary, ERPM, holding a 65% interest and Mintails SA a 35% interest in the joint venture.
 On December 8, 2008, DRDGOLD agreed to acquire Mintails SA's remaining interest in ErgoGold, as well as all of the
 shareholder’s loans owed by ErgoGold to the Mintails group. The acquisition, which was completed on March 31, 2009, resulted in the Group acquiring 100% of ErgoGold. The purchase consideration was paid in cash and amounted to R100 million for the 15% interest and R177 million for the 35% interest.
 On January 21, 2010,  Ergo Mining Operations through its subsidiary ERPM, acquired the remaining 50% interest in the
 Ergo JV from Mintails SA for a total consideration of R82.1 million, consisting of R62.1 million in cash and payment of  the balance of R20 million with DRDGOLD’s shares in Witfontein Mining (Pty) Limited, or Witfontein. The transaction was completed April 15, 2010 and recorded in the financial statements effective May 1, 2010.


23
 
 DRDGOLD treats ErgoGold and the Ergo JV as one operating segment, called Ergo, and includes their respective
 financial results within its Annual Report in accordance with IFRS 8 (Operating Segments). Furthermore, our management believes it is appropriate to present ErgoGold and the Ergo JV together in our financial statements as they share the same infrastructure, human resources and mineable material, with ErgoGold being focused on the extraction of gold from the re-treatment of the Elsburg and Benoni deposition sites, and the Ergo JV being an exploration project focused on the extraction of uranium and further gold from a range of deposition sites (including the Elsburg and Benoni sites).
  Blyvoor
  High Court of South Africa for a provisional judicial management order over the operation. A provisional judicial management order was granted by the High Court of South Africa on November 10, 2009.
    
   at his disposal to take such actions he deemed necessary to save the business. These could include giving certain creditors temporary preference over others and agreeing compromises with creditors without the risk of committing an act of insolvency and thereby exposing the mine to liquidation.
    the provisional judicial management order in place since November 10, 2009. The Company’s application to the court for the lifting of the provisional judicial management order, pointed out that for the period from November 2009 to February 2010, Blyvoor had traded at an unaudited profit of R33.6 million, the amount owed to trade creditors at the time when the provisional judicial management order was granted had been reduced from R39 million to R2.17 million, monthly production of gold had increased from 8,745 ounces to 10,127 ounces and the gold price had increased from R240,000/kg to R265,000/kg.
  Systems (Pty) Limited, or Aurora, for R295 million. On April 1, 2010, the proposed transaction was cancelled by mutual agreement between DRDGOLD and Aurora.
  the promulgation of the new South African Companies Act, 2008, which requires directors of parent companies to seek the consent of the parent company shareholders and then to consider the effects on the solvency and liquidity of the parent company as conditions precedent to the provision of financial assistance to subsidiaries. Blyvoor’s production had been trending down as a result of a drop in grade, public holiday interruptions and seismicity-related work stoppages, while costs had increased due mainly to higher electricity charges, and particularly power utility Eskom’s winter tariff which added R11 million a month to overhead costs.
  proceedings for Blyvoor in terms of Chapter 6 of the Companies Act, 2008. The business rescue process provided for in Chapter 6 replaces the judicial management process in the previous Companies Act, 1973. DRDGOLD supported the decision of the Blyvoor Board of Directors.


24
 
   proceedings at Blyvoor has given notice of Blyvoor’s intention to enter a 60-day consensus-seeking process in terms of Section 189 (3) of the Labour Relations Act with the National Union of Mineworkers, or NUM and the United Association of South Africa, or UASA – the Union, to consider reducing employee numbers by approximately 500 employees. The reason for the need to consider the reduction is that Blyvoor – under business rescue proceedings in terms of Chapter 6 of the Companies Act, 2008, since June this year – has been unable to meet production and financial targets, a situation exacerbated by higher utility costs. Blyvoor is proposing voluntary separation and application of the principle of “last in, first out” as among the mechanisms to be applied to effect the required reduction in employee numbers. Measures currently under consideration to achieve a targeted 30% improvement in the cost of production in R/kg terms, and thus to avoid employee reduction, include:
 •
 
  ERPM
  employees underground. Post mortems suggested that the two men, who had been conducting routine water level measurements, died of asphyxiation. The South West Vertical Shaft had been used only for water pumping purposes for several years.
  into the area to certain restrictions and conditions relating to ventilation. On October 23, 2008, drilling and blasting operations were suspended in all shafts after the cessation of pumping of underground water at South West Vertical shaft on October 6, 2008 for safety reasons.
 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. The consultation process was completed on January 20, 2009 and 1,335 employees were retrenched. On August 20, 2009, we discontinued care and maintenance and closed the underground operations. Other
  Limited, or GoldMoney, to other GoldMoney shareholders. The cash consideration in respect of the disposal amounted to R23.8 million ($2.9 million). GoldMoney is a company that holds the rights, patents and other intellectual property of GoldMoney.com, which is a product specializing in digital gold currency. We previously held a 50.25% shareholding in Net-Gold Services Limited, which was converted on March 30, 2008, into a 12.3% shareholding in GoldMoney.
  West Wits Mining Limited, an Australian based listed company. The formation of the company was to explore, evaluate and potentially extract gold and uranium from the West Rand Goldfield of South Africa's Witwatersrand Basin.
  share purchase agreement (SPA) which resulted in Argonaut (a wholly owned subsidiary of DRDGOLD) and Mintails SA each owning 50% of the shareholding of Witfontein as well as being authorized to each appoint 50% of the board. Previously Mintails SA owned 100% of the issued share capital of Witfontein. Witfontein is to be used as a future deposition establishment facility (i.e. slime deposition). On January 21, 2010, the Company entered into an agreement to sell its interest in Witfontein to Mintails SA for R20 million and regulatory approval was obtained on April 15, 2010. The R20 million consideration was set off against the acquisition price payable to Mintails SA for ERPM’s acquisition of the remaining 50% in the Ergo JV.
    purchase the South African business assets of Mintails after its announcement dated June 29, 2009, which set out information relating to Mintails having conditionally accepted an offer by Ergo Mining Operations, to acquire all of its South African business assets, excluding its interest in West Wits Mining Limited.
  White Water, according to which White Water would acquire from ERPM, for the amount of R18.5 million, the prospecting right over ERPM Extensions 1 and 2 and the mining right over ERPM Extension 1. On September 7, 2010 negotiations were terminated due to the non-fulfillment of conditions precedent.


25
 
   “Property, Plant and Equipment,” and Item 5B.: “Liquidity and Capital Resources.”
 4B. BUSINESS OVERVIEW
 Description of Our Mining Business Exploration
  existing sites and at undeveloped sites. Once a potential ore body has been discovered, exploration is extended and intensified in order to enable clearer definition of the ore body and the portions with the potential to be mined. Geological techniques are constantly refined to improve the economic viability of exploration and exploitation.  Mining
  abandoned Ore Reserves, which require a high degree of opening up and retreatment of these previously abandoned Ore Reserves. Our Metallurgical Plants and Processes
  “Property, Plant and Equipment.” Market
  dollars. Physical demand for gold is primarily for manufacturing purposes, and gold is traded on a world-wide basis. Refined gold has a variety of uses, including jewelry, electronics, dentistry, decorations, medals and official coins. In addition, central banks, financial institutions and private individuals buy, sell and hold gold bullion as an investment and as a store of value (due to the tendency of gold to retain its value in relative terms against basic goods and in times of inflation and monetary crises).
  have meant that historically the potential total supply of gold has been far greater than demand. Thus, while current supply and demand play some part in determining the price of gold, this does not occur to the same extent as in the case of other commodities. Instead, the gold price has from time to time been significantly affected by macro-economic factors such as expectations of inflation, interest rates, exchange rates, changes in reserve policy by central banks, and global or regional political and economic crises. In times of inflation and currency devaluation, gold is often seen as a safe haven, leading to increased purchases of gold and support for its price.
 The gold market was strong but remained volatile in fiscal 2011, trading between a low of $1,157 per ounce and a high of
 $1,553 per ounce. The average spot price was 26% higher than in the previous fiscal year, at $1,369 per ounce. Amid continuing global economic uncertainty, investors turned once more to gold (notably to safe-haven products such as Exchange Traded Funds) and this, together with more de-hedging activity and a slowdown in new mine supply, particularly from South Africa, saw demand exceed supply. The average gold price received by us for the year was R308,220 per kilogram which was 15% higher than the previous year at R267,292 per kilogram.
 Looking ahead, we believe that the global economic environment, including economic uncertainty and other factors, will
 continue to make gold attractive to investors. The supply side shortfall is likely to continue because of circumstances including operational challenges and delays in opening new mines and the challenge, particularly to South African producers such as ourselves, of maintaining profitable production in the face of increasing mining depths and rising costs.
 Our total revenue by geographic market was as follows:
 
 Year ended June 30,
 
 2011  2010  2009
 
 R’000  R’000  R’000


26
 
   with a refining agreement entered into in October 2001. At our various operations the gold bars which are produced consist of approximately 85% gold, 7-8% silver and the balance comprises copper and other common elements. The gold bars are sent to RRL for assaying and final refining where the gold is purified to 99.9% and cast into troy ounce bars of varying weights. RRL then usually sells the gold on the same day as delivery, for the London afternoon fixed Dollar price, with the proceeds remitted to us in rand within two days. In exchange for this service, we pay RRL a variable refining fee plus fixed marketing, loan and administration fees. We currently own 4% (Fiscal 2010: 4%) of RRL (which is jointly owned by South African mining companies), which is disclosed in our financial statements, however the Company believes it has the right to a further 6.22% in RRL which is currently being brought to RRL’s attention and the Company will contest if this additional interest is not awarded. Mr. T.J. Gwebu our Executive Officer Compliance, is a director of RRL and Mr. D.J. Pretorius, our Chief Executive Officer, is an alternate director of RRL.  Ore Reserves
 
 
   
 
  Guide 7. Accordingly, as of the date of reporting, all reserves are planned to be mined out under the life of mine business plans within the period of our existing rights to mine, or within the time period of assured renewal periods of our rights to mine. In addition, as of the date of reporting, all reserves are covered by required permits and governmental approvals. See Item 4D.: “Property, Plant and Equipment” for a description of the rights in relation to each mine.
 
  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.
 
  calculations included in the geological models and input parameters of the reserve estimation procedures, were checked. In addition, visual inspection of the planning to deliver an individual block to the metallurgical plant, and the recovery, and deposition of the tailings, took place. A check is also made of the financial input into the costs and revenue to affirm that they are within reasonable limits.
 
   Reserve tons, grade and content are quoted as delivered to the gold plant. There are two types of methods available to select ore for mining. The first is pay-limit, which includes cash costs, including overhead costs, to calculate the pay-limit grade. The second is the cut-off grade which includes cash costs, excluding fixed overhead costs, to calculate the cut-off grade, resulting in a lower figure than the full pay-limit grade. The cut-off grade is based upon direct costs from the mining plan, taking into consideration production levels, production efficiencies and the expected costs. We use the pay-limit to determine which areas to mine, as an overhead inclusive amount that is indicative of the break-even position, especially for marginal mining operations.
  all overhead costs, including head office charges, are equal to a three-year historical average gold price per ounce for that year. This calculation also considers the previous three years’ mining and milling efficiencies, which includes metallurgical and other mining factors and the production plan for the next twelve months. Only blocks above the pay-limit grade are considered for mining. The pay-limit grade is higher than the cut-off grade, because this includes overhead costs, which indicates the break-even position of the operation, especially significant for marginal mines.
 
   
 
 
   figures in accordance with industry practice, converting mineral deposits to an Ore Reserve through the preparation of a mining plan. The Ore Reserve estimates contained herein inherently include a degree of uncertainty and depend to some extent on statistical inferences which may ultimately prove to have been unreliable.


27
 
   mineralization or formations different from those predicted by past drilling, sampling and similar examinations, reserve estimates may have to be adjusted and mining plans may have to be altered in a way that might adversely affect our operations. Moreover, if the price of gold declines, or stabilizes at a price that is lower than recent levels, or if our production costs increase or recovery rates decrease, it may become uneconomical to recover Ore Reserves containing relatively lower grades of mineralization.
  significant increase in gold prices, since fiscal 2006 the Company prepares its life of mine business plans using the prevailing gold price at the time of the reserve determination, which is at the end of the fiscal year.
 Gold prices and exchange rates used for Ore Reserves and for our business plan are outlined in the following table.
 2011  2010
 
              
 In fiscal 2011, our attributable Ore Reserves increased by 5% from 6.0 million ounces at June 30, 2010, to 6.3 million
  Based on the life of mine business plans, the life of mine for each of our operations at June 30, 2011, are set out in the
 table below. The decrease in the life of mine of Crown is due to the redistribution of the throughput of volumes between the Crown and City plants from 400 tonnes and 200 tonnes per month, respectively, in fiscal 2010 to 300 tonnes and 300 tonnes, respectively, in fiscal 2011.
  Underground  Surface Mine  2011  2010  2011  2010Blyvoor ....................................................
               Our Ore Reserves as of June 30, 2011 and 2010 are set forth in the table below.


Ore Reserves: Imperial
 
 At June 30, 2011
 At June 30, 2010
 
 Proven Ore Reserves
 Probable Ore Reserves
 Proven Ore Reserves
 Probable Ore Reserves
 
 Tons
 Grade
 Gold
 Content
 Tons
 Grade
 Gold
 Content
 Tons
 Grade
 Gold
 Content
 Tons
 Grade
 Gold
 Content
 
 (mill)
 (oz/ton)
 ('000 ozs)
 (mill)
 (oz/ton)
 ('000 ozs)
 (mill)
 (oz/ton)    ('000 ozs)
 (mill)
 (oz/ton)
 ('000 ozs)
 
 
 
 
 
 
 
 
 
 
 
 
 
 Blyvoor
 1
 
 
 
 
 
 
 
 
 
 
 
 
 
 Underground
 .................................................
 18.44
 0.16
 2,913          
  9.06
 0.15
 1,352
 16.83
 0.18
 3,075
 4.40
 0.17
 769
 Surface
 ..........................................................
 2.18
 0.03
 74
 -
 -
 -
 4.98
 0.03
 129
 -
 -
 -
 Total
  Blyvoor ..................................................
 20.62                 
  0.14                     
  2,987
 9.06                
  0.15                  
  1,352          21.81             
  0.15
 3,204               
  4.40
 0.17                     
  769
 Crown
 1 2
 
 
 
 
 
 
 
 
 
 
 
 
 Surface
 .............................................................
 14.95
 0.01
 220        
  54.90                
  0.01                      
  589
 18.74               
  0.02
 293
 50.64                 
  0.01
 565
 Total
  Crown
 ....................................................
 14.95                 
  0.01
 220        
  54.90
 0.01
 589         
  18.74
 0.02
 293
 50.64
 0.01
 565
 Ergo
 1
 
 3
 
 
 
 
 
 
 
 
 
 
 
 
 
 Surface
 .............................................................
 132.51
 0.01
 1,188
 -
 -
 -         
  139.44
 0.01
 1,196
 -
 -
 -
 Total
  Ergo .......................................................
 132.51                 
  0.01                     
  1,188                
  -
 -
 -
 139.44
 0.01                  
  1,196
 -
 -
 -
 Total
 Group
 
 
 
 
 
 
 
 
 Underground
 ....................................................
 18.44
 0.16
 2,913           
  9.06
 0.15
 1,352
 16.83
 0.18
 3,075
 4.40
 0.17
 769
 Surface
 .............................................................
 149.64
 0.01
 1,482         
  54.90                
  0.01                     
  589
 163.16               
  0.01                  
  1,618
 50.64                 
  0.01
 565
 Total
 4
 ..................................................................
 168.08                
  0.03                     
  4,395
 63.96               
  0.03                  
  1,941
 179.99
 0.03                  
  4,693
 55.04                
  0.02                 
  1,334
 
 1
  Proven and Probable Ore reserves for fiscal 2011 and 2010 reflect our attributable 74% interest in Blyvoor, Crown and Ergo.
  2
  Crown’s Ore Reserves include the Cason Dump which is being processed by Crown, however the mining right for the Cason Dump is owned by ERPM.
 3
 
 Ergo’s Ore Reserves include the Elsburg and Benoni tailings complexes which are being processed by Ergo, however the mining rights for these tailings are owned by ERPM.
 4
 The Ore Reserves listed in the above table are estimates of what can be legally and economically recovered from operations, and, as stated, are estimates of mill delivered in tons.


Ore Reserves: Metric
 
 At June 30, 2011
 At June 30, 2010
 
 Proven Ore Reserves
 Probable Ore Reserves
 Proven Ore Reserves
 Probable Ore Reserves
 
 Tonnes             
  Grade
 Gold
 Content           
  Tonnes               
  Grade
 Gold
 Content         
  Tonnes               
  Grade
 Gold
 Content
 Tonnes
 Grade
 Gold
 Content
 
 (mill)         
  (g/tonne)                  
  (tonnes)           (mill)             
  (g/tonne)       (tonnes)            
  (mill)
 (g/tonne)
 (tonnes)
 (mill)
 (g/tonne)
 (tonnes)
 
 
 
 
 
 
 
 
 
 
 
 
 
 Blyvoor
 1
 
 
 
 
 
 
 
 
 
 
 
 
 
 Underground
 ...............................................
 16.73
  5.42 90.61
 8.22 5.12 42.06
 15.27 6.26
 95.63
 3.99 5.99
 23.91
 Surface..............................................................
 1.98 1.16
 2.29 -
 -
 -
 4.52 0.88 4.00 -
 -
 -
 Total Blyvoor
  ................................................
 18.71                 
  4.97                       
  92.90
 8.22                   
  5.12                   
  42.06
 19.79                
  5.03
 99.63
 3.99                   
  5.99
 23.91
 Crown
 1
 
 2
 
 
 
 
 
 
 
 
 
 
 
 
 Surface
 .............................................................
 13.57 0.50
 6.83
 49.81 0.37 18.32
 17.00 0.54 9.11
 45.94 0.38
 17.56
 Total
  Crown
 ....................................................
 13.57                 
  0.50
 6.83
 49.81                    
  0.37                    
  18.32           17.00
 0.54                   
  9.11           45.94                   
  0.38             
  17.56
 Ergo
 1
 
 3
 
 
 
 
 
 
 
 
 
 
 
 
 
 Underground
 .....................................................
 - -
 -
 - - -
 - - -
 - - -
 Surface
 .............................................................
 120.21 0.31 36.96 -
 -
 -
 126.50 0.29
 37.19 -
 -
 -
 Total
  Ergo
 ........................................................
 120.21                   
  0.31                     
  36.96                     
  -
 -
 -
 126.50                 
  0.29
 37.19                     
  -
 -
 -
 Total
 Group
 
 
 
 
 
 Underground
 ...................................................
 16.73                   
  5.42                      
  90.61
 8.22                   
  5.12                   
  42.06
 15.27                
  6.26
 95.63
 3.99                   
  5.99
 23.91
 Surface..............................................................
 135.76                   
  0.34                      
  46.08
 49.81                    
  0.37                   
  18.32
 148.02                 
  0.34
 50.30
 45.94                   
  0.38
 17.56
 Total
 4
 .................................................................
 152.49                  
  0.90                   
  136.69
 58.03                   
  1.04                  
  60.38
 163.29                
  0.89
 145.93
 49.93                  
  0.83
 41.47
 
 1
  Proven and Probable Ore Reserves for fiscal 2011 and 2010 reflect our attributable 74% interest in Blyvoor, Crown and Ergo.
  2
  Crown’s Ore Reserves include the Cason Dump which is being processed by Crown, however the mining right for the Cason Dump is owned by ERPM.
  3
  Ergo’s Ore Reserves include the Elsburg and Benoni tailings complexes which are being processed by Ergo, however the mining rights for these tailings are owned by ERPM.
  4
  The Ore Reserves listed in the above table are estimates of what can be legally and economically recovered from operations, and, as stated, are estimates of mill delivered in tons.


price. If we had used different gold prices than the three-year average prices at the time of reserve determination as of June 30, 2011, 2010 and 2009 respectively, we would have had significantly different reserves as of those dates. Using the same methodology and assumptions as were used to estimate Ore Reserves but with different gold prices, our attributable Ore Reserves as of June 30, 2011, 2010 and 2009 would be as follows:
 Year ended June 30, 2011
 Three-year
 average price
 Business Plan
 at prevailing
 price
 10% Below
 prevailing
 price
 10% Above
 prevailing
 price
           Year ended June 30, 2010
 Three-year
 average price
 Business Plan
 at prevailing
 price
 10% Below
 prevailing
 price
 10% Above
 prevailing
 price
           Year ended June 30, 2009
 Three-year
 average price
 Business Plan
 at prevailing
 price
 10% Below
 prevailing
 price
 10% Above
 prevailing
 price
              Underground Surface
 Mine
 Dilution
 (Sundries,
 Shortfall and
 Development)
 (%)
 Mine Call Factor
 (%)
 Metallurgical and
 recovery factor
 (%)
 Mine Call Factor
 (%)
 Metallurgical and
 recovery factor
 (%)
                   Underground                                                                                                            
  Surface
 Mine
 Dilution
 (Sundries,
 Shortfall and
 Development)
 (%)
 Mine Call Factor
 (%)
 Metallurgical and
 recovery factor
 (%)
 Mine Call Factor
 (%)
 Metallurgical and
 recovery factor
 (%)
                  each category of Ore Reserves at our mines calculated based on a three year average dollar price of gold.
 Mine
 Proven
 Reserves
 Probable
 Reserves


June 30, 2011, are as follows:
 Underground                                                                         
  Surface
 Mine
 Pay-limit grade
 (g/t)
 Costs used to
 determine pay-
 limit grade
 (R/t)
 Pay-limit grade
 (g/t)
 Costs used to
 determine pay-
 limit grade (R/t)
                  
 Underground                                                                          
  Surface
 Mine
 Pay-limit grade
 (g/t)
 Costs used to
 determine pay-
 limit grade
 (R/t)
 Pay-limit grade
 (g/t)
 Costs used to
 determine pay-
 limit grade (R/t)
                 determine the tonnage and grade available for mining.  Governmental regulations and their effects on our business South Africa Common Law Mineral Rights and Statutory Mining Rights
  ownership in mineral rights and statutory mining rights in South Africa could be acquired through the common law or by statute. Under the old regime, the term freehold title refers to a right of ownership of land and the surface thereof and the term “mining title” refers to a right of ownership of the minerals below the surface or the right to mine such minerals. With effect from May 1, 2004, all minerals have been placed under the custodianship of the South African government under the provisions of the MPRD Act, and old order proprietary rights need to be converted to new order rights of use within certain prescribed periods, as dealt with in more detail below.  Old Order Rights - Mining Authorizations
  thereof until May 1, 2009. No person or mining entity may prospect or mine for minerals without being granted a prospecting or mining authorization. Prior to granting a prospecting or mining authorization, two requirements had to be fulfilled. First, the mining entity must either be the registered holder of the mineral rights or have obtained the written consent of the registered holder of the mineral rights to mine the minerals concerned for its own account. Second, the Department of Mineral Resources, or the DMR, must be satisfied with the scale, manner and duration of the intended prospecting or mining operations and must approve an Environmental Management Program, or EMP. A prospecting permit was issued for a limited period but could be renewed on application. A mining license was generally issued until such time that the minerals could no longer be mined in an economically viable manner. The rights enjoyed under these authorities will endure until they are converted within the period of time prescribed in the MPRD Act. Thereafter, such rights will lapse. Conversion of Rights under the Mineral and Petroleum Resources Development Act, 2002
  in order to ensure exclusive access to the mineral for which rights existed at the time of the enactment of the MPRD Act.


statutory criteria. These include the submission of a mining works program, demonstrable technical and financial capability to give effect to the program, provision for environmental management and rehabilitation, and compliance with certain black economic empowerment criteria and the social and labor plan. These applications had to be submitted within five years after the promulgation of the MPRD Act on May 1, 2004. Similar procedures apply where we hold prospecting rights and a prospecting permit and conduct prospecting operations. Where we hold unused old order rights however, the application for conversion to mining or prospecting rights had to be submitted within one year from May 1, 2004. The requirements for unused old order rights are more stringent than for used old order rights, particularly insofar as the percentage of ownership from historically disadvantaged groups is concerned. Under the MRPD Act, mining rights are not perpetual, but endure for a maximum of thirty years, after which they may be renewed for a further thirty years. Prospecting rights are limited to five years, with one renewal of three years. Applications for conversion of our mining rights have been submitted to the DMR and approval is awaited. During this period, we are permitted to continue to operate under the terms and conditions of the old order rights which we hold.
  against the State. The DMR may attach specific conditions and limitations to the exercise of new order rights. It may, for example, reduce the area over which the new order right applies, if it is of the view that the prospecting or mining works programs submitted by an applicant do not justify the extent of the area covered by the old order right. They may also be suspended or cancelled by the Minister of Mineral Resources in the event of a breach or, in the case of mining rights, of non-optimal mining in accordance with the mining works program.  Mining royalties
  Mineral and Petroleum Resources Royalty Act, or the Royalty Act. The most significant feature of the Royalty Act is that the royalty is to be determined in accordance with a formula based system and no longer to be a predetermined specific rate for the different types of minerals. The royalty is deductible for normal income tax purposes.
   The final product can be either the “refined” or “unrefined” mineral depending on the nature of the mineral in question. There has been general consensus that a formula derived mineral royalty rate regime is more equitable and provides the necessary relief for mines during times of difficulties, e.g. low commodity prices and mines that become marginal due to low grades. The formula-based mineral royalty rate regime also ensures that the State shares in the benefits of higher commodity prices. The State thus shares in the downside risks, when mines become marginal, and in the upside benefits during times of high commodity prices. Based on comments received the formulae were adjusted to take into account the capital intensive nature of certain mining operations, especially Gold mining and Oil and Gas. The formulae use earnings before income tax, or EBIT, with 100 percent capital expensing. Given that a distinction is drawn between refined and unrefined minerals, the mineral royalty percentage rates (Y%) is based on the following formulae:
 For refined minerals: Y (%) = 0.5 + [(EBIT divided by (Gross Sales multiplied by 12.5)) multiplied by 100]. This rate is
  For unrefined minerals: Y (%) = 0.5 + [(EBIT divided by (Gross Sales multiplied by 9.0)) multiplied by 100]. This rate is
  For the purpose of calculating the royalty percentage rates a negative EBIT will be set equal to zero.
 The Broad Based Socio-Economic Empowerment Charter
  developed by the Minister within six months of commencement of the MPRD Act, beginning May 1, 2004. The Mining Charter came into effect in August 2004 and its objectives include:


Africans of South African mining assets. It recommends that these are achieved by, among other methods, disposal of assets by mining companies to historically disadvantaged persons on a willing seller, willing buyer basis at fair market value. The goals set by the Mining Charter require each mining company to achieve 15 percent ownership by historically disadvantaged South Africans of its South African mining assets within five years and 26 percent ownership within ten years from May 1, 2004. It also sets out guidelines and goals in respect of employment equity at management level with a view to achieving 40 percent participation by historically disadvantaged persons in management and ten percent participation by women in the mining industry, each within five years from May 1, 2004. Compliance with these objectives is measured on the weighted average “scorecard” approach in accordance with a scorecard which was first published by the government.
  provisions of the Mining Charter apply to each mining company individually. As transactions, to comply with the Mining Charter, are to be at market value, we do not anticipate incurring any loss in continuing to fulfill our obligations provided that we are able to identify suitable partners that are able to obtain adequate funding.
  empowerment structure with Khumo Gold and the DRDSA Empowerment Trust. Our black economic empowerment partners, Khumo Gold and the DRDSA Empowerment Trust, hold 20% and 6% respectively in each of our operating subsidiaries, Ergo Mining Operations and Blyvoor. (See Item 4A.: “History and Development of the Company”).  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. There are amendments to the act currently before parliament to ratify the stopping of production and increase punitive measures including increased financial fines and legal liability of mine management. Some of the more important new provisions in the bill as approved by the Portfolio Committee are a new section 50(7A) that obliges an inspector to impose a prohibition on the further functioning of a site where a person’s death, serious injury or illness to a person, or a health threatening occurrence has occurred; a new section 86A(1) creating a new offence for any person who contravenes or fails to comply with the provisions of the Mine Health and Safety Act thereby causing a person’s death or serious injury or illness to a person. Subsection (3) further provides that (a) the “fact that the person issued instructions prohibiting the performance or an omission is not in itself sufficient proof that all reasonable steps were taken to prevent the performance or omission”; and that (b) “the defense of ignorance or mistake by any person accused cannot be permitted”; or that (c) “the defense that the death of a person, injury, illness or endangerment was caused by the performance or an omission of any individual within the employ of the employer may not be admitted”; a new section 86A(2) creating an offence of vicarious liability for the employer where a Chief Executive Officer, manager, agent or employee of the employer committed an offence and the employer either connived at or permitted the performance or an omission by the Chief Executive Officer, manager, agent or employee concerned; or did not take all reasonable steps to prevent the performance or an omission. The maximum fines have also been increased. Any owner convicted in terms of section 86 or 86A may be sentenced to “withdrawal or suspension of the permit” or to a fine of R3 million or a period of imprisonment not exceeding five years or to both such fine and imprisonment, while the maximum fine for other offences and for administrative fines have all been increased, with the highest being R1 million.
  employers are required to contribute to a fund specifically created for the purpose of compensating employees or their dependants for disability or death arising in the course of their work. Employees who are incapacitated in the course of their work have no claim for compensation directly from the employer and must claim compensation from the COID Act fund. Employees are entitled to compensation without having to prove that the injury or disease was caused by negligence on the part of the employer, although if negligence is involved, increased compensation may be payable by this fund. The COID Act relieves employers from the prospect of costly damages, but does not relieve employers from liability for negligent acts caused to third parties outside the scope of employment. In fiscal 2011, we contributed approximately R12.6 million under the COID 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.
  onerous provisions for personal liability of directors of companies whose mining operations have an unacceptable impact on the environment.
  conducted and all potentially affected parties have been given an opportunity to comment on the proposed mining. Mining companies are also required to demonstrate both the technical and financial ability to sustain an ongoing environmental management program, or EMP, and achieve ultimate rehabilitation, the particulars of which are to be incorporated in an EMP. This program is required to be submitted and approved by the DMR as a prerequisite for the issue of a new order mining right. Various funding mechanisms are in place, including trust funds and concurrent rehabilitation budgets, to fund the rehabilitation liability.
  mining rights.
  environmental risks vary from site to site. These risks have been addressed in EMPs which have been submitted to the DMR for approval. In November 2006, amended EMPs to conform to the required format of the MPRD Act were submitted for all operations in South Africa for approval. Additionally, the 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. Two environmental compliance assessments have been conducted at Blyvoor and Crown, which both show that these mines are in substantial compliance with the conditions of their EMPs.
  MPRD Act.  Financial Provision for Rehabilitation
  monitoring once the mining operations cease. We have funded these environmental rehabilitation costs by making contributions over the life of the mine to environmental trust funds established for each operation. Funds are irrevocably contributed to trusts that function under the authority of trustees that have been appointed by, and who owe a statutory duty of trust, to the Master of the High Court of South Africa. The funds held in these trusts are invested primarily in interest bearing debt securities. As of June 30, 2011, we held a total of R134.2 million (2010: R126.1 million) in trust, the balance held in each fund being R33.5 million (2010: R31.9 million) for Blyvoor, R23.0 million (2010: R21.8 million) for Durban Deep, R56.5 million (2010: R52.3 million) for Crown, R21.2 million (20109: R20.1 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.
  Wits financial provision has been impaired as at June 30, 2010 and 2011, because it will be transferred along with the rehabilitation liability over the West Wits mining rights which have been disposed of.
  the proceeds from the sale of redundant mining equipment at the end of the life of the mine and gold from mine cleanup. If any of the operations are prematurely closed, the rehabilitation funds may be insufficient to meet all the rehabilitation obligations of those operations.


MPRD Act assumes a fully compliant fund at any given time in the production life of a mine. The DMR appears to have taken a practical approach in dealing with this change, and has indicated that the traditional ring fencing of funds may, for investment purposes be relaxed, and that insurance instruments may also be received subject to the DMR’s consent, to make up the shortfall in available cash funds. The Company has subsequently made use of approved insurance products for a portion of its rehabilitation liabilities.
  to R420.6 million at June 30, 2010. This has been included in the provision for environmental rehabilitation, restoration and closure in our financial statements as at June 30, 2011.
 4C. ORGANIZATIONAL STRUCTURE
 
  incorporated in South Africa. We hold the majority of the investments directly or indirectly as indicated below. Refer to Exhibit 8.1 for a list of our significant subsidiaries. In addition, DRDGOLD holds a 50% joint venture interest in Chizim Gold which is incorporated in Zimbabwe.


36
 4D. PROPERTY, PLANT AND EQUIPMENT DRDGOLD OPERATIONS SEPTEMBER 30, 2011


Description of Significant Subsidiaries, Properties and Mining Operations Witwatersrand Basin Geology
  Basin, exploiting gold bearing reefs in addition to certain surface sources. Crown, ERPM and Ergo are also located within the Witwatersrand Basin. Crown exploits various surface sources, including sand and slime tailings deposited as part of historical mining operations. ERPM, which halted its underground mining operation in October 2008, continues as a surface operation processing sand from the Cason Dump as part of the Crown operating segment. Ergo is a surface retreatment operation which is currently processing slime tailings from the Elsburg tailings facility, which were historically deposited by ERPM’s underground mining operation. Our underground operation is typical of the many gold mining operations in the area which together have produced approximately 1.5 billion ounces of gold over a period of more than 100 years.
  Kaapvaal Craton, extending laterally for approximately 186 miles (299 kilometers) East-Northeast and 62 miles (100 kilometers) South-Southeast. The sedimentary rocks generally dip at shallow angles towards the center of the basin, though locally this may vary. The Witwatersrand Basin is Achaean in age and the sedimentary rocks are considered to be approximately 2.7 to 2.8 billion years old.
  goldfields located along the eastern, northern and western margins of the basin. These goldfields are known as the Evander Goldfield, the East Rand Goldfield, the West Rand Goldfield, the Far West Rand Goldfield, the Central Rand Goldfield, the Klerksdorp Goldfield and the Free State Goldfield. As a result of faulting and other primary controls of mineralization, the goldfields are not continuous and are characterized by the presence or dominance of different reef units. The reefs are generally less than 6 feet (2 meters) thick but, in certain instances, these deposits form stacked clastic wedges which are hundreds of feet thick.
  Blyvoor Overview
  Mining Company Limited. The consolidated mining operation, referred to as Blyvoor, consists of the adjacent mines of Blyvooruitzicht and Doornfontein which are located within the Far West Rand Goldfield on the northwestern edge of the Witwatersrand Basin. Blyvoor was the first mine in the “West Wits” line. Together, these two operations have produced over 38 million ounces of gold since inception in 1937 of which over 2.4 million ounces were produced since Blyvoor had been acquired by the DRDGOLD group.
  Property
  Basin, near the town of Carletonville, Gauteng Province, about 50.0 miles (80.5 kilometers) south-west of Johannesburg and is reached via the R528 road to Carletonville on the N12 Johannesburg-Potchefstroom-Kimberly highway.
  situated, is humid continental with warm summers and cold winters. Temperatures range from a minimum of 23 degrees Fahrenheit (-5 degrees Celsius) in June and July, to a maximum of 93 degrees Fahrenheit (34 degrees Celsius) in December and January.
  offices for the managerial, administrative, financial and technical disciplines, extensive workshops and consumable stores, the metallurgical plants, tailings dams and waste rock dumps. Blyvoor also houses the majority of its employees in Blyvoor-owned houses on the property and in the town of Carletonville. The normal support structures, including training, security, sport and recreational facilities, schools and churches are situated on the property. Blyvoor has mining title to 16,242 acres (6,573 hectares) and owns 5,138 acres (2,079 hectares) of freehold property.
  We are in the process of converting these old order mining rights to new order rights under the MPRD Act. The net book value of the mining assets at Blyvoor is R26.0 million at June 30, 2011 (2010: R510.9 million), with 4.3 million attributable ounces of Ore Reserves.


History 1937
 Blyvooruitzicht Gold Mining Company Limited was incorporated and registered as a public company in South Africa on June 10, 1937.
 1942
  1995
  1996
  1997
  2001
  2003
  2004
 On June 28, 2004, we entered into a 60-day review period on Blyvoor. The 60-day review was extended to September 13, 2004. By October 5, 2004, 1,619 employees had been retrenched at a cost of approximately R19.0 million.
 2005
 In August 2005, our Board of Directors approved No. 2 Sub-Shaft Project (now called the WAP Project) and the Slimes Dam Project to establish mining operations from the No. 2 Shaft and expansion to further improve plant efficiency, respectively.  On July 6, 2005, we signed a Memorandum of Understanding with Khumo Bathong Holding (Pty) Limited, or KBH, regarding the acquisition by Khumo Gold SPV (Pty) Limited, or Khumo Gold, of a 15% stake in our South African Operations. On October 27, 2005, our Board of Directors approved the transaction with Khumo Gold. The new structure resulted in Khumo Gold acquiring a 15% interest in a newly created vehicle, Ergo Mining Operations, which owns ERPM, Crown and Blyvoor. We owned an 85% interest in Ergo Mining Operations.
 2006
 On December 11, 2006, Khumo Gold, on behalf of itself and an employee trust, exercised the option granted by us pursuant to the option agreement concluded between us and Khumo Gold in October 2005 to acquire a further 11% in Ergo Mining Operations.
 2007
 After completion of a drilling program to define the uranium resource in Blyvoor’s slimes dam material, a 17.5 million pound uranium and 0.8 million ton sulphur resource was declared in November 2007.
 2008
 In January 2008, electricity supply to the mine was interrupted by Eskom which is government owned and production suspended for a week due to safety concerns.
 2009
 In January 2009, a direct lightning strike to No. 5 shaft Eskom sub-station interrupted production at No. 5 shaft and other areas drawing power from this supply. Employees underground at the time remained in the underground refuge bays until hoisted to safety once the shaft feeder power had been restored. No injuries were recorded. In May and June 2009, three seismic events in excess of 3.5 magnitude took place at No. 5 shaft. As these events affected the highest grade carbon leader mining area, production from these areas was expected to resume in the third quarter of the 2010 fiscal year and was back in full production since May 2010. On November 9, 2009, we announced that, in a bid to save our Blyvoor mine from liquidation, we intended applying to the High Court of South Africa for a provisional judicial management order over the operation. A provisional judicial management order was granted by the High Court of South Africa on November 10, 2009. In December 2009, Aurora Empowerment Systems (Pty) Limited proposed a transaction to purchase 60% of Blyvoor for R295 million.
 2010
 In April 2010, the High Court of South Africa agreed to lift, with immediate effect, the provisional judicial management order in place since November 10, 2009. By mutual agreement between DRDGOLD and Aurora, Aurora’s offer to purchase 60% of Blyvoor was withdrawn.
 2011
 In June 2011, DRDGOLD's Board of Directors decided to suspend financial assistance to Blyvoor.  The Blyvoor Board of Directors, in response to the DRDGOLD Board’s decision, resolved to begin business rescue proceedings for Blyvoor in terms of Chapter 6 of the South African Companies Act.
 Geology and Mineralization
  of the principal ore bodies in the goldfield, and the Middelvlei Reef horizons which occur in discrete channels over parts of the lease area approximately 246 feet (75 meters) vertically above the Carbon Leader Reef horizon. The Carbon Leader Reef is the principal economic horizon across the lease area and is a planar single sheet conglomerate. The Carbon Leader Reef typically comprises basal carbon seam, overlain by a thin, small pebble conglomerate, enriched in carbon in the lower portion. The grade of the Carbon Leader Reef is higher than the Middelvlei Reef. The Middelvlei Reef consists of a variable number of polymictic quartz conglomerate bands, inter-bedded with coarse grain quartzite. The grade of the Middelvlei Reef is more erratic, with distinctive pay shoots forming as southward-orientated linear zones.
  continued existence of mining operations was dependent upon the mining of scattered Carbon Leader Reef remnants and limited sections of the lower grade Middelvlei Reef.


Mining and Processing
  situated at the Blyvoor and Doornfontein mines. Doornfontein was previously a separate mine adjacent to the Blyvoor mine but has since been merged to form Blyvoor. The shaft system consists of four vertical shafts from the surface, thirteen sub-incline shafts and two sub-vertical shafts underground. Of the thirteen sub-incline shafts, only nine are in operation and are used for the conveyance of personnel, pumping and hoisting of mined ore and waste.
  (purchased in 1996 from Western Deep Levels Limited) to allow ore from the bottom of the Blyvoor workings to be trammed across and hoisted up via the Blyvoor No. 5 Shaft, from where it is trucked to the gold plant. The average mining depth at Blyvoor is 10,541 feet (3,213 meters), 5,292 feet (1,613 meters) below mean sea level.
  blasted. The loosened rock is removed from the stope panels and is conveyed to the shaft, tipped into the ore-pass systems, hoisted to the surface and transported to the metallurgical plant for gold extraction.
  conventional flow sheet comprising multi-stage crushing, open circuit primary and closed circuit secondary milling with hydro cyclones, thickening and cyanide leaching in a Carbon-in-Pulp, or CIP, carousel arrangement. The gold is recovered through electro-winning followed by smelting to doré. The circuit was recently modified by the closure of the filtration system and the commissioning of a modern carbon Kemix pumpcell plant. As at June 30, 2011, the overall plant utilization was 90%.
  in Africa. In South Africa, Eskom operates a national power supply grid consisting of 24 power stations across the country. Electricity to Blyvoor is provided from the West Wits substation outside Carletonville at 44,000 volts. Further substations, located on mine site, transform the power to 6,600 volts or 22,000 volts for direct supply to the shaft winder and air compressors. The power supply is further reduced to 525 volts for smaller devices and equipment used on the mine. The average annual power consumption is about 432 GWHr and the maximum demand is about 66 MW.
  week due to safety concerns. The situation did improve during March 2008, the operation is however still on a six hour standby notice, in the event that power supply becomes unstable in the area. Eskom has requested all of its “Key Customers” to reduce power consumption by 10%, Blyvoor has managed to adhere to this request and has continued during fiscal 2009, 2010 and 2011 to save the maximum amount of energy possible.
   Mineral Resources following fatalities suffered after seismic events occurring and a further six production shifts were lost at No. 5 Shaft following a lightning strike at the shaft’s electrical substation. In May and June 2009, three seismic events in excess of 3.5 magnitude took place at No. 5 shaft. As these events affected the highest grade carbon leader mining area, production from these areas was expected to resume in the third quarter of the 2010 fiscal year and was back to full production since May 2010.
 During fiscal 2010, mining ramp-up continued towards the 2,500m
 2
   2
  intention to right-size the Blyvoor operation. Blyvoor proceeded with a 60-day facilitated consultation process in terms of Section 189A of the South African Labor Relations Act to determine the future of affected employees. The consultation process was completed on October 26, 2009 and 330 employees were retrenched. Furthermore, on November 9, 2009, in a bid to save our Blyvoor mine from liquidation, we applied to the High Court of South Africa for a provisional judicial management order over the operation. A provisional judicial management order was granted by the High Court of South Africa on November 10, 2009. In April 2010, after Blyvoor had returned to profitability, the High Court of South Africa agreed to lift the provisional judicial management order in place since November 10, 2009. See Item 4A.: “History and Development of the Company - Blyvoor”.
    flexibility. On June 23, 2011, DRDGOLD announced that it had suspended financial assistance to Blyvoor. The decision followed the promulgation of the new South African Companies Act which requires directors of parent companies to seek the consent of the parent company’s shareholders and then to consider the effects on the solvency and liquidity of the parent company as conditions precedent to the provision of financial assistance to subsidiaries. Blyvoor’s production had been trending down in the last quarter of fiscal 2011 as a result of a drop in grade, attributable to a substitute explosive used for the fourth quarter of fiscal 2011, due to major overhaul repairs at our regular explosive supplier’s manufacturing plant, public holiday interruptions and seismicity-related work stoppages, while costs had increased due mainly to higher electricity charges, and particularly power utility Eskom’s winter tariff, which added R11 million a month to overhead costs. The Board of Directors of Blyvoor had, in response to DRDGOLD’s decision, resolved to begin business rescue proceedings for Blyvoor in terms of Chapter 6 of the Companies Act. The business rescue process provided for in Chapter 6 replaces the judicial management process in the previous Act.


121,114 ounces, or 46% of our total production. Under the terms of business rescue proceedings, the applicant must select a business rescue practitioner, or practitioner, from a list of approved business rescue practitioners. The practitioner has a wide range of powers at his disposal to take such actions he deems necessary to rescue the business. The practitioner needs to implement a business rescue plan which requires the approval of affected parties within a specified period, or if he is of the opinion that the business cannot be rescued, he can apply to the court for liquidation of the company. The practitioner's powers could include giving certain creditors temporary preference over others and agreeing compromises with creditors without the risk of committing an act of insolvency and thereby exposing the mine to liquidation. The practitioner has been granted relief until November 1, 2011, to publish the business resuce 
 plan and until December 2, 2011 for the business rescue process in terms of section 1323(3) of the Companies Act, 2008; further extensions
  may, however be granted.
 The following capital expenditure was incurred at Blyvoor in fiscal 2011, 2010 and 2009:
 
 Year ended June 30,
 
 2011                
  2010               
  2009
 
 R’000              
  R’000             
  R’000
 
                                       
  Exploration and Development
  Blyvoor’s slimes dam material and a uranium and sulphur resource was declared. In fiscal 2009, Blyvoor began an exploration drilling program linked to opening up and development to evaluate the south-west down-dip extension of the Blyvoor ore body south of the Boulder Dyke. Exploration into the south-west block was delayed due to a fire which temporarily cut off services into this area. In fiscal 2011, we continued with exploration and cover drilling with reconnaissance visits made to the Carbon Leader areas at No 5 Shaft. Normal stope face sampling and geological mapping is ongoing. Environmental and Closure Aspects
  sinkholes and subsidences, exposes Blyvoor to relatively unique environmental risks and costs associated with the remediation and filling of these sinkholes.
  level of underground workings. The required rate is in the order of 2 million gallons (8 million liters) per day. Water not used in the operations is discharged into the Wonderfontein Spruit (a stream adjacent to the Blyvoor mine). In order to address the risk of contamination of ground water, streams and wetlands, water is sampled and the level of contaminants monitored in accordance with Blyvoor’s water management plan. Fissure water at Blyvoor is generally of a good quality, therefore we believe that the contribution of this water to pollution of water in the area is minimal.
  catchment area. This group was formed to coordinate efforts and studies in the Wonderfontein Spruit and to liaise with government departments to determine what action if any is required in cleaning the stream. The government has also established a specialist task team to determine what needs to be done. At this stage there is no clear solution. The Mining Interest Group is also represented on the various catchment forums where Non-Governmental Organizations, or NGO’s and other interested and affected parties are present. Blyvoor continues to meet with the Potchefstroom municipality on a monthly basis where the quality of Blyvoor’s discharge water is assessed. Blyvoor remains in compliance with the Potchefstroom agreement.


causing a collapse in the rock structure. Dolomitic rock could be dissolved, resulting in an increased risk of sinkholes and possible pollution of fresh water resources stored in the dolomitic formations. The occurrence of sinkholes is limited to a particular area of Blyvoor, which requires an active program in water management and control. Water from leaking pipes is reported to a monitoring committee and the necessary repairs are undertaken promptly. Ground subsidence surveys are undertaken to timely identify any possible sinkholes. Sinkholes that do occur are filled to prevent further inflow of surface water and potential enlargement of the hole. Sinkholes which form outside of our property are repaired by the Far West Rand Dolomitic Water Association.
  accomplished through ridge ploughing the top surface of dormant tailings dams. Environmentally friendly dust suppressants, such as molasses, are also applied when deemed necessary. In the long-term, dust suppression and water pollution is managed through a program of progressive vegetation of the tailings complexes followed by the application of lime, to neutralize the natural acidic conditions, and fertilizer as the organic growth medium.
  for approval. Blyvoor is currently demolishing and rehabilitating redundant surface infrastructures. Blyvoor completed their uranium plant in fiscal 2011.
  cost for Blyvoor, in current monetary terms as at June 30, 2011, is R45.1 million. This has been included in the provision for environmental rehabilitation, restoration and closure costs in our statement of financial position. A total of R33.5 million has been contributed to a Rehabilitation Trust Fund. This is an irrevocable trust, managed by specific responsible people who we nominated and who are appointed as trustees by the Master of the High Court of South Africa. Ore Reserves and Life of Mine
 
   June 30, 2010, the attributable Proven and Probable Ore Reserves of Blyvoor were 4.0 million ounces. A Mineral Resource competent person is appointed at each operation to review our Ore Reserve calculations for accuracy. For Blyvoor, Mr. Ryno Botha (SACNASP) is the appointed Mineral Resource competent person.
 
   remains at 20 years, as at June 30, 2011. Current Production
 
       underground production reflects the impact of increased flexibility, through additional face length available, together with an increase in the grade recovered, however there was a 20% drop quarter on quarter in the grade recovered during the last quarter of fiscal 2011 as a result of the temporary use of an alternative explosive. Surface gold production increased from 29,226 ounces in fiscal 2010 to 29,645 ounces in fiscal 2011, reflecting the impact of additional gold recovered from surface clean-up operations, together with an increase in volumes from the current surface slimes reserves.
  ounce of gold produced was primarily attributable to the 28.2% effective increase in electricity prices and the stronger R/$ exchange rate.


Year ended June 30,
 
 2011                        
  2010                           
  2009
 Production
            
                           
  
  
 Results of Operations (R)
     
  
  1
  
  1
  
   
  Crown Overview
  consisting of the Crown Central, City Deep and Knights business units, collectively referred to as Crown. ERPM’s Cason Dump surface re-treatment operation is expected to continue to operate until 2014 under the management of Crown based on the current rate of retreatment of approximately 186,000 tpm. Crown undertakes the retreatment of surface sources deposited as tailing from non-operating mining sites across central Johannesburg.
  Property
    rights to 5,787 acres (2,342 hectares) and has the right to occupy 1,490 acres (603 hectares) of freehold property. Crown is in the process of converting these old order rights to new order rights under the MPRD Act. At Crown, the Lycaste dump prospecting right has been approved, the Top Star dump, City Deep, Crown Mines, Consolidated Main Reef and Knights mining rights have been approved. An application has been submitted to the DMR for the Crown mining rights to be consolidated.
  approximately 6 miles (10 kilometers) west of the Johannesburg central business district in the province of Gauteng. Access is via Xavier Road on the M1 Johannesburg-Kimberley-Bloemfontein highway. The City Deep operation is located on the West Wits line within the Central Goldfields of the Witwatersrand Basin, approximately 3 miles (5 kilometers) south-east of the Johannesburg central business district in the province of Gauteng. Access is via the Heidelberg Road on the M2 Johannesburg-Germiston motorway. The Knights operation is located at Stanley and Knights Road Germiston off the R29 Main Reef Road.
  assets which amounts to R18.3 million) with 0.8 million attributable ounces of Ore Reserves.
 
 1
 Cash operating costs, cash cost per ounce and total cost per ounce of gold are financial measures of performance that we use to determine cash
 generating capacities of the mines and to monitor performance of our mining operations.


History 1979
 Rand Mines Limited directors approved the formation of the company Rand Mines Milling and Mining Limited (RM3) to treat the surface gold tailings created from the underground section of the original Crown Mines, which had been in operation since the start of gold mining on the Witwatersrand in the late 1800's.
 1982
  1986
  1997
 Randgold Exploration Limited and Continental Goldfields of Australia entered into a joint venture with the intention to establish a company that would acquire dump retreatment operations on the Witwatersrand. This resulted in the formation of Crown Consolidated Gold Recoveries Limited, or CCGR, which was incorporated as a public company in South Africa in May 1997. Crown was a wholly owned subsidiary of CCGR and consists of the surface retreatment operations of Crown Central, City Deep and Knights.
 1998
  2002
  2005
 On July 6, 2005 we signed a Memorandum of Understanding with KBH regarding the acquisition by Khumo Gold of a 15% stake in our South African Operations. On October 27, 2005, our board of directors approved the transaction with Khumo Gold. The new structure resulted in Khumo Gold acquiring a 15% interest in a newly created vehicle, Ergo Mining Operations, which includes 100% of ERPM, Crown and Blyvoor. We owned an 85% interest in Ergo Mining Operations.
 2006
 On December 11, 2006, Khumo Gold, on behalf of itself and an employee trust, exercised the option granted by us pursuant to the option agreement concluded between us and Khumo Goldin October 2005 to acquire a further 11% in Ergo Mining Operations. On August 28, 2006, we concluded an agreement with AngloGold Ashanti to purchase the Top Star Dump.
 2008
 The Department of Mineral Resources issued in favour of Crown a mining right for gold recovery over the Top Star Dump.
 2009
 The reclamation of the Top Star Dump commenced in December 2008. Crown also commenced with the reduction of volumes to 400,000 tpm to implement the planned Crown Tailings Deposition Facility closure plan.
 2010
 The surface circuit of ERPM was incorporated into Crown for reporting purposes. Crown’s operating and financial results for fiscal 2009 and fiscal 2008 were restated for comparative reporting purposes. Board approval was obtained to construct a pipeline to the Ergo tailings deposition site to enable Crown to restore its deposition capacity to 600 000tpm. Restored deposition capacity provides the operation with the opportunity to bring to account potential new ore reserves.
 2011
 Construction of the pipeline to the Ergo tailings deposition site continued and 88% of the steel pipes and 60% of the HDPE lining of the pipeline were completed. The pipeline is scheduled for completion in December 2011.
 
 Mining and Processing
 
   
  sources have generally undergone a complex depositional history resulting in grade variations associated with improvements in plant recovery over the period of time the material was deposited. Archive material is a secondary source of gold bearing material. This material is generally made up of old gold metallurgical plant sites as well as “river bed” material.
 
   approximately 11.0 million tons of material per year. Up to fiscal 2003, Crown also operated the West Wits gold plant for the processing of sand and slime. Crown also operates the ERPM surface operations with ore being treated at the Knights plant. All of the plants have undergone various modifications during recent years resulting in significant changes to the processing circuits.
 
 
  as Jupiter and No. 15 Shaft Crown Mines, and for Knights by the Ekhurhuleni Town Council. Electricity is supplied directly from the national power grid to the substation and town council at 44,000 volts. Substations, located on mine sites, transform the power to 6,600 volts for direct supply to the plants. The power supply is further reduced to 525 volts for smaller devices and equipment.
 
  is about 8.0 MW. For Knights the average annual power consumption is about 36 GWHr and the maximum demand is about 7.0 MW.


Crown operates three plants with slight variations in design in each plant, with a processing capacity of approximately 1 million tpm, yielding approximately 0.01 oz/t (0.4 g/t). The feed stock is made up of sand and slime which are reclaimed separately. Sand is reclaimed using mechanical front-end loaders, re-pulped with water and pumped to the plant. Slime is reclaimed using high pressure water monitoring guns. The re-pulped slime is pumped to the plant and the reclaimed material is treated using screens, cyclones, ball mills and Carbon-in-Leach, or CIL, technology to extract the gold. As at June 30, 2010, the overall plant utilization was 83% as a result of the planned reduction in tonnage throughput and as at June 30, 2011 68%.
 
 
 City Deep Plant:
 secondary and tertiary cycloning in closed circuit milling, thickening, oxygen preconditioning, CIL, elution and zinc precipitation followed by calcining and smelting to doré. In 1998, the plant was converted to a slimes only operation. However, due to operational difficulties caused by the particulate nature of the slimes, the milling circuit has subsequently been re-commissioned to facilitate the treatment of sand.
 
 
 Crown Mines Plant:
 circuit including screening, primary cycloning, open circuit milling, thickening, oxygen preconditioning, CIP and CIL, elution, zinc precipitation followed by calcining and smelting to doré.
 
 Knights
 Plant:
 cycloning, milling in closed circuit with hydrocyclones, thickening, oxygen preconditioning, CIL, elution, electro-winning and smelting to doré.
   
 The following capital expenditure was incurred at Crown in fiscal 2011, 2010 and 2009:
 
 Year ended June 30,
 2011  2010  2009  R’000  R’000  R’000
                                    
 
 Exploration and Development
 
    
 
   all Crown’s current deposition sites, has been put on hold. A feasibility study regarding the deposition of the Crown tailings on the Brakpan tailings complex was completed in fiscal 2010 and R43 million was approved for the extension of the Brakpan tailings complex to accommodate the Crown tailings. The estimated completion date is December 2011. Environmental and Closure Aspects
  development. The major environmental risks are associated with dust from various recovery sites, and effective management of relocated process material on certain tailings dams. The impact of windblown dust on the surrounding environment and community is addressed through a scientific monitoring and evaluation process, with active input from the University of Witwatersrand and appropriate community involvement. Environmental management programs, addressing a wide range of environmental issues, have been prepared by specialist environmental consultants and applied specifically to each dust sample recovery monitoring site and integrated into Crown’s internal environmental assessment process. Although Crown completed a project for thickening re-processed tailings, there also remains a risk of localized sloughing which can result in that section of the tailings dam required to be closed temporarily, with repair work being done to the dam wall. Water pollution is controlled by means of a comprehensive system of return water dams which allow for used water to be recycled for use in Crown’s metallurgical plant. Overflows of return water dams may, depending on their location, pollute surrounding streams and wetlands. Crown has an ongoing monitoring program to ensure that its water balances (in its reticulation system, on its tailings and its return water dams) are maintained at levels that are sensitive to that capacity of return water dams


chemical and organic dust suppression on recovery sites. Short-term dust control is accomplished through ridge ploughing the top surface of dormant tailings dams. Additionally, environmentally friendly dust suppressants, such as molasses, are applied. Dust fall-out is also monitored. In the long-term, dust suppression and water pollution is managed through a program of progressive vegetation of the tailings followed by the application of lime, to reduce the natural acidic conditions, and fertilizer to assist in the growth of vegetation planted on the tailings dam.
  life of the mine is in place. The surface reclamation process at Crown has several environmental merits as it has removed a potential pollution source and opens up land for development. Crown has conducted its environmental management program performance assessment, which was submitted to and approved by the DMR during fiscal 2005. Crown has updated its EMP in compliance with the MPRD Act and submitted it to the DMR for approval.
  Crown, in current monetary terms as at June 30, 2011, is approximately R206.5 million. A total of R56.5 million has been contributed to the Crown Rehabilitation Trust Fund. This is an irrevocable trust, managed by specific responsible people who we nominated and who are appointed as trustees by the Master of the High Court of South Africa.Ore Reserves and Life of Mine
  2010, our 74% share of Proven and Probable Ore Reserves of Crown was 0.9 million ounces. A Mineral Resource competent person is appointed at each operation to review our Ore Reserve calculations for accuracy. For Crown, Mr. Vivian Labuschage is the appointed Mineral Resource competent person. The current life of mine business plan is estimated to be eleven years. The decrease in the life of mine of Crown is due to the redistribution of the throughput of volumes between the Crown and City plants from 400 tonnes and 200 tonnes per month, respectively, in fiscal 2010 to 300 tonnes and 300 tonnes, respectively, in fiscal 2011. Current Production
  The decrease in gold production in fiscal 2011 was mainly as a result of a 2% decline in the average grade from 0.43g/t to 0.42g/t.
  gold production, the effect of electricity price increases and the stronger R/$ exchange rate and to a lesser extend lower average grade recovered.
  
 Year ended June 30,
 
 2011                 
  2010                  
  2009
 Production
                       Results of Operations (R)
             1
           
 
 1
 Cash operating cost, cash cost per ounce and total cost per ounce of gold are financial measures of performance that we use to determine cash
 generating capacities of the mines and to monitor performance of our mining operations.


Ergo (comprising of the Ergo JV and ErgoGold) Overview
  purchased from AngloGold Ashanti and the Elsburg tailings complex, comprising approximately 180 Mt of tailings. Since 1987, AngloGold Ashanti treated surface material at the Ergo JV until the operation was closed in 2005.
  September 29, 2008, Ergo Mining Operations acquired a further 15% interest in ErgoGold from Mintails SA, thereby increasing its holding to 65% through its subsidiary, ERPM. On December 8, 2008, DRDGOLD acquired the remaining 35% of ErgoGold for a purchase consideration of R177.0 million. The transaction was completed on March 31, 2009.
  consideration of R82.1 million. The transaction was completed on April 15, 2010 and recorded in the financial statements effective May 1, 2010. Ergo currently operates for its own account, under the AngloGold Ashanti old order mining rights, until new order mining rights have been obtained. These assets comprise servitudes, or access agreements, infrastructure, piping, equipment and old order mining rights.
  Property
    the province of Gauteng. Access to the Brakpan plant is via the Ergo Road on the N17 Johannesburg-Springs motorway.
  commensurate with the substantial increases in tailings material and processing capacity.
  year. Phase 2 envisages, firstly, the expansion of the gold plant by refurbishing the second CIL circuit and, secondly, developing uranium and acid plants. The pre-feasibility study for developing uranium and acid plants has been placed temporarily on hold because of the current economic environment and the current low prices of these commodities.
  History
 
 2007
 Ergo was founded as a Ergo Mining Operations and Mintails SA joint venture. On August 6, 2007, the joint venture parties entered into a sale of assets agreement with AngloGold Ashanti pursuant to which it acquired the remaining moveable and immovable assets of the Ergo plant for a consideration of R42.8 million. Additional agreements were concluded with AngloGold Ashanti on November 14, 2007 for the acquisition by Ergo of additional tailings properties and the Withok deposition complex for a payment of R45.0 million.
 
 2008
 Ergo Phase 1 was launched comprising the refurbishment and recomissioning of the Ergo plant’s first CIL circuit and the retreatment of the Elsburg and Benoni tailings complexes. DRDGOLD acquires Mintails SA’s stake in ErgoGold for R277.0 million.
 2009
 Ergo Phase 1 commissioning continues; first feeder line to the Ergo Plant from Elsburg tailings complex comes into operation. Ergo Phase 2 exploration drilling for gold, uranium and acid completed.
 2010
 DRDGOLD acquires control of the Ergo JV through the acquisition of Mintails SA’s 50% in the Ergo JV 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 commences.
 2011
 Construction of the Crown/Ergo pipeline continues and 70% of the second CIL circuit of the Ergo plant has been refurbished as part of the Crown/Ergo pipeline project.


Mining and Processing
 
   
 Material processed by Ergo is sourced from secondary surface sources, namely slime. The surface sources have generally undergone a complex depositional history resulting in grade variations associated with improvements in plant recovery over the period of time the material was deposited. Archive material is a secondary source of gold bearing material; however, no archive material was treated up until September 30, 2011. The metallurgical plant has a current installed capacity to treat approximately 15.0 million tonne of material per year.
  pumped to the plant and the reclaimed material is treated using screens, cyclones and CIL technology to extract the gold. As at June 30, 2011, the overall plant utilization was 92%.
  facilities. The plant is supplied from the national power grid via a secured source from the Ekurhuleni Council of 11,000 volts. Plant sub stations are stepped down to 6,600 volts before being further reduced to 525 volts for the motor control purposes.
 The following capital expenditure was incurred at Ergo in fiscal 2011, 2010 and 2009:
 
 Year ended June 30,
 
 2011                 
  2010                 
  2009
 
 R’000               
  R’000               
  R’000
 
     
   
   
   
   
  
   
   
   
  
  
 
  Exploration and Development
  gold bearing surface material owned by third parties that could be processed on a full treatment basis or purchased outright by Ergo. Exploration drilling has been done to define the uranium potential of the Elsburg complex. Independent competent person reports on uranium, sulphur and gold for the Elsburg resources and reserves have been compiled. Environmental and Closure Aspects
 
   Environmental management programs, addressing a wide range of environmental issues, have been prepared by specialist environmental consultants and integrated into the internal environmental assessment process.
  chemical and organic dust suppression on recovery sites. Short-term dust control is accomplished through ridge ploughing the top surface of dormant tailings dams. Additionally, environmentally friendly dust suppressants, such as molasses, are applied. Dust fall-out is also monitored. In the long-term, dust suppression and water pollution is managed through a program of progressive vegetation of the tailings followed by the application of lime, to reduce the natural acidic conditions, and fertilizer to assist in the growth of vegetation planted on the tailings dam.
    Ergo, in current monetary terms as at June 30, 2011, is approximately R161.7 million.


Ore Reserves and Life of Mine
  74% share of the Proven and Probable Ore Reserves of Ergo was 1.2 million ounces. In fiscal 2010, our 74% share of Proven and Probable Ore Reserves of Ergo was 1.2 million ounces. A Mineral Resource competent person is appointed at each operation to review our Ore Reserve calculations for accuracy. For Ergo, Mr. Vivian Labuschage is the appointed Mineral Resource competent person. The current life-of-mine business plan is estimated to be eleven years.  Current Production
    of slimes recovery reflected by an 11% rise in throughput from 11,867,000 tonnes to 13,206,000 tonnes and a 22% rise in average grade from 0.09g/t to 0.11g/t.
  increase in production.
  2011                 
  2010                  
  2009
 Production
         
    
  
 Results of Operations (R)
     
  
  1
  
  
   
 ERPM
 
 Overview
  consists of an underground section and the Cason Dump surface retreatment operation. Underground mining at ERPM was halted in October 2008 and is included in ‘Corporate head-office and all other expenses’ in the financial statements for segmental reporting purposes. The Cason Dump surface retreatment operation will continue to operate until 2015 under the management of Crown based on the current rate of production of approximately 186,000tpm and has been included under Crown in the financial statements for segmental reporting purposes.
  
 Property
 
  in the town of Boksburg, 20 miles (32 kilometers) east of Johannesburg. Access is via Jet Park Road on the N12 Boksburg-Benoni highway. Historically underground mining and recovery operations comprised relatively shallow remnant pillar mining in the central area and conventional longwall mining in the south-eastern area. Surface reclamation operations including the treatment of sand from the Cason Dump, is conducted through the Knights metallurgical plant, tailings deposition facilities and associated facilities. Until underground mining was halted in October 2008, the mine exploited the conglomeratic South Reef, Main Reef Leader and Main Reef in the central area and the Composite Reef in the south-eastern area. ERPM operates under mining license ML5/1997 in respect of statutory mining and mineral rights.
 
   
 
 1
 Cash operating cost, cash cost per ounce and total cost per ounce of gold are financial measures of performance that we use to determine cash
 generating capacities of the mines and to monitor performance of our mining operations.


History
 
 1895
  1991
  1999
 East Rand Proprietary Mines Limited was liquidated in August 1999. The mine was run by a small number of employees during liquidation. Underground flooding continued during liquidation.
 2000
 KBH took over control of the mine in January 2000. Operating as Enderbrooke Investments (Pty) Limited, or Enderbrooke, and employing an outside contractor, the mine re-commenced mining operations in February 2000.
 2002
  2003
 An underground fire occurred at FEV Shaft, in February 2003. There was also the loss of Hercules Shaft in June 2003 and the loss of a secondary outlet at the FEV shaft in November 2003.
 2004
 In July 2004 it was determined that the underground section would undergo a controlled closure program ending March 2005. The closure program was prevented by a reduction in costs and improved productivity at the mine.
 2005
 Central Shaft placed on care and maintenance. On July 6, 2005, we signed a Memorandum of Understanding with KBH regarding the acquisition by Khumo Gold of a 15% stake in our South African operations. On October 27, 2005, our board of directors approved the transaction with Khumo Gold. The new structure resulted in Khumo Gold acquiring a 15% interest in a newly created vehicle, Ergo Mining Operations, which includes 100% of ERPM, Crown and Blyvoor. We owned an 85% interest in Ergo Mining Operations.
 2006
 On December 11, 2006, Khumo Gold, on behalf of itself and an employee trust, exercised the option granted by us pursuant to the option agreement concluded between us and Khumo Gold in October 2005 to acquire a further 11% in Ergo Mining Operations. A prospecting right covering an area of 1,252 hectares (3,093 acres) of the neighboring Sallies lease area, referred to as ERPM Extension 1 was granted by the DMR.
 2007
 A prospecting right, incorporating the southern section of the old Van Dyk mining lease area and a small portion of Sallies, was granted by the DMR. Known as ERPM Extension 2, the additional area is 5,500ha (13,590 acres).
 2008
 On April 25, 2008, ERPM gave notice of intention to restructure the work force due to operational requirements and 239 employees were retrenched during June 2008.  On October 23, 2008, ERPM announced the suspension of drilling and blasting operations underground, following the cessation of pumping of underground water at the South West Vertical shaft on October 6, 2008 for safety reasons following the deaths of two employees. On November 19, 2008, we announced our intention to place on care and maintenance the underground operations of ERPM, and to proceed with a consultation process in terms of Section 189A of the Labor Relations Act to determine the future of the mine’s 1,700 employees.
 2009
 In January 2009, consultations in terms of Section 189A of the Labor Relations Act regarding the future of employees affected by the placing on care and maintenance of the underground operations were concluded and 1,335 employees were retrenched. In August 2009 the care and maintenance of the underground operations was discontinued.
 2010
  Mining and Processing
  There were also three additional shafts namely the South East Vertical Shaft, or SEV Shaft, used for the transport of employees and materials and the hoisting of rock, the South West Vertical, or SWV, Shaft and the Hercules Shaft that were used for water pumping only. The Cason Dump was used for the retreatment of surface material mined from the defunct Cason shaft.
 On October 23, 2008, drilling and blasting operations were suspended after the cessation of pumping of underground water
 at SWV Shaft on October 6, 2008 for safety reasons following the deaths of two employees at the shaft on September 19, 2008. Although the FEV Shaft where production was taking place was sealed off from water ingress from the SWV Shaft, the pumps at FEV Shaft were no longer able to cope with rising water, which included the water resulting from the ice sent underground every day to cool down the underground working places. Without being able to continue to supply ice underground for this purpose, the underground temperature would become unacceptably high and it would not have been safe for employees to continue work underground at the FEV shaft.
 On November 19, 2008, we announced our intention to place on care and maintenance the underground operations of
 ERPM, and to proceed with a consultation process in terms of Section 189A of the Labor Relations Act to determine the future of the mine’s 1,700 employees. In January 2009, the consultations were concluded and 1,335 employees were retrenched. On August 20, 2009, care and maintenance of the underground operations was stopped.


proximity to the mine in Boksburg. Transmission is at the rate of 88,000 volts. The Simmer Pan substation, located approximately 10 miles (16 kilometers) away from the mine site in Germiston, supplies the SWV and Hercules Shafts. Transmission is at the rate of 44,000 volts. The two substations, located on mine site, transform the power to 6,600 volts for direct supply to the shaft winder and air compressors. The power supply is further reduced to 525 volts for smaller devices and equipment used on the mine. The average annual power consumption has reduced to about 105 GWHr and the maximum demand to about 24 MW. The on-mine substations are older in nature and undergo annual infrared testing to identify hot connections which are potential fire hazards and are subject to regular maintenance which includes the inspection of the settings, blades and changing the transformer oil in the circuit breakers. Exploration and Development
 
   drilling and blasting operations in October 2008. The pre-feasibility study, conducted by an external mining consulting company, to investigate the possibility of exploiting these reserves by means of a trackless decline system, and significantly increasing the life of the underground operations, was also stopped.
  Extension 1. The regional geology of the area indicates that there will be a strike change due to faulting associated with an East-West trending sinistral tear fault. In order to confirm the anticipated change in the geological structure and hence payshoot orientation, it is envisaged that prospecting will take place through development situated 50m in the footwall. Owing to high induced stress experienced at depth, there will be concurrent over-stoping (that is stoping taking place concurrently with development) on the reef plane for safety reasons.
 
  incorporating the southern section of the old Van Dyk mining lease area and a small portion of Sallies, was granted by the DMR in fiscal 2007. Known as ERPM Extension 2, the additional area is 5,500ha (13,590 acres). Environmental and Closure Aspects
 
 
  from the underground section. On May 31, 2004, ERPM stopped continuous pumping of water from the underground section for financial reasons due to the withdrawal of the State pumping subsidy and the low rand gold price making the cost of full time pumping unaffordable, with occasional pumping to surface conducted on weekends. In December 2004, the mine received the pumping subsidy funds and continuous pumping was reinstated. Studies on the estimates of the probable rate of rise of water have been inconsistent, with certain theories suggesting that the underground water might reach a natural subterranean equilibrium, whilst other theories maintain that the water could decant or surface. A program is in place to routinely monitor the rise in water level in the various underground compartments and there has been a substantial increase in the subsurface water levels. ERPM’s SWV Shaft has been used for some time to manage the rising water level on the Central Witwatersrand Basin. Some 60 megalitres of water were pumped daily from a depth of approximately 1,000 meters.
  concurrent rehabilitation of redundant structures and holdings continued throughout fiscal 2007. The pumping infrastructure was upgraded at the South West Vertical Shaft in anticipation of the additional water from the Hercules basin. Pumping continued during fiscal 2007 and 2008 at the South West Vertical Shaft.
  following the death of two employees at the shaft on September 19, 2008. Management concluded that the project to upgrade the total pumping capacity at South West Vertical Shaft with a more efficient system as part of an Eskom-funded demand-side management project was not economically viable.
  cost for ERPM, in current monetary terms as at June 30, 2011, is R57.8 million. A total of R21.2 million has been contributed to the ERPM Rehabilitation Trust Fund. This is an irrevocable trust, managed by specific responsible people who we nominated and who are appointed as trustees by the Master of the High Court of South Africa. Ore Reserves and Life of Mine
  The total surface Ore Reserves comprise of 0.1 million ounces from the Cason Dump and 1.2 million ounces from the Elsburg and Benoni tailings complexes, which will be processed over the next three and eleven years, respectively. A Mineral Resource competent person is appointed at each operation to review our Ore Reserve calculations for accuracy. For ERPM, Mr. Ryno Botha (SACNASP) is the appointed Mineral Resource competent person.


Current Production
 
    
  
 Year ended June 30,
 
 2011          
  2010           2009
 Production
                    Results of Underground Operations (R)
           1
       Durban Deep Overview
  Witwatersrand Basin immediately to the west of Johannesburg. Mining took place within the lease area since the discovery of the Witwatersrand Goldfield in 1886 at nearby Langlaagte.
  of our underground pumping subsidy, the deeper sections of the mine were flooded. On a combined basis, Durban Deep produced more than 37 million ounces of gold prior to the cessation of operations.
  R1.5 million, was granted an option to acquire Durban Deep’s mine village for R15.0 million. The option lapsed on November 19, 2005. On the exercising of the option the option fee would be deemed part payment of the purchase consideration. If not, the option fee would be forfeited to us.
 On November 18, 2005, M5 exercised the option and provided a guarantee for payment. Prior to the registration of the
 transfer occurring, we were notified by Rand Leases Properties Limited (formerly JCI Properties Limited) of an alleged pre-emptive right in respect of the property in terms of an agreement dated December 1996, pursuant to which the property should be sold to them on similar terms. We subsequently repudiated our agreement with M5 and notified Rand Leases Properties Limited that we did not intend offering the property to them. Both parties indicated to us their intentions to institute legal proceedings for the sale and transfer of the property. On December 12, 2006, Rand Leases Properties Limited issued a summons against us and we filed an Appearance to Defend. A trial date was allocated by the High Court of South Africa for April 25, 2008, but the case was postponed. A new date has not yet been set. Dino Properties (Pty) Ltd (previously called M5) has instituted action against the Company seeking to enforce an agreement of sale of the DRD Village entered into on July 21, 2005 alternatively payment of R195 million which is alleged to represent the market value of the property. The Company is defending this action; however, the parties have suspended the pleadings with the possibility of pursuing a settlement of the case. See “Legal Proceedings- Legal proceedings relating to an agreement to sell Durban Deep’s mine village”. Property
  the east. Durban Deep is situated 9.3 miles (15 kilometers) west of Johannesburg and contains mining title to 14,262 acres (5,772 hectares) and owns 3,667 acres (1,484 hectares) of freehold property. These include administrative buildings, hospital, recreation complexes, housing in both hostel and free-standing houses and a security complex. We have title to substantial land tracts on the outskirts of the City of Roodepoort, which is located in this section. We do not intend to convert our rights under the MPRD Act.
 
 1
 Cash operating cost, cash cost per ounce and total cost per ounce of gold are financial measures of performance that we use to determine cash
 generating capacities of the mines and to monitor performance of our mining operations.


Mining and Processing
  maximum depth of 9,200 feet (2,804 meters) and the reefs are known to persist to 13,000 feet (3,962.4 meters) below the surface within the lease area.  Environmental and Closure Aspects
  have been taken over by DRD (Pty) Ltd, which is owned by Mintails. An official liability transfer in terms of section 58 of the MRPDA Act has been submitted to the DMR. DRDGOLD retains only the village that has no assessed liability associated with it. The legal transfer of the liability would be dependent on the DMR's assessment of Mintails' financial capability. DRDGOLD therefore still has a contingent liability until such legal transfer is affected.
  fiscal 2011.
  remaining cost for Durban Deep, in current monetary terms as at June 30, 2011, is R19.0 million. This has been included in the provision for environmental rehabilitation, restoration and closure costs on the statement of financial position. A total of R23.0 million has been contributed to the Environmental Trust Fund. This is an irrevocable trust, managed by specific responsible people who we nominated and who are appointed as trustees by the Master of the High Court of South Africa. West Wits Overview
  Mines Limited, or West Wits. We acquired the entire share capital of WWGH, as well as Consolidated Mining Corporation Limited's loan to WWGH, on April 1, 1996. We also acquired the entire issued share capital and the shareholders' claim and loan account of East Champ d'Or Gold Mine Limited, a gold mining company with mining title in the West Rand. The mining assets were sold to Bophelo Trading (Pty) Limited, subsequently renamed, Mogale Gold (Pty) Limited, or Mogale, during fiscal 2004, effectively leading to the closure of the mining operation.
  Johannesburg. Property
  miles (35 kilometers) west of Johannesburg, Gauteng Province. The mine was reached via the R28 Johannesburg-Krugersdorp highway.
  Luipaardsvlei. West Wits had mining title to 8,364 acres (3,790 hectares) and owned 72 acres (29 hectares) of freehold property on which all of its mining operations were situated. These rights were sold to Mogale during fiscal 2004.  Mining and Processing
  decision was taken after the South African government withdrew the water pumping subsidy. Without the subsidy, mining at West Wits became prohibitively expensive. The mining operation is an agglomeration of old mines on the Randfontein Basin separated from the main part of the Witwatersrand Basin by a geological structure known as the Witpoortjie Horst. Over fifteen different gold-bearing pebble horizons have been mined. Ore has been mined from outcrops at the surface down to a maximum depth of 5,900 feet (1,798.3 meters).
  conglomerates and quartzites dipping at an average of 18 degrees. The combined West Wits produced more than 1.0 million ounces of gold since the mine’s inception, before the cessation of underground and open-pit operations at the end of August 2000. Subsequent to the cessation of mining operations, the metallurgical plant at West Wits was taken over by Crown for the processing of sand dumps only.


Environmental and Closure Aspects
 Responsibility for the mine, including the environmental rehabilitation liability, has been taken over contractually by
 Mintails although the legal transfer thereof would be dependent on the DMR's assessment of Mintails' financial capability. DRDGOLD therefore still has a contingent liability until such legal transfer is affected. Management of the West Rand Consolidated Mines' tailings dams have been taken over by Mintails which plans to reprocess them. An EMP for the balance of the area has been submitted to the DMR as part of the conversion process of ML9/2000. The execution of the conversion is imminent.
 In terms of Acid Mine Drainage (AMD) from the Western Basin, a proposal has been submitted to the regulators for an
 interim solution whereby the Western Basin water is pumped into the Central Basin. Water from the Central Basin is then pumped from 400m below surface and partly treated in the ERPM High Density Separation (HDS) plant before being released. The proposal is based on a Public Private Partnership and will prevent untreated water from polluting the environment until the final sustainable solution is put in place. In terms of this proposal, DRDGOLD will contribute approximately R13.4 million towards the R218 million capital required. Final approval is awaited. The DMR and affected mining companies are involved in the development of a ‘Regional Mine Closure Strategy’ in the gold fields’ area. The government has appointed Trans-Calendon Tunnel Authority to propose solutions for the various basins. They have also provided funding for the interim solution in the Western and Central Basins. In view of the limitation of current information for the accurate estimation of a liability, no reliable estimate can be made for the obligation.
 In fiscal 2010, the Company transferred the environmental rehabilitation liabilities in respect of mining rights over the West
 Wits mining license area which was disposed of. A total of R19.9 million previously contributed to the Environmental Trust Fund has been impaired as a result of the transfer of the liability.
  Legal Proceedings Litigation regarding environmental issues
 On August 2, 2006 and September 4, 2006, two applications were brought against DRDGOLD and its directors for relief
 under the MPRD Act by the Legal Resources Centre on behalf of the residents of two communities, Davidsonville and Kagiso, who reside adjacent to tailings deposition sites of the now dormant Durban Roodepoort Deep mine and the West Witwatersrand mine, respectively. While no financial compensation is sought, the communities are seeking orders for the revision of the environmental management programmes of both sites, and for the sites to be rehabilitated and closed in accordance with the standards of the MPRD Act. DRDGOLD has filed its Appearance to Defend and Answering Affidavits in respect of both matters in the High Court of South Africa. The responsibility rests with the respondent's attorneys to either apply to the High Court for a date of hearing or file replying affidavits.
  Application to reverse the granting of a mining right
 In June 2008, DRDGOLD and Durban Roodepoort Deep (Pty) Limited (“DRD”) brought an application in the High Court
 of South Africa against Main Reef Crushers CC (MRC) and the Minister of Mineral Resources because inter alia the latter granted MRC a mining right:
  MRC are fatally defective.This case has been settled.
 Lawsuit by French shareholders
 
   
  
 South African state against the interests of French shareholders; and


shareholders without consultation with French shareholders. On the basis of these allegations, the association is claiming a payment of 5 million euros for damages, 10,000 euros for
 costs and costs of suit. Ergo Mining Operations has raised the point that the French Courts lack jurisdiction to hear the matter and also filed its defenses on the merits of the case. On May 24, 2011 the Court refused the association’s application for postponement and the case was struck off the roll.
 
 Legal proceedings relating to an agreement to sell Durban Deep’s mine village
 
   R1.5 million, was granted an option to acquire Durban Deep’s mine village for R15.0 million. On November 18, 2005, M5 exercised the option and provided a guarantee for payment. Prior to the registration of the transfer occurring, we were notified by Rand Leases Properties Limited (formerly JCI Properties Limited) of an alleged pre-emptive right in respect of the property in terms of an agreement dated December 1996, pursuant to which the property should be sold to them on similar terms. We subsequently repudiated our agreement with M5 and notified Rand Leases Properties Limited that we did not intend offering the property to them. Both parties indicated to us their intentions to institute legal proceedings for the sale and transfer of the property. On December 12, 2006, Rand Leases Properties Limited issued a summons against us and we filed an Appearance to Defend. On April 25,
 
    Durban Deep’s mine Village entered into on July 21, 2005, or alternatively payment of R195 million which is alleged to represent the market value of the property. DRDGOLD is defending this action, however, the parties have suspended the pleadings with the possibility of pursuing a settlement of the case
 .
 Claim for alleged damages at Blyvoor
 Duffuel (Pty) Ltd and Paul Frederick Potgieter are suing DRDGOLD, Ergo Mining Operations, Blyvoor and the latter's
 directors for alleged pollution of peat reserves which they claim to sell to the mushroom industry. Since the 20-F for fiscal 2010 the plaintiffs amended the amounts claimed against DRDGOLD, Ergo Mining Operations, Blyvoor and the latter's directors as follows:
  
 
 
 
 
 The defendants are defending this action and have also raised an exception on the basis that the claim is vague and
  Business rescue proceedings for Blyvoor operations
 
 On June 23, 2011, DRDGOLD announced that its Board of Directors has decided to suspend financial assistance toDRDGOLD’s 74%-owned subsidiary, Blyvoor. The decision follows the promulgation of the new Companies Act of South Africa
  which came into effect May 1, 2011, which requires directors of parent companies to seek the consent of the parent company
  shareholders and then to consider the effects on the solvency and liquidity of the parent company as conditions precedent to the
  provision of financial assistance to subsidiaries.
In fiscal 2010, Blyvoor accounted for 106,452 ounces of gold, or 44% of our totalproduction and in fiscal 2011 it accounted for 121,114 ounces or 46% of our total production.
  approved business rescue practitioners who will have a wide range of powers at his disposal to take such actions he deems necessary to save the business. The business rescue practitioner needs to implement a business rescue plan which requires the approval of affected parties involved within a specified period or, if such approval is not obtained or if he is of the opinion that the business cannot be saved, apply to the court for liquidation of the company. The business practitioner’s powers could include giving certain creditors temporary preference over others and agreeing compromises with creditors without the risk of committing an act of insolvency and thereby exposing the mine to liquidation. The business rescue practitioner has been granted an extension until November 1, 2011, for submission of the business rescue plan and  until December 2, 2011 for the business rescue process in terms of section 132(3) of the Companies Act, 2008; further extension may,  however, be granted.
 
 
 ITEM 4A. UNRESOLVED STAFF COMMENTS
 Not applicable.


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.
 
      Business overview
   Key drivers of our operating results and principal factors affecting our operating results
 principal uncertainties and variables facing our business and the primary factors that have a significant impact on our operating performance.
   Recent acquisitions and dispositions
    Key financial and operating indicators
    Application of critical accounting policies
    Operating results
    sources.


5A. OPERATING RESULTS
 Business overview
  extraction, processing and smelting. We have operations comprising underground mining and surface tailings retreatment, including the requisite infrastructure and metallurgical processing plants. Our operations are currently located in South Africa. As from June 30, 2010, DRDGOLD's foreign subsidiaries, which were the holding companies for its previously disposed Australasian operations, have been placed into voluntary liquidation. In fiscal 2010, the Group has broadened its activities to include initial exploration activities on a small scale in Zimbabwe.
 During the fiscal years presented in this Annual Report all our operations take place in one geographic region, namely
   Extension 1 and 2 exploration tenements. ERPM’s underground mining operation has been discontinued and are included under ‘Corporate head-office and all other expenses’ in our financial statements’ operating segments. In fiscal 2011, the South African Operations accounted for 100% of our total production and loss for the year of
  Exploration activities are undertaken mainly in South Africa. In fiscal 2010, we also commenced small scale exploration
  From 1895 to 1997, our principal mining operation was the Durban Deep mine. Up to 1999, our general growth strategy
 was to acquire existing under-performing mines in South Africa at relatively low acquisition costs, and turn them into profitable business units by introducing low-cost mining methods and reducing costs through employing our experience in managing marginal gold mines to more efficiently utilize existing infrastructures. From 1999 to 2006 our focus was to expand our operations outside of South Africa by acquiring lower cash cost and higher margin mines than those in South Africa, through the acquisition of Tolukuma, our former 20% interest in Porgera and 79% interest in Emperor (Vatukoula), which together constituted our Australasian Operations. With the exit from our Australasian Operations in 2008, our strategy has since changed to refocus on our operations in South Africa and in particular on the expansion of our surface tailings retreatment operations. A large portion of the proceeds we received from the disposal of our Australasian operations have been utilized during fiscal 2009, 2010 and 2011 to expand our retreatment of surface tailings to recover gold.
 Our new strategy is to enhance shareholders’ value by reducing risk, controlling costs, managing margins and taking a
 disciplined approach to growth. In the short- to medium-term the focus will be on optimizing surface circuits, growing geological expertise to enhance exploration capacity and phasing out underground operations, in a manner  that maximizes shareholder value.
  17% and an increase in production of 10%. In fiscal 2010, revenue was slightly higher than in fiscal 2009. The effect of the higher gold price was offset by lower gold production, in particular from underground operations due to the lower grades recovered as a result of the seismic activity at Blyvoor’s underground operation at the end of fiscal 2009. In fiscal 2009 revenue was slightly higher than in fiscal 2008. The effect of the higher gold price was offset by lower gold production, in particular from underground operations due to the closure of ERPM’s underground operation. We had R259.1 million in cash and cash equivalents as at June 30, 2011 compared to R188.2 million in cash and cash equivalents as at June 30, 2010. The increase in cash and cash equivalents was mainly attributable to increased cash inflows from operating activities.
 As at June 30, 2011, we had attributable Ore Reserves of approximately 6.3 million ounces, compared to 6.0 million
 ounces as at June 30, 2010 and 5.2 million ounces as at June 30, 2009. The increase was mainly attributable to the higher gold price.


Key drivers of our operating results and principal factors affecting our operating results
   
 Gold price
  directly related to the price of gold which can fluctuate widely and is affected by numerous factors beyond our control, including industrial and jewelry demand, expectations with respect to the rate of inflation, the strength of the dollar (the currency in which the price of gold is generally quoted) and of other currencies, interest rates, actual or expected gold sales by central banks, forward sales by producers, global or regional political or economic events, and production and cost levels in major gold-producing regions such as South Africa. In addition, the price of gold is often subject to rapid short-term changes because of speculative activities. The demand for and supply of gold may affect gold prices, but not necessarily in the same manner that supply and demand affect the prices of other commodities. The supply of gold consists of a combination of new production from mining and existing stocks of bullion and fabricated gold held by governments, public and private financial institutions, industrial organizations and private individuals. As a general rule we sell the gold produced at market prices to obtain the maximum benefit from prevailing gold prices.
 The following table indicates the movement in the dollar gold spot price for the 2011, 2010 and 2009 fiscal years:
  2011 fiscal year
 2010 fiscal year
 % change
                       2010 fiscal year
 2009 fiscal year
 % change
                       2009 fiscal year
 2008 fiscal year
 % change
                       sourced from our South African Operations and, until fiscal 2008, our Australasian Operations as well. As a result, the impact of movements in relevant exchange rates during those six fiscal years, has been significant on our operating results. The average gold price in rand (based on average spot prices for the year) increased from R7,899 per ounce in fiscal 2009 (a 32% increase from fiscal 2008), to R8,289 per ounce in fiscal 2010 (a 5% increase from fiscal 2009) and R9,565 per ounce in 2011 (a 15% increase from fiscal 2010).
   will increase our forecast profit for the year by R272.2 million and a 10% decrease in the rand gold price received will decrease our profit for the year by R265.1 million.


Gold production and operating costs
   2010, and 247,690 ounces in fiscal 2009. The benefits enjoyed in fiscal 2011 by the 15% increase (fiscal 2010: 5% increase) in the average rand gold price received were partially offset by an increase in average operating costs of 8% (fiscal 2010: 9%). Average operating costs were reasonably well contained due to higher production and an increased contribution from our lower cost surface retreatment operations.
  services, stores, electricity and other related costs, incurred in the production of gold. ‘Consumables and other’ and 'labor' are the largest components of operating costs, each constituting 35% of operating costs for fiscal 2011. For fiscal 2011, 35%, fiscal 2010 32% and fiscal 2009 44% of our mining operations, based on kilograms of gold produced, involved deep level underground mining which is more labor intensive.
  0.34g/t) from 241,194 ounces in fiscal 2010 (produced from 22.6 million tonnes milled at an average yield of 0.33g/t). Production decreased from 247,690 ounces (produced from 14.5 million tonnes milled at an average yield of 0.53g/t) in fiscal 2009 to 241,194 ounces in fiscal 2010 (produced from 22.6 million tonnes milled at an average yield of 0.33g/t). The reasons for the movements in production are explained in more detail below.
  comparison with 106,452 ounces (from 3.6 million tonnes milled at an average yield of 0.92g/t) in fiscal 2010 and 129,473 ounces (from 4.0 million tonnes milled at an average yield of 1.00g/t) in fiscal 2009. The increase in production at Blyvoor in fiscal 2011 compared to fiscal 2010, reflected continued recovery of the underground operations from the effects of substantial seismic damage in the high-grade areas of No. 5 Shaft and a protracted, wage related strike in fiscal 2010. However, Blyvoor’s production had been trending down in the last quarter of fiscal 2011 due to public holiday interruptions and seismicity-related work stoppages, while costs had increased due mainly to higher electricity charges, and particularly power utility Eskom’s winter tariff which added R11 million a month to overhead costs and as a result of a 20% drop in grade quarter on quarter which was attributable to the use of a substitute explosive for the fourth quarter of fiscal 2011, due to major overhaul repairs at our regular explosive supplier’s manufacturing plant. The decrease in production at Blyvoor in fiscal 2010 compared to fiscal 2009, was as a result of lower recovered grades from underground operations as a result of seismic activity damaging the high-grade mining areas during the last quarter of fiscal 2009 and a month long wage related strike during the first quarter of fiscal 2010.
 Crown (which has been restated to include the surface retreatment operation of ERPM) produced 95,713 ounces (from
 7.1 million tonnes milled at an average yield of 0.42g/t) during fiscal 2011, in comparison with 99,410 ounces (from 7.1 million tonnes milled at an average yield of 0.43g/t) in fiscal 2010 and 95,616 ounces (from 8.0 million tonnes milled at an average yield of 0.37g/t) in fiscal 2009. The decrease in production in fiscal 2011 was mainly as a result of diminishing grades as the processing of the Top Star dump neared completion. The higher grades in fiscal 2010 compared to fiscal 2009 were a result of higher grade material from the Mennells and Top Star sites and the lower throughput was due to constraints created by Crown’s deposition facility.
 ERPM (which has been restated to include only its underground production) had no underground gold production during
 fiscal 2011 and 2010, in comparison with 18,935 ounces (from 0.2 million tonnes milled at an average yield of 3.20g/t) in fiscal 2009. The decrease in production at ERPM resulted from the discontinuation of the underground operations from October 2008.
 Ergo, which commenced production in November 2008, produced 48,352 ounces (from 13.2 million tonnes milled at an
 average yield of 0.11g/t) in fiscal 2011, in comparison with 35,332 ounces (from 11.9 million tonnes milled at an average yield of 0.09g/t) in fiscal 2010 and 3,666 ounces (from 2.3 million tonnes milled at an average yield of 0.05g/t) in fiscal 2009. The increase in production in fiscal 2011 is due to a rise in both throughput and average grade, resulting from continued build-up of slimes recovery from the Elsburg Tailings Complex. The increase in fiscal 2010 compared to fiscal 2009 is due to the first full fiscal year of production and the ramp-up of production towards full production. breakthrough at Ergo which separates out an agent that carries at least 37% of the gold. Whether we implement this technology
  will be determined not just in terms of value over life of mine, but whether payback in the near term can be achieved. We aim to
  take a firm view on this early in the third quarter of fiscal 2012.


General economic factors
  in Zimbabwe (such activities are at an early stage and therefore do not affect our results of operations). We are exposed to a number of factors, which could affect our profitability, such as exchange rate fluctuations, inflation and other risks relating to South Africa. In conducting mining operations, we recognize the inherent risks and uncertainties of the industry, and the wasting nature of the assets. Effect of exchange rate fluctuations
  operating costs were denominated in rand and we derived all of our revenues in dollars. Fiscal 2011 was marked by volatility in the dollar and an overall weakening in the dollar relative to the rand. As the price of gold is denominated in dollars and we realize our revenues in dollars, the depreciation of the dollar against the rand reduces our profitability, whereas the appreciation of the dollar against the rand increases our profitability. Based upon average rates during the respective years, the rand strengthened by 8% against the dollar in fiscal 2011, compared to a strengthening by 16% against the dollar in fiscal 2010 and a weakening by 24% against the dollar in fiscal 2009. The strengthening of the rand against the dollar limited the increase in the average rand gold price received to only 17% in fiscal 2011 and 5% in fiscal 2010, whereas in fiscal 2009 the 32% was increase in the average rand gold price was mainly as a result of the significant weakening (24%) of the rand against the dollar.
 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 operations or to continue the development of some or all of our projects. Our weighted average cash operating costs per kilogram for our operations was R251,296 per kilogram of gold produced in fiscal 2011, R233,112 per kilogram of gold produced in fiscal 2010 and R219,024 per kilogram of gold produced in fiscal 2009. The average gold price received, from operations, was R308,220 per kilogram of gold produced in fiscal 2011, R267,292 per kilogram of gold produced in fiscal 2010 and R250,589 per kilogram of gold produced in fiscal 2009.
  Effect of inflation
  which our gold is sold, if there is a significant increase in inflation in South Africa without a concurrent devaluation of the rand or an increase in the price of gold, our costs will increase, negatively affecting our operating results.
 The movements in the rand/dollar exchange rate, based upon average rates during the periods presented, and the local
 annual inflation rate for the periods presented, as measured by the South African Consumer Price Index, or CPI, are set out in the table below:
 Year ended June 30,
 2011
 (%)
 2010
 (%)
 2009
 (%)
 
 
 
 
         and as at September 30, 2011, it was at 5.7%. From January 2009, the South African Reserve Bank changed the way inflation is measured by expanding the range of consumer goods used and changing the benchmark measure from CPIX (CPI minus mortgage costs) to CPI. Mortgage costs have been replaced by owners’ equivalent rental (OER) to capture housing costs, making CPIX redundant. The closest measure to CPIX is CPI minus OER.
  South African political, economic and other factors
 
  operations are based in South Africa. As a result, we are subject to various economic, fiscal, monetary and political factors that affect South African companies generally. South African companies are subject to exchange control regulations. Governmental officials have from time to time stated their intentions to lift South Africa’s exchange control regulations when economic conditions permit such action. Over the last few years, certain aspects of exchange controls for companies and individuals have been incrementally relaxed. It is, however, impossible to predict when the South African Government will remove exchange controls in their entirety. South African companies remain subject to restrictions on their ability to export and deploy capital outside of the Southern African Common Monetary Area, unless dispensation has been granted by the South African Reserve Bank. For a detailed discussion of exchange controls, see Item 10D.: “Exchange controls.”


introduction of the MPRD Act, private ownership in mineral rights and statutory mining rights in South Africa could be acquired through the common law or by statute. Now, all mineral rights have been placed under the custodianship of the South African Government under the provisions of the MPRD Act, and old order proprietary rights need to be converted to new order rights of use within certain prescribed periods. We have submitted certain applications in this regard. This process is described in more detail under Item 4B.: “Business Overview – Governmental regulations and their effects on our business - South Africa - Common Law Mineral Rights and Statutory Mining Rights.”
 
  The fourth draft of the Royalty Bill was promulgated in Parliament on August 14, 2008 and provides for the payment of a royalty according to a formula based on earnings before interest, tax and after the deduction of capital expenditure. The Mineral and Petroleum Resources Royalty Act, No.28 of 2008 was enacted on November 21, 2008 and was published in the South African Government Gazette on November 24, 2008 and the Mineral and the Petroleum Resources Royalty Act (Administration), No.29 of 2008 on November 26, 2008. The rate as calculated per the abovementioned formula is then applied to revenue to calculate the royalty amount due, with a minimum of 0.5% and a maximum of 5% for gold, payable half yearly with a third and final payment thereafter. The royalty is tax deductible and the cost after tax amounts to a rate of between 0.33% and 3.3% at the prevailing marginal tax rates applicable to the group. The registration process commenced on November 1, 2009, after which the group duly registered, and the payment of royalties commenced on March 1, 2010, with DRDGOLD payments due as from June 30, 2010 and every six months thereafter. The royalty is payable on old unconverted mining rights and new converted mining rights.  Recent acquisitions and dispositions
  Accordingly, we have been, and may continue to be, involved in acquisitions and dispositions as part of this global trend and to identify value-adding business combinations and acquisition opportunities. To ensure that our Ore Reserve base is maintained, or increased, we are currently focusing on organic growth from our existing operations, brownfields exploration in South Africa and greenfield exploration in Zimbabwe.
 The following is a description of acquisitions and dispositions completed by us since July 1, 2008:
 Top Star Dump
  Department of Mineral Resources with effect from August 21, 2008. The mining right for the Top Star Dump has been granted until August 20, 2013 and gold recovery started during December 2008. Ergo (includes ErgoGold and the Ergo JV)
  Mining Operations. Following discussions initiated in the first quarter of 2007, the joint venture parties agreed to pursue a strategy to consolidate certain of their assets on the East Rand. Mintails SA contributed one fully refurbished carbon-in-leach, or CIL, circuit at the Brakpan plant and Ergo Mining Operations contributed the Elsburg tailings complex, comprising approximately 180 Mt of tailings. This part of the project, previously referred to as Ergo Phase 1, was subsequently established under ErgoGold. Mintails SA and Ergo Mining Operations, through their subsidiaries, initially owned 50% each of ErgoGold and the Ergo JV.
  which it acquired the remaining moveable and immovable assets of the Ergo plant for a total consideration of R42.8 million. These assets will be operated by the Ergo JV for its own account, under the AngloGold Ashanti old mining rights, until new order mining rights have been obtained. These assets consist of servitudes (access agreements), infrastructure, piping, equipment, old order mining rights and the right to an additional 15 Mt of tailings material.
  and slimes dams in the region.


105 Mt, from Pamodzi Gold Limited. The Grootvlei properties formed part of the Mintails SA contribution to the expanded Ergo JV.
     estimated 15Mt of tailings a year, for the recovery of approximately 52,000 ounces of gold a year. Ergo Phase 2 includes the expansion of the gold plant by refurbishing the second CIL circuit and developing uranium and acid plants. ErgoGold is managed by Crown.
  in  Ergo Mining Operations, which holds its interest through its subsidiary, ERPM, holding a 65% interest and Mintails SA a 35% interest in the joint venture. On December 8, 2008, DRDGOLD agreed to acquire Mintails SA's remaining interest in ErgoGold, as well as all of the shareholder’s loans owed by ErgoGold to the Mintails group. The acquisition, which was completed on March 31, 2009, resulted in the Group acquiring 100% of ErgoGold. The purchase consideration was paid in cash and amounted to R100.0 million for the 15% interest and R177.0 million for the 35% interest.
 On January 21, 2010,  Ergo Mining Operations through its subsidiary ERPM, acquired the remaining 50% interest in the
 Ergo JV from Mintails SA for a total consideration of R82.1 million, consisting of R62.1 million in cash and payment of the balance of R20.0 million with DRDGOLD’s shares in Witfontein Mining (Pty) Limited. The acquisition was completed on April 15, 2010 and was recorded in the financial statements effective May 1, 2010.
 DRDGOLD treats ErgoGold and the Ergo JV as one operating segment called Ergo, and includes their respective
 financial results within our Annual Report in accordance with IFRS 8 (Operating Segments). Furthermore, the company’s management believes it is appropriate to present ErgoGold and the Ergo JV together in this discussion as they share the same infrastructure, human resources and mineable material, with ErgoGold being focused on the extraction of gold from the re-treatment of the Elsburg and Benoni deposition sites and the Ergo JV being an exploration project focused on the extraction of uranium and further gold from a range of deposition sites (including the Elsburg site).
 ERPM
  employees underground. Post mortems suggested that the two men, who had been conducting routine water level measurements, died of asphyxiation. The South West Vertical Shaft had been used only for water pumping purposes for several years.
  into the area to certain restrictions and conditions relating to ventilation. On October 23, 2008, drilling and blasting operations were suspended in all shafts after the cessation of pumping of underground water at South West Vertical shaft on October 6, 2008 for safety reasons.
 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 Labour Relations Act to determine the future of the mine’s 1,700 employees. The consultation process was completed on January 20, 2009 and 1,335 employees were retrenched. On August 20, 2009, we discontinued care and maintenance and closed the underground operations.
 On June 30, 2010 DRDGOLD signed heads of agreement with White Water Resources Limited (White Water), in terms of
 which White Water would acquire the prospecting rights over ERPM Extensions 1 and 2 and the mining right over ERPM Extension 1 from ERPM. ERPM’s mining right application over ERPM Extension 1 is pending. Both extensions are contiguous to the ERPM mining lease area. The purchase consideration for the prospecting and mining rights was R18.5 million and would be settled through the issue to ERPM of 74 million ordinary shares in White Water and 26 shares in a special purpose vehicle (SPV) to be created, which would hold the assets acquired by White Water from ERPM in accordance with the terms of the transaction. This transaction was part of DRDGOLD’s strategy to focus management efforts on surface retreatment.
 In the event that the Department of Mineral Resources did not approve the transfer of one or more of the prospecting or
 mining rights, the consideration would be reduced to R9.3 million to be settled through the issue to ERPM of 37 million ordinary shares in White Water and 26 ordinary shares in the SPV.
 The transaction was subject to the successful conclusion of various conditions precedent, including its approval by White
 Water shareholders and the DRDGOLD Board of Directors. The DRDGOLD Board of Directors did not approve the transaction and the disposal did not proceed due as the Board of Directors decided that it was more appropriate for DRDGOLD to perform the exploration work to better understand the nature of the asset.


Blyvoor
  a provisional judicial management order over the operation. A provisional judicial management order was granted by the High Court of South Africa on November 10, 2009.
    
   at his disposal to take such actions as he deemed necessary to save the business. These could include giving certain creditors temporary preference over others and agreeing compromises with creditors without the risk of committing an act of insolvency and thereby exposing the mine to liquidation.
 On April 13, 2010, DRDGOLD announced that the High Court of South Africa had agreed to lift, with immediate effect,
 the provisional judicial management order in place since November 10, 2009. The Company’s application to the court for the lifting of the provisional judicial management order indicated that for the period from November 2009 to February 2010, Blyvoor had traded at an unaudited profit of R33.6 million, the amount owed to trade creditors at the time when the provisional judicial management order was granted had been reduced from R39 million to R2.17 million, monthly production of gold had increased from 8,745 ounces to 10,127 ounces and the gold price had increased from R240,000/kg to R265,000/kg.
  Systems (Pty) Limited, or Aurora, for R295 million and to provide a R80 million loan facility over a six month period. On April 1, 2010, the Company announced that through mutual agreement the offer made by Aurora was withdrawn.
  of Ergo Mining Operations, which is the holding company of DRDGOLD’s surface operations, such that Blyvoor would become a direct subsidiary of DRDGOLD. This was done to form separate brands for the Company’s underground and surface operations in two separate investment vehicles; the first being Blyvoor involved in underground operations at a higher risk, marginal gold mine with a high potential upside if the rand gold price reaches more favorable levels and the second being Ergo Mining Operations involved in surface operations at a lower risk, higher margin gold mine. Following this restructuring, DRDGOLD’s Board of Directors announced in April, 2011 that Blyvoor no longer fit within the Company’s strategic focus and that the mine would be sold.
  Blyvoor. The decision followed the promulgation of the new Companies Act of South Africa which requires directors of parent companies to seek the consent of the parent company shareholders and then to consider the effects on the solvency and liquidity of the parent company as conditions precedent to the provision of financial assistance to subsidiaries. Blyvoor’s production had been trending down as a result of a drop in grade, public holiday interruptions and seismicity-related work stoppages, while costs had increased due mainly to higher electricity charges, and particularly power utility Eskom’s winter tariff which adds R11 million a month to overhead costs. The Board of Directors of Blyvoor had, in response to the DRDGOLD Board’s decision, resolved to begin business rescue proceedings for Blyvoor in terms of Chapter 6 of the Companies Act. The business rescue process provided for in Chapter 6 replaced the judicial management process in the previous Companies Act.
  Court of South Africa (Johannesburg) until November 1, 2011, to publish a business rescue plan. On October 20, 2011 it was announced that further extension had been granted till December 2, 2011, for the business rescue process in terms of section 132(3) 
 of the Companies Act, 2008; further extension may, however, be granted. The extension was granted because various processes
  critical to finalization of the business rescue plan were ongoing and would require additional time to conclude. These included:


Blyvoor’s intention to enter a 60-day consensus-seeking process in terms of Section 189 (3) of the Labour Relations Act with the National Union of Mineworkers, or NUM and the United Association of South Africa, or UASA – the Union, to consider reducing employee numbers by approximately 500 employees. The reason for the need to consider the reduction is that Blyvoor – under business rescue proceedings in terms of Chapter 6 of the Companies Act since June this year – has been unable to meet production and financial targets, a situation exacerbated by higher utility costs. Blyvoor is proposing voluntary separation and application of the principle of “last in, first out” as among the mechanisms to be applied to effect the required reduction in employee numbers. Measures currently under consideration to achieve a targeted 30% improvement in the cost of production in R/kg terms, and thus to avoid employee reduction, include:
 •
 
  Other
 
  Limited, or GoldMoney, to other GoldMoney shareholders. The cash consideration in respect of the disposal amounted to R23.8 million ($2.9 million). GoldMoney is a company that holds the rights, patents and other intellectual property of GoldMoney.com, which is a product specializing in digital gold currency. We previously held a 50.25% shareholding in Net-Gold Services Limited, which was converted on March 30, 2008 into a 12.3% shareholding in GoldMoney.
  resulted in Argonaut (a wholly owned subsidiary of DRDGOLD) and Mintails SA each owning 50% of the shareholding of Witfontein as well as being authorized to each appoint 50% of the board. Previously Mintails SA owned 100% of the issued share capital of Witfontein. Witfontein was to be used as a future deposition establishment facility (i.e. slime deposition). On January 21, 2010,  Ergo Mining Operations through its subsidiary ERPM, acquired the remaining 50% interest in the Ergo JV from Mintails for a total consideration of R82.1 million. The purchase consideration was paid in cash in the amount of R62.1 million and the balance of R20.0 million was paid with DRDGOLD’s shares in Witfontein.
  West Wits Mining Limited, an Australian based listed company. The formation of the company was to explore, evaluate and potentially extract gold and uranium from the West Rand Goldfield of South Africa's Witwatersrand Basin.
  purchase the South African business assets of Mintails after its announcement dated June 29, 2009, which set out information relating to Mintails having conditionally accepted an offer by  Ergo Mining Operations, to acquire all of its South African business assets, excluding its interest in West Wits Mining Limited. Key financial and operating indicators
 The financial results for the years ended June 30, 2011, 2010 and 2009 below are stated in accordance with IFRS as


production, operating costs, cash costs per kilogram and total costs per kilogram, capital expenditure and Ore Reserves. The following table presents the key performance measurement data for the past three fiscal years:
  Operating data
 Year ended June 30,
  2011
 2010
 2009
                     1
              Revenue
  
 Year ended June 30,
  2011
 R'000
 2010
 R'000
 2009
 R'000
     2
    3
      Total
 2,565,319 1,990,522 1,910,738
   rand gold price and the 10% increase in gold production. Both Blyvoor and Ergo managed to increase their gold production by 14% and 37%, respectively (discussed in more detail below under “Gold production”). Crown’s gold production decreased by 4%, mainly as a result of diminishing grades as the processing of the Top Star dump neared completion.
 In fiscal 2010, revenue increased from R1,910.7 million in fiscal 2009 to R1,990.5 million. This increase was a
 consequence of the higher average gold price received by us of R265,332 per kilogram of gold produced, compared to R248,019 per kilogram of gold produced in fiscal 2009. The increase in revenue due to the higher average gold price received was offset by lower gold production at Blyvoor as a result of the seismic activity during the last quarter of fiscal 2009 and a month long wage related strike during the first quarter of fiscal 2010 at Blyvoor (discussed in more detail below under “Gold production”), which resulted in production decreasing from 247,690 ounces in fiscal 2009 to 241,194 ounces in fiscal 2010.
  
 1
 Cash operating costs per kilogram and total costs per kilogram are non-IFRS financial measures of performance that we use to determine cash
 generating capacities of the mines and to monitor performance of our mining operations. For a reconciliation to operating costs see Item 5A.: “Operating Results” Under “Reconciliation of cash cost per kilogram, total costs and total costs per kilogram.”
 2
 Ergo has been restated during fiscal 2010 to include ErgoGold and the Ergo JV. ErgoGold started gold production at the end of the second
 quarter of fiscal 2009, at which stage the Group owned 50% of the joint venture and the Mintails group owned the remaining 50%. Effective March 31, 2009 the Group acquired Mintails’ 50% interest, resulting in the Group owning 100%. Effective May 1, 2010 the Group acquired Mintails’ 50% interest in the Ergo JV, resulting in the Group owning 100%.
 3
 Crown has been restated during fiscal 2010 to include the surface retreatment operation of ERPM. ERPM has therefore also been restated and
  comprises only its underground operation.


Gold production
 
  
  South African Production in Year ended June 30
 
 2011  2010  2009
 
 Ounces           
  Kilograms              
  Ounces          Kilograms               
  Ounces           Kilograms
  
 
 
  
 
    
 
 
  1
   
 
  2
   
 
 
  2
  
          Total production
 265,179  8,248
 241,194  7,502
 247,690  7,704
 
   At Blyvoor, total gold production for the year was 121,114 ounces, up by 14% from 106,452 ounces in fiscal 2010. This
 reflected continued recovery of the underground operations from the effects of substantial seismic damage in the high-grade areas of No 5 Shaft and a protracted, wage related strike in the previous year. Underground production rose by 18% to 91,469 ounces from 77,226 ounces in fiscal 2010, as a result of a 16% increase in throughput to 732,000 tonnes from 633,000 tonnes in fiscal 2010 and an increase in average grade to 3.89g/t from 3.79g/t. The increase was partly offset by a drop in grade for the last quarter of fiscal 2011 due to the use of a substitute explosive for the fourth quarter of fiscal 2011, due to the major overhaul of our regular preferred supplier’s explosive manufacturing plant. While surface production was stable, rising by 1% to 29,645 ounces from 29,226 ounces in fiscal 2010, as a result of a 5% increase in throughput to 3,129,000 tonnes from 2,968,000 tonnes in fiscal 2010 which had been offset by a 6% decrease in average grade to 0.29g/t from 0.31g/t in fiscal 2010.
 At Ergo, total gold production was 37% higher at 48,352 ounces (fiscal 2010: 35,332 ounces). This reflects an 11% rise
 in throughput to 13,206,000 tonnes (fiscal 2010: 11,867,000 tonnes) and a 22% rise in average grade to 0.11g/t (fiscal 2010: 0.09g/t), resulting from continued build-up of slimes recovery from the Elsburg Tailings Complex.
 
   At ERPM, underground operations ceased in October 2008 and have been permanently halted. As a result ERPM had no
  For fiscal 2010, our total attributable gold production from operations decreased by 6,496 ounces, or 3%, to 241,194
  At Blyvoor, total production declined by 18% to 106,452 ounces from 129,473 ounces in fiscal 2009, reflecting a 13%
 decrease in production from the underground operations to 77,226 ounces from 88,898 ounces in fiscal 2009 and a 28% decrease in production from surface operations to 29,226 ounces from 40,575 ounces in fiscal 2009. The decrease in underground production was as a result of lower recovered grades following seismic activity which damaged high-grade mining areas during the last quarter of fiscal 2009. As a consequence, the grade recovered from underground operations decreased from 4.59g/t in fiscal 2009 to 3.79g/t in fiscal 2010. A month long wage related strike during the first quarter of fiscal 2010 also contributed to the decrease in total production. The decrease in the surface production is due to lower volumes recovered from lower grade tailings material available and to the discontinuation of the treatment of uneconomic rock dump material.
 At Ergo, fiscal 2010 was the first full year of production, since production commenced at the end of the second quarter of
 fiscal 2009. Ergo has now reached a sustainable state of production, although engineering modifications at the Ergo plant to improve recovered grades are still underway as at September 30, 2011. Ergo’s recovered grade improved from 0.05g/t in fiscal 2009 to 0.09g/t in fiscal 2010 and 0.11g/t in fiscal 2011.
 
 1
 Ergo has been restated during fiscal 2010 to include ErgoGold and the Ergo JV. ErgoGold started gold production at the end of the second
 quarter of fiscal 2009, at which stage the Group owned 50% of the joint venture and the Mintails group owned the remaining 50%. Effective March 31, 2009 the Group acquired Mintails’ 50% interest, resulting in the Group owning 100%. The Ergo JV has not yet produced gold and was a joint venture, where the Group owned 50% and the Mintails group owned 50%. Effective May 1, 2010 the Group acquired Mintails’ 50% interest, resulting in the Group owning 100%.
 2
 Crown has been restated during fiscal 2010 to include the surface retreatment operation of ERPM. ERPM has therefore also been restated and
  comprises only its underground operation.


16% improvement in recoveries from 0.37g/t in fiscal 2009 to 0.43g/t in fiscal 2010. The increase was partly offset by a reduction of throughput to 7,122,000 tonnes from 8,007,000 tonnes because of the continued impact of deposition constraints at Crown’s deposition facility. A more detailed review of gold production at each of our operations is provided under Item 4D.: “Property, Plant and Equipment.”
  Cash costs
 1
 and total costs
 2
 per kilogram
 
  to R251,296 per kilogram of gold from R233,112 per kilogram of gold in fiscal 2010. Total costs increased to R357,486 per kilogram of gold from R237,123 per kilogram of gold in fiscal 2010. The increase in cash costs per kilogram of gold produced in fiscal 2011 was due to price increases in key consumables together with above inflation increases in both labor and electricity, which were partially offset by higher production. The increase in total costs was due to a R546.6 million impairment of Blyvoor’s property, plant and equipment.
 For fiscal 2010, cash costs increased to R233,112 per kilogram of gold from R212,228 per kilogram of gold in fiscal 2009.
 Total costs from our operations decreased to R237,123 per kilogram of gold from R237,344 per kilogram of gold in fiscal 2009. The increase in cash costs per kilogram of gold produced in fiscal 2010 was due to price increases in key consumables (labor, consumables and electricity) and lower production. The decrease in total costs from operations was due to R156.7 million profit on disposal (placed into voluntary liquidation) of our foreign subsidiary companies, which were the holding companies of our Australasian Operations.  Reconciliation of cash costs per kilogram, total costs and total costs per kilogram
 
  exclude depreciation, depletion and amortization, rehabilitation, retrenchment costs and corporate administration costs. Cash costs per kilogram are calculated by dividing cash costs by kilograms of gold produced. Cash costs per kilogram have been calculated on a consistent basis for all periods presented.
 
   
  income, finance expenses and other operating and non-operating costs, but exclude taxation, minority interest, profit or loss from associates and the cumulative effect of accounting adjustments. These costs are excluded as the mines do not have control over these costs and they have little or no impact on the day-to-day operating performance of the mines. Total costs per kilogram are calculated by dividing total costs by kilograms of gold produced. Total costs and total costs per kilogram have been calculated on a consistent basis for all periods presented.
 Cash costs per kilogram, total costs and total costs per kilogram are non - IFRS financial measures that should not be
 considered by investors in isolation or as alternatives to operating costs, net profit/(loss) attributable to equity owners of the parent, profit/(loss) before tax and other items or any other measure of financial performance presented in accordance with IFRS or as an indicator of our performance. While the Gold Institute has provided definitions for the calculation of cash costs, the calculation of cash costs per kilogram, total costs and total costs per kilogram may vary significantly among gold mining companies, and these definitions by themselves do not necessarily provide a basis for comparison with other gold mining companies. However, we believe that cash costs per kilogram, total costs and total costs per kilogram are useful indicators to investors and our management of an individual mine's performance and of the performance of our operations as a whole as they provide:
  
 A reconciliation of operating costs to total costs, cash costs per kilogram and total costs per kilogram, for each of the
 three years ended June 30, 2011, 2010 and 2009 is presented below. In addition, we have also provided below details of the amount of gold produced by each mine for each of those periods.
 
 1
 Cash costs per kilogram is a non - IFRS financial measure of performance that we use to determine cash generating capacities of the mines and
 to monitor performance of our mining operations. For a reconciliation to operating costs see Item 5A.: “Operating Results.”
 2
 Total costs per kilogram is a non - IFRS financial measure of performance that we use to determine cash generating capacities of the mines and
 to monitor performance of our mining operations. For a reconciliation to operating costs see Item 5A.: “Operating Results.”


For the year ended June 30, 2011(in R'000, except as otherwise noted)
  Blyvoor
 
 Ergo
 1
 Crown
 2
 
 ERPM
 2
 
 Other
 3
 Total
  4
      2,072,687
  
    15,612
 Operating costs
  2,088,299
 Plus:
      
       130,919
       839
 Movement in provision for environmental  rehabilitation..................................................
    52,567
 
   (5,651)
 
  42,978
 
  33,596
 Total operating costs
 2,343,547
 Plus:
      
       547,656
       88,086
     (52,792)
       22,047
 Total costs
 2,948,544
        265,179
       8,248
     251,296
     357,486
 
 
 1
 Ergo has been restated during fiscal 2010 to include ErgoGold and the Ergo JV. ErgoGold started gold production at the end of the second quarter of fiscal 2009, at which stage the Group owned 50% of the joint
 venture and the Mintails group owned the remaining 50%.
  2
 Crown has been restated during fiscal 2010 to include the surface retreatment operation of ERPM. ERPM has therefore also been restated and comprises only its underground operation.
  3
 Relates to other non-core operating entities within the Group.
 4
 Cash operating costs equate to cash costs of production.


For the year ended June 30, 2010(in R'000, except as otherwise noted)
  Blyvoor
 
 Ergo
 1
 Crown
 2
 
 ERPM
 2
 
 Other
 3
 Total South
 African
 Operations
 Other-
 Offshore
 Operations
 Total
 Continuing
 Operations
  4
       1,748,806 -
 1,748,806
  
   (29,941) -
 (29,941)
 Operating costs
    1,718,865 -
 1,718,865
 Plus:
      
 
       190,769 -
 190,769
       20,127 -
 20,127
 Movement in provision for environmental  rehabilitation..................................................
      (88,034) -
 (88,034)
 
     (35,290)
  (35,290)
 
     34,851
  34,851
 
     50,499
  50,499
 Total operating costs
    1,891,787
  1,891,787
 Plus:
      
  
       6,224
  6,224
       56,836
  57,026
       (45,079)
  (200,273)
       24,132
  24,132
 Total costs
    1,933,900
  1,778,896
       241,194
  241,194
       7,502
  7,502
       233,112
  233,112
       257,785
  237,123
 
 1
 Ergo has been restated to include ErgoGold and the Ergo JV. ErgoGold started gold production at the end of the second quarter of fiscal 2009, at which stage the Group owned 50% of the joint venture and the Mintails group owned the remaining 50%. Effective March 31, 2009 the Group acquired Mintails’ 50% interest, resulting in the Group owning 100%. Effective May 1, 2010 the Group acquired Mintails’ 50%
  interest in the Ergo JV, resulting in the Group owning 100%.
  2
 Crown has been restated to include the surface retreatment operation of ERPM. ERPM has therefore also been restated and comprises only its underground operation.
  3
 Relates to other non-core operating entities within the Group.
 4
 Cash operating costs equate to cash costs of production.


For the year ended June 30, 2009(in R'000, except as otherwise noted)
   Blyvoor
 
 Ergo
 1
 Crown
 2
 
 ERPM
 2
 
 Other
 3
 Total South
 African
 Operations
 Other-
 Offshore
 Operations
 Total
 Continuing
 Operations
       1,635,006 -
 1,635,006
  
     (7,018) -
 (7,018)
 Operating costs
     1,627,988 -
 1,627,988
 Plus:
      
 
      99,217 -
 99,217
        34,922 -
 34,922
 Movement in provision for environmental  rehabilitation..................................................
      19,545 -
 19,545
 
    18,226
  18,226
 
   31,131
  31,131
 
  2,996
  2,996
 Total operating costs
    1,834,025
  1,834,025
 Plus:
      
  
       75,138
  75,138
       74,763
  83,583
      (206,995)
  (205,991)
       31,425
  41,743
 Total costs
     1,808,356
  1,828,498
       247,690
  247,690
       7,704
  7,704
       212,228
  212,228
       234,729
  237,344
 
 1
 Ergo has been restated to include ErgoGold and the Ergo JV. ErgoGold started gold production at the end of the second quarter of fiscal 2009, at which stage the Group owned 50% of the joint venture and the
 Mintails group owned the remaining 50%. Effective March 31, 2009 the Group acquired Mintails’ 50% interest, resulting in the Group owning 100%. The Ergo JV has not yet produced gold and was a joint venture, where the Group owned 50% and the Mintails group owned 50%. Effective May 1, 2010 the Group acquired Mintails’ 50% interest, resulting in the Group owning 100%.
  2
 Crown has been restated to include the surface retreatment operation of ERPM. ERPM has therefore also been restated and comprises only its underground operation.
  3
 Relates to other non-core operating entities within the Group.
 4
 Cash operating costs equate to cash costs of production.


70
 
 Capital expenditure
 
  increase of 64%. Capital expenditure increased primarily as a result of the Crown/Ergo pipeline project which commenced during June 2010. In fiscal 2011, Ergo spent R29.4 million on the refurbishment of the second CIL circuit at the Ergo plant and R27.7 million on the extension of the Brakpan tailings facility, Crown spent R119.7 million which was all part of the Crown/Ergo pipeline project. Crown also spent R27.9 million on tailings deposition site maintenance and R0.6 million on vehicles and equipment. Blyvoor spent R57.2 million on opening up and development, R25.3 million on equipment and R13.2 million on other equipment and tailings facility management. For a detailed summary of capital expenditure, see Item 4D.: “ Property, Plant and Equipment”.
  R345.1 million in fiscal 2009, a decrease of 44%. Capital expenditure decreased, because most of the capital for Phase 1 of the Ergo project was incurred during fiscal 2009. In fiscal 2010, Ergo spent R34.4 million for the installation and development of infrastructure, Crown spent R29.6 million on the commencement of the Crown/Ergo pipeline project and R16.1 million on tailings deposition site maintenance and vehicles and equipment, Blyvoor spent R79.6 million mainly for opening up and development and equipment. For a detailed summary of capital expenditure, see Item 4D.: “ Property, Plant and Equipment”.
   
 Ore Reserves
 
   ounces at June 30, 2010, representing a 5% increase. The increase is mainly due to an increase in the rand gold price. Excluding the effect of depletion, our Ore Reserves increased by 0.686 million ounces, or 11%. As at June 30, 2010, our Ore Reserves from operations were estimated at 6.0 million ounces, as compared to approximately 5.2 million ounces at June 30, 2009, representing a 15% increase. The increase was mainly due to an increase in the rand gold price and the inclusion of the Crown/Ergo pipeline ore reserves. Excluding the effect of depletion, our Ore Reserves increased by 1.0 million ounces, or 19%.
  acquisitions as well as exploration.
  Year ended June 30,
 
 2011  2010  2009
 
 Ounces
 Kilograms
 Ounces
 Kilograms  Ounces  Kilograms
 
 ‘000
 
 ‘000
 
 ‘000
 
        
  
  
   1
 
      Total Ore  6,336
 197,074
 6,027  187,403  5,220
 163,889
 
 
 
  at the time of reserve determination.  For purposes of our financial statements, depreciation and impairment of property, plant and equipment is determined based upon our "recoverable minerals", which means proven and probable ore reserves, which are calculated using our life of mine business plans and a gold price at the end of each financial year.
 
 1
 Ergo’s Ore Reserves include the Elsburg and Benoni tailings complexes which are being processed by Ergo, however the mining rights for
 these tailings are owned by ERPM.


71
 
 Application of critical accounting policies
 
   appropriate assumptions for calculating financial estimates. By their nature, these judgments are subject to an inherent degree of uncertainty and are based on our historical experience, terms of existing contracts, management's view on trends in the gold mining industry and information from outside sources.
 
   in the preparation of our consolidated financial statements and could potentially impact our financial results and future financial performance:
 
 
 
  Directors and the Audit Committee, both of which have approved and reviewed the disclosure of these policies. Our significant accounting policies relating to our accounting estimates and judgments are described in more detail in note 1 to the consolidated financial statements. Refer to Item 18.: “Financial statements’’. This discussion and analysis should be read in conjunction with the consolidated financial statements and related notes included in Item 18.: “Financial statements’’.
 
 Property, plant and equipment
 
   capitalized to the specific mine to which the cost relates. Depreciation is calculated on a mine-by-mine basis using the units of production method. Other assets are depreciated using the straight-line method over the expected life of these assets. Under the units of production method, we estimate the depreciation rate based on actual production over total Proven and Probable Ore Reserves of the particular mine, which are calculated using our life of mine business plans and a gold price at the end of each financial year. This rate is then applied to actual costs capitalized to date to arrive at the depreciation expense for the period. Proven and Probable Ore Reserves of the particular mine reflect estimated quantities of economically and legally recoverable reserves. Changes in management’s estimates of the quantities of economically recoverable reserves impact depreciation on a prospective basis. The estimate of the total reserves of our mines could be materially different from the actual gold mined due to changes in the factors used in determining our Ore Reserves, such as the gold price, foreign currency exchange rates, labor costs, engineering evaluations of assay values derived from sampling of drill holes and other openings. Any change in management’s estimate of the total Proven and Probable Ore Reserves would impact the depreciation charges recorded in our consolidated financial statements. The prevailing market price of gold at the end of the financial year was R236,227, R306,081 and R328,155 per kilogram for the fiscal years ended June 30, 2009, 2010 and 2011, respectively.
 
 Impairment of property, plant and equipment
 
  determine whether there is any indication of impairment. If any such indication exists, the asset's recoverable amount is estimated. The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Future cash flows are estimated based on quantities of recoverable minerals, expected gold prices, production levels and cash costs of production, all based on life of mine business plans. The term “recoverable minerals” means proved and probable ore reserves, which are calculated using our life of mine business plans and a gold price at the end of each financial year. The prevailing market price of gold at the end of the financial year was R236,227, R306,081 and R328,155 per kilogram for the fiscal years ended June 30, 2009, 2010 and 2011, respectively. For the purpose of impairment testing, assets are grouped together into the smallest group of assets which generates cash inflows from continuing use that is largely independent of the cash inflows of other assets or groups of assets, or the cash-generating unit. An impairment loss is recognized directly against the carrying amount of the asset whenever the carrying amount of an asset, or its cash generating unit, exceeds its recoverable amount. Impairment losses are recognized in profit or loss.
 
  also consider such factors as our market capitalization, the quality of the individual ore body and country risk in determining the recoverable amount. During fiscal 2011, R546.6 million was recorded as an impairment and during fiscal 2010 a reversal of impairment of R12.5 million and in 2009 an impairment of R72.4 million were recorded by applying these principles.


72
 
  per kilogram in year one escalating at 6.1% per annum, and a discount rate of 13.9%. With a 10% reduction in the gold price to R315,584 per kilogram, an additional impairment of R366.2 million would be raised, or at an increase in the discount rate of 3.8 percentage points (27.3%) to 17.7%, the group would start to raise an additional impairment of the mining assets. The increase in discount rate from 13.7% in fiscal 2010 to 13.9% in fiscal 2011, was as a result of the increase in the groups average borrowing rate from 10.0% to 10.7% as well as an increase in the beta factor from 0.63 to 0.77 indicating an increased volatility in the group’s share price. The increase in the escalation rate from 5.8% in fiscal 2010 to 6.1% in fiscal 2011 was a result of higher inflation rates from 4.2% (CPI) up to 5.3% (CPI).
 The R546.6 million impairment in fiscal 2011, related to Blyvoor which represents one cash generating unit. A discount rate
 of 14.4% (2010: 13.7%), together with further risk adjustments to future cash flows were used in determining the impairment. Management also took into consideration as part of their reasonableness assessment, a sensitivity analysis and the fact that Blyvoor is under business rescue proceedings, with the business rescue plan not being approved as at year end. Further considerations included the group's market capitalization which exceeded the group's net asset value.
 As at June 30, 2011, the net asset value as per the statement of financial position amounting to R1,219.2 million, was near to
 the company’s market capitalization amounting to R1,258.6 million and as at June 30, 2010, the net asset value of R1,650 million exceeded the market capitalization of R1,312.5 million. This is an indicator of possible impairment in accordance with paragraph 12 of IAS 36 – Impairment of assets (International Financial Reporting Standards (IFRS)). Management has assessed the recoverable amounts of the mining assets through each operation’s respective life-of-mine plans, using the value in use method and the assumptions mentioned in the aforementioned paragraph, and determined that no additional impairment is required.
 
 Deferred income and mining taxes
 
   financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognized for the following temporary differences: the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit, and differences relating to investments in subsidiaries and jointly controlled entities to the extent that it is probable that they will not reverse in the foreseeable future. In addition, deferred tax is not recognized for taxable temporary differences arising on the initial recognition of goodwill. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences, based on the expected manner of realization or settlement of the carrying amount of assets and liabilities, and based on the laws that have been enacted or substantively enacted by the reporting date.
 
   all factors that could possibly affect the probability that future taxable profit will be available against which unused tax credits can be utilized. These factors included profitability of the operations and an estimate of the gold price. The amount recognized as a deferred tax asset is sensitive to the current gold spot price. As at June 30, 2011 we recognized a deferred tax asset of R69.2 million (June 30, 2010: R140.7 million and June 30, 2009: R165.1 million). The amount recognized at June 30, 2011 is based on a future gold price received of R350,649 per kilogram in year one, escalating at an average of 6.1% per annum. At a 10% lower gold price received of R315,584 per kilogram, the deferred tax asset will reduce by R15.3 million.
  effective tax rate, resulting from the South African income tax formula for mining income. This change has been accounted for as a change in estimate and is therefore applied prospectively. The change reduced the expense through profit or loss and the net deferred tax liability by R39.9 million.
 
 Reclamation and environmental costs
 
   rectifying damage caused before production commenced. Accordingly an asset is recognized and included within mining properties. Provisions for environmental rehabilitation are provided at the present value of the expenditures expected to settle the obligation, using estimated cash flows based on current prices. The unwinding of the obligation is included in profit or loss. Estimated future costs of environmental rehabilitation are reviewed regularly and adjusted as appropriate for new circumstances or changes in law or technology. Changes in estimates are capitalized or reversed against the related asset but taken to profit or loss if there is no related asset left. Gains or losses from the expected disposal of assets are not taken into account when determining the provision.
 
   based on our environmental management plans in compliance with current technological, environmental and regulatory requirements. An average discount rate of 8.53%, average inflation rate of 5.98% and expected life of mines according to the life-of-mine plans were utilized in the calculation of the estimated net present value of the rehabilitation liability (fiscal 2010: average discount rate of 8.95%, average inflation rate of 5.76% and fiscal 2009: average discount rate of 8.25% and inflation rate of 5.7%). During fiscal 2011 there was a net increase in the provision of R10.9 million for the Ergo JV and R18.1 million for Crown, representing an increase in their respective footprints and a reduction amounting to R21.4 million for rehabilitation costs incurred (during fiscal 2010 there was a net increase in our provision of R6.4 million and due to the acquisition of the remaining 50% interest in the Ergo JV an increase amounting to R79.0 million).


73
 
   the transfer of liabilities to the amount of R63.4 million and R4.8 million relating to the disposal of the mining rights of Durban Roodepoort Deep and West Witwatersrand Gold Mine (Pty) Limited, respectively) and R34.2 million were raised in fiscal 2011, 2010 and 2009, respectively. Unwinding of the provisions amounting to R9.4 million, R10.8 million and R9.8 million was recorded in fiscal 2011, 2010 and 2009, respectively.
 
    
 Post-retirement medical benefits
 
  remaining service lives of relevant employees. We have an obligation to provide medical benefits to certain of our pensioners and dependants of ex-employees. These liabilities are provided in full, calculated on an actuarial basis. Periodic valuation of these obligations is carried out by independent actuaries using appropriate mortality tables, long-term estimates of increases in medical costs and appropriate discount rates. Actuarial gains and losses are recognized immediately in profit or loss. Assumptions used to determine the liability include a discount rate, health cost inflation rate, real discount rate, retirement age, spouse age gap, continuation at retirement and proportion married at retirement. At June 30, 2011 a provision of R5.5 million (June 30, 2010: R12.5 million, June 30, 2009: R42.5 million) for post-retirement medical benefits has been raised. During fiscal 2011, a gain of R4.0 million (fiscal 2010: R29.7 million gain; fiscal 2009: R21.0 million expense) relating to these post-retirement medical benefits went to profit or loss. The gain in fiscal 2011 was brought about by the partial settlement of the liability. The gain in fiscal 2010 was brought about by an actuarial valuation after management revised their assumptions used in this provision as a result of a project initiated during fiscal 2010 to optimize the synergies of our surface retreatment operations and the resulting possibility of a settlement of existing post retirement medical benefits. An independent legal opinion was obtained in this regard. While we believe that these assumptions are appropriate, significant changes in the assumptions may materially affect post-retirement obligations as well as future expenses, which may have an impact on earnings in the periods where the changes in the assumptions occur.
  Financial instruments
 Financial instruments recognized on the statement of financial position include investments, trade and other receivables,
 cash and cash equivalents, long- and short-term interest-bearing borrowings, trade and other payables, and bank overdrafts. Financial instruments are initially recognized at fair value and include any directly attributable transaction costs, except those financial instruments measured at fair value through profit or loss.
 If the value of the financial instrument cannot be obtained from an active market, we have established fair value by using
 valuation techniques. These include the use of recent arm’s length transactions, reference to other instruments that are substantially the same, discounted cash flow analysis and option pricing models, refined to reflect the issuer’s specific circumstances. Preference shares are measured at amortized cost based on expected future discounted cash flows. The original risk adjusted discount rate of 13% is used when estimating the future liability and are re-measured on an annual basis. This original risk adjusted discount rate is replaced with a risk adjusted market rate to determine a fair value on an annual basis.
  Operating results
 
 Comparison of financial performance for the fiscal year ended June 30, 2011 with fiscal year ended June 30, 2010
 
 Revenue
 
   
  
 Impact of change in volume
 
 
 
 R’000
 Total
 revenue
 2010  Acquisitions
 Internal
 growth/
 (decline)
 Impact of
 change in
 price  Net  change
 Total
 revenue
 2011
         1
         2
        Total Operations
 1,990,522
 -
 196,052
 378,745
 574,797
 2,565,319
 
 
 1
 Ergo has been restated during fiscal 2010 to include ErgoGold and the Ergo JV. ErgoGold started gold production at the end of the second
 quarter of fiscal 2009, at which stage the Group owned 50% of the joint venture and the Mintails group owned the remaining 50%. Effective March 31, 2009 the Group acquired Mintails’ 50% interest, resulting in the Group owning 100%. Effective May 1, 2010 the Group acquired Mintails’ 50% interest in the Ergo JV, resulting in the Group owning 100%.
 2
 Crown has been restated during fiscal 2010 to include the surface retreatment operation of ERPM.


74
 
  and the 10% increase in gold production. The average gold price increased from R265,332 per kilogram in fiscal 2010 to R311,023 per kilogram in fiscal 2011.
 
 Operating costs
 
   
  
 Impact of change in volume
 
 
 
 R’000
 Total
 operating
 costs
 2010  Acquisitions
 Internal
 growth/
 (decline)
 Impact of
 change in
 costs  Net  change
 Total
 operating
 costs
 2011
  
    
  1
  
      2
  
      Total
 1,718,865  -
 
 184,908
 184,526
 369,434
 2,088,299
  
 Years ended June 30,
 Costs
 2011  2010
    
  
   
 
  
  components of operating costs. Operating costs are linked directly to the level of production of a specific fiscal year. Operating costs in fiscal 2011 increased by 22% to R2,088.3 million compared to operating costs of R1,718.9 million in fiscal 2010. This increase was mainly as a result of a 7% rise in volumes, together with above inflation increases in both labor and electricity costs which affected Blyvoor in particular.
  of increased volumes and above inflation increases in both labor and electricity costs. Operating costs at Ergo increased from R249.0 million in fiscal 2010 to R310.2 million in fiscal 2011 which is due in part to a ramp-up in volumes. Operating costs at Crown increased from R624.8 million in fiscal 2010 to R662.3 million in fiscal 2011, due to higher labor and electricity costs. Rehabilitation provision and amounts contributed to environmental trust funds
 As of June 30, 2011, we estimate our total rehabilitation provision, being the discounted estimate of future costs, to be
 R490.2 million as compared to R420.6 million at June 30, 2010. The increase in the provision for environmental rehabilitation in fiscal 2011 was due to changes in discount and inflation rate assumptions, changes in estimates resulting from changes to the life-of-mines and additional environmental damage incurred. In fiscal 2011 an expense of R52.6 million (fiscal 2010: R88.0 million benefit) including an unwinding of the discount of R9.4 million were recorded (fiscal 2010: R10.8 million) in profit or loss.
 A total of R134.2 million was invested in our various environmental trust funds as at the end of fiscal 2011, as compared
 to R126.1 million for fiscal 2010. The increase is attributable to interest received on the investment of these funds and contributions of R1.2 million during fiscal 2011. The shortfall between the trust funds and the estimated provisions is expected to be financed by ongoing financial contributions in available financial investments over the remaining production life of the respective mining operations, the proceeds on the disposal of remaining assets and gold from plant clean-up.
 
 1
 Ergo has been restated during fiscal 2010 to include ErgoGold and the Ergo JV. ErgoGold started gold production at the end of the second
 quarter of fiscal 2009, at which stage the Group owned 50% of the joint venture and the Mintails group owned the remaining 50%. Effective March 31, 2009 the Group acquired Mintails’ 50% interest, resulting in the Group owning 100%. Effective May 1, 2010 the Group acquired Mintails’ 50% interest in the Ergo JV, resulting in the Group owning 100%.
 2
 Crown has been restated during fiscal 2010 to include the surface retreatment operation of ERPM.


75
 
 Depreciation
 Depreciation charges were R130.9 million for fiscal 2011 compared to R190.8 million for fiscal 2010. The decrease is
 mainly attributable to the extension of Crown's life-of-mine due to the construction of the Crown/Ergo pipeline. Retrenchment costs
 Retrenchment costs decreased to R0.8 million in fiscal 2011 from R20.1 million in fiscal 2010. In fiscal 2011, these costs
 relate to the last of the retrenchments at ERPM due to the closure of its underground operation. Impairments
 In fiscal 2011, an impairment of R546.6 million was raised against Blyvoor’s property, plant and equipment due to its
 current distressed financial position and the uncertainties relating to the outcome of the business rescue plan which is expected on November 1, 2011. Blyvoor represents one cash generating unit. A discount rate of 14.4% (2010: 13.7%), together with further risk adjustments to future cash flows were used in determining the impairment. Management also took into consideration as part of their reasonableness assessment, a sensitivity analysis and the fact that Blyvoor is under business rescue proceedings, with the business rescue plan not being approved as at year end. Further considerations included the group's market capitalization in comparison to the group's net asset value.
 In addition, an impairment amounting to R1.1 million was raised against the West Witwatersrand Gold Mines (Pty)
  
 Administration expenses and general costs
 
 
 2010, an increase of R31.1 million. In fiscal 2010, administration expenses and general costs included a non-recurring credit of approximately R30.0 million as a result of a decrease in the provision for post-retirement medical benefits as part of a project initiated during fiscal 2010 to optimize the synergies of DRDGOLD’s surface operations, and the resulting settlement of the post-retirement medical benefit, management has revised the assumptions used in calculating the provision. Other than inflation related increases, this was the main reason for the year-on-year increase. Finance income
 Finance income decreased from R200.3 million in fiscal 2010 to R52.8 million in fiscal 2011. The majority of the
 decrease in fiscal 2011 was due to the fact that finance income in fiscal 2010 included a non-recurring gain of R156.7 million for foreign currency translation reserves realized on the liquidation of foreign subsidiaries, which included the Australasian Operations. Finance expenses
  attributable to the capitalization of borrowing costs in the current year relating to the Crown/Ergo pipeline, amounting to R6.4 million. Income tax
 The net tax charge of R32.2 million for fiscal 2011 comprises a current taxation charge of R1.2 million, a deferred tax
 charge of R25.9 million and secondary tax on companies amounting to R5.1 million. This compares to a net tax charge of R8.3 million for fiscal 2010, comprising a current taxation charge of R8.5 million, a deferred tax benefit of R2.0 million and secondary tax on companies amounting to R1.8 million. The year-on-year increase in the net tax charge was mainly due to higher profits, in particular at Crown and Ergo, which resulted in an increase in the deferred tax charge for the year.


76
 
 Comparison of financial performance for the fiscal year ended June 30, 2010 with fiscal year ended June 30, 2009 Revenue
     
 Impact of change in volume
 
 
 
 R’000
 Total
 revenue
 2009  Acquisitions
 Internal
 growth/
 (decline)
 Impact of
 change in
 price  Net  change
 Total
 revenue
 2010
         1
    
  2
         2
        Total Operations
 1,910,738
 -
 (77,108)
 156,892
 79,784
 1,990,522
 Revenue for fiscal 2010 increased by R79.8 million, or 4.2%, to R1,990.5 million, primarily due to the higher gold price
 received. The average gold price increased from R248,019 per kilogram in fiscal 2009 to R265,332 per kilogram in fiscal 2010. The impact of the increase in the gold price was offset by the decrease in production at ERPM due to its underground operation ceasing production in October 2008 and due to a decrease in production at Blyvoor as a result of the seismic events during the last quarter of fiscal 2009 and the month-long labor strike.
  Operating costs
  to the total change on a consolidated basis for fiscal 2010 in comparison to fiscal 2009:
 
 Impact of change in volume
 
 
 
 R’000
 Total
 operating
 costs
 2009 Acquisitions
 Internal
 growth/
 (decline)
 Impact of
 change in
 costs  Net  change
 Total
 operating
 costs
 2010
            
         2
   
   
 Total
 1,627,988
 -
 135,652
 (44,775)
 90,877
 1,718,865
 
  
 Years ended June 30,
 Costs
 2010  2009
    
  
   
 
  
  components of operating costs. Operating costs are linked directly to the level of production of a specific fiscal year. Operating costs in fiscal 2010 increased by 5.5% to R1,718.9 million compared to operating costs of R1,628.0 million in fiscal 2009. This increase was primarily attributable to Ergo which started its operations during November 2008 and therefore had its first full twelve month fiscal year of production during fiscal 2010. This was offset by the cessation of ERPM’s underground operation during fiscal 2009.
 
 1
 Ergo has been restated during fiscal 2010 to include ErgoGold and the Ergo JV. ErgoGold started gold production at the end of the second
 quarter of fiscal 2009, at which stage the Group owned 50% of the joint venture and the Mintails group owned the remaining 50%. Effective March 31, 2009 the Group acquired Mintails’ 50% interest, resulting in the Group owning 100%. Effective May 1, 2010 the Group acquired Mintails’ 50% interest in the Ergo JV, resulting in the Group owning 100%.
 2
 Crown has been restated during fiscal 2010 to include the surface retreatment operation of ERPM. ERPM has therefore also been restated and
  comprises only of its underground operation.


77
 
 
  volume from 129,473 ounces to 106,452 ounces produced, as a result of the seismic events during the last quarter of fiscal 2009 and a month-long wage related labor strike during the second quarter of fiscal 2010.  Operating costs at Ergo were R249.0 million in fiscal 2010, representing operating costs for the first full twelve months of production. Operating costs at Crown were R624.8 million in fiscal 2010, compared to R520.3 million in fiscal 2009. The increase in Crown’s operating costs was due to wage increases and higher electricity tariffs. At ERPM there were no operating costs relating to underground production during fiscal 2010 due to the underground operations being placed under care and maintenance, and later suspended during fiscal 2010.  Rehabilitation provision and amounts contributed to environmental trust funds
 As of June 30, 2010, we estimated our total rehabilitation provision, being the discounted estimate of future costs, to be
 R420.6 million as compared to R412.5 million at June 30, 2009. The increase in fiscal 2010 related to the acquisition of the remaining 50% interest in the Ergo JV which was partially offset by a reduction in the rehabilitation provision of R4.8 million and R63.4 million due to the Durban Roodepoort and West Witwatersrand Gold Mines (Pty) Ltd liabilities being taken over by Mintails SA Limited, respectively. In fiscal 2010 a benefit of R88.0 million (fiscal 2009: R19.5 million expense) including an unwinding of the discount of R10.8 million were recorded (fiscal 2009: R9.8 million) in profit or loss.
 A total of R126.1 million was invested in our various environmental trust funds as at the end of fiscal 2010, as compared
 to R129.7 million for fiscal 2009. The decrease is attributable to an impairment of the rehabilitation trust fund relating to the West Witwatersrand Gold Mines (Pty) Limited amounting to R18.7 million, as a result of the transfer of the relating environmental rehabilitation provision. The shortfall between the trust funds and the estimated provisions is expected to be financed by ongoing financial contributions in available financial investments over the remaining production life of the respective mining operations, the proceeds on the disposal of remaining assets and gold from plant clean-up. Depreciation
 Depreciation charges were R190.8 million for fiscal 2010 compared to R99.2 million for fiscal 2009. The increase was
 mainly attributable to additional assets acquired during the last quarter of fiscal 2009 by Ergo, therefore fiscal 2010 includes a full 12 months of depreciation for these assets, the acquisition of the remaining 50% interest in the Ergo JV during the last quarter of fiscal 2010, and the decrease in the Crown life-of-mine for purposes of depreciation due to limited deposition capacity in fiscal 2009. Retrenchment costs
 Retrenchment costs decreased to R20.1 million in fiscal 2010 from R34.9 million in fiscal 2009. In fiscal 2010, these
 costs related to retrenchments at Blyvoor amounting to R10.9 million, retrenchments at ERPM amounting to R4.0 million and retrenchments at our corporate head office amounting to R5.2 million. These retrenchments were due to various cost reduction initiatives implemented during fiscal 2010, which included the right-sizing initiative at Blyvoor and the closure of ERPM’s underground operation. Impairments
 In fiscal 2010, an impairment reversal of R12.5 million was made against Crown’s property, plant and equipment due to
 the extension of the Knights plant’s life-of-mine. An impairment was recorded amounting to R18.7 million against the West Witwatersrand Gold Mines (Pty) Limited rehabilitation trust fund, due to the disposal of the relating mining rights over the West Wits mining lease area.
 
 Administration expenses and general costs
 
 
 2009, a decrease of R26.6 million. The decrease was mainly due to an insurance claim received by Blyvoor amounting to R14.1 million and cost reduction initiatives undertaken by management, including a non-recurring credit of approximately R30.0 million as a result of a decrease in the provision for post-retirement medical benefits as part of a project initiated during fiscal 2010 to optimize the synergies of DRDGOLD’s surface operations, and the resulting settlement of the post-retirement medical benefit, management has revised the assumptions used in calculating the provision.


78
 
 Finance income
 Finance income decreased from R206.0 million in fiscal 2009 to R200.3 million in fiscal 2010. The majority of the
 decrease in fiscal 2010 related to the decrease in interest received on our cash and cash equivalents which were significantly lower in fiscal 2010 than in fiscal 2009. In addition, finance income for fiscal 2010 included a R156.7 million profit on disposal of subsidiaries and R14.6 million net gain on the preference shares carried at amortized cost due to an increase in the repayment period. Finance expenses
  unwinding of discount on financial liabilities measured at amortized cost and unrealized foreign exchange losses were the main reasons for the decrease from fiscal 2009 to fiscal 2010.
  Income tax
 The net tax charge of R8.3 million for fiscal 2010 comprised a current taxation charge of R8.5 million, a deferred tax
 benefit of R2.0 million and secondary tax on companies charge as a result of the dividend declared amounting to R1.8 million. This compared to a net tax benefit relating to our operations of R28.4 million for fiscal 2009, which comprised a current taxation charge of R46.2 million and a deferred tax benefit of R74.6 million. The increase in the deferred tax benefit in fiscal 2009 was as a result of the recognition of estimated tax losses at our operations and other temporary differences which were not recognized previously. On the statement of financial position this deferred tax asset raised was offset by a deferred tax liability raised on the acquisition of ErgoGold amounting to R185.7 million. The decrease in the deferred tax benefit in fiscal 2010, was due to no acquisitions or transactions with similar tax implications taking place during fiscal 2010.
  5B. LIQUIDITY AND CAPITAL RESOURCES
 
 Operating activities
 
   operating activities of R53.6 million for fiscal 2010 and R208.2 million for fiscal 2009. During fiscal 2011, the net working capital movement represented an outflow of cash of R3.3 million, compared to an outflow of R31.5 million in fiscal 2010 and an inflow of R41.4 million in fiscal 2009. Cash generated from operating activities increased largely due to the 15% increase in the rand gold price and the 10% improvement in gold production for the year, which resulted in a significant rise in the group’s revenue. Although Blyvoor contributed towards the increase in cash generated from operating activities, our surface retreatment operations generated most of the cash flows from operating activities.
 
 Investing activities
 
   
  equipment, of which R176.8 million related to the Crown/Ergo pipeline project. In addition, R22.6 million was spent on environmental trust funds and rehabilitation payments. In fiscal 2010, cash utilized by investing activities mainly consisted of R194.0 million in additions to property, plant and equipment, and R40.4 million for the acquisition of the remaining 50% of the Ergo JV. Cash utilized by investing activities in fiscal 2009, mainly consisted of R345.1 million in additions to property, plant and equipment and R277.8 million for the acquisition of the remaining 50% of ErgoGold.
 
 
  Crown/Ergo pipeline project, Ore Reserve development, new infrastructure and new mining equipment at our operations. Significant continuing capital projects for fiscal 2011 included:


79
 
  development, new infrastructure and new mining equipment at our operations. Significant continuing capital projects for fiscal 2010 included:
  
 Total capital expenditure (cash) for fiscal 2009 was R345.1 million. Capital expenditure was predominantly on Ore Reserve
 development, new infrastructure and new mining equipment at our operations. Significant continuing capital projects for fiscal 2009 included:
 
    2011 on operations. We expect to incur R244.0 million of capital expenditure on mining equipment and development, upgrading current metallurgical plants and tailings facilities as follows:
 
 Financing activities
 
    
   which had been offset by an R8.3 million repayment of borrowings and a dividend payment of R19.2 million.
  share option scheme for a consideration of R1.0 million. Costs relating to these share issues were incurred, amounting to R2.0 million. A dividend of R19.0 million was paid and there was a repayment of borrowings amounting to R2.1 million.
  R37.7 million was paid and there was a repayment of borrowings amounting to R54.4 million.
 
 Borrowings and funding
 
  securities, which include the following:
  AngloGold Ashanti Limited for the purchase of the remaining movable and immovable assets of Ergo. The facilities were repayable in equal monthly installments over 23 and 19 months, respectively, of which the final installment was made during fiscal 2010. The loans bore interest at the prime lending rate, which was 10.0% at June 30, 2010. The loan was secured over the assets that were purchased from AngloGold Ashanti Limited. The facilities were repaid in full early in fiscal 2010, therefore, as of such date the facilities were no longer in place.
 On January 1, 2009, we entered into a facility of R250.0 million with Investec Bank Limited. The facility bore interest at
 the three-month Johannesburg Inter-bank Acceptance Rate, or JIBAR, plus 300 basis points. During fiscal 2009, we had not drawn down against this facility. During fiscal 2010 we drew down and settled, R50 million against this facility. This facility was not renewed and, therefore, as at June 30, 2010, this facility was no longer in place.
 On October 1, 2010 Ergo Mining Operations (formerly DRDGOLD SA), established a R500 million Domestic Medium
 Term Note Programme, or DMTN Programme, under which it may from time to time issue notes. On October 1, 2010, Ergo Mining Operations successfully issued R108 million in notes under the DMTN Programme and the different notes issued mature 12 and 24 months from the date of issue and bear interest at the three month JIBAR rate plus a margin ranging from 4% to 5% per annum. The loan notes with a 12 month maturity, amounting to R78.0 million, are repayable on October 3, 2011. The remaining 
 loan notes with a 24 month maturity, amounting to R30.0 million, are repayable on October 3, 2012.


80
 
   Anticipated funding requirements and sources
  assets less current liabilities) of R100.0 million, compared to cash and cash equivalents of R188.2 million and positive working capital of R132.9 million at June 30, 2010 and cash and cash equivalents of R352.7 million and positive working capital of R224.5 million at June 30, 2009. At September 30, 2011, our cash and cash equivalents were R293.9 million.
  negotiated funding facilities will be sufficient to meet our anticipated commitments for fiscal 2012 as described above.
  would be adversely affected if:
 
    business, which would have an adverse impact on our financial position and our ability to continue operating as a going concern. We would need to reassess our operations, consider further restructuring and/or obtain additional debt or equity funding. There can be no assurance that we will obtain this additional or any other funding on acceptable terms or at all.
 5C. RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES, ETC.
 
   5D. TREND INFORMATION
 
  operations. Gold production from our operations for the second quarter of fiscal 2012 is expected to be in line with the first quarter results. Cash costs for the second quarter of fiscal 2012 are expected to be slightly lower due to winter tariffs for electricity applying during the first quarter of fiscal 2012.
  cash costs of approximately R288,747 per kilogram, based on an exchange rate assumption of approximately $1.00/R7.27. Our ability to meet the full year’s production target could be impacted by, amongst other factors, seismicity, lower grades, achieving the targets set at Ergo and timely installation of the Crown/Ergo pipeline. We are also subject to cost pressures due to increases in labor costs; increases in crude oil, steel, electricity and water prices; unforeseen changes in ore grades and recoveries; unexpected changes in the quality or quantity of reserves; unstable or unexpected ground conditions and seismic activity; technical production issues; environmental and industrial accidents; gold theft; environmental factors; and pollution, which could adversely impact the forecasted cash costs for fiscal 2012.
 5E. OFF-BALANCE SHEET ARRANGEMENTS
 
  obligations, unconsolidated special purposes entities or unconsolidated affiliates.


81
 
 5F. TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS
  
  
 Estimated and actual payments due by period
  Total
 Less than
 1 year
 Between
 1-3 years
 Between
 3-5 years
 More than 5
 years
  R’000  R’000  R’000  R’000  R’000
              1
  
   Preference shares held by Khumo Gold SPV (Pty) Limited and the DRDSA Empowerment Trust (including interest)....
      Environmental rehabilitation, reclamation and closure costs
 2
       Total contractual cash obligations
 820,049  155,136
 30,800
 -  634,113
  5G.  SAFE  HARBOR
 
  
 
 
 1
 Represents planned capital expenditure for which contractual obligations exist.
 2
 Operations of gold mining companies are subject to extensive environmental regulations in the various jurisdictions in which they operate. These
 regulations establish certain conditions on the conduct of our operations. Pursuant to environmental regulations, we are also obliged to close our operations and reclaim and rehabilitate the lands upon which we have conducted our mining and gold recovery operations. The estimated closure costs at existing operating mines and mines in various stages of closure are reflected in this table. For more information on environmental rehabilitation obligations, see Item 4D.: “Property, Plant and Equipment” and Note 19 “Provision for environmental rehabilitation, reclamation and closure costs” under Item 18.: “Financial Statements”.


82
 
 ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES 6A. DIRECTORS AND SENIOR MANAGEMENT
 Directors and Executive Officers
  June 30, 2010, our board consisted of six 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.
  offices.  Executive Directors
 Daniël Johannes Pretorius (44)
 Designate on August 21, 2008. On January 1, 2009 he succeeded Mr. John William Cornelius Sayers as Chief Executive Officer. Mr. Pretorius holds a B Proc, LLB degree and was appointed Group Legal counsel for the Company in February 2003. He has 18 years of experience in the mining industry. He was appointed as Chief Executive Officer of Ergo Mining Operations, previously known as DRDGOLD SA, in July 2006 and is also an alternate director of Rand Refinery Limited.
 Craig Clinton Barnes (41)
 Accountant. A Chartered Accountant, he has a B Com degree from the University of the Witwatersrand, or Wits University, and a B Com Honors degree from the University of South Africa, or Unisa. Prior to joining the Company, he was head of financial reporting for Liberty Group Limited and he has over 17 years financial experience. He was appointed as Chief Financial Officer of Ergo Mining Operations in July 2006 and as Chief Financial Officer of DRDGOLD in May 2008. Non-Executive Directors
 
 Geoffrey Charles Campbell (50).
 Independent Non-Executive Director in December 2003 and as Non-Executive Chairman in October 2005. A qualified geologist, he has worked on gold mines in Wales and Canada. He then spent 15 years first as a stockbroker and afterwards as a fund manager, during which time he managed the Merrill Lynch Investment Manager’s Gold and General Fund, one of the largest gold mining investment funds. He was also Research Director for Merrill Lynch Investment Managers. Mr. G.C. Campbell is also a director of Oxford Abstracts.
 Robert Peter Hume (71).
 the field of auditing, including 18 years as a partner in the East London (South Africa) office of KPMG. Since retiring from KPMG in 1999, he has been an Investment Manager at Nvest Securities (Pty) Limited (formerly Sasfin Frankel Pollak) in East London.
 
 James  Turk  (64).
 GoldMoney Network Limited, formerly G.M. Network Limited (also known as GoldMoney.com), the operator of a digital gold currency payment system. Since graduating from George Washington University with a BA degree in International Economics in 1969, he has specialized in international banking, finance and investments. After starting his career with Chase Manhattan Bank (now J.P. Morgan Chase) he joined RTB Inc., a private investment and trading company of a prominent precious metals trader in 1980. He moved to the United Arab Emirates in 1983 as Manager of the Commodity Department of the Abu Dhabi Investment Authority. Since resigning from this position in 1987, he has written frequently on money and banking.
 Edmund Jeneker (49)
 November 1, 2007. He trained as an accountant and has over 20 years’ experience in finance, taxation, business strategy and general management at Grant Thornton, SwissReSA, World Bank Competitiveness Fund and Deloitte. He is active in community development and serves as a member of the Provincial Development Commission of the Western Cape Provincial Government. He currently holds the position of Managing Executive – Absa AllPay Consolidated Investment Holdings at Absa Group Limited. Senior Management
  
 David Johannes Botes (54)
 7, 1988 as Group Financial Manager. He was appointed Group Risk Manager on February 1, 2003. He has 28 years of financial management experience.


83
 
 
 Jacob Hendrik Dissel (53)
 Financial Manager in October 1999. He has 28 years experience in the mining industry
 Themba John Gwebu (47)
 LLM) is a qualified attorney who worked as a magistrate prior to joining the Company in April 2004 as Assistant Legal Advisor. He was appointed to the position of Company Secretary in April 2005 and Executive Officer: Legal, Compliance and Company Secretary on January 1, 2007.
   Henry Gouws (42)
 National Higher Diploma in Extraction Metallurgy in 1991. He completed a MDP in 2003 through Unisa School of Business Leadership. He was appointed Operations Manager of Crown in January 2006 and General Manager in July 2006. He was appointed to this current position with effect from October 1, 2011. He has 24 years experience in the mining industry.
 Kevin Peter Kruger (43)
 from Wits University and joined the Company in 1994. Previously the Engineering Manager at the Company’s North West Operations, he was appointed to his current position with effect from October 1, 2011.
   Charles Methley Symons (57)
 transferred to Crown in January 1986 where he was appointed General Manager in 1995. He holds a Masters degree in Business Leadership and a B Comm degree from Unisa, and he also has a National Diploma in Extractive Metallurgy. He was appointed Executive Officer: Surface Operations on January 1, 2008,  Executive Officer: Operations on May 11, 2010 and Chief Operating Officer with effect from October 1, 2011.  Phillip  Watters  (55)
 on August 1, 2005. He was previously General Manager ERPM. Mr. P. Watters, who obtained a Mine Manager’s certificate of Competency in May 1993, has a total of 36 years experience in mining, 24 years of which were spent with Gold Fields and four with Anglo American. His career includes both production and project management experience.
 William Stanly Owen O’Brien (47)
 Blyvoor on September 25, 2008. He was previously employed by Harmony Gold where he held various management positions. He has 27 years of experience in the mining industry and holds a Mine Manager’s Certificate of Competency.
 Martin Bruce Ebell (53)
 Manager Metallurgical Technical Services. He was previously employed by Bateman Minerals and Metals, Alex Steward Assayers, Dowding Reynard and Associates, Millsell/Henry Gould and Rand Mines, and has 30 years of experience in the field of extractive metallurgy in various managerial, consulting and project engineering positions. He is registered professional engineer and a member of SAIMM and MMMA and holds a MEng (MEM) USA, BSc (Eng) Minerals Processing, B Comm degrees and a MDP certificate.  Ryno  Botha  (39)
 his current position as Mineral Resource Manager on November 1, 2008. He was previously employed by JCI, Amplats, Anglo Platinum and has 19 years of mining experience. He holds a M(Eng) in Mineral Resource Management, Graduate Diploma in Engineering (MRM), National Higher Diploma in Mineral Resource Management, National Diploma in Mine Surveying and a Mine Surveyor’s Certificate of Competency.
 Barry Gordon de Blocq (49)
 from AngloGold, where he was Divisional Industrial Relations Manager. He holds a B Soc Sc, degree and was promoted to his current position on January 1, 2010. He has 24 years experience in the mining industry.
   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.


84
 
 6B. COMPENSATION
   Non-Executive Directors. The total amount of directors' remuneration paid and or accrued for the year ended June 30, 2011 was R15.6 million. Non-Executive Directors receive the following fees:
 
 
 
 
 
 
 
  
  
 
 
        Directors
 
 Basic
 salary/board
 fees
 (R'000)
 Retirement fund
 contributions/
 bonus/restraint
 of
 trade/expenses
 (R'000)
 
 Total
 (R'000)
 
 Share
 option
 scheme
 gains
 (R'000)
 Executive
       
   
 Subtotal
 7,080  5,314
 12,394  -
 Non-Executive
       
 
    
 
   
 
      Subtotal
 3,186
 -
 3,186
 -
 Prescribed officers
 1
 
 
 
 
 
 
 
 
 
 
   Subtotal   3,682
 2,090  5,772
 -
 Total   13,948
 7,404  21,352
 -
   
 1
 The Companies Act, 2008 (Act 71 of 2008), under section 30, requires the remuneration of prescribed officers, as defined in regulation
  38
  of  Company Regulations 2008, to be disclosed with that of directors of the Company.  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.


85
 
 Compensation of senior management
 Our senior management comprises its executive directors, prescribed officers and executive officers. Under the JSE
 Listing Rules we are not required to, and we do not otherwise, disclose compensation paid to individual senior managers other than executive directors, non-executive directors and prescribed officers. However, the aggregate compensation paid to senior management, excluding compensation paid to Executive Directors, in fiscal 2011 was R22.1 million (fiscal 2010: R18.5 million), representing 11 executive officers in fiscal 2011 and 11 executive officers in fiscal 2010.
  Executive Director meet all the targets set in terms of such predetermined key performance indicators, he will be entitled to a bonus of up to 50%, 75% or 100% of his remuneration package, depending on his particular agreement. Should an Executive Director not meet all the targets set in terms of the predetermined key performance indicators, he will be entitled to a lesser bonus as determined by the Remuneration and Nominations Committee. Service Agreements
  employment and are approved by our Remuneration and Nominations Committee.
  with us, on January 1, 2009 and May 5, 2008 respectively. Mr. C.C.Barnes’ service contract has been renewed for another three years, effective from May 5, 2011, by our Remuneration Committee at a meeting held in August 2011. These agreements regulate the employment relationship with Messrs. D.J. Pretorius and C.C. Barnes.
 Mr. D.J. Pretorius receives from us a remuneration package of R4.2 million per annum. Mr. D.J. Pretorius is eligible
 under his employment agreement, for an incentive bonus of up to 100% of his annual remuneration package in respect of one bonus cycle per annum over the duration of his appointment, on condition that he achieves certain key performance indicators. DRDGOLD shall issue Mr. D.J. Pretorius with 100,000 ordinary DRDGOLD shares or alternatively shall pay Mr. D.J. Pretorius the cash value of 100,000 ordinary DRDGOLD shares reckoned at market value on the date that the conversion of mining rights of DRDGOLD’s South African operations is completed.
  his employment agreement, for an incentive bonus of up to 75% of his annual remuneration package in respect of one bonus cycle per annum over the duration of his appointment, on condition that he achieves certain key performance indicators. As a further consideration for agreeing to remain in the employment of the company as set out in the agreement, the company will issue Mr. C.C. Barnes with, up to 50% of his annual package, share options in DRDGOLD Limited on an annual basis and on the third anniversary of this agreement a bonus payment equal to 30% of his annual package.
  terminated by us in the case of our executive officers, except where terminated as a result of certain action on the part of the director, or upon the director reaching a certain age, or by the director upon the occurrence of a change of control of us. A termination of a director's employment upon the occurrence of a change of control of us is referred to as an “eligible termination.” Upon an eligible termination, the director is entitled to receive a payment equal to at least one year's salary or fees, but not more than three years salary for Executive Directors or two years fees for Non-Executive Directors, depending on the period of time that the director has been employed.
  September 30, 2012, October 31, 2012, and October 31, 2011 respectively. After their two year period, the agreements continue indefinitely until terminated by either party on not less than three months prior written notice. Mr. G.C. Campbell has a service agreement which continues indefinitely until terminated by either party on not less than three months prior written notice.


86
 
 6C. BOARD PRACTICES
 Board of Directors
  Mr. C.C. Barnes), and four Non-Executive Directors (Messrs. G.C. Campbell, R.P. Hume, J. Turk and E.A. Jeneker). The Non-Executive Directors are independent under the Nasdaq requirements and the South African King II and King III Reports.
 In accordance with the King II and King III Reports on corporate governance, as encompassed in the JSE Listings
 Requirements, and in accordance with the United Kingdom Combined Code, the responsibilities of Chairman and Chief Executive Officer are separate. Mr. G.C. Campbell is the Non-Executive Chairman, Mr. D.J. Pretorius is the Chief Executive Officer and Mr. C.C. Barnes is the Chief Financial Officer. The board has established a nominations committee, and it is our policy for details of a prospective candidate to be distributed to all directors for formal consideration at a full meeting of the board. A prospective candidate would be invited to attend a meeting and be interviewed before any decision is taken. In compliance with the Nasdaq 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 Committee formally evaluates the executive directors and the alternate directors on an annual basis, based on objective criteria.
 All directors, in accordance with the Company’s MOI, are subject to retirement by rotation and re-election by
 shareholders. In addition, all directors are subject to election by shareholders at the first annual general meeting following their appointment by directors. The appointment of new directors is approved by the board as a whole. The names of the directors submitted for re-election are accompanied by sufficient biographical details in the notice of the forthcoming annual general meeting to enable shareholders to make an informed decision in respect of their re-election.
 All directors have access to the advice and services of the Company Secretary, who is responsible to the board for
 ensuring compliance with procedures and regulations of a statutory nature. Directors are entitled to seek independent professional advice concerning the affairs of the Company at the Company’s expense, should they believe that course of action would be in the best interest of the Company.
 Two of the Non-Executive Directors (Messrs. G.C. Campbell and R.P. Hume) have share options under the Company’s
 share option scheme, but we do not believe that this interferes with their independence. No new share options were issued to Non-Executive Directors since December 2004. See Item 6A.: “Directors and Senior Management” and Item 6E.: “Share ownership”.
 Board meetings are held quarterly in South Africa. The structure and timing of the Company’s board meetings, which are
 scheduled over 2 or 3 days, allows adequate time for the Non-Executive Directors to interact without the presence of the Executive Directors. The board meetings include the meeting of the Risk Committee, Audit Committee, Remuneration and Nominations Committee and Transformation and Sustainable Development Committee which act as subcommittees to the board. Each subcommittee is chaired by one of the Independent Non-Executive Directors, except for the Risk Committee which is chaired by the Chief Executive Officer, who provide a formal report back to the board. Each subcommittee meets for approximately half a day. Certain senior members of staff are invited to attend the subcommittee meetings.
 The board sets the standards and values of the Company and much of this has been embodied in the Company’s Code of
 Ethics and Conduct, a copy of which is available on our website at www.drdgold.com. The Code of Ethics and Conduct applies to all directors, officers and employees, including the principal executive, financial and accounting officers, in accordance with Section 406 of the US Sarbanes-Oxley Act of 2002, the related US securities laws and the Nasdaq rules. The Code contains provisions under which employees can report violations of Company policy or any applicable law, rule or regulation, including US securities laws.


87
 
 
  Directors' Terms of Service
  directors as at June 30, 2011:
 Director  Title  Year  first
 appointed
 Term of
 current
 office
 Unexpired
 term of
 current office
                                C.C. Barnes’ service contract has been renewed for another three years, effective from May 5, 2011 in the Remuneration Committee meeting
 held in August 2011
   Executive Committee
  Symons, and Mr. T.J. Gwebu.
   consideration by the board of directors. Members of the Executive Committees, 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
  responsibilities and to effectively fulfill its decision-making process. Each committee acts within written terms of reference which have been approved by the board and under which specific functions of the board are delegated. The terms of reference for all committees can be obtained by application to the Company Secretary at the Company’s registered office. Each committee has defined purposes, membership requirements, duties and reporting procedures. Minutes of the meetings of these committees are circulated to the members of the committees and made available to the board. Remuneration for Non-Executive Directors for their services on the committees concerned is determined by the board. The committees are subject to regular evaluation by the board with respect to their performance and effectiveness.
 The following information reflects the composition and activities of these committees.
 Committees of the Board of Directors Remuneration Committee
  Hume and Mr. J. Turk.
  directors. The committee meets quarterly, but may meet more often on an ad hoc basis if required. The Remuneration Committee is governed by its terms of reference and is responsible for approving the remuneration policies of the Company, the terms and conditions of employment, and the eligibility and performance measures of the DRDGOLD (1996) Share Option Scheme applicable to executive directors and senior management.
 The committee’s objective is to evaluate and recommend to the board competitive packages which will attract and retain
 executives of the highest caliber and encourage and reward superior performance. The committee also aims to ensure that criteria are in place to measure individual performance. The committee approves the performance-based bonuses of the executive directors based on such criteria. The Executive Officer: Human Resources provides the committee with access to comparative industry surveys, which assist in formulating remuneration policies. As and when required the committee may also engage the services of independent consultants to evaluate and review remuneration policies and related issues and brief members on pertinent issues. The committee has in the past year engaged the services of such consultants to review the employment contracts of the executive directors.


88
 
 The remuneration policy, relating to the remuneration of directors and senior executives, is based on a reward system
 comprising four principal elements:
 
 A copy of the policy is available by application to the Company Secretary at the Company’s registered office.
 Nominations Committee
  Committee is chaired by the Chairman of the board, Mr. G.C. Campbell. The terms of reference were approved in August 2008. Its duties include:
 making recommendations on the composition of the board generally and the balance between Executive and Non-  Executive directors appointed to the board;
     Audit and Risk Committees
   meetings. The members meet and the business of each committee is handled in joint deliberations taking place on the issues raised. The Audit Committee is chaired by Mr. R.P. Hume and the Risk Committee by Mr. D.J. Pretorius. The reason for the joint sittings is that there is a great deal of overlap between the financial risks discussed at Audit Committee level and at Risk Committee level. The joint sittings of the Committees bring about better disclosure and ensure that the Company conforms more closely to the process prescribed by the US Sarbanes-Oxley Act of 2002.
  Audit Committee
  Jeneker.
  “Corporate Governance”. The primary responsibilities of the Audit Committee, as set out in the Audit Committee charter, is to assist the board in carrying out its duties relating to accounting policies, internal financial control, financial reporting practices and the preparation of accurate financial reporting and financial statements in compliance with all applicable legal requirements and accounting standards. A copy of the charter is available by application to the Company Secretary at the Company’s registered office.
    Financial Officer and the Internal Audit and Compliance Manager to review the audit plans of the internal auditors, to ascertain the extent to which the scope of the internal audits can be relied upon to detect weaknesses in the internal controls and to review the annual and interim financial statements prior to approval by the board. The Audit Committee reviews our annual results, the effectiveness of our system of internal financial controls, internal audit procedures and legal and regulatory compliance. The committee also reviews the scope of work carried out by our internal auditors and holds regular discussions with the external auditors and internal auditors.
 The committee appoints, re-appoints and removes the external auditors and approves the remuneration and terms of
 engagement of the external auditors. The committee is required to pre-approve, and has pre-approved, non-audit services provided by our external auditors. The Company’s external audit function is currently being undertaken by KPMG Inc.


89
 
  where necessary, to the Chairman of the board and Chief Executive Officer. All important findings arising from audit procedures are brought to the attention of the committee and, if necessary, to the board.
  Risk Committee
   The Risk Committee was established in January 2004 and currently comprises four Non-Executive Directors and two
 Executive Directors. Its overall objective is to assist the board in its duties relating to risk management and control responsibilities, assurance issues, health, safety and environmental compliance, and the monitoring and reporting of all these matters. The Risk Committee facilitates communication between the board, the Audit Committee, internal auditors and other parties engaged in risk management activities. The terms of reference of the Risk Committee can be obtained by application to the Company Secretary at the Company’s registered office.
  The Risk Committee’s role is to ensure that: •  an effective risk management program is implemented and maintained;
   required. Certain members of executive management are occasionally invited to attend Risk Committee meetings, such as the Internal Audit and Compliance Manager, the Group Risk Manager, the Group Financial Manager, the Operational Managers and the Group Legal Counsel.
 The system to manage risk involves all significant business and operational risks which could undermine the
 achievement of business objectives and undermine the preservation of shareholder value. The significant risks facing the Group including those at operations have been identified and have been included in Item 3D.: “Risk factors.” Individuals have been appointed to address each risk and the results thereof are reviewed by senior management through regular risk meetings. The aim of the internal control systems is for management to provide reasonable assurance that the objectives will be met. In addition to the above initiatives the Group also employs third party consultants to benchmark our operations against other mining operations throughout South Africa and worldwide.
 
  disaster. We have embarked on a program to ensure that our major assets and potential business interruption and liability claims are covered by group insurance policies that encompass our operations. The majority of the cover is through reputable insurance companies in London and Europe and the insurance programs are renewed on an annual basis. A cell captive has been established to enable further reduction in annual insurance premiums.
 
 Transformation and Sustainable Development Committee
 
  triple bottom line espoused in the King II and King III Reports and in order to reach the empowerment goal to which it is committed, establishing a committee, the focus of which will be transformation and sustainable development. The terms of reference were approved by the board at the August 2008 meeting. The board has resolved to convert the current Transformation and Sustainable Development Committee in the Social and Ethics Committee which the Company is required to set up in terms of the Companies Act, 2008. The objectives of this committee are:


90
 
 6D. EMPLOYEES
 Employees
   
 Year ended June
 30
 
 2011
  2010
 
 2009
     
  directly employed by us and our subsidiary companies. As of September 30, 2011, we had 6,916 employees (including 1,760 contract employees). The increase in the number of employees in fiscal 2011 is mainly due to the learnerships signed on across the operations.
   
 Year ended June 30,
 Category of Activity
 2011  2010  2009
  
  
  
  
  
  
  
  
  
  
  
 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. The DRDGOLD/NUM coordinating forum meets regularly to discuss matters pertinent to both parties at a DRDGOLD SA level, while operations level forums continue to deal with local matters.
  operations of the ERPM mine, and to proceed with a consultation process in terms of Section 189A of the Labour Relations Act to determine the future of the mine's 1,700 employees. Underground mining at the ERPM mine was halted on October 31, 2008 when pumping infrastructure could no longer cope with rising underground water levels. On January 20, 2009, the process was concluded and 1,335 employees were retrenched. A further 105 employees were retrenched in November 2009 following the total cessation of all underground mining activities at ERPM.
  would proceed with a 60-day facilitated consultation process in terms of Section 189A of the Labour Relations Act to determine the future of affected employees. A combined management/unions task team was appointed to investigate possible cost-reduction measures at the mine.
 On November 9, 2009, the Company announced its intention to apply to the High Court of South Africa for a judicial
 management order over the Blyvoor operation after the restructuring process in terms of Section 189A of the Labour Relations Act failed to deliver the expected turnaround and the mine faced a four-week wage strike by the National Union of Mineworkers which resulted in decreased production. The result of the process saw 278 employees retrenched.


91
 
 In September 2009 the Company signed a two-year wage settlement with the United Association of South Africa
 (UASA). In terms of the settlement, employees in the UASA recognition unit at Blyvoor would receive a 6.5% increase, at Crown a 6% increase and at ERPM a 4% increase. In addition, employees in the UASA recognition unit are eligible for a gold price/profit linked incentive scheme, in terms of which their overall increases can rise to a total of 15%. The NUM rejected the company’s offer of a 7% increase for lowest-category employees at Blyvoor and 6.5% for the balance, a 6.0% across-the-board increase at Crown and a 4% across-the-board increase at ERPM. The NUM also rejected the gold price/profit linked incentive scheme. The NUM was granted strike certificates in respect of the three operations and strike action started with the night shift on Tuesday, September 15, 2009.
 On October 7, 2009, the Company and NUM reached agreement on a wage settlement at Crown. The agreement was
 implemented for a twenty-one month period, with effect from October 1, 2009. In terms of the settlement, employees of all unions and associations received an 8% increase for year one and will receive a minimum of 8% in year two. The strike by the NUM was called off and employees returned to work on October 8, 2009. On October 9, 2009, the Company and NUM reached agreement on a wage settlement at Blyvoor. The agreement was implemented for a period of two years, with effect from July 1, 2009. In terms of the settlement, employees of all unions and associations received an 8% increase for year one and will receive a minimum of 8% in year two. The strike by the NUM was called off and employees returned to work on October 11, 2009.
    at Blyvoor has given notice of Blyvoor’s intention to enter a 60-day consensus-seeking process in terms of Section 189 (3) of the Labour Relations Act with the National Union of Mineworkers, or NUM, and United Association of South Africa, or UASA – The Union, to consider reducing employee numbers by approximately 500 employees. The reason for the need to consider the reduction is that Blyvoor – under business rescue proceedings in terms of Chapter 6 of the Companies Act since June this year – has been unable to meet production and financial targets, a situation exacerbated by higher utility costs. Blyvoor is proposing voluntary separation and application of the principle of “last in, first out” as among the mechanisms to be applied to effect the required reduction in employee numbers. Measures currently under consideration to achieve a targeted 30% improvement in the cost of production in R/kg terms, and thus to avoid employee reduction, include:
 
 
 
  wage increases. In October 2011, Blyvoor signed a three-year wage settlement agreement with the NUM and UASA. In terms of the settlement, employees in Categories 4 and 5 miners would receive a 7% increase and employees in Categories 6 - 8, miners, artisans and Officials would receive a 6% increase in each year, with the third year being the greater of these percentages or CPI as at 1 July 2013. In addition, employees in both recognition units will participate in a gold price/profit linked profit share bonus scheme, in terms of which their overall increases can rise to a total of 15%. Blyvoor’s wage settlement agreements were concluded without any industrial action by either NUM or UASA.
  appropriate projects that give effect to the ideals of the Mining Charter and good corporate governance. We recognize the need for transformation and have put structures in place to address this at both management and board level.
  our operations, a severance package of not less than one week’s remuneration for every completed year of service. In specific agreements with organized labor we undertook, as in the past, to pay packages equal to two weeks basic pay for every completed year of service as part of a balancing compromise with the labor unions between the high additional costs of non-financial items and incentive payments (which are deemed part of remuneration), and an additional one week benefit based on basic pay. These employees were provided with counseling services and the opportunity to undergo skills training to be able to find employment outside the mining industry.
  productivity and increased medical costs. The exact extent of infection in our workforce is not known at present, although it is roughly estimated by the industry that the prevalence of HIV, the virus that causes AIDS, in the South African industry is currently approximately 30% to 35%. We have several AIDS awareness campaigns in place at our operations.


92
 
  health programs, a wellness program, which treats AIDS related illnesses, provides counseling on healthy life styles and monitors the progression of the HIV virus.
  Safety statistics
  following are our 2011 overall safety statistics for our managed mines: (Per million man hours)
 Year ended June 30,
  2011
  2010
  1
     1
     1
  
  
  6E. SHARE OWNERSHIP
   Directors
 Options
 at
 June 30,
 2010
 Options granted
 during
 the
 period
 Average
 Purchase
 price of
 option
 granted
 (R)
 Average
 Exercise
 price (R)
 Options
 exercised
 during
 the
 year
 Average
 Exercise
 Price (R)
 Options
 lapsed
 during
 the
 year
 Options at
 September
 30,
 2011
 Expiration
 Dates
 2
 
           Non-Executive
            
 
        
    Executive
               
      
 
    Prescribed Officers
             
    
       
    
  
  become or could potentially become aware of material price sensitive information, such as information relating to an acquisition, quarterly results etc., which is not in the public domain. When these employees have access to this information an embargo is placed on share trading for those individuals concerned. The embargo need not involve the entire Company in the case of an acquisition and may only apply to the board of directors, executive committee, and the financial and new business teams, but in the case of quarterly results the embargo is group-wide.
  share ownership of individual officers in our share capital. However, to the best of our knowledge, we believe that our ordinary shares held by executive officers, in aggregate, do not exceed one percent of the Company’s issued ordinary share capital. For details of share ownership of directors see Item 7A.: “Major Shareholders.”
 
 1
 Calculated as follows: actual number of instances divided by the total number of man hours worked multiplied by one million.
 2
 Certain Directors hold options which expire at various times. For those directors, a range is provided indicating the earliest and latest expiration
 dates.


93
 
 DRDGOLD (1996) Share Option Scheme, or the Scheme
  experience are recognized as being essential to the Company’s performance. Two of our Non-Executive Directors (Messrs. G.C. Campbell and R.P. Hume) have share options under the Scheme; however, no new share options have been issued to Non-Executive Directors since December 2004. In compliance with JSE Listing Requirements, DRDGOLD has amended the terms of the share option scheme, with the amendment being approved at the annual general meeting on November 26, 2010. According to the JSE Listing Requirements, options awarded to an individual employee are subject to a cumulative upper limit of two million options which is lower than the previous 2% of the Company’s issued share capital. In addition, a maximum of 40 million options are available for utilization under the share option scheme which is lower than the previous 15% of the issued ordinary shares. As at September 30, 2011, the number of issued and exercisable share options was approximately 5.6% of the issued ordinary share capital, representing 21.6 million of the available 40 million share options. In addition, the participants in the Scheme are fully taxed based on individual tax directives obtained from the South African Revenue Service on any gains realized on the exercise of share options.
  weighted average price of a share on the JSE for the seven days on which the JSE is open for trading, preceding the day on which the employee is granted the option. The allocation date will be the date when the directors approve allocation of share options. Each option remains in force for five years after the date of grant (ten years if issued prior to 2009), subject to the terms of the option plan. Options granted under a plan vest primarily according to the following schedule over a maximum of a three year period:
 Percentage vested in each period
 Period after the original date of the option grant
 
 
 
 
 
  expire and may not thereafter be exercised. The previous bi-annual allocation of options was changed in April 2006 to an annual allocation.
  16,011,187 ordinary shares were currently exercisable. In fiscal 2011, a total of 72 employees participated in the Scheme including Executive Directors and other senior employees. The outstanding options are exercisable at purchase prices that range from R3.50 to R29.10 per share and expire five years (issued prior to 2009: ten years) from the date of issue to the participants.


94
 
 ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
  7A. MAJOR SHAREHOLDERS
 
   
 
  government and there are no arrangements, the operation of which may at a subsequent date result in a change in control of us.
   
 
 
  2011 by:
 
  Shares  Beneficially
 Owned
 Holder
 Number  Percent
     *  *
  *  *
  *  *
  *  *
  *  *
  *  *
       Bank of New York ADRs ....................................................................................................................  101 Barclay Street New York, NY 10011
 
 * Indicates share ownership of less than 1% of our outstanding ordinary shares.
  power with respect to securities. Ordinary shares issuable pursuant to options, to the extent the options are currently exercisable or convertible within 60 days of September 30, 2011, are treated as outstanding for computing the percentage of any other person. As of September 30, 2011, we are not aware of anyone owning 5% or more of our ordinary shares other than the Bank of New York which holds 57.7% of our issued ordinary shares through our ADR program, Soges Fiducem SA which holds 7.3% and Investec which holds 5.9%. Unless otherwise noted, each person or group identified possesses sole voting and investment power with respect to the shares, subject to community property laws where applicable. Unless indicated otherwise, the business address of the beneficial owner is: DRDGOLD Limited, 50 Constantia Boulevard, Constantia Kloof Ext. 28, Roodepoort, 1709, South Africa.


95
 
 Cumulative Preference Shares
  Randgold's address is 23 Southerland Avenue, Craighall Park, Johannesburg, South Africa.
  than six months. The terms of issue of the cumulative preference shares are that they carry the right, in priority to the Company's ordinary shares, to receive a dividend equal to 3% of the gross future revenue generated by the exploitation or the disposal of the Argonaut mineral rights acquired from Randgold in September 1997. They will only obtain their potential voting rights once the Argonaut Project becomes an operational gold mine, and dividends accrue to them. The prospecting rights have since expired and the Argonaut Project terminated. Additionally, holders of cumulative preference shares may vote on resolutions which adversely affect their interests and on the disposal of all or substantially all of our assets or mineral rights. There is currently no active trading market for our cumulative preference shares. No shareholder has voting rights which differ from the voting rights of any other shareholder. On May 1, 2005, the Argonaut mineral rights reverted to the South African State, in terms of the MPRD Act. On February 6, 2006, a prospecting right covering an area of 969 hectares over part of the Argonaut Project was obtained.
 7B. RELATED PARTY TRANSACTIONS
 Rand Refinery Limited (RRL) agreement
  Africa. Under the agreement, RRL performs the final refining of our gold and casts it into troy ounce bars. RRL then usually sells the gold on the same day as delivery, for the London afternoon close price on the day the gold is sold. In exchange for this service, we pay RRL a variable refining fee plus fixed marketing, loan and administration fees. This amounted to R6.0 million, Rnil and R4.1 million for fiscal 2011, 2010 and 2009, respectively. Mr. T.J. Gwebu, Executive Officer: Legal, Compliance and Company Secretary of DRDGOLD is a director of RRL and a member of their Audit Committee and Remuneration Committee. Mr. D.J. Pretorius, CEO of DRDGOLD Limited, is an alternate director of RRL. The Company currently owns 4% (Fiscal 2010: 4%) of RRL (which is jointly owned by South African mining companies), which is disclosed in our financial statements, however the Company believes it has the right to a further 6.22% in RRL which is currently being brought to RRL’s attention and the Company will contest if this additional interest is not awarded. Management service agreements
  agreements entered into with each of them. These services include financial management, gold administration, technical and engineering services, mineral resource services and other management related services. We own a 74% interest in Ergo Mining Operations and Blyvoor. Crown and ERPM are wholly-owned subsidiaries of Ergo Mining Operations. These arrangements allow us to monitor and provide input on the management of these companies in which we have an investment.
   interest in Blyvoor was transferred from Ergo Mining Operations to DRDGOLD), Crown and ERPM are provided by Ergo Mining Operations. Ergo Mining Operation’s management fee for services performed in fiscal 2011 at Blyvoor was R4.1 million (2010: R17.6 million), Crown R16.5 million (2010: R17.6 million) and ERPM R16.5 million (2009: R17.6 million). Management fees recovered from Ergo Mining Operations were R23.3 million (2009: R34.6 million) and from Blyvoor (from October 1, 2010) R12.3 million (2010: Rnil).
 Ergo Mining Operations receives interest from Blyvoor (up until September 30, 2010 which is the date the group
 restructured and the groups interest in Blyvoor was transferred from Ergo Mining Operations to DRDGOLD), Crown and ERPM. Ergo Mining Operation’s interest received in fiscal 2011 from Blyvoor was R1.2 million (2010: R2.2 million), Crown R0.8 million (2010: R0.2 million) and ERPM R30.6 million (2010: R33.9 million). Interest recovered from Ergo Mining Operations were R26.8 million (2010: R33.3 million) and from Blyvoor (from October 1, 2010) R3.2 million (2010: Rnil). Consultancy agreement
  Khumo Gold, to provide guidance and participate in the Company’s transformation initiatives, which owns 20% of Ergo Mining Operations and Blyvoor. The agreement provides for a monthly retainer of R200,000
 .
 
 During the year ended June 30, 2011, consultancy fees were paid to Mr. P Judge who is a shareholder of Khumo Gold
 amounting to R0.5 million.


7C. INTERESTS OF EXPERTS AND COUNSEL
 Not applicable.
  ITEM 8. FINANCIAL INFORMATION 8A. CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION
 
 1.    
  Please refer to Item 18.: "Financial Statements."
 
 2.    
  Please refer to Item 18.: "Financial Statements."
 
 3.    
  Please refer to Item 18.: "Financial Statements."
 
 4.    
  The last year of audited financial statements is not older than 15 months.
 
 5.    
  Not applicable.
 
 6.    
  Not applicable.
 
 7.    
  See under Item 4D.: "Property, plant and equipment—Legal Proceedings."
 
 8.    
  Please see Item 10B.: "Memorandum and Articles of Association."
 
 8B. SIGNIFICANT CHANGES
 
 For a discussion of significant changes that have occurred since June 30, 2011, the date of the last audited financial
 statements included in this Annual report, please see Note 33 “Subsequent Events” under Item 18.: "Financial Statements," which describes post balance sheet (statement of financial position) events.


97
 
 ITEM 9. THE OFFER AND LISTING
  9A.
 OFFER AND LISTING DETAILS
 
  volumes of our ordinary shares on the JSE and ADSs on the Nasdaq Capital Market.
 Price
 Per
 Ordinary Share
 R
 Price Per
 ADS
 1
 
 $
  Average Daily
 Trading
 Volume
 Year Ended
 High  Low  High  Low
 Ordinary
 Share  ADSs
 1
 
                    
                       Price  Per
 Ordinary Share
 R
 Price Per
 ADS
 1
 
 $
 Average Daily
 Trading
 Volume
 Quarter
 High  Low  High  Low
 Ordinary
 Share  ADSs
 1
 
                                                                        Price  Per
 Ordinary Share
 R
 Price Per
 ADS
 $
 Average Daily
 Trading Volume
 Month Ended
 High  Low  High  Low
 Ordinary
 Share  ADSs
                                           
    ended June 30, 2011, nor have there been any significant trading suspensions with respect to our ADRs on the Nasdaq Capital Market since our listing on that market. 9B. PLAN OF DISTRIBUTION  Not
  
 1
 Note that with effect from July 23, 2007, we changed our ADS ratio to reflect one ADS for ten of our ordinary shares.


98
 
 9C. MARKETSNature of Trading Markets
  (formerly Nasdaq SmallCap Market) in the form of ADRs under the symbol “DROOY.” Our ordinary shares trade on the JSE under the symbol “DRD.” Our ordinary shares also trade on the Marche Libre on the Paris Bourse (symbol: DUR) and Brussels Bourse (symbol: DUR) in the form of International Depository Receipts. The ordinary shares also trade on the over the counter markets in Berlin, Stuttgart and the Regulated Unofficial Market on the Frankfurt Stock Exchange. The ADRs are issued by The Bank of New York, as depositary. Each ADR represents one ADS. Until July 23, 2007, each ADS represented one of our ordinary shares. Prior to February 2001, our ADSs traded on the Nasdaq National Market.
  share Minimum Bid Price Requirement, or the MBPR, on the Nasdaq Capital Market for continued listing set forth in Marketplace Rule 4320(e)(2)(E)(ii). In accordance with this Rule, we were provided with 180 calendar days, or until July 23, 2007, to regain compliance. As our ADSs had been consistently trading on the Nasdaq Capital Market at a price below the MBPR, we changed our ADS ratio from one ADS for one of our ordinary shares to one ADS for ten of our ordinary shares on July 23, 2007. With effect from the commencement of business on July 23, 2007, we affected a 1:10 reverse stock split (i.e. a 10:1 consolidation) of our ADRs. Nasdaq Exemption
 Exemption from the shareholder approval requirements
 
  investorsresulting in the issuance of ordinary shares, and securities convertible into ordinary shares, totaling 46,843,902, or 25.43% of the total shares outstanding on a pre-issuance basis. Included within those issuances, on December 12, 2003, the Company entered into an agreement granting Investec the option to acquire 10.2 million ordinary shares. The Company requested an exemption from Nasdaq Marketplace Rule 5635(a)(1)(B) in reliance upon Nasdaq Marketplace Rule 5615(a)(3). Rule 5635(a)(1)(B) provides that shareholder approval is required upon issuing 20% or more of the common stock outstanding before the issuance. Nasdaq granted this exemption on the basis that the shareholder approval requirements of Rule 4350(i)(1)(D) are contrary to generally accepted business practices of companies located in South Africa.
 
   issuance of any shares or rights to shares, which approval can be provided by specific authority or a general authority granted by means of a resolution passed by shareholders in a general meeting. JSE Listing Requirements require 75% shareholder approval for any issuance of shares for cash. JSE Listing Requirements do, however, permit an issuer to issue shares for cash under a general authority granted by its shareholders, but not in excess of 15% of the company’s total issued share capital during any financial year under that authority, or the general authority. In terms of the specific issuances for which the Company received the exemption from Nasdaq described above, there was no JSE requirement that would mandate specific shareholder approval for these transactions. The JSE Listing Requirements accept a general authority by our shareholders under certain circumstances. The shareholders had approved a general authority which covered the relevant transactions by resolutions passed at the Company's annual general meetings in November 2003. In addition, included in the shares issued for cash were approximately 24.4 million shares to the value of R435.5 million ($63.1 million) which were used for the acquisition of the Porgera Joint Venture. Approval was obtained from the JSE to deem these shares to be a vendor placing.
   Exemption from the quorum requirements
 
  state in Rule 5620(c) that the minimum quorum for any meeting of holders of the company’s common stock must be no less than 33 1/3 % of the issuer’s outstanding shares. Consistent with the practice of companies incorporated in South Africa, our Memorandum of Incorporation only require a quorum of three members. As a result, and in connection with the listing of our ADSs on the Nasdaq National Market in July 1996, we requested, and Nasdaq granted us in October 1996, an exemption from compliance with the Rule 5620(c) quorum requirement.  9D. SELLING SHAREHOLDERS  Not
 9E. DILUTION  Not
 9F. EXPENSES OF THE ISSUE


99
 
 ITEM 10. ADDITIONAL INFORMATION
  10A. SHARE CAPITAL
 Not
  10B. MEMORANDUM AND ARTICLES OF ASSOCIATION
 1
 
 Description of Our Memorandum and Articles of Association and Ordinary Shares
  preference shares, R0.10 par value. On that date, we had issued 384,884,379 ordinary shares and 5,000,000 cumulative preference shares.
  cumulative preference shares, R0.10 par value. On that date, we had issued 384,884,379 ordinary shares and 5,000,000 cumulative preference shares.
  1
  African Companies Act, 2008 (as amended), or the Companies Act, and the requirements of the JSE, all as in effect on September 30, 2011. 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 requirements of the JSE.
  Memorandum of Incorporation, our purpose is to explore and exploit mineral rights and establish and own mining enterprises.  Borrowing Powers
  they see fit. For so long as we are a listed company, the directors shall so restrict our borrowings and exercise all voting and other rights or powers of control exercisable by us in relation to our subsidiary companies so that the aggregate principal amount outstanding in respect of us and any of our subsidiary companies, as the case may be, exclusive of inter-company borrowings, shall not, except with the consent of our shareholders at a general meeting, exceed R30.0 million or the aggregate from time to time of our issued and paid up capital, together with the aggregate of the amounts standing to the credit of all distributable and non-distributable reserves, any of our share premium accounts and our subsidiaries' share premium accounts certified by our auditors and which form part of our and our subsidiaries' financial statements, whichever is higher, refer to note 22 of our financial statements documented in Item 18.  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.
  shall be not less than two.
  discussion, depending on the nature of the interest, he shall not be allowed to vote and shall not be counted, for the purpose of any resolution regarding his interest, in the quorum present at the meeting.
  sets out guidelines to promote the highest standards of corporate governance among South African companies. The board of directors believes that our business should be conducted according to the highest legal and ethical standards. In accordance with the board practice, all remuneration of directors is approved by the Remuneration and Nominations Committee.
 
 1
 The Companies Act, 2008 (Act 71 of 2008) came into operation on May 1, 2011. However, the current Memorandum and Articles of
 Association are now called the Memorandum of Incorporation and will remain in place until amended by the company. Companies have been given a period of two years within which to amend their Memorandum of Incorporation. DRDGOLD has a project in place to determine the impact of and implement the necessary amendments.


100
 
 
  within the context of the report’s ‘apply or explain’ principle.
  exercise proper care and skill in discharging their responsibilities.  Age Restrictions
  Election of Directors
  director but he shall only hold office until the next annual general meeting when the relevant director shall be eligible for election. One third of our directors, on a rotating basis, are subject to re-election at each annual general shareholder’s meeting. Retiring directors usually make themselves available for re-election.  General Meetings
  right of voting at general meetings, we shall within 14 days of the lodging of a request by such shareholders issue a notice to shareholders convening a general meeting for a date not less than 21 days and not more than 35 days from the date of the notice. Directors may convene general meetings at any time.
  by giving 21 days advance written notice of that meeting. For any other general meeting of our shareholders, 14 days advance written notice is required.
  hour after the time selected for the meeting, such meeting shall be dissolved. The necessary quorum is three members present in person or represented by proxy.  Voting Rights
  per person and on a poll have one for every share held. The holders of our cumulative preference shares are not entitled to vote at a general meeting unless any preference dividend is in arrears for more than six months at the date on which the notice convening the general meeting is posted to the shareholders. Additionally, holders of cumulative preference shares may vote on resolutions which adversely affect their interests and on resolutions regarding the disposal of all or substantially all of our assets or mineral rights. When entitled to vote, holders of our cumulative preference shares are entitled to one vote per person on a show of hands and that portion of the total votes which the aggregate amount of the nominal value of the shares held by the relevant shareholder bears to the aggregate amount of the nominal value of all shares issued by us.  Dividends
  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
  ordinary shares or securities convertible into our ordinary shares.  Winding-up
  liquidation, shall be applied to repay to the shareholders the amount paid up on our issued capital and thereafter the balance shall be distributed to the shareholders in proportion to their respective shareholdings. On a winding up, our cumulative preference shares rank, in regard to all arrears of preference dividends, prior to the holders of ordinary shares. As of September 30, 2011, 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.


101
 
 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 theMOI
  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
  shareholders in accordance with the provisions of the Companies Act and other consents required by law from time to time. We may, for example, in a general meeting, upon recommendation of our directors, resolve that any surplus funds representing capital profits arising from the sale of any capital assets and not required for the payment of any fixed preferential dividend, be distributed among our ordinary shareholders. However, no such profit shall be distributed unless we have sufficient other assets to satisfy our liabilities and to cover our paid up share capital.
 10C. MATERIAL CONTRACTS
 Facility Agreement between Investec Bank limited (“the Lender”) and DRDGOLD Limited (“the Borrower”) dated March 31, 2009.
  December 31, 2009, unless terminated by agreement between the parties and the parties may extend the agreement. The Borrower may discharge its obligations to pay the Lender either in cash or by allotting issuing and delivering shares to the Lender. The interest rate payable on overdue amounts shall be the rate per annum as determined by the Lender to be the aggregate of the rate for deposits in rand for a period of 90 days, which appears on the Reuters Screen SAFETY page under the caption “YIELD” at 11:00 am on the relevant Quotation Date plus 2%. The Borrower shall also pay for necessary costs and a drawdown fee of 4% of the advanced amount. Final Heads of Agreement between Chizim Investments (Pvt) Limited (“Chizim”) and DRDGOLD Limited (“DRDGOLD”) dated December 9, 2009
  the purposes of exploring and mining gold and other minerals for the mutual benefit of both Chizim and DRDGOLD as shareholders. Chizim and DRDGOLD shall each hold 50% shares in the issued share capital of the joint venture company to be formed. Chizim’s main initial contribution to the joint venture company will be the procurement of mining licenses and DRDGOLD will make an initial contribution toward the venture capital of the joint venture company of R7.5 million. Memorandum of Agreement between Ergo Uranium (Pty) Ltd (“Ergo Uranium”) and East Rand Proprietary Mines Limited (“ERPM”) dated January 21, 2010
  Mining (Pty) Limited (“Ergo Mining”) in aggregate of R118 million and the 300 ordinary par value shares of R1.00 each in the capital of Ergo Mining, constituting 50% of the total issued share capital in Ergo Mining. The purchase consideration for the sale of the claims and shares is R82,088,321.73. The loan was purchased due to it forming part of the shareholder’s investment in Ergo Mining.


102
 
 Heads of Agreement between East Rand Proprietary Mines Limited (“ERPM”) and Aurora Empowerment System (Pty) Limited (“Aurora”) dated January 22, 2010
  of R5 million and the balance of R15 million was payable on or before June 30, 2010, however ERPM may elect to waive payment of the balance of the purchase price in exchange for the option to reclaim the Grootvlei and Marievale tailings dams for minerals. Subsequently, as at September 30, 2011, the exercise periods of the transaction expired and ERPM kept the R5 million deposit and the transaction will therefore not be completed. Domestic Medium Term Note Programme (“DMTN Programme”) entered into by DRDGOLD South African Operations (Pty) Limited (“Issuer”) and DRDGOLD Limited (“guarantor’) dated September 30 2010.
  amount of all such notes from time to time outstanding under the DMTN Programme will not exceed R500,000,000 (five hundred million South African Rand). The guarantor guarantees to the holders of the notes the due and punctual performance by the Issuer of its payment obligations under the DMTN Programme notes. The notes may be listed on the JSE Limited. ABSA Capital, a division of ABSA Bank Limited, has been appointed dealer and arranger of the notes. See Item 18 “Financial Statements” Note 22 – Loans and borrowings”.
  10D. EXCHANGE CONTROLS
 
  publicly available documents. The following summary is not a comprehensive description of all the exchange control regulations. The discussion in this section is based on the current law and positions of the South African Government. Changes in the law may alter the exchange control provisions that apply, possibly on a retroactive basis.  Introduction
  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.
  African Reserve Bank, or SARB, which is responsible for the day to day administration and functioning of exchange controls. SARB has a wide discretion. Certain banks authorized by the Treasury to co-administer certain of the exchange controls, are authorized by the Treasury to deal in foreign exchange. Such dealings in foreign exchange by authorized dealers are undertaken in accordance with the provisions and requirements of the exchange control rulings, or Rulings, and contain certain administrative measures, as well as conditions and limits applicable to transactions in foreign exchange, which may be undertaken by authorized dealers. Non-residents have been granted general approval, in terms of the Rulings, to deal in South African assets, to invest and disinvest in South Africa.
  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 SARB prior to raising foreign funding on the strength of their South African statements of financial position, which would permit recourse to South Africa in the event of defaults. Where 75% or more of a South African company's capital, voting power, power of control or earnings is directly or indirectly controlled by non-residents, such a corporation is designated an “affected person” by SARB, and certain restrictions are placed on its ability to obtain local financial assistance. We are 
 not, and have never been, designated an “affected person” by SARB.


103
 
 
  SARB, South African companies are generally required to repatriate to South Africa profits of foreign operations and are limited in their ability to utilize profits of one foreign business to finance operations of a different foreign business. South African companies establishing subsidiaries, branches, offices or joint ventures abroad are generally required to submit financial statements on these operations as well as progress reports to SARB on an annual basis. As a result, a South African company's ability to raise and deploy capital outside the Common Monetary Area is restricted.
  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 SARB is required in advance for investments in excess of R500 million. On application to  SARB, corporations are also allowed to use part of their local cash holdings to finance up to 10% of approved new foreign  investments where the cost of these investments exceeds the current limits;    predetermined period of time, as a prerequisite to allowing the expatriation of funds. If these requirements are not met,  SARB may instruct that the equity be disposed of. In our experience SARB has taken a commercial view on this, and has on  occasion extended the period of time for compliance; and
 
  cover 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:
 with an authorized dealer and not released except temporarily for switching purposes, without the approval of SARB.  Authorized dealers must at all times be able to demonstrate that listed or quoted securities or financial instruments which are  dematerialized or immobilized in a central securities depository are being held subject to the control of the authorized dealer  concerned; or
 
  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
  the Common Monetary Area between non-residents of the Common Monetary Area. In addition, the proceeds from the sale of ordinary shares on the JSE on behalf of shareholders who are not residents of the Common Monetary Area are freely remittable to such shareholders. Share certificates held by non-residents will be endorsed with the words “non-resident,” unless dematerialized.  Dividends
  remittable.


104
 
 
  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.
  pay tax in South Africa except in the following circumstances:  Income Tax and Taxation of 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) R32,000 if the taxpayer is 65 years of age or older or (b) R22,300 if the taxpayer is younger than 65 years of age at the end of the relevant tax year.
    higher tax rate would apply for both mining and non-mining income. In fiscal 2011, the tax rates for taxable mining and non-mining income, for companies that elected the STC exemption were 43% (2010: 43% and 2009: 43%) and 35% (2010: 35% and 2009: 35%), respectively. During those same years the tax rates for companies that did not elect the STC exemption were 34% (2010: 34% and 2009: 34%) and 28% (2010: 28% and 2009: 28%), respectively. In 1993, the Company elected not to be exempt from STC, as this would have meant that the Company would have been liable for normal taxation at the higher rates of 43% for mining income and 35% for non-mining income. The Company, having chosen not to be subject to the STC exemption, is subject to 34% tax on mining income and 28% for non-mining income. With the exception of Crown, all of the South African subsidiaries elected not to be exempt from STC.
  Act except in respect of foreign dividends received by or accrued to residents of South Africa. Accordingly, there is no withholding tax on dividends received by or accrued to non-resident shareholders of companies listed in South Africa and non-residents will receive the same dividend as South African resident shareholders. Prior to payment of the dividend, the Company pays Secondary Tax on Companies (STC) at a rate of 10% (before October 1, 2007 12.5%) of the excess of dividends declared over dividends received in a dividend cycle but the full amount of the dividend declared is paid to shareholders.
  Section 10(1)(k), withholding tax of 10% will be deductable from dividends declared after the effective date as opposed to the relevant company having to pay STC over-and-above the dividend declared. These amendments are set out in Part VIII in Chapter II of the Income Tax Act. Section 64F of the amendments will set out beneficial owners who are exempt from the withholding tax, which includes resident companies receiving a dividend after the effective date being April 1, 2012. After these amendments come into operation, 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 percent of the gross amount of the dividends if such US resident is a company which holds directly at least 10 percent of our voting 
 stock and 15 percent of the gross amount of the dividends in all other cases.


105
 
  The above provisions shall not apply if the beneficial owner of the dividends is resident in the US, carries on business in
 South Africa through a permanent establishment situated in South Africa, or performs in South Africa independent personal services from a fixed base situated in South Africa, and the dividends are attributable to such permanent establishment or fixed base. Capital Gains Tax
  gains arising from the disposal of capital assets if the assets disposed of consist of:
 property. A non-resident will have an interest in immovable property if it has a direct or indirect shareholding of at least  20% in a company, where 80% or more of the net assets of that company (determined on a market value basis) are  attributable directly or indirectly to immovable property; or
 
  it follows that they will also not be able to claim the capital losses arising from the disposal of the assets.  Material United States Federal Income Tax Consequences
  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 consequences and does not address the effect of any state, local, or foreign tax laws that may apply, the alternative minimum tax or the application of the federal estate or gift tax.
   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.
 
  partner and on the activities of the partnership. Partners of partnerships holding any ordinary shares or ADSs are urged to consult their tax advisors.
 Because individual circumstances may differ, US holders of ordinary shares or ADSs are urged to consult their tax
 advisors concerning the US federal income tax consequences applicable to their particular situations as well as any consequences to them arising under the tax laws of any foreign, state or local taxing jurisdiction. Ownership of Ordinary Shares or ADSs
  ordinary shares represented by those ADSs. Exchanges of ordinary shares for ADSs and ADSs for ordinary shares generally will not be subject to US federal income tax.


106
 
 
  ordinary shares or ADSs, other than distributions in liquidation and distributions in redemption of stock that are treated as exchanges, will be taxed to US holders as ordinary dividend income to the extent that the distributions do not exceed our current and accumulated earnings and profits. For US federal income tax purposes, the amount of any distribution received by a US holder will equal the dollar value of the sum of the South African rand payments made (including the amount of South African income taxes, if any, withheld with respect to such payments), determined at the “spot rate” on the date the dividend distribution is includable in such US holder's income, regardless of whether the payment is in fact converted into dollars. Generally, any gain or loss resulting from currency exchange fluctuations during the period from the date a US holder includes the dividend payment in income to the date such holder converts the payment into dollars will be treated as ordinary income or loss. Distributions, if any, in excess of our current and accumulated earnings and profits will constitute a non-taxable return of capital and will be applied against and reduce the holder's basis in the ordinary shares or ADSs. To the extent that these distributions exceed the US holder's tax basis in the ordinary shares or ADSs, as applicable, the excess generally will be treated as capital gain, subject to the discussion below under the heading “Passive Foreign Investment Company”. We do not intend to calculate our earnings or profits for US federal income tax purposes. US holders should therefore assume that any distributions with respect to our ordinary shares or ADSs will constitute dividend income.
  beginning on or before December 31, 2012 generally will be taxed at a maximum US federal income tax rate of 15% provided certain conditions are met, including a minimum holding period. This reduced rate generally would apply to dividends paid by us if, at the time such dividends are paid, either (i) we are eligible for benefits under a qualifying income tax treaty with the US or (ii) our ordinary shares or ADSs with respect to which such dividends were paid are readily tradable on an established securities market in the US. However, this reduced rate is subject to certain important requirements and exceptions, including, without limitation, certain holding period requirements and an exception applicable if we are treated as a passive foreign investment company as discussed under the heading “Passive Foreign Investment Company”. US holders are urged to consult their tax advisors regarding the US federal income tax rate that will be applicable to their receipt of any dividends paid with respect to the ordinary shares and ADSs.
  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.
  deduction generally allowed to a US corporation under Section 243 of the Code. Dividend income will be treated as foreign source income for foreign tax credit and other purposes. In computing the separate foreign tax credit limitations, dividend income should generally constitute “passive category income,” or in the case of certain US holders, “general category income.”  Disposition of Ordinary Shares or ADSs
  taxable disposition of ordinary shares or ADSs, a US holder will recognize gain or loss in an amount equal to the difference between the US dollar value of the amount realized on the sale or exchange and such holder's adjusted tax basis in the ordinary shares or ADSs. Subject to the application of the “passive foreign investment company” rules discussed below, such gain or loss generally will be capital gain or loss and will be long-term capital gain or loss if the US holder has held the ordinary shares or ADSs for more than one year. The deductibility of capital losses is subject to limitations. Gain or loss recognized by a US holder on the taxable disposition of ordinary shares or ADSs generally will be treated as US-source gain or loss for US foreign tax credit purposes.
  ADSs, the amount realized will be based on the spot rate as determined on the settlement date of such exchange. A US holder who receives payment in rand and converts rand into US dollars at a conversion rate other than the rate in effect on the settlement date may have a foreign currency exchange gain or loss that would be treated as ordinary income or loss.
  disposition of ordinary shares or ADSs, provided that the election is applied consistently from year to year. Such election may not be changed without the consent of the Internal Revenue Service. In the event that an accrual basis holder does not elect to be treated as a cash basis taxpayer, such US holder may have a foreign currency gain or loss for US federal income tax purposes because of the differences between the US dollar value of the currency received prevailing on the trade date and the settlement date. Any such currency gain or loss will be treated as ordinary income or loss and would be in addition to gain or loss, if any, recognized by such US holder on the disposition of such ordinary shares or ADSs.


107
 
 Passive Foreign Investment Company
  investment company, or PFIC. We would be a PFIC for US federal income tax purposes if for any taxable year either (i) 75% or more of our gross income, including our pro rata share of the gross income of any company in which we are considered to own 25% or more of the shares by value, were passive income or (ii) 50% or more of our average total assets (by value), including our pro rata share of the assets of any company in which we are considered to own 25% or more of the shares by value, were assets that produced or were held for the production of passive income. If we were a PFIC, US holders of the ordinary shares or ADSs would be subject to special rules with respect to (i) any gain recognized upon the disposition of the ordinary shares or ADSs and (ii)  any receipt of an excess distribution (generally, any distributions to a US holder during a single taxable year that is greater than 125% of the average amount of distributions received by such US holder during the three preceding taxable years in respect of the ordinary shares or ADSs or, if shorter, such US holder's holding period for the ordinary shares or ADSs). Under these rules:
 
 
  holding period, if we cease to satisfy the requirements for PFIC classification, the US holder may avoid PFIC classification for subsequent years if such holder elects to recognize gain based on the unrealized appreciation in the ordinary shares or ADSs through the close of the tax year in which we cease to be a PFIC.
  Investment Company or Qualified Electing Fund) with the Internal Revenue Service for each tax year such holder holds stock in a PFIC and (i) recognizes gain on a direct or indirect disposition of such stock, (ii) receives certain direct or indirect distributions from such PFIC, or (iii) is making certain elections (including a mark-to-market election and an election to be treated as a “qualified electing fund,” as described below) with respect to such PFIC. This form describes any distributions received with respect to such stock and any gain realized upon the disposition of such stock. Under newly enacted legislation, unless otherwise provided by the US Secretary of Treasury, shareholders of a PFIC are required to file an annual report with the Internal Revenue Service containing such information as the US Secretary of Treasury may require. Although the information required to be reported to the Internal Revenue Service pursuant to such newly enacted legislation remains unknown, it could enhance the reporting requirements applicable to US holders of our ordinary shares or ADSs.
  avoid the imposition of the special tax and interest charge described above by making a mark-to-market election. Pursuant to this election, the US holder would include in ordinary income or loss for each taxable year an amount equal to the difference as of the close of the taxable year between the fair market value of the ordinary shares or ADSs and the US holder's adjusted tax basis in such ordinary shares or ADSs. Losses would be allowed only to the extent of net mark-to-market gain previously included by the US holder under the election for prior taxable years. If a mark-to-market election with respect to ordinary shares or ADSs is in effect on the date of a US holder's death, the tax basis of the ordinary shares or ADSs in the hands of a US holder who acquired them from a decedent will be the lesser of the decedent's tax basis or the fair market value of the ordinary shares or ADSs. US holders desiring to make the mark-to-market election are urged to consult their tax advisors with respect to the application and effect of making the election for the ordinary shares or ADSs.
  special tax and interest charge described above will not apply if such holder makes an election to treat us as a “qualified electing fund” in the first taxable year in which such holder owns the ordinary shares or ADSs and if we comply with certain reporting requirements. However, we do not intend to supply US holders with the information needed to report income and gain pursuant to a “qualified electing fund” election in the event that we are classified as a PFIC.


108
 
 
  and assets are require to be measured and classified in accordance with US federal income tax principles. Our analysis is based on our financial statements as prepared in accordance with IFRS, which may substantially differ from US federal income tax principles. Therefore, no assurance can be given that we were not a PFIC for our 2011 fiscal year ended June 30, 2011. Furthermore, the tests for determining whether we would be a PFIC for any taxable year are applied annually and it is difficult to make accurate predictions of future income and assets, which are relevant to this determination. In addition, certain factors in the PFIC determination, such as reductions in the market value of our capital stock, are not within our control and can cause us to become a PFIC. Accordingly, there can be no assurance that we will not become a PFIC.  The rules relating to PFICs are very complex. US holders are urged to consult their tax advisors regarding the application of the PFIC rules to their investments in our ordinary shares or ADSs. Information Reporting and Backup Withholding
  the sale or other disposition of our ordinary shares or ADSs may be subject to information reporting and US federal backup withholding if the recipient of such payment is not an “exempt recipient” and fails to supply certain identifying information, such as an accurate taxpayer 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.
  date of enactment, a US holder may be required to submit to the Internal Revenue Service certain information with respect to such US holder's beneficial ownership of ordinary shares or ADSs, if such ordinary shares or ADSs are not held on such US holder's behalf by a financial institution. This new law also imposes penalties if a US holder is required to submit such information to the Internal Revenue Service and fails to do so.
  rules.
 10F. DIVIDENDS AND PAYING AGENTS
 
  Secondary tax on companies of R2.9 million is payable on the dividend. There are no dividend restrictions.
                             10G. STATEMENT BY EXPERTS
 Not
    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 our principal executive offices at DRDGOLD Limited, Quadrum Office Park, Building 1, 50 Constantia Boulevard, Constantia Kloof Ext.28, South Africa 1709.
 10I. SUBSIDIARY INFORMATION


109
 
  ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 General
 
   and credit risks. We do not hold or issue derivative financial instruments for speculative purposes, nor do we hedge forward gold sales.
 
    
 Commodity price risk
 
   pay dividends and undertake capital expenditures, and the market price of our ordinary shares or ADSs. Historically, 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 gold price is impossible for us to predict. The price of gold may not remain at a level allowing us to economically exploit our reserves. It is our policy not to hedge this commodity price risk.  Concentration of credit risk
 
   .
 
   financial institutions located in South Africa after evaluating the credit ratings of the representative financial institutions. Furthermore, our trade receivables and loans are regularly monitored and assessed for recoverability. Where it is appropriate, an impairment loss is raised. In addition, our South African operations deliver their gold to Rand Refinery Limited (Rand Refinery), which refines the gold to saleable purity levels and then sells the gold, on behalf of the South African operations, on the bullion market. The gold is sold by Rand Refinery usually on the same day as it is delivered and settlement is made within two days.
 
 Foreign currency risk
 
   this into 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 relatively insignificant.
 
 Long-term debt
 
   
 
 
 Total
 
 
 R'000
 Interest rate
                     
 
  Repayment period


110
 
 
  ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
  12A. DEBT SECURITIES
 Not
  12B. WARRANTS AND RIGHTS
 Not
  12C. OTHER SECURITIES
 Not
  12D. AMERICAN DEPOSITARY SHARES
 Depositary Fees and Charges
  the New York Stock Exchange 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: Service
 Fees (USD)
 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
     2
  Distribution of securities distributed to holders of deposited securities which are distributed by the Depositary to ADS registered holders
   2
    (1) taxes and other governmental charges, (2) such registration fees as may from time to time be in effect for the registration of transfers of ordinary shares generally on the share register and applicable to transfers of ordinary shares to the name of the Depositary or its nominee or the Custodian or its nominee on the making of deposits or withdrawals, (3) such cable, telex and facsimile transmission expenses as are expressly provided in the Deposit Agreement, and (4) such expenses as are incurred by the Depositary in the conversion of foreign currency to U.S. Dollars.
 The Depositary collects its fees for delivery and surrender of ADSs directly from investors depositing or surrendering ADSs
 for the purpose of withdrawal or from intermediaries acting for them.  The Depositary, collects fees for making distributions to investors by deducting those fees from the amounts distributed or by selling a portion of distributable property to pay the fees.  The Depositary may collect its annual fee for depositary services by deductions from cash distributions or by directly billing investors or by charging the book-entry system accounts of participants acting for them. The Depositary may generally refuse to provide fee-attracting services until its fees for those services are paid.  Depositary Payments for Fiscal 2011
  an amount of $92,800.23 mainly for contributions towards the Company’s investor relations activities (including investor meetings, conferences and fees of investor relations service vendors).
 
 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.
 2
 In practice, the Depositary has not collected these fees. If collected, such fees are offset against the related distribution made to the ADR
 holder.


PART II
 
 ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
 
 There have been no material defaults in the payment of principal, interest, a sinking or purchase fund installment, or any
 other material defaults with respect to any indebtedness of ours.
 ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF
  PROCEEDS
 Not applicable.
 
 ITEM 15. CONTROLS AND PROCEDURES
 
 15A. Disclosure Controls and Procedures
 
 As of June 30, 2011, our management, with the participation of our Chief Executive Officer and Chief Financial Officer
 have evaluated the effectiveness of our disclosure controls and procedures (as this term is defined under the rules of the SEC). Our management, including the Chief Executive Officer and Chief Financial Officer, concluded that our disclosure controls and procedures were effective as of June 30, 2011.
 Our disclosure controls and procedures are designed to provide reasonable assurance that information required to be
 disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the applicable rules and forms and that such information required to be disclosed by us in the reports we file or submit under the Securities Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures.
 There are inherent limitations in the effectiveness of any system of disclosure controls and procedures. These limitations
 include the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, any such system can only 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:  •    
  pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and    dispositions of our assets; •  provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements   in accordance with IFRS, and that our receipts and expenditures are being made only in accordance with  authorizations of our management and board; and •  provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition  of our assets that could have a material effect on our financial statements.
 Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
 Instead, it must be noted that even those systems that management deems to be effective can only provide reasonable assurance with respect to the preparation and presentation of our financial statements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or the degree of compliance with the policies and procedures.


112
 
 
  making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework. Based on our assessment and those criteria, our management concluded that as of June 30, 2011 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, 2011 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, 2011, there have not been any changes in our internal control over financial reporting that
  
 ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT
 
   expert within the meaning of the Sarbanes-Oxley Act, in accordance with the Rules of the Nasdaq Capital Market and rules promulgated by the SEC and independent both under the Nasdaq Stock Market Rules and the South African Johannesburg Stock Exchange Rules. The board is satisfied that the skills, experience and attributes of the members of the audit committee are sufficient to enable those members to discharge the responsibilities of the audit committee.
 
 ITEM 16B. CODE OF ETHICS
 
  Chairman, the Chief Executive Officer, Chief Financial Officer, Chief Operating Officer and the Group Financial Manager and Financial Manager at each mining operation as well as all other employees. 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
 
    
    
 Auditors' remuneration
 Year ended June
 30,
  2011  2010
  R’000  R’000
 Audit fees ....................................................................................................................................................  10,065  9,859 Audit-related fees .........................................................................................................................................  -  - Tax fees .......................................................................................................................................................  -  - All other fees ................................................................................................................................................  -  -
 
 
 Audit Fees
 
  provide, include the company audit; statutory audits; comfort letters and consents; attest services; and assistance with and review of documents filed with the SEC.
 
 Audit-Related Fees


113
 
 Tax Fees
 
 
   
 All Other Fees
 
 
    
   external auditors as well as the remuneration and terms of engagement of the external auditors. The committee pre-approves, and has pre-approved, all non-audit services provided by the external auditors. The Audit Committee considered all of the fees mentioned above and determined that such fees are compatible with maintaining KPMG Inc.’s independence.
 
 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
 
  requirements imposed by Nasdaq. Under Nasdaq Stock Market Rule 5615(a)(3), a foreign private issuer such as us may follow its home country corporate governance practices in lieu of certain of the Nasdaq Stock Market Rules corporate governance requirements. The following paragraphs summarize the significant differences between our corporate governance practices and those followed by U.S. companies listed on the Nasdaq Capital market:  Independence of audit committee members.
  three independent members. A foreign private issuer may be exempted from the requirement that all members of the audit committee qualify as independent under Nasdaq Stock Market Rules provided, among other requirements, that the members of the audit committee are independent under Exchange Act Rule 10A-3. As at September 30, 2011 all of our audit committee members are independent both under the Nasdaq Stock Market Rules and the South African Johannesburg Stock Exchange Rules. Exemption from the shareholder approval requirements.
  investors resulting in the issuance of ordinary shares, and securities convertible into ordinary shares, totaling 46,843,902, or 25.43% of the total shares outstanding on a pre-issuance basis. Included within those issuances, on December 12, 2003, the Company entered into an agreement granting Investec the option to acquire 10.2 million ordinary shares. The Company requested an exemption from Nasdaq Marketplace Rule 5635(a)(1)(B) in reliance upon Rule 5615(a)(3). Rule 5635(a)(1)(B) provided that shareholder approval is required upon issuing 20% or more of the common stock outstanding before the issuance. Nasdaq granted this exemption on the basis that the shareholder approval requirements of Rule 5635(a)(1)(B) were contrary to generally accepted business practices of companies located in South Africa.
   of any shares or rights to shares, which approval can be provided by specific authority or a general authority granted by means of a resolution passed by shareholders in a general meeting. JSE Listing Requirements require 75% shareholder approval for any issuance of shares for cash. JSE Listing Requirements do, however, permit an issuer to issue shares for cash under a general authority granted by its shareholders, but not in excess of 15% of the company’s total issued share capital during any financial year under that authority, or the general authority. In terms of the specific issuances for which the Company received the exemption from Nasdaq described above, there was no JSE requirement that would mandate specific shareholder approval for these transactions. The JSE Listing Requirements accept a general authority by our shareholders under certain circumstances. The shareholders had approved a general authority which covered the relevant transactions by resolutions passed at the Company's annual general meetings in November 2003. In addition, included in the shares issued for cash were approximately 24.4 million shares to the value of R435.5 million ($63.1 million) which were used for the acquisition of the Porgera Joint Venture. Approval was obtained from the JSE to deem these shares to be a vendor placing.


114
 
 Exemption from the quorum requirements.
  common stock must be no less than 33 1/3 % of the issuer’s outstanding shares. Consistent with the practice of companies incorporated in South Africa, our articles of association only require a quorum of three members. As a result, and in connection with the listing of our ADSs on the Nasdaq National Market in July 1996, we requested, and Nasdaq granted us in October 1996, an exemption from compliance with the Rule 5620 (c) quorum requirement.


115
 
 PART III
 
 ITEM 17. FINANCIAL STATEMENTS
 Not
  ITEM 18. FINANCIAL STATEMENTS
 
   
 
 
 Page


F-1
 
 Report of the Independent Registered Public Accounting Firm
 The Board of Directors and Shareholders of DRDGOLD Limited. We have audited the accompanying consolidated statement of financial position of DRDGOLD Limited, its subsidiaries and associate as of June 30, 2011 and 2010, and the related consolidated statement of comprehensive income, the consolidated statement of changes in equity, and the consolidated statement of cash flows for each of the years in the three-year period ended June 30, 2011. We also have audited DRDGOLD Limited’s internal control over financial reporting as of June 30, 2011, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). DRDGOLD Limited’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying management’s annual report on internal control over financial reporting. Our responsibility is to express an opinion on these consolidated financial statements and an opinion on DRDGOLD Limited’s internal control over financial reporting based on our audits.
 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 of financial reporting and the preparation of financial statements for external purposes in accordance with International Financial Reporting Standards. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with International Financial Reporting Standards, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
 Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
 In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of DRDGOLD Limited and subsidiaries as of June 30, 2011 and 2010, and the results of their operations and cash flows for each of the years in the three-year period ended June 30, 2011, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board. Also in our opinion, DRDGOLD Limited maintained, in all material respects, effective internal control over financial reporting as of June 30, 2011, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. /s/ KPMG Inc. KPMG Inc. Registered Accountants and Auditors Johannesburg, Republic of South Africa October 28, 2011


F-2
 DRDGOLD Limited   CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME   for the year ended June 30, 2011
 
 
 
 
 
 
   2011
 2010
 2009
  Note
 R'000
 R'000
 R'000
   2,565,319
      (2,343,548)
      (2,143,611)
     (130,919)
      (839)
     (52,567)
     (15,612)
   Gross profit from operating activities
  221,771
     (547,656)
     (88,086)
      Results from operating activities
 (413,971)
      52,792
      (22,047)
   (Loss)/profit before taxation
  (383,226)
      (32,152)
   (Loss)/profit for the year
  (415,378)
   Attributable to:
  
   
   
     (287,915)
      (127,463)
   (Loss)/profit for the year
  (415,378)


F-3
 
 DRDGOLD Limited   CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (continued)   for the year ended June 30, 2011
 
 
 
 
 
 
 2011  2010
 2009
 
 Note
 R'000
 R'000
 R'000
 Other comprehensive income, net of tax
 
 
  
  747
 
 
  -
 
   747
 
   -
 
 
  275
 
 
  214
 
 Non-controlling interest in fair value adjustment on available-for-sale investment
  61
 
   -
 
 
  -
 
 
  -
 
 
  -
 
   -
 
 
  
   Total comprehensive income for the year
  (414,356)
 
 Attributable to:
  
     (286,954)
 
   (127,402)
 
 Total comprehensive income for the year
  (414,356)
 
 
          Earnings per share attributable to equity owners of the parent
   (75)
 
 The accompanying notes are an integral part of these consolidated financial statements.


F-4
 DRDGOLD Limited
 
 CONSOLIDATED STATEMENT OF FINANCIAL POSITION at June 30, 2011
   2011  2010
 
 Note
 R’000  R’000
 ASSETS
  
 
 Non-current assets
  1,778,646
    1,540,003
    159,312
    10,099
    69,232
  Current assets
  510,015
    122,922
    126,410
    1,571
    259,112
    -
  Total assets
  2,288,661
  EQUITY AND LIABILITIES
 
  Equity
  1,219,166
    1,247,238
    (28,072)
  Non-current liabilities
  659,446
    490,225
    6,268
    122,525
    40,428
  Current liabilities
  410,049
    330,468
    79,345
   236
  Total equity and liabilities
  2,288,661


F-5
 DRDGOLD Limited CONSOLIDATED STATEMENT OF CHANGES IN EQUITY for the year ended June 30, 2011
 
 Number
 of
 ordinary
 shares
 Number of
 cumulative
 preference
 shares
 Share capital
 and share
 premium
 R’000
 Cumulative
 preference
 share
 capital
 R’000
 Revaluation
 and other
 reserves
 1
 
 R’000
 Accumulated
 loss
 R’000
 Equity of the
 owners of the
 parent
 R’000
 Non-
 controlling
 interest
 R’000
 
 Total equity
 R’000
 Balance at June 30, 2008
 376,571,588
 5,000,000
 4,098,206
 500
 207,934
 (3,062,383)
 1,244,257
 61,204
 1,305,461
    6,707
 6,707
     (433)
 (433)
       7,873
 7,873
       (37,658)
 (37,658)
        260,727
  302,029
       (1,133)
 (1,133)
       (606)
 (606)
 Non-controlling interest forming part of the acquisitionof subsidiary
      12,892
     
      133,342
  180,192
       129,124
  110,684
 Balance at June 30, 2009
 378,001,303
 5,000,000
 4,104,480
 500
 347,410
 (2,970,917)
 1,481,473
 102,506
 1,583,979
                                             Balance at June 30, 2010
 384,884,379
 5,000,000
 4,133,318
 500
 198,869
 (2,782,056)
 1,550,631
 99,330
 1,649,961
  (714)
 
 (714)
 (714)
  
 3,519
 3,519
 3,519
  
 (19,244)
 (19,244)
 (19,244)
  
 961
 (287,915)
 (286,954)
 (127,402)
 (414,356)
  
 214
 214
 61
 275
  
 747
 747
 747
  
 (287,915)
 (287,915)
 (127,463)
 (415,378)
 Balance at June 30, 2011
 384,884,379
 5,000,000
 4,132,604
 500
 203,349
 (3,089,215)
 1,247,238
 (28,072)
 1,219,166
 
 1
 
   The accompanying notes are an integral part of these consolidated financial statements.


F-6
 DRDGOLD Limited CONSOLIDATED STATEMENT OF CASH FLOWS for the year ended June 30, 2011
 
 
 2011
 2010
 2009
  Note
 R’000
 R’000
 R’000
 CASH FLOWS FROM OPERATING ACTIVITIES
 
 
    2,565,319
     (2,249,516)
   Cash generated by operations
  315,803
     13,384
     6,013
     (4,975)
     (6,212)
   Net cash inflow from operating activities
  324,013
   CASH FLOWS FROM INVESTING ACTIVITIES
    -
     (317,250)
     4,662
     (22,577)
     -
     -
     -
   Net cash outflow from investing activities
 
 (335,165)
   CASH FLOWS FROM FINANCING ACTIVITIES
    -
     (714)
     109,636
     (8,332)
     (19,244)
   Net cash inflow/(outflow) from financing activities
 
 81,346
   NET INCREASE/(DECREASE) IN
  
   CASH AND CASH EQUIVALENTS
  70,194
     188,152
     766
   Cash and cash equivalents at the end of the year
  259,112
   The accompanying notes are an integral part of these consolidated financial statements.


F-7
 NOTES TO THE ANNUAL FINANCIAL STATEMENTSfor the year ended June 30, 2011 1. ACCOUNTING POLICIES DRDGOLD Limited (‘the company’) is a company domiciled in South Africa. The consolidated financial statements of the company for the year ended June 30, 2011 comprise the company and its subsidiaries, (together referred to as the group) and the group’s interests in associates and jointly controlled entities. STATEMENT OF COMPLIANCE The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) and its interpretations adopted by the International Accounting Standards Board (IASB). The financial statements were approved by the Board of Directors on September 19, 2011. BASIS OF MEASUREMENT The financial statements are prepared on the historical cost basis, unless otherwise stated. FUNCTIONAL AND PRESENTATION CURRENCYThe consolidated financial statements are presented in South African Rands, which is the company's functional currency. All financial information presented in South African Rands has been rounded to the nearest thousand. USE OF ESTIMATES AND JUDGMENTS The preparation of financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the reporting date, and the reported amounts of revenues and expenses during the reporting period. The determination of estimates requires the exercise of judgment based on various assumptions and other factors such as historical experience, current and expected economic conditions, and in some cases actuarial techniques. Actual results could differ from those estimates. The estimates and underlying assumptions are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable in the circumstances. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods, if the revision affects both current and future periods. The judgments that management has applied in the application of accounting policies, and the estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are discussed below:
 (a)  Recoverable amount of mining assets and depreciation
 The recoverable amount of mining assets is generally determined utilizing discounted future cash flows. Management also considers such factors as the market capitalization of the group, the quality of the individual ore body and the country risk in determining the recoverable amount. During the year under review, the group calculated recoverable amount based on updated life-of-mine business plans, a gold price of R350,649 per kilogram (2010: R311,636 per kilogram) in year one escalating at an average of 6.1% (2010: 5.8%) per year, and a discount rate of 13.9% (2010: 13.7%).  At a 10% lower gold price received of R315,584 per kilogram, an additional impairment of R366.2 million would be recognized and at a 3.8 percentage points (27.3%) increase in the discount rate to 17.7%, the group would begin additional impairment of the mining assets (refer note 10). The calculation of the units-of-production rate of depreciation could be affected to the extent that actual production in the future is different from current forecast production based on proved and probable Ore Reserves.  This would generally arise when there are significant changes in any of the factors or assumption used in estimating Ore Reserves.  Factors could include:


F-8
 NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued)for the year ended June 30, 2011 1. ACCOUNTING POLICIES (continued)USE OF ESTIMATES AND JUDGMENTS (continued)
 (b)  Valuation of financial instruments
 If the value of a financial instrument cannot be obtained from an active market, the group has established fair value by using valuation techniques. These include the use of recent arm’s-length transactions, reference to other instruments that are substantially the same, discounted cash flow analysis and option pricing models, refined to reflect the issuer’s specific circumstances.
 (c)  Estimate of exposure and liabilities with regard to rehabilitation costs
 Estimated provisions for environmental rehabilitation, comprising pollution control rehabilitation and mine closure, are based on the group’s environmental management plans in compliance with current technological, environmental and regulatory requirements.  An average discount rate of 8.53%, average inflation rate of 5.98% and expected life of mines according to the life-of-mine plans were utilized in the calculation of the estimated net present value of the rehabilitation liability (2010: discount rate of 8.95% and inflation rate of 5.76%) (refer note 19).
  (d)  Estimate of post-retirement medical liability
 An actuarial valuation is carried out every three years. Assumptions used to determine the liability include a discount rate, health cost inflation rate, real discount rate, retirement age, spouse age gap, continuation at retirement and proportion married at retirement (refer note 20).
 (e)  Estimate of taxation
 The group is subject to income tax in South Africa and Zimbabwe. Significant judgment is required in determining income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. The group recognizes liabilities for anticipated tax issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will have an impact on the income tax and deferred tax provisions in the period in which such determination is made.
 (f)  Fair value of share-based compensation
 The fair value of options granted is determined using the Black-Scholes option pricing model. The significant inputs into the model are: vesting period and conditions, risk-free interest rate, volatility, market price on date of grant and issue price of grant. (Refer to notes 18 and 20 for detail on the share option scheme.)
 (g)  Gold in process
 Gold in process in certain plants is estimated based on the best estimate of the metallurgist of the gold content and grade thereof.
 (h)  Assessment of contingencies
 Contingencies will realize only when one or more future events occur or fail to occur. The exercise of significant judgment and estimates of the outcome of future events are required during the assessment of the impact of such contingencies.
 (i)  Ore Reserves estimate
 At the end of each financial year, the estimate of proved and probable Ore Reserves is updated.  Depreciation of mining assets is prospectively adjusted, based on these changes. Ore Reserves are estimates of the amount of product that can be economically and legally extracted from the group’s properties.  In order to calculate Ore Reserves, estimates and assumptions are required about a range of geological, technical and economic factors, including but not limited to quantities, grades, production techniques, recovery rates, production costs, transport costs, commodity demand, commodity prices and exchange rates.


F-9
 NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued)for the year ended June 30, 2011 1. ACCOUNTING POLICIES (continued)USE OF ESTIMATES AND JUDGMENTS (continued)
 (i)  Ore Reserves estimate (continued)
 Estimating the quantity and/or grade of Ore Reserves requires the size, shape and depth of ore bodies to be determined by analyzing geological data such as the logging and assaying of drill samples.  This process may require complex and difficult geological judgments and calculations to interpret the data. Because the economic assumptions used to estimate Ore Reserves change from period to period and because additional geological data is generated during the course of operations, estimates of Ore Reserves may change from period to period.  Changes in reported Ore Reserves may affect the group’s financial results and financial position in a number of ways including the following:
 
 These adjustments are made prospectively where relevant.
 (j)  Estimate of deferred taxation
 The amount recognized as a deferred tax asset is generally determined utilizing discounted future cash flows similar to estimates used in the calculation of depreciation and rehabilitation liabilities. Management considers all factors that could possibly affect the probability that future taxable profit will be available against which unused tax credits can be utilized. These factors include profitability of the operations and an estimate of the gold price. The amount recognized as a deferred tax asset is sensitive to the current gold spot price. The amount recognized at June 30, 2011 is based on a future gold price received of R350,649 per kilogram (2010: R311,636 per kilogram) in year one, escalating at an average of 6.1% (2010: 5.8%) per year.  At a 10% lower gold price received of R315,584 per kilogram (2010: R280,472 per kilogram), the deferred tax asset will reduce by R15.3 million (2010: Rnil). During the year under review the group changed the deferred tax rate from the maximum statutory rate to the expected average effective tax rate, resulting from the income tax formula for mining income. This change has been accounted for as a change in estimate and is therefore applied prospectively. The change reduced the expense through profit or loss and the net deferred tax liability with R39.9 million (refer notes 8 and 21).
 SIGNIFICANT ACCOUNTING POLICIES The accounting policies set out below have been applied consistently by all entities in the group to all periods presented, except as explained below under ‘New standards, interpretations and amendments to standards and interpretations adopted’. New standards, interpretations and amendments to standards and interpretations adopted The group adopted the following new standards, amendments to standards and interpretations, which are applicable to the group:
 •  IFRS 2 – Share-based Payments amendment: Group Cash-settled Share-based Payment Transactions
  •  IAS 32 – Financial Instruments amendment: Presentation: Classification of Rights Issues
  •  IFRIC 19 – Extinguishing Financial Liabilities with Equity Instruments


F-10
 NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued) for the year ended June 30, 2011 1. ACCOUNTING POLICIES (continued) IFRS 2 amendment – Group Cash-settled Share-based Payment TransactionsThe group adopted IFRS 2 amendment – Share Based Payments: Group Cash-settled Share-based Payment Transactions as of July 1, 2010. These amendments require an entity that receives goods or services (“receiving entity”) in either an equity-settled or a cash-settled share-based payment transaction to account for the transaction in its separate or individual financial statements. This principle even applies if another group entity or shareholder settles the transaction (“settling entity”) and the receiving entity has no obligation to settle the payment. Previously IFRS 2 had explicit requirements to attribute transactions settled by a parent or shareholder only if those transactions were equity-settled. These amendments did not have any effect on the financial position or financial performance of the group. IAS 32 - Financial Instruments: Presentation: Classification of Rights IssuesThe group adopted IAS 32 – Financial Instruments: Presentation – Classification of Rights Issues as of July 1, 2010. The amendment requires that rights, options or warrants to acquire a fixed number of the entity’s own equity instruments for a fixed amount of any currency are equity instruments if the entity offers the rights, options or warrants pro rata to all of its existing owners of the same class of its own non-derivative equity instruments. These amendments did not have any effect on the financial position or financial performance of the group. IFRIC 19 - Extinguishing Financial Liabilities with Equity InstrumentsThe group adopted IFRIC 19 – Extinguishing Financial Liabilities with Equity Instruments, as of July 1, 2010. This interpretation applies to the accounting by the debtor in a debt for equity swap transaction, except for:
 
 IAS 39, paragraph 41, requires that an entity recognize in profit or loss the difference between the carrying amount of the financial liability extinguished and the consideration paid. The interpretation clarifies that equity instruments issued to a creditor to extinguish all or part of a financial liability in a debt for equity swap would be “consideration paid” in accordance with IAS 39 paragraph 41. This interpretation did not have any impact on the financial position or financial performance of the group. New accounting standards Certain new accounting standards and amendments to accounting standards have been published that have various effective dates. These new standards and amendments to accounting standards have not been early adopted by the group and a reliable estimate of the impact of the adoption thereof for the group cannot yet be determined for some of them. At the date of authorization of these financial statements, the following relevant standards and amendments to accounting standards were in issue but not yet effective such that they could have bearing on the group and the group expects to adopt the standards and amendments to accounting standards when effective:


F-11
 NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued) for the year ended June 30, 2011
 1. ACCOUNTING POLICIES (continued
 
 New accounting standards (continued)
 Standard/interpretation  Effective  date
   Annual periods commencing on or after January 1, 2011
 (2)
    Annual periods commencing on or after January 1, 2013
 (2)
    Annual periods commencing on or after July 1, 2011
   Annual periods commencing on or after July 1, 2012
   Annual periods commencing on or after January 1, 2013
 (2)
    Annual periods commencing on or after January 1, 2013
 (2)
    Annual periods commencing on or after January 1, 2013
 (2)
    Annual periods commencing on or after January 1, 2013
 (2)
    Annual periods commencing on or after January 1, 2013
 (2)
    Annual periods commencing on or after January 1, 2013
 (2)
    Annual periods commencing on or after January 1, 2013
 (2)
  (1)  No material impact. (2)  The impact is not known or estimable.
 Each of these standards and interpretations is described briefly below: Revised IAS 24 – Related party disclosures The changes introduced in the revised IAS 24, include amendments to the definition of a related party and related party disclosure requirements for government-related entities.
 IFRS 9 – Financial InstrumentsIFRS 9 deals with classification and measurement of financial assets and will replace the relevant sections of IAS 39. Classification The standard requires that financial assets be classified as either measured at:
 
 A financial asset is measured at amortized cost if:
 
 All other financial assets are measured at fair value, with fair value changes recognized in profit or loss. The standard eliminates the existing IAS 39 categories of held to maturity, available for sale and loans and receivables.  Classification takes place on initial recognition and subsequent changes are expected to be rare and subject to certain conditions. Embedded derivatives are no longer separated from hybrid contracts that have a financial asset host. Instead, the entire hybrid contract is assessed for classification using the principles above. IAS 39 continues to apply to derivatives embedded in financial liabilities.


F-12
 NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued) for the year ended June 30, 2011 1. ACCOUNTING POLICIES (continued) New accounting standards (continued)
 IFRS 9 – Financial Instruments (continued)Fair value optionsAn entity may designate a financial instrument on initial recognition as measured at fair value through profit or loss only if it eliminates or significantly reduces a measurement or recognition inconsistency (“accounting mismatch”). Investments in Equity InstrumentsInvestments in equity instruments are generally measured at fair value with gains and losses recognized in profit or loss. For an investment in an equity instrument that is not held for trading, an entity may on initial recognition elect to present all fair value changes from the investment in other comprehensive income (OCI). No amount recognized in OCI is ever reclassified to profit or loss at a later date. Dividends on such investments are recognized in profit or loss, rather than OCI, in accordance with IAS 18 Revenueunless they clearly represent a recovery of the cost of the investment. IFRS 9 eliminates the exception in IAS 39 that allows investments in unquoted equity instruments, and related derivatives, for which a fair value cannot be determined reliably, to be measured at cost. These instruments are now measured at fair value although the standard notes that in some limited circumstances cost may be an appropriate estimate of fair value. The guidance in IAS 39 on impairments of financial assets and on hedge accounting continues to apply. However, as a result of the simplified classification requirements, the numerous impairment methods in IAS 39 have been reduced to a single impairment method. IFRS 7 amendments – Disclosures – Transfers of Financial AssetsThe amendment introduces new disclosure requirements about transfers of financial assets, including disclosures for:
 
 IAS 1 amendments – Presentation of Items of Other Comprehensive IncomeThe amendments:
 
 The amendments do not address which items are presented in other comprehensive income or which items need to be reclassified. The requirements of other IFRSs continue to apply in this regard. IFRS 10 – Consolidated Financial StatementsIFRS 10 introduces a new approach to determining which investees should be consolidated and provides a single model to be applied in the control analysis for all investees. An investor controls an investee when:
 
 Control is reassessed as facts and circumstances change.


F-13
 NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued) for the year ended June 30, 2011 1. ACCOUNTING POLICIES (continued) New accounting standards (continued) IFRS 11 – Joint ArrangementsIFRS 11 focuses on the rights and obligations of joint arrangements, rather than the legal form (as is currently the case). It:
 
 IFRS 11 supersedes IAS 31 and SIC-13 Jointly Controlled Entities—Non-Monetary Contributions by Venturers. IFRS 12 – Disclosure of Interests in Other EntitiesIFRS 12 contains the disclosure requirements for entities that have interests in subsidiaries, joint arrangements (i.e. joint operations or joint ventures), associates and/or unconsolidated structured entities, aiming to provide information to enable users to evaluate:
 
 IFRS 13 – Fair Value MeasurementIFRS 13 replaces the fair value measurement guidance contained in individual IFRSs with a single source of fair value measurement guidance. It defines fair value, establishes a framework for measuring fair value and sets out disclosure requirements for fair value measurements. It explains how to measure fair value when it is required or permitted by other IFRSs. It does not introduce new requirements to measure assets or liabilities at fair value, nor does it eliminate the practicability of exceptions to fair value measurements that currently exist in certain standards. IAS 19 amended 2011 – Employee BenefitsThe amended IAS 19 includes the following requirements:
 corridor method and eliminate the ability for entities to recognize all changes in the defined benefit obligation and  in plan assets in profit or loss, which currently is allowed under IAS 19; and
 IAS 27 – Separate Financial StatementsIAS 27 (2011) supersedes IAS 27 (2008). IAS 27 (2011) carries forward the existing accounting and disclosure requirements for separate financial statements, with some minor clarifications. IAS 28 – Investments in Associates and Joint VenturesIAS 28 (2011) supersedes IAS 28 (2008). IAS 28 (2011) makes the following amendments:


F-14
 NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued) for the year ended June 30, 2011 1. ACCOUNTING POLICIES (continued) BASIS OF CONSOLIDATION Subsidiaries Subsidiaries are entities controlled by the group. Control exists when the group has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that are currently exercisable or convertible are taken into account. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. Changes in the group’s interest in a subsidiary which does not lead to loss of control are recorded as a transaction with equity owners in their capacity as equity owners and no profit or loss is recognized. Subsequent changes to an exercise price of an option or forward price forming part of the aforementioned transaction is recognized in profit or loss. When control is lost, the gain or loss is recognized in profit or loss and any remaining interest is recorded at the fair value on the transaction date, which is deemed to be the cost price, and, depending on the nature of the remaining investment, is either recognized as an associate, joint venture or as a financial instrument. Subsidiaries with a year-end on a date other than June 30 are included in the consolidated financial statements using the most recent financial results with no more than a three-month difference if it is impracticable to prepare financial statements at the group reporting date. Adjustments are made for material transactions and events between the group and subsidiary in the intervening period. The accounting policies of subsidiaries have been changed, where necessary, to align them with the policies adopted by the group. Special purpose entities The group has established a special purpose entity for investment purposes. The group has a direct shareholding in the entity. A special purpose entity is consolidated if, based on evaluation of the substance of its relationship with the group and the special purpose entity’s risks and rewards, the group concludes that it controls the special purpose entity. The special purpose entity controlled by the group was established under terms that impose strict limitations on the decision-making powers of the special purpose entity’s management and that result in the group receiving the majority of the benefits related to the special purpose entity’s operations and net assets, being exposed to the majority of risks incident to the special purpose entity’s activities, and retaining the majority of the residual or ownership risks relating to the special purpose entity or its assets. Associates Associates are those entities in which the group has significant influence, but not control, over the financial and operating policies. Significant influence is presumed to exist when the group holds between 20% and 50% of the voting power of another entity. Associates are accounted for using the equity method and are initially recognized at cost. The group's investment in associates includes goodwill identified on acquisition and is presented net of any accumulated impairment losses. The consolidated financial statements include the group's share of the total recognized income and expenses and equity movements of associates, after adjustments to align the accounting policies with those of the group, from the date that significant influence commences until the date that significant influence ceases. When the group's share of losses exceeds its interest in an associate, the group's carrying amount is reduced to nil and recognition of further losses is discontinued except to the extent that the group has incurred legal or constructive obligations or made payments on behalf of an associate. Joint ventures Joint ventures (jointly controlled entities) are those entities for which the group has joint control over their activities. They are established by contractual agreement and require unanimous consent for strategic financial and operating decisions. The consolidated financial statements include the group's proportionate share of the entities' assets, liabilities, revenue and expenses, with items of a similar nature on a line-by-line basis, from the date that joint control commences until the date that joint control ceases.


F-15
 NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued) for the year ended June 30, 2011 1. ACCOUNTING POLICIES (continued) BASIS OF CONSOLIDATION (continued) Transactions eliminated on consolidationIntra-group balances, transactions and any unrealized gains and losses or income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements. Unrealized gains arising from transactions with associates and jointly controlled entities are eliminated to the extent of the group's interest in the entity. Unrealized losses are eliminated in the same way as unrealized gains, but only to the extent that there is no evidence of impairment. Acquisitions from entities under common control Business combinations arising from transfers of interests in entities that are under the control of the shareholder which controls the group is accounted for as if the acquisition had occurred at the beginning of the earliest comparative year presented or, if later, at the date that common control was established. For this purpose comparatives are restated. The assets and liabilities acquired are recognized at the carrying amounts recognized previously in the group controlling shareholder’s consolidated financial statements. The components of equity of the acquired entities are added to the same components within the group equity except that any share capital of the acquired entities is recognized as part of share premium. Any cash paid for the acquisition is recognized directly in equity. Allocation of losses to non-controlling interests In the absence of an agreement with non-controlling interest shareholders’ applicable losses in subsidiaries are allocated to non-controlling interest even if doing so causes the non-controlling interest to have a deficit balance. FOREIGN CURRENCY Functional currency The functional currency is the currency of the primary economic environment in which the entity operates. This is determined by all companies in the group after analyzing all sources and influences of various currencies on their respective financial position and performance, in order to establish the currency with the most dominant influence as its functional currency. Each entity in the group has determined its own functional currency in accordance with the above process. The functional currency of the company is the South African Rand. Foreign currency transactions Transactions in foreign currencies undertaken by group entities are translated at the foreign exchange rates ruling at the dates of these transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are translated to the functional currency at the foreign exchange rate ruling at that date. Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. Non-monetary assets and liabilities denominated in foreign currencies, measured at fair value, are translated at foreign exchange rates ruling at the date that the fair value was determined. Foreign exchange differences arising on translation are recognized in profit or loss. Foreign operations The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated into South African Rands at the foreign exchange rates ruling at the reporting date. The revenues and expenses of foreign operations are translated to South African Rands at rates approximating the foreign exchange rates ruling at the dates of the transactions. Foreign exchange differences arising on retranslation are recognized in other comprehensive income and presented within equity in the foreign exchange translation reserve. When a foreign operation is disposed of the relevant amount in the foreign exchange translation reserve is transferred to profit or loss as part of the profit or loss on disposal. On partial disposal of a subsidiary that includes a foreign operation, the relevant portion of such cumulative amount is reattributed to non-controlling interest.


F-16
 NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued) for the year ended June 30, 2011 1. ACCOUNTING POLICIES (continued) FOREIGN CURRENCY (continued) Net investment in foreign operationsForeign exchange gains and losses arising from a monetary item receivable from or payable to a foreign operation, the settlement of which is neither planned nor likely in the foreseeable future, are considered to form part of a net investment in a foreign operation and are recognized in other comprehensive income and presented within equity in the foreign exchange translation reserve in the consolidated financial statements. FINANCIAL INSTRUMENTS Financial instruments recognized in the statement of financial position include investments, available-for-sale financial instruments, trade and other receivables, cash and cash equivalents, long- and short-term interest-bearing borrowings, trade and other payables and bank overdrafts. Financial instruments are initially recognized at fair value and include any directly attributable transaction costs, except those financial instruments measured at fair value through profit or loss. Subsequent to initial recognition, financial instruments are measured as described below. Financial assets and liabilities are off-set and the net amount presented in the statement of financial position when, and only when, the group has the legal right to off-set the amounts, and intends either to settle on a net basis, or to realize the assets and settle the liabilities simultaneously. Financial assets are derecognized when the contractual rights to the cash flows from the financial asset expire or to the extent that the company transfers substantially all the risks and rewards of ownership of the financial asset. Financial liabilities are derecognized when the obligation specified in the contract is discharged or cancelled or has expired. Any gain or loss on derecognition is taken to profit or loss. Loans and receivablesLoans and receivables (which include trade and other receivables) are measured at amortized cost, using the effective interest method, less any impairment losses. Available-for-sale financial assets The group's investments in equity securities and certain debt securities are classified as available-for-sale financial assets. Subsequent to initial recognition, they are measured at fair value and changes therein, other than impairment losses and foreign exchange gains and losses on available-for-sale monetary items are recognized in other comprehensive income and presented within equity in the revaluation and other reserves. When an investment is derecognized, the cumulative gain or loss in other comprehensive income is transferred to profit or loss. Cash and cash equivalents Cash and cash equivalents comprise cash on hand, demand deposits, and highly liquid investments with an original maturity of three months or less. Subsequent to initial recognition, cash and cash equivalents are measured at amortized cost, which is equivalent to their fair value. Bank overdrafts that are repayable on demand and form an integral part of the group's cash management are included as a component of cash and cash equivalents for the purpose of the statement of cash flows. Interest-bearing borrowings Interest-bearing borrowings (including the preference share liabilities) are subsequently measured at amortized cost with any difference between the initial amount and the redemption value being recognized in profit or loss over the period of the borrowings on an effective interest basis. If the group revises its estimates of payments, the carrying amount of the liability is adjusted to reflect actual and revised estimated cash flows. The carrying amount is recalculated by computing the current value of estimated future cash flows at the liability's original effective interest rate. The adjustment is recognized as income or expense in profit or loss.


F-17
 NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued) for the year ended June 30, 2011 1. ACCOUNTING POLICIES (continued) FINANCIAL INSTRUMENTS (continued) Trade and other payables
 
  
 PROPERTY, PLANT AND EQUIPMENT
 
 Owned assets
 
 The group's property, plant and equipment consist mainly of mining assets which comprise mining properties (including mineral rights), mine development costs, mine plant facilities, exploration assets and equipment and vehicles.  Development costs, which are capitalized, consist primarily of expenditure that gives access to proved and probable Ore Reserves. Capitalized development costs include expenditure incurred to develop new ore bodies, to define future mineralization in existing ore bodies and to expand the capacity of a mine. Mine development costs to maintain production are expensed as incurred. Where funds have been borrowed specifically to finance a project, the amount of interest capitalized represents the actual borrowing costs incurred (refer to accounting policy on borrowing costs capitalized). Mine development costs include acquired proved and probable Ore Reserves at the acquisition date. Exploration and evaluation costs, including the costs of acquiring licenses, property and qualifying borrowing costs, are capitalized as exploration assets on a project-by-project basis, pending determination of the technical feasibility and commercial viability of the project. The capitalized costs are presented as tangible assets according to the nature of the assets acquired. When a license is relinquished or a project is abandoned, the related costs are recognized in profit or loss immediately. Pre-license costs are recognized in profit or loss as incurred.
 
 Items of property, plant and equipment are measured at cost, less accumulated depreciation and accumulated impairment losses.  Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of self-constructed assets includes the cost of materials and direct labor, any other costs directly attributable to bringing an asset to a working condition for its intended use, as well as the costs of dismantling and removing an asset and restoring the site on which it is located.
 
 Where parts of an item of property, plant and equipment, with costs that are significant in relation to the total cost of the item, have different useful lives, they are accounted for as separate items of property, plant and equipment.
 
 Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the net proceeds from disposal with the carrying amount of property, plant and equipment, and are recognized in profit or loss. When assets are sold which have been revalued on acquisition for consolidated purposes, the amounts included in the revaluation reserve are transferred to retained earnings.Leased assets
 
 Leases in terms of which the group assumes substantially all the risks and rewards of ownership are classified as finance leases. Upon initial recognition, the leased asset and liability are measured at amounts equal to the lower of the fair value of the leased asset and the present value of the minimum lease payments. Subsequent to initial recognition, the asset is accounted for in the same manner as owned property, plant and equipment. Subsequent costs The group recognizes in the carrying amount of an item of property, plant and equipment, the cost of replacing part of an item when that cost is incurred, if it is probable that the future economic benefits embodied within the part will flow to the group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognized. All other costs are recognized in profit or loss as an expense as incurred.


F-18
 NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued) for the year ended June 30, 2011 1. ACCOUNTING POLICIES (continued) PROPERTY, PLANT AND EQUIPMENT (continued) Depreciation Depreciation of mining properties (including mineral rights), mine development and mine plant facilities relating to underground operations are computed using the units-of-production method based on estimated proved and probable Ore Reserves, which are calculated using the group’s life-of-mine business plans and a gold price at the end of each financial year. Proved and probable Ore Reserves reflect estimated quantities of economically recoverable reserves which can be recovered in the future from known mineral deposits. Exploration assets that are available for use are depreciated over their estimated useful lives. Changes in management’s estimates of the quantities of the economically recoverable reserves impact depreciation on a prospective basis. The prevailing market price of gold at the end of the financial year was R236,227, R306,081 and R328,155 per kilogram for the fiscal years ended June 30, 2009, 2010 and 2011, respectively. Other assets are depreciated using the straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment. Leased assets are depreciated over the shorter of the lease term and their estimated useful lives, unless it is
  reasonably certain that the group will obtain ownership by the end of the lease term. Land is not depreciated.                 The residual values, estimated useful lives and depreciation methods are reassessed annually and adjusted if appropriate. INTANGIBLE ASSETS Acquisition and goodwill arising thereon The group measures goodwill as the fair value of the consideration transferred, including the recognized amount of any non-controlling interest in the acquiree, less the net recognized amount (generally fair value) of the identifiable assets acquired and liabilities assumed, all measured as of the acquisition date. In the case of a bargain purchase, the resulting gain is recognized in profit or loss on the acquisition date. Goodwill relating to equity-accounted investments is included within the carrying value of the investment and tested for impairment when indicators exist. Acquisitions of non-controlling interests are accounted for as transactions with equity holders in their capacity as equity holders and therefore no goodwill is recognized as a result of such transactions.  Goodwill relating to subsidiaries is tested annually for impairment and measured at cost less accumulated impairment losses. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold. Goodwill is allocated to cash-generating units for the purposes of impairment testing. IMPAIRMENT
Financial assets A financial asset is assessed at each reporting date to determine whether there is any objective evidence that it is impaired. A financial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash flows of that asset.Financial assets measured at amortized costAn impairment loss in respect of a financial asset measured at amortized cost is calculated as the difference between its carrying amount and the present value of the estimated future cash flows discounted at the original effective interest rate, that is, the effective interest rate computed at initial recognition of these financial assets.


F-19
 NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued) for the year ended June 30, 2011 1. ACCOUNTING POLICIES (continued) IMPAIRMENT (continued) Available-for-sale financial assets An impairment loss in respect of an available-for-sale financial asset is calculated by reference to its fair value. When a decline in
  the fair value of an available-for-sale financial asset has been recognized directly in other comprehensive income, and there is
  objective evidence that the asset is impaired, the cumulative loss that had been recognized in other comprehensive income is
  recognized in profit or loss even though the financial asset has not been derecognized. The amount of the cumulative loss that is
  recognized in profit or loss is the difference between the acquisition cost and current fair value, less any impairment loss on that
  financial asset previously recognized in profit or loss. Financial assets that are individually significant are tested for impairment
  on an individual basis. The remaining financial assets are assessed collectively in groups that share similar credit risk
  characteristics. All impairment losses are recognized in profit or loss.
  An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was recognized. For financial assets measured at amortized cost and available-for-sale financial assets that are debt securities, the reversal is recognized in profit or loss. For available-for-sale financial assets that are equity securities, the reversal is recognized in other comprehensive income. Non-financial assets The carrying amounts of the group's assets, other than inventories and deferred tax assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, the asset's recoverable amount is estimated. The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Future cash flows are estimated based on quantities of recoverable minerals, expected gold prices, production levels and cash costs of production, all based on life of mine business plans. The term "recoverable minerals" means proved and probable Ore Reserves which are calculated using our life of mine business plans and a gold price at the end of each financial year. The prevailing market price of gold at the end of the financial year was R236,227, R306,081 and R328,155 per kilogram for the fiscal years ended June 30, 2009, 2010 and 2011, respectively. For purposes of impairment testing, assets are grouped together into the smallest group of assets which generates cash flows from continuing use that is largely independent of the cash inflows of other assets or groups of assets (‘cash-generating units’). 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. Impairment losses recognized in respect of cash-generating units are allocated to the carrying amounts of the assets in the unit (group of units) on a pro ratabasis. Impairment losses recognized in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of depreciation, if no impairment loss had been recognized. Exploration assets Exploration assets are assessed for impairment if facts and circumstances suggest that the carrying amount exceeds the recoverable amount. For purposes of impairment testing, exploration assets are allocated to cash-generating units consistent with the determination of reportable segments. The technical feasibility and commercial viability of extracting a Mineral Resource is considered to be determinable when proven reserves are determined to exist. Upon determination of proven reserves, exploration assets attributable to those reserves are first tested for impairment and then reclassified from exploration assets to a separate category within tangible assets. Expenditure deemed to be unsuccessful is recognized in profit or loss immediately. INVENTORIES Gold in process is stated at the lower of cost and net realizable value. Costs are assigned to gold in process on a weighted average cost basis. Costs comprise all costs incurred to the stage immediately prior to smelting, including costs of extraction and processing as they are reliably measurable at that point. Selling, refining and general administration costs are excluded from inventory valuation. Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses. Consumable stores are stated at the lower of cost and net realizable value. Cost of consumables is based on the weighted average cost principle and includes expenditure incurred in acquiring inventories and bringing them to their existing location and condition.


F-20
 NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued) for the year ended June 30, 2011 1. ACCOUNTING POLICIES (continued) INVENTORIES (continued)Bullion is stated at the lower of cost and net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less the estimated cost of completion and selling expenses. TAXATION Income tax expense comprises current and deferred tax. Income tax is recognized in profit or loss except to the extent that it relates to a business combination, or to items recognized directly in equity or other comprehensive income. Current taxation Current taxation is the expected tax payable on the taxable income for the year, using tax rates enacted, or substantively enacted, at the reporting date, and any adjustment to tax payable in respect of previous years. Deferred taxationDeferred taxation is recognized in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognized for the following temporary differences: the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit, and differences relating to investments in subsidiaries and jointly controlled entities to the extent that it is probable that they will not reverse in the foreseeable future. In addition, deferred tax is not recognized for taxable temporary differences arising on the initial recognition of goodwill. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences, based on the expected manner of realization or settlement of the carrying amount of assets and liabilities, and based on the laws that have been enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, if these relate to income taxes levied by the same tax authority on the same taxable entity or on different tax entities, if the group intends to settle current tax liabilities and assets on a net basis, or if their tax assets and liabilities will be realized simultaneously. A deferred tax asset is recognized only to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized. Additional income taxes that arise from the distribution of dividends, such as secondary tax on companies, are recognized at the same time as the liability to pay the related dividend is recognized. SHARE CAPITAL Ordinary share capital Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares are recognized as a deduction from equity, net of any tax effect. Preference share capitalPreference share capital is classified as equity if it is non-redeemable, or redeemable only at the company's option, and any dividends are discretionary. Dividends on preference share capital classified as equity are recognized as distributions within equity. Preference share capital is classified as a liability if it is redeemable on a specified date or at the option of the shareholders, or if dividend payments are not discretionary. Dividends thereon are recognized as interest expense in profit or loss as accrued. Dividends Dividends are recognized as a liability in the period in which they are declared.


F-21
 NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued) for the year ended June 30, 2011 1. ACCOUNTING POLICIES (continued) EMPLOYEE BENEFITS  Defined contribution plansA defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into a separate entity and has no legal or constructive obligation to pay further amounts. Pension plans, which are multi-employer plans in the nature of defined contribution plans, are funded through monthly contributions to these defined contribution plans. Obligations for contributions are recognized as an employee benefit expense in profit or loss as incurred. Long-service benefitsThe group makes long-service bonus payments (long-service awards) for certain eligible employees, under the Chamber of Mines of South Africa Long Service Award Scheme. The amount of the award is based on both the employee's skill level and years of service with gold mining companies that qualify for the scheme. The obligation is accrued over the service life of the employees and is calculated using a projected unit credit method. Any actuarial gains or losses are recognized in profit or loss in the period in which they arise. Share-based payment transactions The group grants share options to certain employees under an employee share plan to acquire shares of the company. The fair value of options granted is recognized as an employee expense with a corresponding increase in equity. The fair value is measured at grant date and spread over the period during which the employees become unconditionally entitled to the options. The fair value of the options granted is measured using the Black-Scholes option pricing model, taking into account the terms and conditions upon which the options were granted. The amount recognized as an expense is adjusted to reflect the actual number of share options that vest except where forfeiture is only due to market conditions such as share prices not achieving the threshold for vesting. Post-retirement medical benefitsPost-retirement medical benefits in respect of qualifying employees are recognized as an expense over the expected remaining service lives of relevant employees and the remaining life expectancies of retirees. The group has an obligation to provide medical benefits to certain of its pensioners and dependants of ex-employees. These liabilities are provided in full, calculated on an actuarial basis and discounted using the projected unit credit method. The discount rate is the yield at the reporting date on corporate bonds that have maturity dates approximating the terms of the group's obligations and that are denominated in the same currency in which the benefits are expected to be paid. Periodic valuation of these obligations is carried out by independent actuaries using appropriate mortality tables, long-term estimates of increases in medical costs and appropriate discount rates. The fair value of any plan assets is deducted. Actuarial gains and losses are recognized immediately in profit or loss. When the calculation results in a benefit to the group, the recognized asset is limited to the net total of any unrecognized past service costs and the present value of any future refunds from the plan or reductions in future contributions to the plan. When the benefits of a plan are improved, the portion of the increased benefit relating to past service by employees is recognized in profit or loss on a straight-line basis over the average period until the benefits become vested. To the extent that the benefits vest immediately, the expense is recognized immediately in profit or loss. Termination benefits Termination benefits are recognized as an expense when the group is demonstrably committed, without realistic possibility of withdrawal, to a formal detailed plan to either terminate employment before the normal retirement date, or to provide termination benefits as a result of an offer made to encourage voluntary redundancy. Termination benefits for voluntary redundancies are recognized as an expense if the group has made an offer for voluntary redundancy, it is probable that the offer will be accepted, and the number of acceptances can be estimated reliably. If benefits are payable more than 12 months after the reporting period, they are discounted to their present value. PROVISIONSA provision is recognized in the statement of financial position when the group has present legal or constructive obligations resulting from past events that can be estimated reliably and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability.


F-22
 NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued) for the year ended June 30, 2011 1. ACCOUNTING POLICIES (continued) PROVISIONS (continued) Decommissioning liabilities The provision for decommissioning represents the cost that will arise from rectifying damage caused before production commenced. Accordingly, an asset is recognized and included within mining properties. Decommissioning liabilities are measured at the present value of the expenditures expected to settle the obligation, using estimated cash flows based on current prices. The unwinding of the decommissioning obligation is included in profit or loss. Estimated future costs of decommissioning obligations are reviewed regularly and adjusted as appropriate for new circumstances or changes in law or technology. Changes in estimates are capitalized or reversed against the relevant asset. Gains or losses from the expected disposal of assets are not taken into account when determining the provision. Restoration liabilitiesThe provision for restoration represents the cost of restoring site damage after the start of production. Increases in the provision are recognized in profit or loss as a cost of production. Gross restoration liabilities are estimated at the present value of the expenditures expected to settle the obligation. Rehabilitation trust fundsAnnual contributions are made to dedicated rehabilitation trust funds to fund the estimated cost of rehabilitation during and at the end of the life of the relevant mine. These contributions are recognized as a right to receive reimbursement from the fund and measured at the fair value of the fund assets. Changes in the carrying value of the fund assets, other than contributions to and payments from the fund, are recognized in profit or loss.REVENUE RECOGNITION Gold bullion and by-products Revenue from the sale of gold bullion and by-products is measured at the fair value of the consideration received or receivable. Revenue is recognized in profit or loss when the significant risks and rewards of ownership have been transferred to the buyer, recovery of the consideration is probable, the associated costs can be estimated reliably, there is no continuing management involvement with the goods, and the amount of revenue can be measured reliably. Government grantsGovernment grants are not recognized until there is reasonable assurance that the entity will comply with the conditions attaching to them and the grant will be received. Grants that compensate the group for expenses incurred are recognized in profit or loss as a deduction against the related expense. Finance incomeFinance income includes dividends received, interest received, growth in the environmental rehabilitation trust funds, net gains on financial instruments measured at amortized cost, net foreign exchange gains, and other profits and losses arising on disposal of investments. Dividends are recognized when the group's right to receive payment is established. Interest is recognized on a time proportion basis taking account of the principal outstanding and the effective rate to maturity on the accrual basis. EXPENSES Operating lease payments Payments made under operating leases are recognized in profit or loss on a straight-line basis over the period of the lease. Finance lease paymentsMinimum lease payments are apportioned between the finance charge and the reduction of the outstanding liability. The finance charge is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability.


F-23
 NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued) for the year ended June 30, 2011 1. ACCOUNTING POLICIES (continued) EXPENSES (continued) Finance expenses Finance expenses comprise interest payable on borrowings calculated using the effective interest method, unwinding of the discount of the provision for environmental rehabilitation, net foreign exchange losses, net losses on financial instruments measured at amortized cost, and interest on finance leases. Borrowing costs capitalized Interest on borrowings relating to the financing of qualifying major capital projects under construction is capitalized during the construction phase as part of the cost of the project. Such borrowing costs are capitalized over the period during which the asset is being acquired or constructed and borrowings have been incurred. Capitalization ceases when construction is interrupted for an extended period or when the asset is substantially complete. Other borrowing costs are expensed as incurred. SEGMENT REPORTING Operating segments are identified on the basis of internal reports that the group’s Chief Operating Decision Maker (CODM) reviews regularly in allocating resources to segments and in assessing their performance. The CODM for the group has been identified as the group’s Executive Committee. Reportable segments are identified based on quantitative thresholds of revenue, profit or loss, and assets. The amounts disclosed for each reportable segment are the measures reported to the CODM, which are not necessarily based on the same accounting policies as the amounts recognized in the financial statements. Aggregation of operating segments is implemented where disclosure of information enables users of the group’s financial statements to evaluate the nature and effects of the business activities in which it engages and the economic environment in which it operates, where the operating segments have characteristics so similar that they can be expected to have essentially the same future prospects and where they are similar in the following respects:
 
 NON-CURRENT ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS A held-for-sale asset is classified as such if it is a non-current asset, or disposal group comprising assets and liabilities, that is expected to be recovered primarily through sale rather than through continuing use. Immediately before classification as held-for-sale, the assets (or components of a disposal group) are remeasured in accordance with the group's accounting policies. Thereafter, in general, the non-current assets or disposal groups are measured at the lower of carrying amount and fair value less costs to sell. Impairment losses on initial classification as held-for-sale are included in profit or loss. The same applies to gains and losses on subsequent measurement. Gains are not recognized in excess of any cumulative impairment loss.  A discontinued operation in the group is a component of the group's business that represents a separate major line of business, a geographical area of operations which has been disposed of or is held-for-sale, or a subsidiary acquired exclusively for resale. When an operation is classified as a discontinued operation, the comparative statement of comprehensive income is restated as if the operation had been discontinued from the start of the comparative period. EARNINGS OR LOSS PER SHARE The group presents basic and diluted earnings per share data for its ordinary shares. Basic earnings or loss per share are calculated based on the net profit or loss after taxation for the year attributable to ordinary shareholders of the company, divided by the weighted average number of ordinary shares in issue during the year. Diluted earnings or loss per share are presented when the inclusion of ordinary shares that may be issued in the future which comprises share options granted to employees has a dilutive effect on earnings or loss per share.


F-24
 NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued) for the year ended June 30, 2011 2. OPERATING SEGMENTS The group has three reportable segments, as described below, which are the group's strategic divisions. The strategic divisions reflect different operational locations reported on separately to the Executive Committee (chief operating decision maker or CODM). The group's revenue stream consists of the sale of gold bullion. The following summary describes the operations in each of the group’s reportable operating segments: -  Blyvoor:  which incorporates the Doornfontein mine, is situated on the north-western edge of the Witwatersrand Basin.  The    Crown   facility consists of three plants known as Crown, City Deep and Knights. Included in the Crown segment is the surface  operation of ERPM consisting of the Cason dump.  Ergo   treating ERPM's old slime dumps. The facility consists of one plant known as the Brakpan plant together with the Brakpan  tailings facility. Phase one has been established as a surface retreatment operation to retreat the Elsburg dump owned by  ERPM. Phase two of the Ergo project is to explore, evaluate and process surface uranium- and sulphur bearing tailings on the  East and Central Rand goldfields of South Africa.


F-25
 NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued)for the year ended June 30, 2011
  2. OPERATING SEGMENTS (continued)
 2011
 
 Blyvoor
 R’000
 Crown(2)
 R’000
 Ergo(3)
 R’000
 Corporate head
 office and all (4)
 other expenses
 R’000
 
 Total
 R’000
 Financial performance
 
 
 Segmental revenue
 1,185,860
 910,867
 468,592
 -
 2,565,319
 Cash operating costs
 (1,091,941)
 (671,770)
 (308,976)
 -
 (2,072,687)
 Movement in gold in process
 (23,879)
 9,464
 (1,197)
 -
 (15,612)
 Operating profit
 70,040  248,561  158,419
 -  477,020
 Interest and other investment income
 3,103
 1,778
 164  14,548  19,593
 Interest expense
 (842)
 (14)
 (6)  (10,533)  (11,395)
 Retrenchment costs
 -
 -
 -
 (839)
 (839)
 Administration expenses and general costs
 (1,781)
 (1,956)
 (9,438)  (74,911)  (88,086)
 Taxation charge (1)
 (27)  (222)
 -  (6,011)  (6,260)
 Working profit/(loss) before capital expenditure
 70,493  248,147  149,139  (77,746)  390,033
 Capital expenditure (5)
 (95,683)  (166,354)
 (68,046)
 (9,981)  (340,064)
 Working (loss)/profit after capital expenditure
 
 (25,190)  81,793  81,093
 (87,727)  49,969
 (1)  The taxation charge excludes deferred tax.
 
 
 
 
 
 
 (2)  Crown includes ERPM’s Cason surface retreatment operations.
 
 
 
 
 
 
 (3)  Includes 100% of ErgoGold and the Ergo JV.
 
 
 
 
 
 (4)  Corporate head office expenses are taken into consideration in the strategic decision-making process of the CODM and are therefore included in the disclosure here, even though they do not earn revenue. (5)  Includes adjustments to the provision for environmental rehabilitation resulting from changes to estimates.
 Operating results (6)
 
 
 
 
 
 
 Ore milled
 -  underground
 t’000  732
 -
 -
 -
 732
 -
 surface
 t’000  3,129
 7,120  13,206
 -  23,455
 -
 total
 t’000  3,861
 7,120  13,206
 -  24,187
 Average yield
 -  underground
 g/t  3.89
 -
 -
 -
 3.89
 -
 surface
 g/t  0.29
 0.42
 0.11
 -
 0.23
 -
 total
 g/t  0.98
 0.42
 0.11
 -
 0.34
 Gold dispatched
 -  underground
 kg  2,845
 -
 -
 -
 2,845
 -
 surface
 kg  922  2,977  1,504
 -  5,403
 -
 total
 kg  3,767
 2,977
 1,504
 -
 8,248
 -
 underground
 oz  91,469
 -
 -
 -
 91,469
 -
 surface
 oz  29,645
 95,713
 48,352
 -  173,710
 -
 total
 oz  121,114
 95,713
 48,352
 -
 265,179
 Cash operating costs  -  underground
 R/kg  342,123
 -
 -
 -
 342,123
 -
 surface
 R/kg  128,636
 225,653
 205,436
 -
 203,470
 -
 total
 R/kg  289,870
 225,653
 205,436
 -
 251,296
 -
 underground
 $/oz  1,523
 -
 -
 -
 1,523
 -
 surface
 $/oz  573  1,002
 915
 -
 906
 -
 total
 $/oz  1,290
 1,002
 915
 -
 1,119
 (6)  Unaudited


F-26
 NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued)for the year ended June 30, 2011
  2. OPERATING SEGMENTS (continued)
 2011
 
 Blyvoor
 R’000
 Crown(1)
 R’000
 Ergo(2)
 R’000
 Corporate head
 office and all (3)
 other expenses
 R’000
 
 Total
 R’000
 Reconciliation of assets
 
 
 
 Reportable segment assets
 26,046  330,154
 1,125,162  58,641
 1,540,003
 Other assets
 148,096  150,262  116,437  333,863  748,658
 Total assets
 174,142  480,416
 1,241,599  392,504
 2,288,661
 Reconciliation of liabilities
 
 
 
 
 
 
 Reportable segment liabilities
 174,115  322,647  206,673  243,299  946,734
 Taxation and deferred taxation
 27
 7,715
 114,806  213
 122,761
 Total liabilities
 174,142  330,362  321,479  243,512
 1,069,495
 Other material information
 
 
 
 
 
 
 Depreciation
 (32,638)  (11,247)  (86,917)
 (117)  (130,919)
 Impairment of assets
 (546,566)
 -
 -
 (1,090)  (547,656)
 Reconciliation of revenues
 
 
 
 
 
 
 Total revenues for reportable segments
 1,185,860
 910,867
 468,592
 -
 2,565,319
 Statement of cash flows
 
 
 
 
 
 
 Cash flows from operating activities
 89,400  203,508  126,093
 (94,988)  324,013
 Cash flows from investing activities
 (94,323)  (152,399)  (78,497)  (9,946)  (335,165)
 Cash flows from financing activities
 -    -  -
 81,346
 81,346
 Reconciliation of (loss)/profit
 
 
 
 
 
 
 Segment working profit/(loss) before capital expenditure
 70,493  248,147  149,139
 (77,746)  390,033
 - Depreciation
 (32,638)  (11,247)  (86,917)
 (117)  (130,919)
 - Movement in provision for environmental rehabilitation
 (5,649)  (27,198)  (9,154)  (10,566)  (52,567)
 - Impairments
 (546,566)
 -
 -
 (1,090)  (547,656)
 - Net gain/(loss) on financial liabilities measured at amortized cost
 30,856
 -
 -  (6,048)  24,808
 - Growth in environmental rehabilitation trust funds
 1,769  3,096
 -  3,526  8,391
 - Unwinding of provision for environmental rehabilitation
 (1,049)  (3,631)  (3,672)  (1,053)  (9,405)
 - Unwinding of discount on financial liabilities measured at amortized cost
 (3,550)
 -
 -  (4,117)  (7,667)
 - Borrowing costs capitalized
 -
 1,011  -
 5,409
 6,420
 - Ongoing rehabilitation expenditure
 (1,453)  (25,197)  (7,114)  (9,214)  (42,978)
 - Actuarial gain on post-retirement and other employee benefits
 -
 5,651  -  -
 5,651
 - Net other operating (costs)/income
 (8,559)  (3,552)
 2,279  ( 23,764)  (33,596)
 - Deferred tax
 (2,532)  (18,502)  53,332  (58,191)  (25,893)
 (Loss)/profit for the year
 (498,878)
 168,578
 97,893  (182,971)  (415,378)
 (1)  Crown includes ERPM’s Cason surface retreatment operations. (2)  Includes 100% of ErgoGold and the Ergo JV. (3)  Corporate head office expenses are taken into consideration in the strategic decision-making process of the CODM and are therefore included in the disclosure here, even though they do not earn revenue.


F-27
 NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued)for the year ended June 30, 2011
  2. OPERATING SEGMENTS (continued)
 2011
 Revenues
 Non-
 current  assets(1)
 
 
 R’000  R’000
 
 
 
 Geographical Information
 
 
 
 
 South Africa
 2,565,319  1,534,428
 
 
 
 Zimbabwe
 -  15,674
 
 
 
 Total
 2,565,319  1,550,102
 
 
 
 
 
 
 
 
 (1)  Non-current assets consist of property, plant and equipments and non-current inventory.
 Information about major customers The group has only one major customer regarding the sale of gold ore in each geographical area due to regulatory authority.


F-28
 NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued)for the year ended June 30, 2011
  2. OPERATING SEGMENTS (continued)
 2010
 
 Blyvoor
 R’000
 Crown(2)
 R’000
 Ergo(3)
 R’000
 Corporate head
 office and all (4)
 other expenses
 R’000
 
 Total
 R’000
 Financial performance
 
 
 Segmental revenue
 861,409
 834,788
 294,325
 -  1,990,522
 Cash operating costs
 (878,888)
 (615,726)
 (254,192)
 -  (1,748,806)
 Movement in gold in process
 33,766  (9,040)   5,215                                    
-                          
29,941
 Operating profit
 16,287                        210,022
 45,348
 -                       
  271,657
 Interest and other investment income
 412
 901
 814                       
  15,802                         
  17,929
 Interest expense
 (1,064)
 (66)
 (2)
 (3,730)
 (4,862)
 Retrenchment costs
 (10,925)
 -
 -
 (9,202)
 (20,127)
 Administration expenses and general costs
 12,007
 (2,136)
 (6,169)                      (60,728)                      
  (57,026)
 Taxation charge (1)
 -
 (7,509)
 -
 (2,799)
 (10,308)
 Working profit/(loss) before capital expenditure
 16,717                        
  201,212
 39,991                     
  (60,657)                     
  197,263
 Capital expenditure(5)
 (79,552)                        
  (45,949)                       
  (68,584)                        
  (6,320)                  
  (200,405)
 Working (loss)/profit after capital expenditure
 (62,835)                        
  155,263                      
  (28,593)                      
  (66,977)                          
  3,142)
 (1)  The taxation charge excludes deferred tax.
 
 
 
 
 
 
 (2)  Crown includes ERPM’s Cason surface retreatment operations.
 
 
 
 
 
 
 (3)  With effect from May 1, 2010, Ergo represents 100% of ErgoGold and the Ergo JV.
 
 
 
 
 
 (4)  Corporate head office expenses are taken into consideration in the strategic decision-making process of the CODM and are therefore included in the disclosure here, even though they do not earn revenue.(5)  Includes adjustments to the provision for environmental rehabilitation resulting from changes in estimates.
 Operating results (6)
 
 
 
 
 
 
 Ore milled
 -       
  underground
 t’000                       
  633
 -
 -
 -
 633
 -
 surface
 t’000                    
  2,968
 7,122                         
  11,867
 -                          
  21,957
 -
 total
 t’000                    
  3,601
 7,122                          
  11,867
 -                          
  22,590
 Average yield                 
  -       underground
 g/t                       
  3.79
 -
 -
 -
 3.79
 -
 surface
 g/t                       
  0.31
 0.43
 0.09
 -
 0.23
 -
 total
 g/t                       
  0.92
 0.43
 0.09
 -
 0.33
 Gold dispatched
 -       underground
 kg                     
  2,402
 -
 -
 -
 2,402
 -
 surface
 kg                         
  909                             
  3,092                            
  1,099
 -                             
  5,100
 -
 total
 kg                     
  3,311
 3,092
 1,099
 -
 7,502
 -
 underground
 oz                   
  77,226
 -
 -
 -
 77,226
 -
 surface
 oz                   
  29,226
 99,410
 35,332
 -                        
  163,968
 -
 total
 oz                 
  106,452
 99,410
 35,332
 -
 241,194
 Cash operating costs    
  -       underground
 R/kg                
  324,736
 -
 -
 -
 324,736
 -
 surface
 R/kg                
  108,771
 199,135
 231,294
 -
 189,959
 -
 total
 R/kg                
  265,445
 199,135
 231,294
 -
 233,112
 -
 underground
 $/oz                     
  1,327
 -
 -
 -
 1,327
 -
 surface
 $/oz                         
  444
 814
 945
 -
 776
 -
 total
 $/oz  1,085  814  945  -  953
 (6)  Unaudited


F-29
 NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued)for the year ended June 30, 2011
  2. OPERATING SEGMENTS (continued)
 2010
 
 Blyvoor
 R’000
 Crown(1)
 R’000
 Ergo(2)
 R’000
 Corporate head
 office and all (3)
 other expenses
 R’000
 
 Total
 R’000
 Reconciliation of assets
 
 
 
 Reportable segment assets
 510,883  171,390  1,144,036
 31,337  1,857,646
 Other assets
 120,838  136,396  96,508  368,904  722,646
 Total assets
 631,721  307,786  1,240,544  400,241  2,580,292
 Reconciliation of liabilities
 
 
 
 
 
 
 Reportable segment liabilities
 144,160  276,881  207,542  133,195  761,778
 Taxation and deferred taxation
 -  -  168,138  414   168,552
 Total liabilities
 144,160  276,881  375,680  133,609  930,330
 Other material information
 
 
 
 
 
 
 Depreciation
 (32,616)  (61,005)  (95,418)
 (1,730)  (190,769)
 Reversal of impairment/(impairment) of assets
 -  12,514  -  (18,738)  (6,224)
 Reconciliation of revenues
 
 
 
 
 
 
 Total revenues for reportable segments
 861,409  834,788  294,325
 -  1,990,522
 Statement of cash flows
 
 
 
 
 
 
 Cash flows from operating activities
 (24,585)
 198,498
 (21,013)
 (99,288)
 53,612
 Cash flows from investing activities
 (79,553)
 (50,066)
 (72,848)
 (23,914)
 (226,381)
 Cash flows from financing activities
 
 -    -  (4,202)  11,985  7,783
 Reconciliation of profit/(loss)
 
 
 
 
 
 
 Segment working profit/(loss) before capital expenditure
 16,717  201,212  39,991  (60,657)  197,263
 - Depreciation
 (32,616)  (61,005)  (95,418)
 (1,730)  (190,769)
 - Movement in provision for environmental rehabilitation
 (1,246)  16,994
 (578)  72,864  88,034
 - Reversal of impairment/(impairment)
 -
 12,514  -
 (18,738)
 (6,224)
 - Net gain/(loss) on financial liabilities measured at amortized cost
 33,887
 -
 -  (19,244)  14,643
 - Growth in environmental rehabilitation trust funds
 2,011  3,384  -  4,057  9,452
 - Profit on disposal of subsidiaries
 -  -  -
 156,749
 156,749
 - Profit on disposal of joint venture
 -    -  -
 1,500
 1,500
 - Unrealized foreign exchange loss
 -  -  -  (5)  (5)
 - Unwinding of provision for environmental rehabilitation
 (1,139)  (5,050)  (2,573)  (2,035)  (10,797)
 - Unwinding of discount on financial liabilities measured at amortized cost
 (7,039)  -  -  (1,429)  (8,468)
 - Ongoing rehabilitation expenditure
 (1,942)  (20,924)  (5,272)  (6,713)  (34,851)
 - Actuarial gain on post-retirement and other employee benefits
 -  35,290  -  -
 35,290
 - Net other operating (costs)/income
 (7,350)  (14,371)
 493  (29,271)  (50,499)
 - Deferred tax
 14,934  (33,108)  14,012  6,207  2,045
 Profit/(loss) for the year
 16,217  134,936  (49,345)  101,555  203,363
 (1)  Crown includes ERPM’s Cason surface retreatment operations. (2)  With effect from May 1, 2010, Ergo represents 100% of ErgoGold and the Ergo JV. (3)  Corporate head office expenses are taken into consideration in the strategic decision-making process of the CODM and are therefore included in the disclosure here, even though they do not earn revenue.




F-30
 NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued)for the year ended June 30, 2011
  2. OPERATING SEGMENTS (continued)
 2010
 Revenues
 Non-
 current
 assets
 (1)
 
 
 R’000  R’000
 
 
 
 Geographical Information
 
 
 
 
 South Africa
 1,990,522  1,858,005
 
 
 
 Zimbabwe
 -  5,220
 
 
 
 Total
 1,990,522  1,863,225
 
 
 
 
 
 
 
 
 (1)  Non-current assets consist of property, plant and equipment and non-current inventory.
 Information about major customersThe group has only one major customer regarding the sale of gold ore in each geographical area due to regulatory authority.


F-31
 NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued)for the year ended June 30, 2011
 
 2. OPERATING SEGMENTS (continued)
 2009
 
 Blyvoor
 R’000
 Crown(2)
 R’000
 Ergo(3)
 R’000
 Corporate head
 office and all (4)
 other expenses
 R’000
 Total
 R’000
 Financial performance
 
 
 Segmental revenue
 1,018,527
 733,990
 24,178
 134,043
 1,910,738
 Cash operating costs
 (830,336)
 (525,516)
 (66,442)
 (212,712)  (1,635,006)
 Movement in gold in process
 (9,445)  5,231  11,232  -  7,018
 Operating profit/(loss)
 178,746
 213,705
 (31,032)
 (78,669)
 282,750
 Interest and other investment income
 3,185
 2,347
 5  74,454  79,991
 Interest expense
 (521)
 (5)
 (1)  (3,078)  (3,605)
 Retrenchment costs
 -
 -
 -
 (34,922)
 (34,922)
 Administration expenses and general costs
 (1,719)
 (4,980)
 (2,810)  (74,074)  (83,583)
 Taxation charge (1)
 -  (41,529)  -  (4,660)  (46,189)
 Working profit/(loss) before capital expenditure
 179,691
 169,538
 (33,838)  (120,949)
 194,442
 Capital expenditure (5)
 
 (97,537)  (43,115)  (174,154)  (31,862)  (346,668)
 Working profit/(loss) after capital expenditure
 82,154  126,423  (207,992)  (152,811)  (152,226)
 (1)  The taxation charge excludes deferred tax.
 
 
 
 
 
 
 (2)  Crown includes ERPM’s Cason surface retreatment operations.
 
 
 
 
 
 
 
 (3)  Includes 50% of the Ergo JV and with effect from April 1, 2009, 100% of ErgoGold.
 
 
 
 
 
 
 (4)  Corporate head office expenses are taken into consideration in the strategic decision-making process of the CODM and are therefore included in the disclosure here, even though they do not earn revenue.
 The underground operations of ERPM, which were placed under care and maintenance during the year ended June 30, 2009 are also included in this segment.
 (5)  Includes adjustments to the provision for environmental rehabilitation provision resulting from changes to estimates.
 Operating results (6)
 
 
 
 
 
 
 Ore milled
 -  underground
 t’000  603
 -
 -
 184
 787
 -
 surface
 t’000  3,433
 8,007
 2,296
 -  13,736
 -
 total
 t’000  4,036
 8,007
 2,296
 184  14,523
 Average yield
 -  underground
 g/t  4.56
 -
 -
 3.20
 4.26
 -
 surface
 g/t  0.37
 0.37
 0.05
 -
 0.32
 -
 total
 g/t  1.00
 0.37
 0.05
 3.20
 0.53
 Gold dispatched
 -  underground
 kg  2,765
 -
 -
 589
 3,354
 -
 surface
 kg  1,262
 2,974
 114
 -
 4,350
 -
 total
 kg  4,027
 2,974
 114
 589
 7,704
 -
 underground
 oz  88,898
 -
 -
 18,935  107,833
 -
 surface
 oz  40,575
 95,616
 3,666
 -  139,857
 -
 total
 oz  129,473
 95,616
 3,666
 18,935
 247,690
 Cash operating cost  -  underground
 R/kg  255,517
 -
 -
 361,141
 274,066
 -
 surface
 R/kg
 98,124  188,320  644,053
 -  164,549
 -
 total
 R/kg
 209,170  188,320  644,053  361,141  219,024
 -
 underground
 $/oz  878
 -
 -  1,287
 842
 -
 surface
 $/oz  337
 647  2,077
 -
 566
 -
 total
 $/oz  719
 647  2,077  1.287  753
 (6) Unaudited


F-32
 NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued)for the year ended June 30, 2011
 
 2. OPERATING SEGMENTS (continued)
 2009
 
 Blyvoor
 R’000
 Crown(1)
 R’000
 Ergo (2)
 R’000
 Corporate head
 office and all (3)
 other expenses
 R’000
 
 Total
 R’000
 Reconciliation of assets
 
 
 
 
 
 
  463,947
 150,947  1,039,667
 78,658  1,733,219
  96,536  183,235
 95,275  517,507  892,553
 Total assets
 560,483
 334,182  1,134,942
 596,165  2,625,772
 Reconciliation of liabilitiesReportable segment liabilities
 182,783
 297,498
 150,546
 215,475
 846,302
  12,403
 650  182,150
 288  195,491
 Total liabilities
 195,186
 298,148
 332,696
 215,763  1,041,793
 Other material informationDepreciation
 (29,273)
 (38,112)
 (30,784)
 (1,048)
 (99,217)
  -
 (19,426)
 -
 (55,712)
 (75,138)
 Reconciliation of Revenues
 
 
 
 
 
 
  1,018,527
 733,990
 24,178
 134,043
 1,910,738
 Statement of cash flows
 
 
 
 
 
 
  165,751
 113,358
 (83,708)
 12,831
 208,232
  (97,158)
 (46,352)  (332,840)  (117,069)  (593,419)
  -
 (30,402)
 (45,265)
 (10,155)
 (85,822)
 Reconciliation of profit/(loss)
 
 
 
 
 
 
  179,691
 169,538
 (33,838)  (120,949)
 194,442
  (29,273)
 (38,112)
 (30,784)
 (1,048)
 (99,217)
  426
 (11,002)  2,825
 (11,794)
 (19,545)
  -
 -
 -
 53,006
 53,006
  -
 (19,426)
 -
 (55,712)
 (75,138)
  
 36,141  (1,403)
 -  27,262  62,000
  -
 -
 -
 (1,873)
 (1,873)
  2,929
 4,441
 -
 5,497  12,867
  -
 -
 -
 (10,318)
 (10,318)
  (1,119)
 (4,137)
 (2,365)
 (2,176)
 (9,797)
  (10,388)
 (3,237)
 -
 (4,398)
 (18,023)
  (4,971)  (13,084)
 (3,419)
 (9,657)  (31,131)
  -
 (18,226)
 -
 -
 (18,226)
  (7,022)
 (3,238)
 (3,561)
 10,825
 (2,996)
  (43,154)  25,594  3,491  88,702  74,633
  123,260  87,708  (67,651)  (32,633)  110,684
 (1)
  (2)
  .
 (3)
 Corporate head office expenses are taken into consideration in the strategic decision-making process of the CODM and are therefore included in the disclosure here, even though they do not earn revenue. The underground operations of ERPM, which were placed under care and maintenance during the year ended June 30, 2009, are also included in this segment.


F-33
 NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued)for the year ended June 30, 2011
  2. OPERATING SEGMENTS (continued)
 2009
 Revenues
 Non-
 current
 assets
 (1)
 
 
 R’000  R’000
 
 
 
 Geographical Information
 
 
 
 
 
 South Africa
 1,910,738  1,737,457
 
 
 
 Total
 1,910,738  1,737,457
 
 
 
 
 
 
 
 
 (1)  Non-current assets consist of property, plant and equipment and non-current inventory.
 Information about major customersThe group has only one major customer regarding the sale of gold ore in each geographical area which is due to regulatory authority.
  
 .


F-34
 NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued)for the year ended June 30, 2011
 2011
 2010
 2009
 R’000
 R’000
 R’000
 3. REVENUE
 
 
 
    2,541,226
    24,093
   Total revenue
 2,565,319
   4. RESULTS FROM OPERATING ACTIVITIES INCLUDE      THE FOLLOWING:
  (10,065)
    (8,950)
    (1,115)
    -
    
    (3,671)
    
    (762,236)
    (723,166)
    (3,519)
    (839)
    (34,712)
    
  3,255
    (547,656)
    (546,566)
    -
    (1,090)
   During the year ended June 30, 2011, the group recorded an impairment of R546.6 million against Blyvoor's property, plant and equipment (recoverable amount determined based on value in use) due to the uncertainties pertaining to Blyvoor's current distressed financial position (refer note 10). Blyvoor represents one cash generating unit. A discount rate of 14.4% (2010: 13.7%), together with further risk adjustments to future cash flows were, used in determining the impairment. Management also took into consideration as part of their reasonableness assessment, a sensitivity analysis and the fact that Blyvoor is under business rescue proceedings, with the business rescue plan not being approved as at June 30, 2011. Further considerations included the group’s market capitalization in comparison to the group’s net asset value.  The group recorded an impairment of R1.1 million against the West Witwatersrand Gold Mines (Pty) Limited's rehabilitation trust fund due to the disposal of the relating mining rights over the West Wits mining lease area (refer note 11). During the year ended June 30, 2010, the group reversed an impairment of R12.5 million against Crown's property, plant and equipment. The reversal of impairment was due to the recoverable amount (value in use) of these assets being higher than their carrying amount due to the extension of the Knights life-of-mine plan. The group recorded an impairment of R18.7 million against the West Witwatersrand Gold Mine (Pty) Limited's rehabilitation trust fund due to the transfer of the related mining rights over the West Wits mining lease area (refer note 11). During the year ended June 30, 2009, impairments of R53.0 million and R19.4 million were recorded against ERPM’s and Crown’s property, plant and equipment, respectively.  The impairments were due to the recoverable amount of these assets being less than their carrying amount for ERPM due to closure of underground operations and for Crown due to restriction of deposition capacity. The Crown plant, City plant and ERPM’s underground operations are separate cash-generating units. Furthermore, an impairment relating to the investment in West Wits SA (Pty) Limited amounting to R2.7 million was recognized.  The impairment was due to the recoverable amount of this asset being less than its carrying amount.


F-35
 NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued) for the year ended June 30, 2011
 2011  2010
 2009
 R’000  R’000
 R’000
 4. RESULTS FROM OPERATING ACTIVITIES INCLUDE
 THE FOLLOWING: (continued)
 
  (1,456)
    (4,365)
    -
    
 
 5. DIRECTORS' AND PRESCRIBED OFFICERS’ EMOLUMENTS
    Executive directors
    Services rendered as directors of the company
     (7,080)
    (5,314)
   Services rendered by directors as directors of subsidiaries
 
    -
    -
    -
    Non-executive directors
 Services rendered as directors of the company
 
    (3,186)
   
 (15,580)
   Prescribed officers
 
    (3,682)
    (1,867)
    (224)
    (21,353)
   6. FINANCE INCOME
  6,013
    13,291
    24,808
    -
    -
    -
    8,391
    -
    289
    52,792


F-36
 NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued) for the year ended June 30, 2011
 2011  2010
 2009
 R’000  R’000
 R’000
 7. FINANCE EXPENSES
 
  (10,459)
    (156)
    -
    (9,405)
    
    (7,667)
    (780)
    6,420
    (22,047)
   8. INCOME TAX
  (28,940)
    1,882
    (5,094)
    (32,152)
    
   South African
 
    (1,197)
    32
    (25,893)
    (5,094)
    (32,152)
    In South Africa, mining tax on mining income is determined based on a formula which takes into account the profit and revenue from a gold mining company during the year. Non-mining income, which consists primarily of interest, is taxed at a standard rate of 28% (2010: 28%) (2009: 28%).  The tax rates applicable to mining and non-mining income of a gold mining company depend on whether the company has elected to be exempt from secondary tax on companies (STC). STC is a tax on dividends declared, which is payable by the company declaring the dividend and, at present, the STC tax rate is equal to 10% (2010: 10%) (2009: 10%) of the amount of income declared as a dividend. In 1993, all existing gold mining companies had the option to elect to be exempt from STC. If the election was made, a higher tax rate would apply to both mining and non-mining income. As from April 1, 2012, STC will be replaced by a dividend tax of 10%, which will be incurred by the person receiving the dividend. In 2011, the tax rates for taxable mining and non-mining income for companies that elected the STC exemption were 43% (2010: 43%) (2009: 43%) and 35% (2010: 35%) (2009: 35%) respectively. During those same years, the tax rates for companies that did not elect the STC exemption were 34% (2010: 34%) (2009: 34%) and 28% (2010: 28%) (2009: 28%), for taxable mining and non-mining income respectively. In 1993, the company elected not to be exempt from STC, as this would have meant that the company would be subject to normal taxation at the higher rates of 43% for mining income and 35% for non-mining income. The company, having chosen not to be subject to the STC exemption, is subject to 34% (2010: 34%) (2009: 34%) tax on mining income and 28% (2010: 28%) (2009: 28%) for non-mining income. With the exception of Crown, all of the South African subsidiaries elected not to be exempt from STC.


F-37
 NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued) for the year ended June 30, 2011 8. INCOME TAX (continued)The formulae for determining the South African gold mining tax rates for both the current and prior years are:
 Y = 43 – 215/X (elect not to pay STC) Y = 34 – 170/X (elect to pay STC)
 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 incomes derived, expressed as a percentage. During the year ended June 30, 2011, the group changed the deferred tax rate applied from the maximum statutory mining tax rates to the expected average effective tax rates. The effective tax rates are based on the group's current estimate of future profitability when temporary differences will reverse. Depending on the profitability of the operations, the tax rate can consequently be significantly different from year to year. This change has been accounted for as a change in estimate and is therefore applied prospectively. The change reduced the expense through profit or loss and the net deferred tax liability by R39.9 million. If a one percentage point increase in the effective tax rate is applied it would increase the movement in profit or loss by R2.9 million to a R28.8 million expense (refer note 21). Each company is taxed as a separate entity and no tax set-off is allowed between the companies.
 2011
 2010  2009
 R’000
 R’000  R’000
 
      2,183,572
 
  743,970
    2,927,542
 
 Estimated future tax relief at applicable statutory rates
 778,793
    Tax reconciliation
            Taxation on net loss/(profit) before taxation at South African corporate tax rate of 28%
 107,303
    19,018
    (1,746)
    9,095
    3,658
    410
    (5,094)
   Temporary differences including tax losses recognized for which deferred tax assets were previously unrecognized
 3,608
    (166,642)
    (1,762)
   Taxation (charge)/relief
 (32,152)
   (a) The current year losses for which no deferred tax asset was recognized relates to the impairment of Blyvoor (refer note 4 and 10).


F-38
 NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued) for the year ended June 30, 2011 9. EARNINGS PER SHARE
 Basic
             (287,915)
    384,884,379
   Diluted
        (287,915)
    -
    (287,915)
   Reconciliation of weighted average number of ordinary shares to diluted weighted average number of ordinary shares
  384,884,379
    -
    384,884,379
   Basic (loss)/earnings per ordinary share (cents)
 (75)
    (75)
   
  At June 30, 2011, 21.6 million options (2010: 19.5 million and 2009: 17.3 million) were excluded from the diluted weighted average number of ordinary shares calculation as their effect would have been anti-dilutive.
 2011  2010  2009
 R’000  R ’000  R’000


F-39
 NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued) for the year ended June 30, 2011
 2011  2010
 R’000  R’000
 10. PROPERTY, PLANT AND EQUIPMENT
 Total
 
  Cost
 3,548,479
   3,191,996
   -
   340,064
   6,420
   (4,766)
   15,000
   (235)
  Accumulated depreciation and impairment
 (2,008,476)
   (1,334,350)
   (130,919)
   (546,566)
   3,359
  Carrying value
 1,540,003


F-40
 NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued) for the year ended June 30, 2011
 2011
 2010
 R’000
 R’000
 10. PROPERTY, PLANT AND EQUIPMENT (continued)
 Mining property
   332,197
   314,309
   -
   4,204
   (1,316)
   15,000
  Accumulated depreciation and impairment
 (219,720)
   (159,179)
   (5,407)
   (55,134)
  Carrying value
 112,477
  Mine development
 
 Cost
 2,095,084
   1,970,999
   -
   127,107
   (3,022)
  Accumulated depreciation and impairment
 (1,237,325)
   (717,586)
   (104,923)
   (417,838)
   3 022
  Carrying value
 857,759


F-41
 NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued) for the year ended June 30, 2011
 2011  2010
 R’000  R’000
 10. PROPERTY, PLANT AND EQUIPMENT (continued)
 Mine plant facilities
   Cost
 917,564
   734,422
   -
   176,875
   6,420
   (153)
  Accumulated depreciation and impairment
 (530,291)
   (439,227)
   (17,569)
   (73,594)
   99
  Carrying value
 387,273
  Equipment and vehicles
 
  Cost
 30,622
   27,131
   -
   3,766
   (275)
  Accumulated depreciation and impairment
 (21,140)
   (18,358)
   (3,020)
   238
  Carrying value
 9,482
  
 Exploration Assets (a)
 Cost
 173,012
   145,135
   -
   28,112
   -
   -
   (235)
  Carrying value
 173,012


F-42
 NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued) for the year ended June 30, 2011 10. PROPERTY, PLANT AND EQUIPMENT (continued) Borrowing costs are capitalized to qualifying assets at the rate applicable to the specific financing obtained (refer note 22). In assessing the recoverability of the above assets, where there are indicators of possible impairment, the estimated cash flows have been calculated using the following estimates:
  •    gold price estimates are based on a gold price of R350,649 per kilogram of gold (US$1,500 per ounce) in year one,  escalating at an average of 6.1% per annum, and a base exchange rate of R7.2775 = US$1.00, with the Rand weakening  in future years based on the expected differential between the local South African interest rates in those years over the  United States interest rates in those years.  working cost estimates are based on current working costs per kilogram at June 30, 2011, escalated for expected South  African inflationary increases of approximately 6.0% per annum; and  capital cost estimates are based on current estimates of future development costs to mine the current proved and probable  Ore Reserves, escalated for expected South African inflationary increases of approximately 6.0% per annum.
 
 2011  2010
 R’000  R’000
 11. NON-CURRENT INVESTMENTS AND OTHER ASSETS
  14,987
   10,078
   -
   134,247
   126,069
   (1,090)
   (339)
   1,216
   8,391
   159,312
           Fair
 Carrying
 Carrying
   Number  value
 value  value
  of  2011
 2011
  % Held
 shares
 R'000
 R'000
                        Unlisted investments comprise investments in unlisted companies in South Africa. The valuations are based on the net asset value of these investments which constitutes the instruments’ fair value.  The monies in the environmental rehabilitation trust funds are invested primarily in low-risk interest-bearing debt securities and may be used only for environmental rehabilitation purposes. (a) The terms and conditions of the loans to the black empowerment entities are linked to the payments of preference share dividends (refer note 22).


F-43
 NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued) for the year ended June 30, 2011 12. INVESTMENT IN SUBSIDIARIESAcquisition of subsidiariesBlyvooruitzicht Gold Mining Company Limited (Blyvoor)On September 8, 2010 DRDGOLD acquired a 74% interest in Blyvoor from Ergo Mining Operations (Pty) Limited (Ergo Mining Operations) for a total consideration of R75.7 million settled against Ergo Mining Operations' inter-company loan with DRDGOLD. The acquisition has been accounted for as an acquisition of an entity under common control. IFRS 3 Business Combinations was therefore not applied. The transaction was recognized with effect September 30, 2011. The carrying amounts of the assets and liabilities on the statement of financial position at acquisition of Blyvoor have been set out below.
 Statement of financial position
 As at September
 30, 2010
 R’000
  Non-current assets
 
 510,411
  40,874
  3,893
  6,898
 Current assets
 
 
 57,568
 25,376
  6,285
 Total carrying amount of assets
 651,305
 Non-current liabilities
 
  (485,444)
 (38,946)
  (810)
  (24,305)
 Current liabilities
 
  (101,800)
 Total carrying amount of liabilities
 (651,305)
 Consolidated carrying amount of net assets on date of acquisition excluding amounts owing to group companies
 485,444
 Non-controlling interest in the consolidated carrying amount of net assets
 (42,402)


F-44
 NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued) for the year ended June 30, 2011 12. INVESTMENT IN SUBSIDIARIES (continued) Ergo Mining (Pty) Limited (Ergo JV)On January 21, 2010, DRDGOLD, signed an agreement to acquire Mintails’ remaining 50% interest in the Ergo JV for a total consideration of R82.1 million: R62.1 million settled in cash and the balance in shares in Witfontein Mining (Pty) Limited, valued at R20 million (refer note 13). The Ergo JV was consolidated effective May 1, 2010. The acquisition was recorded as an asset acquisition due to the Ergo JV not being capable of operating as a business. IFRS 3 Business Combinations was therefore not applied. The relative fair values of the assets and liabilities on the statement of financial position at acquisition of the Ergo JV have been set out below.
 Statement of financial position
 
 As at April 30,
 2010
 R’000
 Non-current assets
 
  Current assets
 
  
    Total relative fair value of assets
  Non-current liabilities
 
    Current liabilities
   Total relative fair value of liabilities
  Purchase consideration of 50% of the net assets on the date of acquisition
  Non-controlling interest in relative fair value of net assets
  Disposal of subsidiaries All DRDGOLD’s foreign subsidiaries, which were holding companies of DRDGOLD’s foreign operations, have been placed into voluntary liquidation as at June 30, 2010. A foreign currency translation reserve has accumulated over the life of these foreign subsidiaries. The voluntary liquidation constitutes a disposal, therefore any accumulated foreign currency translation reserves have been realized in profit or loss.
 2011  2010
 R’000  R’000
   -
   -
   -
   -
  -
  Total profit on disposal of foreign subsidiaries
 -


F-45
 NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued) for the year ended June 30, 2011
 2011  2010
 R’000  R’000
 13. INVESTMENT IN JOINT VENTURESThe joint ventures for which the statement of comprehensive income and statement of financial position have been proportionately consolidated were as follows:
 
  50%
   100%
  Chizim Gold (Pvt) LimitedDuring the year ended June 30, 2011 the group acquired a 50% interest in a start-up company called Chizim Gold (Pvt) Limited (Chizim Gold) for a nominal cash consideration, pursuant to a joint venture agreement entered into on December 9, 2009 with Chizim Investments (Pvt) Limited. Chizim Gold is registered in Zimbabwe and is currently conducting feasibility studies on certain exploration tenements in Zimbabwe. The group has a contingent liability as at June 30, 2011, amounting to R35.7 million in terms of the joint venture agreement and capital commitments amounting to R16.9 million.
 
 Ergo Mining (Pty) LimitedIn the year ended June 30, 2009, the group acquired a 50% interest in Ergo Mining (Pty) Limited (Ergo JV) with effect from May 6, 2008.  The Ergo JV was previously jointly controlled by the group and Mintails Limited. In the year ended June 30, 2010 the group acquired the remaining 50% interest in the Ergo JV on April 15, 2010. The transaction was accounted for as an asset acquisition for a total consideration of R82.1 million and the Ergo JV has subsequently been consolidated as a subsidiary from May 1, 2010 (refer note 12).
 
 The group’s effective share of income, expenses, assets and liabilities of the joint ventures, which are included in the consolidated financial statements, are as follows:
 
 Statement of comprehensive income
 
  -  -
  -  (11,825)
  -  (11,825)
  -  (4,568)
 Loss before taxation
 -  (16,393)
  
 Statement of financial position
 
  15,674  -
  552  -
 Total assets
 16,226  -
  16,226  -
 Total equity and liabilities
 16,226
 -
 14. INVESTMENT IN ASSOCIATEThe associate has been accounted for using the equity method in the statement of comprehensive income and statement of financial position.  An impairment has been provided against this investment.
 West Wits SA (Pty) Limited – percentage held
 28.33%
   2,700
   (2,700)
  Carrying value of investment in associate
 -


F-46
 NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued) for the year ended June 30, 2011
 2011  2010
 R’000  R’000
 15. INVENTORIES Current      Gold in process
 41,760
  
 65,633
   15,529
  
 122,922
  Non-current
 10,099
  Total inventories
 133,021
  Inventory includes gold in process carried at net realizable value amounting to R18.7 million (2010: R14.0 million) and finished stock – bullion amounting to R1.5 million (2010: R27.6 million). 16. TRADE AND OTHER RECEIVABLES
  50,131
   51,427
   9,266
   438
   888
   21,526
   (7,266)
   126,410
  17. ASSETS CLASSIFIED AS HELD FOR SALE Mining property of R15.0 million, being the DRDGOLD mine village, was presented as held for sale following the decision of the group’s management to sell this disposal group as part of the closure of the old Durban Deep mine.  A sale was initially expected by June 30, 2011, however this did not take place due to ongoing litigation between Dino Properties (Pty) Limited and the group (refer note 23). The group does not believe that a sale of the property is highly probable within the next year and it has therefore been reclassified to property, plant and equipment. For the year ended June 30, 2010, the disposal group was carried at the lower of carrying amount or fair value less costs to sell and was included within ‘Corporate head office and all other expenses’ for operating segmental reporting purposes (refer note 2).
 
 Assets classified as held for sale
    -
   -


F-47
 NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued) for the year ended June 30, 2011
 2011                        
  2010
 2009
 R’000                      
  R’000
 R’000
 18. EQUITY OF THE OWNERS OF THE PARENT
        Authorized share capital
 
 
 
          500
   Issued share capital
 
    
    4,132,604
    
    500
    4,133,104
   Share capital Unissued sharesThe group operates a share option scheme as an incentive tool for its executive directors and senior employees whose skills and experience are recognized as being essential to the group's performance. In terms of the scheme rules, a maximum of 40 million (2010: 15% and 2009: 15%) of the issued ordinary shares is reserved for issuance thereunder and no participant may hold options at any time, which if exercised in full, would exceed 2 million (2010: 2% and 2009: 2%) of the company's issued share capital at that time. The number of issued and exercisable share options is 5.61% (2010: 5.1% and 2009: 4.6%) of the issued ordinary share capital, representing 21.6 million of the available 40.0 million share options.  In addition, the participants in the scheme are fully taxed at their marginal tax rate on any gains realized on the exercise of their options.  In terms of an ordinary resolution passed at the previous annual general meeting, the remaining unissued ordinary shares in the group are under the control of the directors until the next general meeting. Cumulative preference sharesThe terms of issue of the cumulative preference shares were that they carried 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 Argonaut's mineral rights acquired from Randgold and Exploration Company Limited in September 1997. In 2005, the Argonaut mineral rights reverted to the South African Government after no application for conversion was lodged within the stipulated period of one year, under the provisions of the Mineral and Petroleum Resources Development Act (MPRDA).  Option instrumentsThe company currently has one class of options authorized but not issued, namely Durban Deep ‘C’ options. There are 10,000,000 authorized option instruments at year-end which entitle the holder to subscribe for one ordinary share per option instrument at a subscription price of R15 per ordinary share. These are exercisable at any time during the period from the date on which the option is issued by the company to a date no later than five years from the date of issue.


F-48
 NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued) for the year ended June 30, 2011 18. EQUITY OF THE OWNERS OF THE PARENT (continued)
 2011  2010
 2009
 R’000  R’000
 R’000
 
 Revaluation and other reserves
     747
 
  143,049
 
  59,553
 
  203,349
 
 (a)  The foreign exchange translation reserve represents the cumulative translation effect arising on the translation of the financial statements of the group’s foreign operations. During the year ended June 30, 2010, the company disposed (placed into voluntary liquidation) all of its foreign subsidiaries and the foreign exchange translation reserve relating thereto has been transferred to profit or loss. (b)  Certain items of property, plant and equipment that were revalued to fair value on or prior to July 1, 2004, the date of transition to IFRS, were measured on the basis of deemed cost, being the revalued amount at the date of the revaluation. A revaluation adjustment of R5.0 million was recognized in the asset revaluation reserve. The reserve also includes a R4.7 million (2010: R4.5 million and 2009: R0.6 million) fair value adjustment on available-for-sale financial instruments. On the acquisition of ErgoGold, in the year ended June 30, 2009, an amount of R133.3 million was taken to the asset revaluation reserve.  This amount represented the increase in the fair value of ErgoGold’s net assets after the acquisition of the group’s initial interest, which is attributable to that initial interest. (c)  The company issues equity-settled instruments to certain qualifying employees under an employee share option scheme to purchase shares in the company’s authorized but unissued ordinary shares. Equity share-based payments are measured at the fair value of the equity instruments at the date of the grant. Deferred share-based compensation is expensed over the vesting period, based on the company’s estimate of the shares that are expected to eventually vest. A deferred share-based compensation expense of R3.5 million (2010: R4.1 million and 2009: R7.9 million), was charged to profit or loss (refer to note 4).
 2011  2010
 R’000  R’000
 DividendsThe following dividends were declared and paid by the group:
  (19,244)
    After June 30, 2011 a dividend of 7.5 cents per qualifying share (R28.9 million) was approved by the directors for 2011.  The dividend has not been provided for, nor was a provision made for the secondary tax on companies which is charged at 10% of the dividend which is declared and is estimated to amount to R2.9 million.
 19. PROVISION FOR ENVIRONMENTAL REHABILITATION
  420,604
   -
   29,010
   9,405
   (21,361)
   52,567
   490,225
      The group intends to fund the ultimate rehabilitation costs from the money invested with the trust funds as well as, at the time of mine closure, the proceeds on sale of remaining assets and gold from plant clean-up. The rehabilitation is expected to occur progressively towards the end of life of the respective mines. The credit to profit or loss for the year ended June 30, 2010, includes credits of R63.4 million and R4.8 million relating to the derecognition of the provisions of Durban Roodepoort Deep and West Witwatersrand Gold Mines (Pty) Limited, respectively (refer note 23).


F-49
 NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued) for the year ended June 30, 2011 20. POST-RETIREMENT AND OTHER EMPLOYEE BENEFITS
 2011  2010
 R’000  R’000
  5,540
   728
   6,268
  Contribution fundsIn South Africa, the group participates in a number of multi-employer, industry-based retirement plans. All plans are governed by the Pension Funds Act, 1956. The group pays fixed contributions to external institutions and will have no legal or constructive obligation to pay further amounts. Pension plans, which are multi-employer plans in the nature of defined contribution plans, are funded through monthly contributions to these defined contribution plans. Obligations for contributions are recognized as an employee benefit expense in profit or loss as incurred.
     (38,772)
  
 
  (a)  Post-retirement medical benefits
 
  The group has an obligation to fund a portion of the medical aid contributions of certain of its employees after they have retired. A provision for post-retirement medical benefits has been raised, based on the latest calculations using a projected unit credit method, of independent actuaries performed as at June 30, 2010. Post-retirement medical benefits are actuarially valued every three years. The obligation is unfunded.  During the year ended June 30, 2011, settlement offers were made to all participants of the post-retirement medical benefit scheme. This offer was accepted by some participants, which resulted in an actuarial gain of R5.7 million.  As a result of a project initiated during the year ended June 30, 2010 to optimize the synergies of the group’s surface retreatment operations, management revised the assumptions used in the calculation of this provision. The resulting decrease in the provision for post-retirement medical benefits of approximately R30 million was treated, for accounting purposes, as a change in estimate and was included in administrative expenses and general costs.
  
   12,507
   349
   (5,651)
   (2,543)
   (364)
   1,242
   5,540
   
   (349)
   5,651
   (1,242)
   4,060
   Principal actuarial assumptions at the reporting date:
    7.8%
   9.3%
   1.4%
   60
   59.8
   3 years
   100%
   85%


F-50
 NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued) for the year ended June 30, 2011 20. POST-RETIREMENT AND OTHER EMPLOYEE BENEFITS (continued) Historical information:
 2011
 2010
 2009
 2008
 2007
 R’000
 R’000
 R’000
 R’000
 R’000
 Unfunded liability
 5,540
      (5,651)
     There are currently no long-term assets set aside in respect of post-retirement medical benefit liabilities.  Assuming all other variables remain constant a one percentage point change in the stated assumptions would have the following effects: Sensitivity analysis:
 Health  care
 
  Variation  cost  inflation
 Mortality  Resignation  rate
  R’000
 R’000
 R’000
                     The group expects to pay contributions of R0.2 million during 2012. (b)  Long-service awards
 The group participates in the Chamber of Mines of South Africa Long Service Awards Scheme (the scheme). The scheme does not confer on any employee or other persons any right of payment of any award. In terms of the scheme, bonus payments may be made to certain employees, usually semi-skilled, upon reaching the age of 55, who have completed 15 years of continuous service in South African gold mining companies which are members of the Chamber of Mines of South Africa and The Employment Bureau of Africa, provided such service is not pensionable service. The scheme lays down the rules under which an employee may be eligible for the award. The award is paid by the company for which the employee works upon becoming eligible for the award and electing to receive payment. All awards must be confirmed by the Chamber of Mines of South Africa before payment.  The amount of the award is based on both the employee's skill level and years of service with gold mining companies that qualify for the scheme.
 2011
 2010
 R’000
 R’000
  Amounts recognized in the statement of financial position are as follows:
    858
   (130)
  Closing balance
 728
  Share option scheme a) Details of the scheme The company operates a share option scheme, DRDGOLD (1996) Share Scheme (the scheme) as an incentive tool for its executive directors and senior employees whose skills and experience are recognized as being essential to the group's performance. In terms of the scheme rules, a maximum of 40 million (2010: 15%) of the issued ordinary shares of the group is reserved for issuance thereunder and no participant may hold options at any time, which, if exercised in full, would exceed 2 million (2010: 2%) of the company's issued share capital at that time. The number of issued and exercisable share options is approximately 5.61% (2010: 5.1%) of the issued ordinary share capital, representing 21.6 million of the available 40 million share options. In addition, the participants in the scheme are fully taxed at their marginal tax rate on any gains realized on the exercise of their options.


F-51
 NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued) for the year ended June 30, 2011 20. POST-RETIREMENT AND OTHER EMPLOYEE BENEFITS (continued) Share option scheme (continued) The price at which an option may be  granted will be, in respect of each share which is the subject of the option, the volume weighted average price of a share on the JSE for the seven days on which the JSE is open for trading, preceding the day on which the employee is granted the option. The allocation date will be the date when the directors approve allocation of share options. Each option remains in force for five years after the date of grant, subject to the terms of the option plan. Options granted under a plan vest primarily according to the following schedule over a maximum of a three year period:
 Percentage vested in each period grant:
 Period after the original date of the option:
 
 
 
 
 Any options not exercised within a period of 5 years (issued prior to 2009: 10 years) from the original date of the option will expire and may not thereafter be exercised. b) Share options activity in respect of the DRDGOLD (1996) Share Scheme was as follows:
 Outstanding  Vested
  Average
 Average
  
 price per
 price per
  Number of
 share
 Number of
 share
  shares
 R
 shares
 R
      
   
   
        
   
    21,582,927
 10.07
 16,011,187  12.13
 Options to acquire the company’s ordinary shares that were granted post November 7, 2002 and which remain unvested at January 1, 2005, are measured at fair value at grant date. This fair value is recognized as an employee expense over the vesting period, adjusted to reflect actual levels of vesting, with the corresponding credit to a revaluation and other reserve, which is part of equity. The fair value of the options granted is measured using the Black–Scholes option pricing model, taking into account the terms and conditions upon which the options were granted. Analysis of share options: Range of exercise prices
 Years
 Vested
 Unvested
  to
 June 30,
 June 30,
 June 30,
 June 30,
  expiry  2011
 2012
 2013
 2014
 
     
     
      
     
      16,011,187  2,732,308  1,826,886
 1,012,546


F-52
 NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued) for the year ended June 30, 2011 20. POST-RETIREMENT AND OTHER EMPLOYEE BENEFITS (continued)
 2011
 2010
 R’000
 R’000
 c) The fair value of the options determined using the Black - Scholes option pricing model. Significant inputs into the model were:
 Market price at date of grant (Rand per share)
 
   10.93
   5.13
   5.50
   5.94
   9.93
   5.50
   4.70
   5.30
   3.66
 Vesting periods (years)
 
   3
   3
   3
   3
   3
   3
   3
   3
   3
 Option strike price (Rand per share)
 
   11.70
   4.84
   7.10
   8.78
   9.08
   3.88
   3.50
   5.35
   3.69
 Risk-free rate
 
   8.56%
   7.81%
   7.58%
   7.94%
   8.39%
   8.79%
   9.55%
   8.72%
   6.74%
 Volatility
 (1)
 
 
   29%
   37%
   38%
   36%
   44%
   28%
   31%
   25%
   31%
  (1)


F-53
 NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued) for the year ended June 30, 2011 21. DEFERRED TAX
 2011  2010
 R’000  R’000
 Balances arose from the following temporary differences:
 Deferred tax asset
    295,557
   97,048
   56,817
   151,450
   -
   (531,640)
   69,232
  Deferred tax liability
 
   (144,244)
   21,722
   (3)
   (122,525)
   (53,293)
   
  Reconciliation between deferred taxation opening and closing balances
 
   (27,400)
   (25,893)
   (53,293)
  The group provides for deferred tax at the rates which are expected to apply for temporary differences. During the year ended June 30, 2011 the group changed from using the maximum statutory rates to the expected average effective tax rates, resulting from the mining tax formula for mining income based on forecasts per individual entity. This change has been accounted for as a change in estimate and is therefore applied prospectively. The change reduced the expense through profit or loss and the net deferred tax liability by R39.9 million. If a one percentage point increase in the effective tax rate is applied, the deferred tax liability would amount to R56.2 million compared to the current R53.3 million (refer note 8).  Deferred tax assets have not been recognized in respect of tax losses of R18.4 million (2010: R8.1 million), unredeemed capital expenditure of R361.8 million (2010: R396.7 million) and capital losses of R151.4 million (2010: R151.4 million). The deferred tax relating to the group’s investment in subsidiaries, joint venture and associate is Rnil (2010: Rnil), resulting from the fact that these investments are to be realized through dividend distributions which are exempt under current South African tax legislation. As a result there are no temporary differences. 22. LOANS AND BORROWINGS
 Unsecured
   109,636
  Preference shares held by Khumo Gold SPV (Pty) Limited and the DRDSA Empowerment Trust (b)
 10,137
   119,773
   (79,345)
   40,428
   Loans and borrowings expected repayment schedule for capital amounts payable in the twelve months to:June 30, 2012
 79,345  -
  30,291  -
  10,137  58,977
  119,773  58,977
  Analysis of gross loans and borrowings by currency:South African Rand
 119,773
   
 Effective interest rates:
 
 Unsecured liabilities
 
  9.6% - 10.6%


F-54
 NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued) for the year ended June 30, 2011 22. LOANS AND BORROWINGS (continued) (a) On September 30, 2010 the group entered into a R500 million Domestic Medium Term Note Programme (DMTN Programme) with ABSA Capital, a division of ABSA Bank Limited, under which DRDGOLD may from time to time issue notes. R108 million was issued on October 1, 2010, consisting of R78 million and R30 million respectively, under the DMTN Programme. The different notes issued mature 12 and 24 months from the date of issue and bear interest at the three month Johannesburg Inter-bank Acceptance Rate plus a margin ranging from 4% to 5% per annum. The DMTN Programme is unsecured. (b) On November 18, 2005, the group issued Class A cumulative participating preference shares to Khumo Gold SPV (Pty) Limited (Khumo Gold), for a subscription price of R10.6 million. Class B and Class C cumulative participating preference shares, for a subscription price of R7.1 million and R8.6 million, were issued to Khumo Gold and the DRDSA Empowerment Trust respectively on November 30, 2006. The preference shares entitle Khumo Gold and the employee trust to receive a dividend of R0.26 for every R0.74 paid by Crown, ERPM and Blyvoor to DRDGOLD towards capital and interest on their outstanding intragroup loans as at November 30, 2005. Crown repaid its loan to DRDGOLD during the year ended June 30, 2009 and a preference dividend of R31.8 million was paid to Khumo Gold and the employee trust. There were no further obligations pursuant to the Crown preference shares and they were cancelled.  The preference shares are measured at amortized cost based on the effective interest method. As these financial instruments do not have fixed terms, the repayment schedules for the loans are based on an estimated repayment schedule, calculated using the available cash flows of the relevant operations with reference to their respective life-of-mine plans. The impairment of Blyvoor's property, plant and equipment resulted in a positive adjustment of R30.8 million (2010: R33.9 million), which is based on the expected cash flows of the Blyvoor life-of-mine plan. The payment of a R31.7 million dividend and reduction of the repayment period at ERPM resulted in a negative adjustment of R6.0 million (2010: R19.3 million).


F-55
 NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued) for the year ended June 30, 2011 23. COMMITMENTS AND CONTINGENT LIABILITIES
 2011  2010
 R’000  R’000
 
 Capital commitments
    50,370
   119,110
   169,480
  
 This capital expenditure will be financed from existing cash resources, cash generated from operations and negotiated funding facilities.
 
 Operating lease commitmentsThe group leases its office building in terms of an operating lease. The group does not have an option to acquire the building at the termination of the lease. There is an escalation of 8% per annum imposed by the lease agreement.
 
 Crown leases its vehicles under various operating leases. There is an average escalation of 2.5% per annum imposed by these lease agreements.
 
 
 The future minimum lease payments under non-cancellable operating leases are asfollows:
    1,414
   3,310
  
 Contingent liabilities
 
 EnvironmentalAt Durban Roodepoort Deepmine, rehabilitation and other responsibilities like the National Nuclear Regulator Certificate of Registration requirements have been taken over by DRD (Pty) Ltd (a subsidiary of Mintails). An official liability transfer in terms of section 58 of the Mineral and Petroleum Resources Development Act (MRPDA) has been submitted to the Department of Mineral Resources (DMR). DRDGOLD retains only the DRD Village that has no assessed liability associated with it. The legal transfer of the liability would be dependant on the DMR's assessment of Mintail's financial capability. DRDGOLD therefore still has a contingent liability until such legal transfer is affected, amounting to R63.4 million. We are still awaiting a response from the DMR on their assessment of the transfer. At West Witwatersrand Gold Mine (Pty) Limitedmine, responsibility for the mine, including the environmental rehabilitation liability, has been taken over contractually by Mintails although the legal transfer thereof would be dependant on the DMR's assessment of Mintail's financial capability. DRDGOLD, therefore, still has a contingent liability until such legal transfer is affected, amounting to R4.8 million. We are still awaiting a response from the DMR on their assessment of the transfer. Mine residue deposits have a potential pollution impact on ground water through seepage. The group has taken certain
  preventative actions as well as remedial actions in an attempt to minimize the group’s exposure and environmental contamination.
  No reliable estimate can be made for the potential obligation. DRDGOLD has identified a flooding and future pollution risk posed by deep groundwater at Blyvoor (Far West Rand gold fields), West Witwatersrand Gold Mines (Pty) Ltd (Western Basin) and ERPM (Central Basin) mines. Due to the interconnected nature of mining operations, any proposed solution needs to be supported by all the mines located in these areas. The DMR and affected mining companies are involved in the development of a ‘Regional Mine Closure Strategy’ in the gold fields’ area. The government has appointed Trans-Calendon Tunnel Authority (TCTA) to propose solutions for the various basins. They have also provided funding for the interim solution in the Western and Central Basins. In view of the limitation of current information for the accurate estimation of a potential liability, no reliable estimate can be made for the potential obligation.


F-56
 NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued) for the year ended June 30, 2011 23. COMMITMENTS AND CONTINGENT LIABILITIES (continued) Dispute at the DRD Village Dino Properties (Pty) Limited has instituted action against DRDGOLD seeking to enforce an agreement of sale of the DRD Village entered into on July 21, 2005 or, alternatively payment of R195 million which is alleged to represent the market value of the property. DRDGOLD is defending this action. There is a dispute on the quantification of the possible damages or determination of the possible market value. The amount of the alleged market value cannot be measured with sufficient reliability. Dispute with the Ekurhuleni Municipality The Ekurhuleni Municipality has brought an action against ERPM claiming an amount of R42 million in respect of outstanding rates and taxes which are allegedly owing. ERPM has employed experts to investigate the allegations and it appears that this claim is unfounded. ERPM is defending this action and has employed Norton Rose Attorneys to represent it. There are sufficient defences to repel the claim, therefore the probability of an outflow of resources is not probable. 24. FINANCIAL INSTRUMENTS OverviewThe group has exposure to credit risk, liquidity risks, as well as other market risks from its use of financial instruments. This note presents information about the group’s exposure to each of the above risks, the group’s objectives and policies and processes for measuring and managing risk. The group’s management of capital is disclosed in note 25. Further quantitative disclosures are included throughout these consolidated financial statements. Risk management frameworkThe Board of Directors has overall responsibility for the establishment and oversight of the group's risk management framework. The board has established the Risk Committee, which is responsible for developing and monitoring the group's risk management policies. The committee reports regularly to the Board of Directors on its activities. The group's risk management policies are established to identify and analyze the risks faced by the group, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes to market conditions and the group's activities. The group, through its training and management standards and procedures, aims to develop a disciplined and constructive control environment in which all employees understand their roles and obligations. The Audit Committee oversees management’s monitoring of compliance with the group's risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the group. The Audit Committee is assisted in its oversight role by the internal audit function. The internal audit function undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the Audit Committee. CREDIT RISK Credit risk is the risk of financial loss to the group if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the group’s receivables from customers and investment securities.  The group's financial instruments do not represent a concentration of credit risk, because the group deals with a variety of major banks and financial institutions located in South Africa after evaluating the credit ratings of the representative financial institutions. Furthermore, its trade receivables and loans are regularly monitored and assessed for recoverability. Where appropriate, an impairment loss is raised. In addition, the group's operations all deliver their gold to Rand Refinery Limited (Rand Refinery), which refines the gold to saleable purity levels and then sells the gold, on behalf of the South African operations, on the bullion market. The gold is usually sold by Rand Refinery on the same day as it is delivered and settlement is made within two days.


F-57
 NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued) for the year ended June 30, 2011 24. FINANCIAL INSTRUMENTS (continued)The following represents the maximum exposure to credit risk for all financial assets at June 30:
  Carrying
 Carrying
 value
 value
  2011
  R'000
  
 
 
   Financial assets
 
 
    14,987
   10,078
  Investments in environmental rehabilitation trust funds (refer note 11)  134,247  126,069Trade and other receivables (refer note 16)
 65,717
  259,112
  484,141
  
  The following represents the maximum exposure to credit risk for trade and other receivables at June 30:
   Carrying
 Carrying
 
 value
 value
  2011
  R'000
  50,131
  438
  15,148
  65,717
  
   
 
    Gross  Impair-
 Gross  Impair-
  value  ment
 value  ment
  2011  2011
 
  R'000  R'000
 
  60,334  (159)
 
  840  (53)
 
  975  (496)
 
  10,834  (6,558)
 
  72,983  (7,266)
 
 Impairments were raised due to the uncertainty around the recoverability and timing of the cash flows. Movement in the allowance for impairment in respect of trade and other receivables during the year was as follows:
 Impairment
 Impairment
  2011
   R'000
   (12,882)
   5,616
   (7,266)
  The group has no significant credit risk as the majority of the group’s receivables are from debtors with a good track record. The impairment raised for debtors older than 120 days largely relates to the leasing of hostels.


F-58
 NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued) for the year ended June 30, 2011 24. FINANCIAL INSTRUMENTS (continued) LIQUIDITY RISK Liquidity risk is the risk that the group will not be able to meet its financial obligations as they fall due. The group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the group’s reputation. The group ensures that it has sufficient cash on demand to meet expected operational expenses, including the servicing of financial obligations; this excludes the potential impact of extreme circumstances that cannot reasonably be predicted, such as natural disasters. Unless otherwise stated, the following are the contractual maturities of financial liabilities, including estimated interest payments and excluding the impact of netting agreements:
 Carrying  Contractual
 6
 months
 6-12
 More than
  amount
 cash flows
 or less
 months
 2-5 years
 5 years
  R’000  R’000
 R’000
 R’000
 R’000
 R’000
 June 30, 2011
       Unsecured
 
 
 
 
 
 Absa Domestic Medium Term NoteProgramme
 109,636  (116,517)
 (84,135)
 (1,582)
 (30,800)
 -
  
 
 
 
 
 
  
 
 
 
 
 
 DRDSA Empowerment Trust (expected repayments)
 10,137  (162,937)
 -
 -
 -
 (162,937)
  325,737  (325,737)  (325,737)  -  -  -
  445,510  (605,191)
 (409,872)
 (1,582)
 (30,800)
 (162,937)
 
 
       June 30, 2010
       Unsecured
                     DRDSA Empowerment Trust (expected repayments)


F-59
 NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued) for the year ended June 30, 2011 24. FINANCIAL INSTRUMENTS (continued) MARKET RISKMarket risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the group's income or the value of its holding of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing returns. Commodity price sensitivityThe profitability of the group's operations, and the cash flows generated by those operations, are affected by changes in the market price of gold which is predominantly sold in US Dollar. DRDGOLD does not enter into forward sales, derivatives or other hedging arrangements to establish a price in advance for the sale of future gold production. Interest rate risk Fluctuations in interest rates impact on the value of short-term cash investments and financing activities, giving rise to interest rate risks. In the ordinary course of business, the group receives cash from its operations and is obliged to fund working capital and capital expenditure requirements. This cash is managed to ensure surplus funds are invested in a manner to achieve maximum returns while minimizing risks. Funding deficits for the group's mining operations have been financed through the issue of additional shares and external borrowings. Lower interest rates result in lower returns on investments and deposits and may also 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. The following represents the interest rate risk profile for the group's interest-bearing financial instruments:
 2011
 2010
  Carrying
 Carrying
  value
 value
  2011
   R’000
  Variable interest rate instruments
    393,359
   (109,636)
   283,723
  Cash flow sensitivity analysis for variable rate instruments: A change of 100 basis points (bp) in interest rates at the reporting date would have increased/(decreased) profit/(loss) by the amounts shown below. This analysis assumes that all other variables, in particular foreign currency rates, remain constant. The analysis is performed on the same basis for 2010.
  2011  2010
  Profit/(loss)
 Profit/(loss)
  100 bp
 100 bp
    increase
 decrease
 
 June 30
 R’000
 R’000
 
  2,837
 (2,837)
 
  2,837
 (2,837)


F-60
 NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued) for the year ended June 30, 2011 24. FINANCIAL INSTRUMENTS (continued) Foreign currency risk The group’s reporting currency is the South African Rand. Although gold is sold in US Dollars, the group is obliged to convert this into South African Rand. The group is thus exposed to fluctuations in the US Dollar/South African Rand exchange rate. The group conducted its operations in South Africa during the current year. Foreign exchange fluctuations affect the cash flow that it will realize from its operations as gold is sold in US Dollars, while production costs are incurred primarily in South African Rands. The group's results are positively affected when the US Dollar strengthens against the Rand and adversely affected when the US Dollar weakens against the Rand.  The group's cash and cash equivalent balances are held in US Dollars and South African Rands; holdings denominated in other currencies are relatively insignificant. The group does not hedge against foreign currency fluctuations and considers the risk to be low due to foreign currency normally being disposed of on the same day. The group is also exposed to certain by-product commodity price risk. The following represents the exposure to foreign currency risks:
  USD
 USD
  2011
   ’000
   30
   7,390
   7,420
   The following significant exchange rates applied during the year:
  Spot rate at year-end
 Average rate
  2011
  2011
   6.8295
  6.9865
  Sensitivity analysis A 10% strengthening of the Rand against the currencies mentioned at June 30, would have increased/(decreased) equity and profit/(loss) by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant. The analysis is performed on the same basis for 2010.
  USD
 USD
  2011
   R’000
   (55)
   (5,013)
  A 10% weakening of the Rand against the above currencies at June 30, would have had the equal but opposite effect on the above currencies to the amounts shown above, on the basis that all other variables remain constant.


F-61
 NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued) for the year ended June 30, 2011 24. FINANCIAL INSTRUMENTS (continued) Other market price risk Equity price risk arises from available-for-sale equity securities fair value adjustments accounted for in other comprehensive income. Investments within the portfolio are managed on an individual basis and all buy and sell decisions are approved by the Risk Committee when significant. CATEGORIES OF FINANCIAL INSTRUMENTS The following table represents the carrying amounts and net gain/(loss), finance income and finance expense per category of financial instruments at June 30:
  Net gain/(loss),
 finance income
 Net gain/(loss),
 finance income
  Carrying
 value
 and finance
 expense
 Carrying
 value
 and finance
 expense
  2011
 2011
    R'000
 R'000
   Financial assets
   14,987
 6,013
    469,154
 20,421
    484,141
 26,434
   Financial liabilities
   445,510
 13,716
    445,510
 13,716
   FAIR VALUE HIERARCHY The table below analyses financial instruments carried at fair value, by valuation method. The different levels have been defined as follows:
    Level 2: inputs other than quoted prices included within Level 1 that are observed for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and
   
 
  Level 1
 Level 2
 Level 3
 Total
  
 
 
 
  R'000  R'000  R'000  R'000
 June 30, 2011
      -  -
 14,987
 14,987
  -  -
 14,987
 14,987
 June 30, 2010
 
 
    -  -
 
  -  -
 
 There have been no transfers in either direction between the different levels (2010: no transfers in either direction). Reconciliation of fair value measurements in Level 3 during the year:
 2011  2010
  Level 3
 Level 3
  R'000
  Available-for-sale financial assets
    14,712
   -
   275
  Balance at end of year
 14,987
   275
  The gain or loss on the fair value adjustment is recognized in other comprehensive income net of deferred tax.


F-62
 NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued) for the year ended June 30, 2011 24. FINANCIAL INSTRUMENTS (continued) FAIR VALUE HIERARCHY (continued) The available-for-sale financial assets comprise investments in unlisted shares for which no reasonable alternative measure for fair value is deemed appropriate. Therefore no sensitivity analysis has been prepared. The fair value of the Rand Refinery Limited's unlisted shares is a director's valuation, which was made by using the net asset value of the group. The Rand Mutual Assurance Company's fair value is also based on a directors' valuation of which the value per share is fixed at R0.20 between shareholders. FAIR VALUE OF FINANCIAL INSTRUMENTSThe following table represents the carrying amounts and fair values of the group's financial instruments at June 30:
 Carrying  Fair
 Carrying
 Fair
  value  value
 value
 value
  2011  2011
    R’000  R’000
   Financial assets
 
 
    14,987  14,987
    10,078  10,078
   Investments in environmental rehabilitation trust funds(refer note 11)
 134,247
 134,247
    65,717  65,717
    259,112
 259,112
    484,141
 484,141
   Financial liabilities
 
 
    
  40,428  40,022
    79,345  79,345
    325,737
 325,737
    445,510
 445,104
   The fair value of a financial instrument is defined as the amount at which the instrument could be exchanged between knowledgeable, willing parties in an arm's length transaction. Fair valuesTrade and other receivablesThe fair value approximates the carrying value due to their short-term maturities. Loans to black empowerment entities The fair value of these loans cannot be reliably estimated due to the unavailability of market information. Preference shares held by Khumo Gold SPV (Pty) Limited and the DRDSA Empowerment TrustPreference shares are measured at amortized cost based on expected future discounted cash flows. The original risk adjusted discount rate of 13% is used when estimating the possible future liability and are re-measured on an annual basis. The original risk adjusted discount rate is replaced with a risk adjusted market rate to determine a fair value on an annual basis. Loans from Absa Domestic Medium Term ProgrammeLoans from the ABSA Domestic Medium Term Note Programme are measured at amortized cost using the three month Johannesburg Inter-bank Acceptance Rate plus a margin ranging from 4% to 5% per annum. The loan bears interest at the three month Johannesburg Inter-bank Acceptance Rate plus a margin ranging from 4% to 5% per annum. Fair value is calculated by reference to quoted prices for floating interest instruments. Cash and cash equivalents and environmental trust fundsThe carrying value of cash and cash equivalents approximates their fair value due to the short-term maturity of these deposits. The carrying value of the environmental trust funds approximates their fair value due to these investments being cash in nature.


F-63
 NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued) for the year ended June 30, 2011 24. FINANCIAL INSTRUMENTS (continued) Fair values (continued) Trade and other payablesThe fair value approximates the carrying value due to their short-term maturities. Unlisted investmentsThe valuations are based on the net asset values of these investments which constitutes the investments’ fair value. 25. CAPITAL MANAGEMENT The primary objective of the Board of Directors in managing the group's capital is to ensure that there is sufficient capital available to support the funding requirements of the group, including capital expenditure, in a way that optimizes the cost of capital, maximizes shareholders' returns, and ensures that the group remains in a sound financial position. There were no changes to the group's overall capital management approach during the current year. The group manages and makes adjustments to the capital structure as opportunities arise in the market place, as and when borrowings mature, or as and when funding is required. This may take the form of raising equity, market or bank debt or hybrids thereof. The board monitors the return on capital, which the group defines as net operating income divided by total shareholders' equity, excluding non-redeemable preference shares and non-controlling interest from continued operations, and seeks to maintain a balance between the higher returns that might be possible with higher levels of borrowings and the advantages and security afforded by a sound capital position. The board also monitors the level of dividends to ordinary shareholders. The group’s net debt to equity ratio as at June 30, was as follows:
 2011
 2010
  R’000
 R’000
  1,069,495
   (259,112)
  Net liabilities
 810,383
  Total equity
 1,219,166
  Net debt to equity ratio June 30
 0.66
    26. RELATED PARTY TRANSACTIONS The group has related party relationships with its associates, joint ventures, subsidiaries, and with its directors and key management personnel. Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the group, directly or indirectly, including any director (whether executive or otherwise) of the group.  For the year ended June 30, 2011, total directors’ remuneration (short-term benefits) amounted to R15.6 million (2010: R13.8 million and 2009: R16.4 million) which includes no end-of-contract payments (2010: Rnil and 2009: R1.4 million) long-service awards consist of share-based payment expense amounting to R0.4 million (2010: R0.4 million and 2009: R0.8 million) as well as a post-retirement medical benefit contributions of Rnil (2010: Rnil and 2009: Rnil) (refer note 5). Key management personnel remuneration (short-term benefits) of R52.0 million (2010: R58.8 million and 2009: R58.6 million). For key management, long-service awards consist of share-based payment expense amounting to R3.1 million (2010: R3.7 million and 2009: R7.0 million) as well as a post-retirement medical benefit liability of R5.5 million (2010: R12.5 million and 2009: R6.8 million). Prior to the awarding of a contract to a related party for the supply of goods and services the group procurement manager reviews both the pricing, quality and the reliability of that party.  The contract terms are compared to similar suppliers of goods and services to ensure that the contract is on market related terms. The group’s executive directors review the terms and conditions of all loans to ensure that the terms of the loans are similar to those offered by financial institutions. Transactions with associates, joint ventures and subsidiary companiesDuring the year ended June 30, 2011, the company earned management fees from Ergo Mining Operations (Pty) Ltd (formerly known as DRDGOLD South African Operations (Pty) Ltd) (Ergo Mining Operations) amounting to R23.3 million (2010: R34.6 million and 2009: R15.6 million) and interest of R26.8 milllion (2010: R33.3 million and 2009: R26.6 million), and from Blyvoor amounting to R12.3 million (2010: Rnil and 2009: Rnil) and received interest amounting to R3.2 million (2010: Rnil and 2009: Rnil), respectively.  Transactions with associates are priced on an arm’s length basis.


F-64
 NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued) for the year ended June 30, 2011 26. RELATED PARTY TRANSACTIONS (continued) Subsidiaries
  
 
 ISSUED ORDINARY SHARE
 CAPITAL
 SHARES AT COST
 LESS
 IMPAIRMENTS
 R’000
 EFFECTIVE
 DATE OF
 ACQUISITION
 INDEBTEDNESS
 NET OF
 IMPAIRMENTS
 R’000
 NUMBER OF
 SHARES
 % HELD
 South Africa
 
 
 
 
 
 Argonaut Financial Services (Pty) Limited  100
 100
 -
 Oct
 1, 1997
 (1,055)
 Crown Consolidated Gold Recoveries Limited  51,300,000
 100
 -
 Sep 14, 1998
 (245,316)
 Ergo Mining Operations (Pty) Limited
 1
 
 1,000,000
 74
 113,177
 Nov 14 , 2005
 852,365
 Hartebeestfontein Gold Mining Company Limited  1
 100
 -
 Aug 16, 1999
 -
 Rand Leases (Vogelstruisfontein) Gold Mining
 
 
 
 
 Company Limited
 118,505,000
 100
 -
 Jan 1, 1996
 (42,092)
 Roodepoort Gold Mine (Pty) Limited  1
 100
 -
 Jan
 1, 1996
 -
 West Witwatersrand Gold Holdings Limited
 99,000,000
 100
 -
 Apr 1, 1996
 (22,996)
 Guardrisk Insurance Company Limited (2)  20
 100
 100
 Jul
 1, 2008
 -
 ErgoGold  -
 35
 52,551
 Mar 31, 2009
 161,450
 Blyvooruitzicht Gold Mining Company Limited(3)  38  079  728  74  Sep 30, 2010
 -
 Total
 
 165,828
 702,356
 
 1
 2
 3
 Ergo Mining Operations (Pty) Limited (formerly DRDGOLD South African Operations (Pty) Limited) holds the following investments: 100% of East Rand
 Proprietary Mines Limited (ERPM), 100% of Crown Gold Recoveries (Pty) Limited (Crown) and 100% of Ergo Mining (Pty) Limited (Ergo JV) and 65% of the ErgoGold (formerly Elsburg Gold Mining Joint Venture) (unincorporated).   Guardrisk Insurance Company Limited is consolidated as a special purpose entity.  On September 30, 2010 following a restructuring exercise DRDGOLD now directly holds 74% interest in Blyvooruitzicht Gold Mining Company Limited.


F-65
 NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued) for the year ended June 30, 2011 26. RELATED PARTY TRANSACTIONS (continued)
 Joint VenturesThe joint ventures for which the statement of comprehensive income and statement of financial position have been proportionately consolidated are disclosed in note 13. Rand Refinery agreementThe group has entered into an agreement with Rand Refinery Limited (Rand Refinery), for the refining and sale of all of its gold produced in South Africa.  Under the agreement, Rand Refinery performs the final refining of the group’s gold and casts it into troy ounce bars.  Rand Refinery then usually sells the gold on the same day as delivery for the London afternoon fixed price on the day the gold is sold.  In exchange for this service, the group pays Rand Refinery a variable refining fee plus fixed marketing, loan and administration fees.  Mr. Gwebu, Executive Officer: Legal, Compliance and Company Secretary of DRDGOLD, is a director of Rand Refinery and a member of the Audit Committee and Remuneration Committee. Mr. Pretorius, CEO of DRDGOLD, is also an alternate director of Rand Refinery. The group currently owns shares in Rand Refinery (which is jointly owned by South African mining companies) (refer note 11).  Trade receivables to the amount of R50.1 million (2010: R12.4 million) relate to metals sold.  The group received a dividend of R6.0 million (2010: Rnil) from Rand Refinery. Consultancy agreementOn June 23, 2008 Ergo Mining Operations approved a consultancy agreement with Khumo Gold, which owns 20% of Ergo Mining Operations and Blyvoor. The agreement provides for a monthly retainer of R200,000. During the year ended June 30, 2011, consultancy fees were paid to Mr. P Judge who is a shareholder of Khumo Gold amounting to R0.5 million.
  2011
 2010
 2009
  R’000  R’000
 R’000
  165,828  165,828
 165,828
  702,356
 1,246,103
 1,036,417
  1,659,529  1,701,478
 1,622,795
  (645,714)
 (143,916)
 (275,974)
  (311,459)  (311,459)
 (310,404)
  
 
 
  868,184  1,411,931
 1,202,245
 The non-operating entity loans are interest free and the operational entity loans bear interest at prime minus four. The loans are unsecured and without any fixed re-payment arrangements.
 
 
 
  
 
 
  
 
 
  (792,992)  (84,845)
 (163,271)
  193,919  151,004
 270,175


F-66
 NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued) for the year ended June 30, 2011 27. CASH GENERATED BY OPERATIONS
 2011  2010  2009
 R’000  R’000  R’000
 (Loss)/profit before taxation
 (383,226)
 
 Adjusted for:
 
    130,919
 
  52,567
 
  15,612
 
  547,656
 
  (3,255)
 
  3,519
 
  339
 
  (3,038)
 
  (5,617)
 
  (5,651)
 
  (52,792)
 
  22,047
 
  319,080
 
 Working capital changes
 (3,277)
 
  (56,087)
 
  (10,417)
 
  63,227
 
 Cash generated by operations
 315,803


F-67
 NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued) for the year ended June 30, 2011 28. CASH FLOW ON ACQUISITION OF SUBSIDIARIES, NET OF CASH
 2011
 2010
 2009
 R’000
 R’000
 R’000
 Total net cash flow on acquisition of subsidiaries
 
    -
    -
    -
    -
    -
   
 Acquisition of DRDGOLD Limited (Cell No. 170)
  
  On July 1, 2008, DRDGOLD acquired 100% of a separate class of share in Guardrisk Insurance Company Limited known as DRDGOLD Limited (Cell No 170).
  
    -
 
 Acquisition of ErgoGold
  
  On March 31, 2009, East Rand Proprietary Mines Limited and DRDGOLD acquired 15% and 35% respectively, of ErgoGold from Mogale Gold (Proprietary) Limited.
  
   The fair value of the net assets acquired net of non-controlling interest were as follows:
  
     -
 
  -
 
   -
 
   -
 
   -
 
   -
 
   -
 
   -
 
   -
 
   -
 
   -
 
 Acquisition of Ergo Mining (Pty) Limited
  
   On April 30, 2010 DRDGOLD acquired the remaining 50% interest in Ergo Mining (Pty) Limited (Ergo JV) from Ergo Uranium (Pty) Limited for a total consideration of R82.1 million, R62.1 million settled in cash and the balance in shares in Witfontein Mining (Pty) Limited. A further R0.3 million was incurred on transaction cost. DRDGOLD has consolidated 100% of the Ergo JV from May 1, 2010. Prior to the acquisition, the Ergo JV was accounted for as a joint venture (refer note 13).
  
     
     -
 
   -
 
   -
 
 
 Acquisition of Blyvooruitzicht Gold Mining Company Limited (Blyvoor)
    Effective September 30, 2010, DRDGOLD acquired a 74% interest in Blyvoor from Ergo Mining Operations for a total consideration of R75.7 million settled against Ergo Mining Operation’s inter-company loan with DRDGOLD. The acquisition has been accounted for as an acquisition of an entity under common control (refer note 12).
   -  -


F-68
 NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued) for the year ended June 30, 2011 29. CASH FLOW ON ACQUISITION/DISPOSAL OF JOINT VENTURES, NET OF CASH
 2011
 2010
 2009
 R’000
 R’000
 R’000
 Acquisition of Witfontein Mining (Pty) Limited
        On February 28, 2009, DRDGOLD through its subsidiary Argonaut Financial Services (Pty) Limited acquired a 50% interest in Witfontein Mining (Pty) Limited and entered into a joint venture agreement with Mintails SA (Pty) Limited which owns the remaining 50%.
   -
   Disposal of Witfontein Mining (Pty) Limited On April 30, 2010, Argonaut Financial Services (Pty) Limited disposed of its 50% interest in the Witfontein Mining (Pty) Limited joint venture for R20.0 million. No cash consideration was received as this disposal formed part of the purchase consideration paid (value of R20.0 million) for the acquisition of the remaining 50% interest in the Ergo JV. The carrying value of the net asset disposed of were as follows:
     -
    -
    -
    -
    -
    -
    -
    -
   Acquisition of Chizim Gold (Pvt) Limited During the year ended June 30, 2011, the group entered into a 50:50 joint venture in a start-up company  called Chizim Gold (Pvt) Limited for a nominal cash consideration amounting to $1 (refer note 13).
 
  -
   30. CASH FLOW ON ACQUISITION OF ASSOCIATE Acquisition of West Wits SA (Pty) Limited In January 2009, DRDGOLD acquired a 28.33% interest in West Wits SA (Pty) Limited.
   -


F-69
 NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued) for the year ended June 30, 2011
 2011
 2010
 2009
 R’000
 R’000
 R’000
 31. CASH AND CASH EQUIVALENTS
 Cash and cash equivalents comprise cash on hand, demand deposits and highly liquid investments with an original maturity of three months or less. Included in cash and cash equivalents is restricted cash in a form of a guarantee relating to the rehabilitation of the Brakpan tailings dam, given to AngloGold Ashanti Limited amounting to R43.0 million (2010: R43.0 million and 2009: R34.4 million). Further guarantees are held by Guardrisk amounting to R8.3 million (2010: R8.3 million and 2009: R9.7 million), and by Standard Bank of South Africa Limited, amounting to R24.3 million (2010: R17.9 million and 2009: R18.1 million).
 
 
   259,112
    -
    259,112
   
 32. CASH FLOWS RELATING TO EXPLORATION ASSETS
 
    
    17,210
   
 33. SUBSEQUENT EVENTS
 
 Extension granted for publication of Blyvoor rescue planOn 17 August 2011, DRDGOLD Limited has announced that its 74%-owned subsidiary, Blyvooruitzicht Gold Mining Company Limited (Blyvoor), currently involved in a business rescue process in terms of Chapter 6 of the Companies Act, has been granted an extension by the Southern Gauteng High Court of South Africa (Johannesburg) until 1 November 2011 to publish a business rescue plan. On 20 October 2011, further extension has been granted till 2 December 2011, for the business rescue process in terms 
 of section 132(3) of the Companies Act 2008; further extension may, however, be granted. Interested parties had until 13 September 2011 to show cause why the order granting the extension should not be confirmed. In court papers motivating for the extension, Blyvoor’s registered business rescue practitioner, Peter van den Steen, stated that various processes critical to finalisation of the business rescue plan were ongoing and would require additional time to conclude. These included:
 
 
 
 
 Anglogold Ashanti offers to sell Savuka mining area to Blyvoor On 14 July 2011, Blyvoor received an indicative offer from AngloGold Ashanti Limited (AngloGold Ashanti), which was subject to the finalisation of a definitive agreement. The AngloGold Ashanti offer involves the sale to Blyvoor of some 390 000 square metres of its neighbouring Savuka mining area for R35.0 million. The area is not within AngloGold Ashanti’s current mine planning. Pending the necessary regulatory approvals and subject to the finalisation of a binding agreement, Blyvoor will mine the area under contract. Blyvoor gives notice of intention to reduce employee numbers On September 27, 2011, DRDGOLD announced that the Business Rescue Practitioner overseeing business rescue proceedings at its 74%-owned Blyvooruitzicht Gold Mining Company Limited (“Blyvoor”) has given notice of Blyvoor’s intention to enter a 60-day consensus-seeking process in terms of Section 189 (3) of the Labour Relations Act with the National Union of Mineworkers and UASA – The Union, to consider reducing employee numbers by approximately 500 people. The reason for the need to consider the reduction is that Blyvoor – under business rescue proceedings in terms of Chapter 6 of the Companies Act since June this year – has been unable to meet production and financial targets, a situation exacerbated by higher utility costs.


F-70
 NOTES TO THE ANNUAL FINANCIAL STATEMENTS (continued) for the year ended June 30, 2011 33. SUBSEQUENT EVENTS (continued)
 
 Blyvoor gives notice of intention to reduce employee numbers (continued) Blyvoor is proposing voluntary separation and application of the principle of “last in, first out” as among the mechanisms to be applied to effect the required reduction in employee numbers. Measures currently under consideration to achieve a targeted 30% improvement in the cost of production in R/kg terms, and thus to avoid employee reduction, include:


116
 ITEM 19. EXHIBITS
 
     (1)
    (7)
    (1)
    (2)
    (1)
    (7)
    (7)
    (7)
  Registration Rights Agreement between DRDGOLD Limited and CIBC World Markets Corp., dated November 12, 2002.
  (7)
  DRDGOLD Limited 6% Senior Convertible Note Due 2006 in the amount of $61,500,000 issued pursuant to Rule 144A of the Securities Act of 1933, as amended.
  (7)
  DRDGOLD Limited 6% Senior Convertible Note Due 2006 in the amount of $4,500,000 issued pursuant to Regulation S under the Securities Act of 1933, as amended.
  (1)
    (1)
    (1)
  Agreement, dated September 28, 1995, among First Westgold Mining (Proprietary) Limited, DRDGOLD Limited and Rand Leases in respect of purchase of assets of First Westgold by Rand Leases.
  (2)
  Pumping Assistance, dated October 14, 1997, for the 1997/1998 fiscal year from the Minister of Mineral and Energy Affairs – Republic of South Africa to DRDGOLD Limited.
  (3)
  Deposit Agreement among DRDGOLD Limited, The Bank of New York 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)
  Security Agreement, dated November 5, 1998, between The Chase Manhattan Bank, DRDGOLD Limited, Blyvoor, Buffels and West Wits.
  (4)
  Loan Agreement, dated June 8, 1999, between Industrial Development Corporation of South Africa Limited, Crown and DRDGOLD Limited.
  (4)
  Lender Substitution Deed, dated August 18, 1999, between DRDGOLD Limited, DRD Australasia, NM Rothschild & Sons (Singapore) Limited, NM Rothschild & Sons (Australia) Limited, as agent in its own capacity, and Rothschild Nominees (Pty) Limited.
  (4)
  A $10m Facility Agreement, dated September 10, 1999, between DRDGOLD Limited, DRD Australasia and NM Rothschild & Sons (Australia) Limited.
  (4)
  Facility Agreement, dated August 9, 1996, between PT Barisan Tropical Mining, Rothschild Australia Limited and the Participants.
  (4)
  Deposit Agreement, dated September 30, 1999, between Buffels and BOE Merchant Bank, a division of BOE Bank Limited.
  (4)
  Undertaking and Security Agreement, dated November 17, 1999, between BOE Bank Limited, through its division BOE Merchant Bank, and Buffels.
  (4)
  Guarantee and Indemnity Agreement, dated November 17, 1999, between DRDGOLD Limited, Blyvoor, Argonaut Financial Services (Proprietary) Limited, West Wits, Crown and BOE Bank Limited, through its division BOE Merchant Bank.
  (4)
  Loan Security Agreement, dated November 17, 1999, between FBCF Equipment Finance (Proprietary) Limited and Buffels.
  (4)
  Sale of Business Agreement in respect of Harties, dated August 16, 1999, between Avgold Limited, Buffels and DRDGOLD Limited.
  (4)
    (4)
  Sale of Shares Agreement, dated September 29, 1997, between RMP Properties Limited, Randgold, Crown, City Deep Limited, Consolidated Main Reef Mines and Estate Limited, Crown Mines Limited, RMP Properties SA Limited and Industrial Zone Limited.
  (5)
    (5)
    (5)
  Share Sale Option Agreement, dated March 12, 1993, between Newmont Proprietary Limited, Ballimore No. 56 Proprietary Limited, Clayfield Proprietary Limited and Dome Resources N.L.
  (5)
  Convertible Loan Agreement, dated November 19, 1997, between Tolukuma Gold Mines Proprietary Limited, Dome Resources N.L. and Mineral Resources Development Company Proprietary Limited.
  (5)
  First Deed of Variation of Loan Agreement, between Mineral Resources Development Company Pty Limited, Dome Resources N.L. and Tolukuma Gold Mines Pty Limited.
  (5)
    (5)
  Independent Auditor’s Report from PricewaterhouseCoopers to the Board of Directors and Shareholders of Crown Consolidated Gold Recoveries Limited, dated August 28, 2000.


117
  (5)
  Shareholders’ Agreement, dated September 29, 2000, between DRDGOLD Limited, Fraser Alexander Tailings (Proprietary) Limited and Mine Waste Solutions (Proprietary) Limited.
  (5)
  First Addendum to the Agreement, dated November 15, 2000, between DRDGOLD Limited and Western Areas Limited.
  (5)
  Second Addendum to the Agreement, dated December 21, 2000, between DRDGOLD Limited and Western Areas Limited.
  (6)
  Agreement between DRDGOLD Limited, Western Areas Limited, Consolidated African Mines Limited and JCI Gold Limited, dated April 25, 2001.
  (6)
  Addendum to the Agreement between DRDGOLD Limited, Western Areas Limited, Consolidated African Mines Limited and JCI Gold Limited, dated August 31, 2001.
  (6)
  Addendum to the Agreement between DRDGOLD Limited, Western Areas Limited, Consolidated African Mines Limited and JCI Gold Limited, dated September 26, 2001.
  (6)
  Guarantee and Cession in Securitatem Debiti Agreement between DRDGOLD Limited and Investec Bank Limited, dated October 9, 2001.
  (6)
  Second Deed of Variation of Loan Agreement between Tolukuma Gold Mines Limited, Dome Resources NL and Mineral Resources Development Company Limited, dated June 28, 2001.
  (6)
  Principal Terms and Conditions for Waiving Right to Declare Default and Enforce Security Deed under 1993 Purchase Agreement between Newmont Second Capital Corporation, Tolukuma Gold Mines (Pty.) Limited, Dome Resources (PNG) Pty. Limited, Dome Resources NL and DRDGOLD Limited, dated July 16, 2001.
  (6)
  Loan Agreement between Bank of South Pacific Limited and Tolukuma Gold Mines Limited, dated November 8, 2001.
  (7)
  Master Finance Lease between Volvo Truck Finance Australia (Pty) Ltd and Dome Resources N.L., dated November 1, 2000.
  (7)
    (7)
  Share Purchase Agreement between Crown Consolidated Gold Recoveries Ltd, The Industrial Development Corporation of South Africa Ltd, Khumo Bathong Holdings (Pty) Ltd and DRDGOLD Limited, dated June 12, 2002.
  (7)
  Shareholder’s Agreement between The Industrial Development Corporation of South Africa Limited, Khumo Bathong Holdings (Pty) Ltd, Crown Consolidated Gold Recoveries Ltd, and Crown Gold Recoveries (Pty) Ltd and DRDGOLD Limited, dated June 12, 2002.
  (7)
  Addendum to Shareholder’s Agreement between The Industrial Development Corporation of South Africa Limited, Khumo Bathong Holdings (Pty) Ltd, Crown Consolidated Gold Recoveries Ltd, Crown Gold Recoveries (Pty) Ltd and DRDGOLD Limited, dated June 14, 2002.
  (7)
  Subscription Agreement between Khumo Bathong Holdings (Pty) Limited and DRDGOLD Limited, dated June 12, 2002.
  (7)
    (7)
  Memorandum of Loan Agreement No. 1 between Durban Roodepoort Deep and Crown Gold Recoveries (Pty) Ltd, dated June 12, 2002.
  (7)
  Memorandum of Loan Agreement No. 2 between DRDGOLD Limited and Crown Gold Recoveries (Pty) Ltd, dated June 12, 2002.
  (7)
  Memorandum of Loan Agreement No. 3 between Crown Consolidated Gold Recoveries Ltd and Crown Gold Recoveries (Pty) Ltd, dated June 12, 2002.
  (7)
  Loan Agreement between Industrial Development Corporation of South Africa Ltd and Blyvooruitzicht Gold Mining Company Ltd, dated July 18, 2002.
  (7)
  Agreement of Loan and Pledge between DRDGOLD Limited and East Rand Proprietary Mines Limited, dated September 12, 2002.
  (7)
  Management Services Agreement between DRDGOLD Limited, Khumo Bathong Holdings (Pty) Ltd and Crown Gold Recoveries (Pty) Ltd, dated October 1, 2002.
  (7)
  Agreement amongst DRDGOLD Limited, West Witwatersrand Gold Mines Limited and Bophelo Trading (Pty) Ltd, dated June 12, 2002.
  (7)
  Letter Agreement between DRDGOLD Limited and The Standard Bank of South Africa, represented by its Standard Corporate and Merchant Bank Division, dated October 7, 2002.
  (7)
  Memorandum of Agreement between Daun Et Cie A.G., Courthiel Holdings (Pty) Ltd, Khumo Bathong Holdings (Pty) Ltd, Claas Edmond Daun, Paul Cornelis Thomas Schouten, Moltin Paseka Ncholo, Michelle Patience Baird, Derek Sean Webbstock, as sellers, and Crown Gold Recoveries (Pty) Ltd, as purchaser, dated October 10, 2002.
  (7)
  Memorandum of Loan Agreement between DRDGOLD Limited and Crown Gold Recoveries (Pty) Ltd, dated October 10, 2002.
  (7)
  Letter Agreement Relating to Consultancy Arrangement between DRDGOLD Limited and Nicolas Goodwin, dated October 15, 2002.
  (7)
  Management Services Agreement between DRDGOLD Limited and East Rand Proprietary Mines Ltd, dated October 10, 2002.
  (7)
  Agreement for sale of shares in Emperor Mines Limited, between DRD (Isle of Man) Limited and Kola Ventures Limited, dated December 13, 2002.
  (8)
    (8)
  Amendment to Confirmation, dated September 4, 2003, between DRDGOLD Limited and Investec Bank (Mauritius) Limited.


118
  (9)
  Deed of Amalgamation for the Corporate Restructuring of Orogen Minerals (Porgera) Limited, Mineral Resources Porgera Limited and Dome Resources (PNG) Limited, dated October 14, 2003.
  (9)
    (9)
  Loan Assignment Agreement between Orogen Minerals Limited, DRD (Isle of Man) Limited and Orogen Minerals (Porgera) Limited, dated October 14, 2003.
  (9)
    (9)
  Loan Assignment Agreement, between Dome Resources (PNG) Limited, Dome Resources Pty Limited, DRD (Isle of Man) Limited and Tolukuma Gold Mines Limited, dated November 21, 2003.
  (9)
  Memorandum of Agreement made and entered into between DRDGOLD Limited, West Witwatersrand Gold Mines Limited, Mogale Gold (Proprietary) Limited and Luipaards Vlei Estates (Proprietary) Limited dated June 6, 2003.
  (10)
  Porgera Joint Venture Operating Agreement between Placer (P.N.G.) Pty Limited and Highlands Gold Properties Pty. Limited and PGC (Papua New Guinea) Pty Limited, dated November 2, 1988.
  (10)
    (10)
  Banking Facilities Agreement made and entered between DRDGOLD Limited and Standard Bank of South Africa, Limited, dated November 14, 2003.
  (10)
  Agreement of Employment between DRDGOLD Limited and Mr. M.M. Wellesley-Wood, dated as of December 1, 2003.
  (10)
  Service Agreement between DRD (Isle of Man) Limited and Mr. M.M. Wellesley-Wood, dated as of December 1, 2003.
  (10)
    (10)
    (10)
  Subscription and Option Agreement made and entered between DRD (Isle of Man) Limited, Net-Gold Services Limited and G.M. Network Limited, dated January 26, 2004.
  (10)
  Forward Bullion Transaction Agreements made and entered between DRDGOLD Limited and Investec Bank Limited, dated February 4, 2004, February 6, 2004, February 10, 2004, February 11, 2004 and February 12, 2004.
  (10)
    (10)
  Termination Agreement made and entered between DRDGOLD Limited, Eskom Holdings Limited and Investec Bank Limited, dated June 24, 2004.
  (10)
  Novation Agreement made and entered between J Aron & Company, Eskom Holdings Limited and Investec Bank Limited, dated June 24, 2004.
  (10)
  Memorandum of Understanding made and entered between Buffelsfontein Gold Mines Limited, Buffelsfontein Division and The National Union of Mineworkers, The United Association of South Africa, The Mine Workers Union (Solidarity) and The South African Electrical Workers Association regarding retrenchments associated with No. 9, 10 and 12 Shafts of Buffelsfontein Division, dated August 6, 2004.
  (10)
  CCMA Settlement Agreement made and entered between Blyvooruitzicht Gold Mining Company Limited and The United Association of South Africa, South African Equity Workers’ Association, Solidarity and The National Union of Mineworkers regarding the retrenchment of up to 2,000 employees of the Blyvooruitzicht Gold Mining Company, dated September 2, 2004.
  (10)
  Loan Agreement made and entered between DRDGOLD Limited and Investec Bank Limited, dated September 15, 2004.
  (10)
  Subscription Agreement made and entered between DRD (Isle of Man) Limited and DRDGOLD Limited, dated September 21, 2004.
  (10)
  Common Terms Agreement of Loan made and entered between DRD (Isle of Man) Limited and Investec Bank (Mauritius) Limited, dated October 14, 2004.
  (10)
  Facility A Loan Agreement made and entered between DRD (Isle of Man) Limited and Investec Bank (Mauritius) Limited, dated October 14, 2004.
  (11)
  Loan Agreement made and entered between DRDGOLD Limited and Investec Bank Limited, dated December 10, 2004.
  (11)
  Subscription Agreement between DRDGOLD Limited and Baker Steel Capital Managers LLP (BSCM), dated April 7, 2005.
  (11)
  Underwriting Agreement between DRDGOLD Limited, the Baker Steel Capital Managers LLP (BSCM) and certain underwriters, dated April 5, 2005.
  (11)
  Memorandum of Agreement between DRDGOLD Limited, Simmer & Jack Mines Limited and Simmer & Jack Investments (Proprietary) Limited (S&J Companies), dated August 31, 2005.
  (11)
  Cession Agreement entered into among The Industrial Development Corporation of South Africa Limited (IDC), DRDGOLD Limited, Business Ventures Investment No. 750 (Pty) Ltd and Business Ventures Investment No. 751 (Pty) Ltd (the BVI Companies), dated July 13, 2005.
  (11)
  Share Sale Agreement entered into among The Industrial Development Corporation of South Africa Limited (IDC), DRDGOLD Limited, Business Ventures Investment No. 750 (Pty) Ltd (BVI 1) and Business Ventures Investment No. 751 (Pty) Ltd (BVI 2), dated July 13, 2005.
  (11)
  Term Sheet concluded between DRDGOLD Limited and Khumo Bathong Holdings (Pty) Ltd (KBH), dated July 6, 2005.
  (11)
  Facility B Loan Agreement between Investec Bank (Mauritius) Limited and DRD (Isle of Man) Limited (DRDIOM), dated March 3, 2005.


119
  (11)
  Convertible Loan Facility Agreement between DRDGOLD Limited and Emperor Mines Limited (Emperor), dated July 8, 2005.
  (11)
    (11)
  Option Agreement entered into by and between DRDGOLD Limited and M5 Developments (Pty) Limited, dated July 21, 2005.
  (11)
  Share Sale Agreement between DRD (Offshore) Limited, DRDGOLD Limited and Emperor Mines Limited, dated November 16, 2005.
  (12)
  Deed of Loan, Cession, Payment and Set-Off entered into between DRDGOLD Limited, East Rand Proprietary Mines Limited, Crown Gold Recoveries (Pty) Limited  and Blyvooruitzicht Gold Mining Company Limited, dated November 7, 2005.
  (12)
  Share Sale Agreement between Business Venture Investments 750 (Pty) Ltd and DRDGOLD South African Operations (Pty) Limited, dated November 8, 2005. Share Sale Agreement between Business Venture Investments 751 (Pty) Limited and DRGOLD South African Operations (Pty) Limited, dated November 8, 2005.
  (12)
  Subscription Agreement between DRDGOLD Limited and DRDGOLD South African Operations (Pty) Limited, dated November 9, 2005.
  (12)
  Share Sale Agreement between Crown Consolidated Gold Recoveries Limited and DRDGOLD South African Operations (Pty) Limited, dated November 14, 2005.
  (12)
  Subscription Agreement between DRDGOLD South African Operations (Pty) Limited and Khumo Gold SPV (Pty) Limited, dated November 18, 2005.
  (12)
  Subscription Agreement between DRDGOLD Limited and Khumo Gold SPV (Pty) Limited, dated November 18, 2005.
  (12)
  Cession Agreement between DRDGOLD Limited and Khumo Gold SPV (Pty) Limited and Khumo Bathong Holdings (Pty) Limited, dated November 18, 2005.
  (12)
  Cession Agreement between DRDGOLD Limited and The Industrial Development Corporation of South Africa Limited and Business Venture Investments No. 750 (Pty) Limited and Business Venture Investments No. 751 (Pty) Limited, dated November 18, 2005.
  (12)
  Option Agreement between DRDGOLD Limited and Khumo Gold SPV (Pty) Limited and DRDGOLD South African Operations (Pty) Limited, dated November 18, 2005.
  (12)
  Offer of Class A Preference Share between Khumo Gold SPV (Pty) Limited and East Rand Proprietary Mines Limited, dated November 18, 2005.
  (12)
  Offer of Class A Preference Share between Khumo Gold SPV (Pty) Limited and Blyvooruitzicht Gold Mining Company Limited, dated November 18, 2005.
  (12)
  Offer of Class A Preference Share between Khumo Gold SPV (Pty) Limited and Crown Gold Recoveries (Pty) Limited, dated November 18, 2005.
  (12)
  Shareholders’ Agreement between DRDGOLD Limited and Khumo Gold SPV (Pty) Limited and DRDGOLD South African Operations (Pty) Limited, dated November 24, 2005.
  (12)
  Sale and Subscription Agreement between DRDGOLD Limited and DRD (Offshore) Limited, dated January 4, 2006.
  (12)
    (12)
  Restructure Deed between DRD (Offshore) Limited and DRD (Isle of Man) Limited and Emperor Mines Limited and Emperor Gold Mining Company Limited and Australia and New Zealand Banking Group Limited, dated February 24, 2006.
  (12)
  Facility Agreement between DRD (Porgera) Limited and Tolukuma Gold Mines Limited and Australia and New Zealand Banking Group Limited, dated March 20, 2006.
  (12)
  Settlement of Loans Agreement between DRD (Isle of Man) Limited and DRD (Offshore) Limited, dated March 23, 2006.
  (14)
  Option Exercise Agreement between DRDGOLD Limited, Khumo Gold SPV (Pty) Limited and the Trustees for the time being of the DRDSA Empowerment Trust dated October 10, 2006.
  (14)
  Class B Preference Share Subscription Agreement between DRDGOLD Limited and Khumo Gold SPV (Pty) Limited dated October 24, 2006.
  (14)
  Three Class B Preference Share Subscription Agreements between Khumo Gold SPV (Pty) Limited and Blyvooruitzicht Gold Mining Company Limited, Crown Gold Recoveries (Pty) Limited and East Rand Proprietary Mines Limited, dated October 24, 2006.
  (14)
  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 (Pty) Limited and East Rand Proprietary Mines Limited, dated October 24, 2006.
  (14)
  Share Sale Agreement between Emperor Mines Limited and Westech Gold (Pty) Limited, dated March 22, 2007,` regarding the disposal of its Fijian assets.
  (14)
  Joint Venture Interest Sale Deed – Procurement Deed between Barrick Gold Corporation, or Barrick, and Emperor Mines Limited, dated April 12, 2007.
  (14)
    (14)
  Joint Venture Interest Sale Deed between Barrick Gold Corporation, Barrick (Niugini) Limited, Emperor Mines Limited and DRD (Porgera) Limited dated July 19, 2007.


120
  (14)
  Deed of Assignment and Assumption between Barrick (Niugini) Limited (“Buyer”), DRD (Porgera) Limited (“Seller”), Barrick (Goldfields PNG Holdings) Limited (“Goldfields”) and Minerals Resources Enga Limited (“MRE”) (collectively “the parties”) dated July 19, 2007.
  (14)
  Memorandum of Agreement between Anglo Gold Ashanti Limited, Friedshelf 849 (Proprietary) Limited (renamed Ergo Mining (Pty) Limited), DRDGOLD South African Operations (Pty) Limited and Mintails SA (Pty) Limited, dated August 6, 2007.
  (14)
  Merger Implementation Deed between Emperor Mines Limited and Intrepid Mines Limited, dated September 18, 2007.
  (14)
  Mandate for the Placement of DRD (Offshore) Limited’s 78.72% Shareholding in Emperor Mines Limited, dated September 28, 2007.
  (14)
  Term Sheet for the joint venture agreement entered into by Acorn Gold (Proprietary) Limited, DRDGOLD Limited, Durban Roodepoort Deep (Proprietary) Limited, Friedshelf 850 (Proprietary) Limited, Geotorm Investments Limited, Kgosi Resource Management (Proprietary) Limited, Minerals and Mining Reclamation Services (Proprietary) Limited, Mintails SA (Proprietary) Limited, West Witwatersrand Gold Mines Limited, West Witwatersrand Holdings Limited, West Wits Mining Limited, West Wits Mining SA (Proprietary) Limited, dated November 9, 2007.
  (15)
  Third Addendum to Memorandum of Agreement between AngloGold Ashanti Limited (“AGA”), Ergo Mining (Pty) Limited  (formerly called Friedshelf 849 (Pty) Limited) (“Ergo”), DRDGOLD South African Operations (Pty) (“DRDGOLD SA”) Mintails South Africa (Pty) Limited dated November 14, 2007.
  (15)
  Fifth Addendum to Memorandum of Agreement between AngloGold Ashanti Limited (“AGA”), Ergo Mining (Pty) Limited  (formerly called Friedshelf 849 (Pty) Limited (“Ergo”), DRDGOLD South African Operations (Pty) (“DRDGOLD SA”) Mintails South Africa (Pty) Limited dated May 22, 2008.
  (15)
  Mining User Contract between Crown Gold Recoveries (Pty) Limited (“Crown”), East Rand Proprietary Mines Limited (“ERPM”), Elsburg Gold Mining Joint Venture (“Elsburg JV”), Ergo Mining (Pty) Limited (“Ergo”), Ergo Uranium (Pty) Limited (“Ergo Uranium”) and Mogale Gold (Pty) Limited (“Mogale Gold”) dated August 15, 2008
  (15)
  Ergo Uranium Sale Agreement of Brakpan Plants to Ergo Mining between Ergo Uranium (Pty) Limited (“Ergo Uranium”) and Ergo Mining (Pty) Limited (“Ergo”) dated August 15, 2008.
  (15)
  Ergo Mining Shareholders’ Agreement between Crown Gold Recoveries (Pty) Limited (“Crown”) and Ergo Uranium (Pty) Limited (“Ergo Uranium”) dated August 15, 2008.
  (15)
  Elsburg Gold Mining Joint Venture (“Elsburg JV”) Agreement between East Rand Proprietary Mines Limited (“ERPM”) and Mogale Gold (Pty) Limited (“Mogale Gold”) dated August 15, 2008.
  (15)
  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 (Pty) Limited (“Mogale Gold”) dated September 29, 2008.
  (16)
  Heads of Agreement entered into by Mintails Limited, Mogale Gold (Pty) Limited (“Mogale Gold”), Ergo Mining (Pty) Limited (“Ergo Joint Venture”), DRDGOLD Limited (“DRDGOLD”) and East Rand Proprietary Mines Limited (“ERPM”), dated December 8, 2008.
  (16)
  Loan Facility entered into by Mintails South Africa (Pty) Limited (“Borrower”), DRDGOLD Limited (“Lender”), Mintails Limited (“Borrower’s Guarantor”), Mogale Gold (Pty) Limited (Mogale Gold”) Ergo Uranium (Pty) Limited (“Ergo Uranium”) dated December 8, 2008.
  (16)
  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.
  (16)
 
  (17)
 4.136
 (17)
 4.137
 (17)
  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 (Pty) Ltd (“Ergo Uranium”) and East Rand Proprietary Mines Limited (“ERPM”) dated January 21, 2010. Heads of Agreement between East Rand Proprietary Mines Limited (“ERPM”) and Aurora Empowerment System (Pty) Limited (“Aurora”) dated January 22, 2010.
  (17)
  Domestic Medium Term Note Programme (“Programme”) entered into by DRDGOLD South African Operations (Pty) Limited (“Issuer”) and DRDGOLD Limited (“guarantor’) dated September 30 2010.
  (18)
    (18)
    (18)
    (18)
    (18)
    (10)
    (11)
  Crown Gold Recoveries (Pty) Limited Consolidated Financial Statements for the years ended June 30, 2005, 2004 and 2003.
  (13)
  Crown Gold Recoveries (Pty) Limited Unaudited Consolidated Financial Statements for the period ended December 1, 2005 and the years ended June 30, 2005 and 2004.
  (13)
  Emperor Mines Limited Unaudited Consolidated Financial Statements for the period ended April 6, 2006 and the years ended June 30, 2005 and 2004.
  (11)


121
 (1)
  (2)
  (3)
  333-140850
  (4)
  (5)
  (6)
  (7)
  (8)
  (9)
  (10)
  (11)
  (12)
  (13)
  (14)
  (15)
  (16)
  (17)
  (18)


122
 SIGNATURES
 
  authorized the undersigned to sign this annual report on its behalf.
    
    
 D.J. Pretorius Chief Executive Officer
  
  C.C. Barnes Chief Financial Officer