DRDGOLD LIMITED - Condensed consolidated provisional results for the year ended 30 June 2018

Release Date: 05/09/2018 08:00
Code(s): DRD
 
Wrap Text
Condensed consolidated provisional results for the year ended 30 June 2018

DRDGOLD Limited
(Incorporated in the Republic of South Africa)
Registration No.1895/000926/06
JSE share code: DRD 
NYSE trading symbol: DRD
ISIN: ZAE 000058723
("DRDGOLD" or the "Company" or the "Group")

CONDENSED CONSOLIDATED PROVISIONAL RESULTS
for the year ended 30 June 2018

KEY FEATURES

Acquisition of West Rand Tailings Retreatment Project assets completed effective 31 July 2018

Gold production up 10% to 4 679 kg

Operating profit increased 38% to R355.2 million

All-in sustaining costs margin increased to 5.5%

Free cash flow R93.4 million

Dust exceedances stable at 0.58%

Externally sourced potable water usage decreased by 38%

REVIEW OF OPERATIONS                                                                                 
                                                           Year ended   Year ended            %   
                                                          30 Jun 2018  30 Jun 2017    change(1)   
Gold production                  kg                             4 679        4 265           10   
                                 oz                           150 423      137 114           10   
Gold sold                        kg                             4 653        4 268            9   
                                 oz                           149 604      137 211            9   
Cash operating costs             R per kg                     458 866      489 549          (6)   
                                 US$ per oz                     1 118        1 122            -   
All-in sustaining costs          R per kg                     505 622      530 930          (5)   
                                 US$ per oz                     1 258        1 216            3   
Average gold price received      R per kg                     534 344      548 268          (3)   
                                 US$ per oz                     1 300        1 254            4   
Operating profit                 R million                      355.2        256.8           38   
Operating margin                 %                               14.3         11.0           30   
All-in sustaining costs margin   %                                5.5          3.2           72   
Headline earnings                R million                        7.0          0.8          775   
                                 SA cents per share (cps)         1.7          0.2          750   

(1) % Change is rounded to the nearest percent and is based on the rounded amounts as presented, which is rounded to the nearest hundred thousand Rand

SHAREHOLDER INFORMATION

Issued capital

431 429 767 ordinary no par value shares (30 June 2017: 431 429 767)
265 000 000 shares issued on 31 July 2018 as payment for the WRTRP transaction
9 361 071 treasury shares held within the Group (30 June 2017: 9 361 071)
5 000 000 cumulative preference shares (30 June 2017: 5 000 000)

Stock traded                                                         JSE   NYSE(2)   
Price                                                                                
- 12 month intra-day high                                         R 5.52    $0.411   
- 12 month intra-day low                                          R 2.69    $0.223   
- Close                                                           R 3.65    $0.254   

(2) This data represents per share data and not American Depository Receipt ("ADR") data -
    one ADR reflects ten ordinary shares

Market capitalisation                                                   Rm    US$m   
As at 30 June 2018                                                 1 574.7   109.6   
As at 30 June 2017                                                 1 790.4   135.9   

Rounding of figures may result in computational discrepancies

RESULTS   

The condensed consolidated provisional results for the year ended
30 June 2018 are available on DRDGOLD's website as well as at the
Company's registered office.

FORWARD LOOKING STATEMENTS

Many factors could cause the actual results, performance or achievements to be materially
different from any future results, performance or achievements that may be expressed or
implied by such forward-looking statements, including, among others, adverse changes
or uncertainties in general economic conditions in the markets we serve, a drop in the gold
price, a sustained strengthening of the rand against the dollar, regulatory developments
adverse to DRDGOLD or difficulties in maintaining necessary licenses or other governmental
approvals, changes in DRDGOLD's competitive position, changes in business strategy, any
major disruption in production at key facilities or adverse changes in foreign exchange rates
and various other factors.

These risks include, without limitation, those described in the section entitled "Risk Factors"
included in our annual report for the fiscal year ended 30 June 2017, which we filed with
the United States Securities and Exchange Commission on 31 October 2017 on Form 20-F.
You should not place undue reliance on these forward-looking statements, which speak
only as of the date thereof. We do not undertake any obligation to publicly update or revise
these forward-looking statements to reflect events or circumstances after the date of this
report or to the occurrence of unanticipated events. Any forward-looking statements and
financial information included in this presentation have not been reviewed and reported on
by DRDGOLD's auditors.

DEAR SHAREHOLDER

INTRODUCTION

It is very pleasing to report that the improvement in operating and
financial performance for the first six months of FY2018, reported in
February 2018, was sustained in the ensuing six months to 30 June 2018.
Consequently, FY2018, compared with FY2017, was markedly better.

Year-on-year comparisons are drawn below but by way of general
comment, gold production was significantly higher, with particularly
stronger average yield making the largest contribution to our performance.

Higher grade sand material reclaimed from the 5A9 and 4L30 dumps,
reporting to the Knights plant, was the main contributor to improved
average yield, offsetting the impact that repeated failures in the power
supply - particularly in the second half - had on tonnage throughput.

Cash operating costs were substantially lower, the result of both higher
gold production and completion of the rehabilitation of the Crown
footprint. This, with the increase in gold production, contributed to much
lower all-in sustaining costs (AISC).

Operating profit for the year increased by 38%, a consequence of high
gold production and sales and lower costs, despite a 3% decline in the
average Rand gold price received to R534 344/kg.

By financial year-end, three important projects - part of our on-going
drive to keep the cost line below the revenue line, had been completed:
  
- ramp-up of reclamation from the 4L50 slimes dam, which is the
  southern portion of the Elsburg Tailings Complex, bordering Boksburg
  and Germiston;

- conversion of the Ergo plant's electro-winning circuit to zinc
  precipitation; and
  
- the installation at Ergo of two ball mills, reclaimed from the company's
  Crown plant in order to process higher grade sand at better margins.

The 4L50 slimes dam contains some 20.5Mt of material with an average
grade of 0.256g/t. Reclamation and retreatment at a rate of around
450 000tpm over the next four years is expected to result in greater
plant stability and thus, efficiency.

Cost savings of between R2 million and R2.5 million a month are expected
to result from zinc precipitation, due mainly to a major reduction in the
time to complete the final stage of gold recovery - to around three
hours from around 18 hours for electro-winning - and from significant
cuts in the consumption of caustic soda and cyanide.

The full impact of the centralised water management plant also came
through this year, with a reduction in the usage of potable water of 38%.

The two 60 000tpm ball mills from Crown have been moved to the
Ergo plant and refurbished at a cost of around R41 million. An estimated
12-15Mt of sand is recoverable from the Benoni Cluster. Over the next
five years, 7.3Mt will be targeted for reclamation.

Our acquisition of the bulk of Sibanye-Stillwater's West Rand Tailings
Retreatment Project (WRTRP), increasing our reserves by approximately
82%, was completed after the year end. An update on our progress
and plans regarding this asset, now known as Far West Gold Recoveries
Proprietary Limited (FWGR), appears below.

12 MONTHS ENDED 30 JUNE 2018 VS 12 MONTHS ENDED 30 JUNE 2017

OPERATIONAL REVIEW

Gold production increased by 10% to 4 679kg due to a 13% increase in
the average yield to 0.193g/t. Total throughput, however, was 3% lower
at 24 281 000t.

Cash operating costs were 6% lower at R458 866/kg.

AISC were 5% lower at R505 622/kg. I elaborate on the reasons for these
shifts in my introductory comments above.

FINANCIAL REVIEW

Revenue was 6% higher at R2 490.4 million. Operating profit was 38%
higher at R355.2 million after accounting for total cash operating costs,
3% higher at R2 159.7 million. I comment in more detail about these
movements in my introduction above.

The operating and AISC margins were 14.3% and 5.5% respectively,
compared to 11.0% and 3.2% in the prior year.

Headline earnings were R7 million (1.7 SA cents per share) compared
with R0.8 million (0.2 SA cents per share).

Based on the good results for the year, free cash flow of R 93.4 million
was generated, in comparison to negative R 45.1 million in the prior year.

SUSTAINABLE DEVELOPMENT

Human capital

The total number of historically disadvantaged people in management,
core and critical skills positions continued to grow in 2018 - to 251 (70%
of the total workforce) from 242 in 2017 (68% of the total workforce).

Women in mining remained unchanged at 20% of the total workforce.
The percentage of women in core positions within the workforce is 12%,
exceeding the Mining Charter's requirement of 10%.

Some 1 546 individual training courses took place at a total cost to
company of R9.0 million, compared with 1 296 at a total cost to
company of R10.3 million in 2017.

Social capital

In 2018, we spent R14.5 million on various community and skills
development projects of benefit to communities, mainly within our
operating footprint. This compares with R14.3 million in 2017.

Natural capital

Dust: 1 188 samples from sites spanning our total operating footprint
were analysed during 2018. There were seven exceedances during this
period, representing 0.58% of the total number of measurements,
compared with five exceedances in 2017, representing 0.44% of the total
number of measurements. The increase was as a result of earthworks in
progress on developments being undertaken by other parties, bordering
our operational footprint.

The number of exceedances in both 2017 and 2018 were a marked
improvement on the 22 exceedances reported in 2016, representing
1.58% of the total number of measurements. The improvement over the
past two years is attributable to our continuing programme to vegetate
the top surfaces and side slopes of the tailings dams for which we are
responsible. Some 35 hectares were vegetated in 2018.

Our total cash spent on environmental rehabilitation for the 2018
financial year amounted to R51.6 million compared with R41.9 million
for the 2017 financial year.

Water: We reduced our usage of externally sourced potable water by
38% to 3 377Ml, demonstrating the continued efficiency of our new
water distribution system completed in 2017. In terms of our agreement
with the TCTA, treated acid mine drainage (AMD) water entered our
system for the first time in 2017. Our usage of TCTA treated water was
approximately 909Ml in 2018.

Land: At year-end, applications in respect of 191 hectares of
rehabilitated land had been lodged with the National Nuclear Regulator
for clearance for redevelopment.

WEST RAND TAILINGS RETREATMENT PROJECT

Post year-end - on 1 August 2018 - we announced completion of
our acquisition of the gold assets associated with Sibanye-Stillwater's
WRTRP, to be known going forward as FWGR.

This acquisition increases our gold reserves by 82% and - having secured
a R300 million revolving credit facility from ABSA Bank Limited (acting
through its Corporate and Investment Banking division) - we have already
embarked on the first phase of its planned two-phase development.

Phase 1 involves the upgrading of the Driefontein 2 plant to process
tailings from the Driefontein 5 dump at a rate of between 400 000
and 600 000tpm and depositing the residue on the Driefontein 4
tailings dam. First production is expected in the first quarter of
calendar 2019.

SHORT-TERM PRICE PROTECTION

DRDGOLD wishes to reaffirm its long-term strategy to remain an
unhedged gold producer and to keep borrowings to a minimum.
However, the development of the first phase of FWGR will necessitate
medium term borrowings that will introduce some liquidity risk to the
Group. To mitigate this liquidity risk, management traded a zero-cost
collar to provide price protection against a possible decrease in the Rand
gold price while the borrowings will be in place.

As a result, DRDGOLD is committing 50 000 ounces of gold under a
zero-cost collar with a floor of R565 000/kg and a ceiling of just under
R609 000/kg, spread equally over the next nine months, and cash-
settled at the end of each month.

FINANCIAL YEAR 2019 PRODUCTION AND COST GUIDANCE

For Ergo, during the 2019 financial year, we are planning gold production
of between 148 000 and 154 000 ounces at a cash operating cost of
approximately R490 000/kg.

LOOKING AHEAD

To the east, our Ergo footprint looks set for improved performance in
FY2019 as benefits from the projects described above start to flow.

To the west, we can look forward to FWGR starting to materially
contribute to our bottomline by the end of the second half of the
financial year.

Niël Pretorius
Chief Executive Officer
5 September 2018

CONDENSED CONSOLIDATED
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

                                                          Year ended    Year ended   
                                                         30 Jun 2018   30 Jun 2017   
                                                            Reviewed       Audited   
                                                 Notes            Rm            Rm   
Revenue                                                      2 490.4       2 339.9   
Cost of sales                                              (2 347.7)     (2 307.9)   
Gross profit from operating activities                         142.7          32.0   
Other income                                                       -          12.9   
Administration expenses and other costs                       (90.7)        (69.4)   
Results from operating activities                    2          52.0        (24.5)   
Finance income                                                  38.8          40.0   
Finance expenses                                              (58.4)        (52.2)   
Profit/(loss) before tax                                        32.4        (36.7)   
Income tax                                           2        (25.9)          50.4   
Profit for the year                                              6.5          13.7   
Other comprehensive income                                                           
Items that will be reclassified                                                      
subsequently to profit or loss, net of tax                                           
Net fair value adjustment on available-                                              
for-sale investments                                             0.6         (0.3)   
Total other comprehensive income                                                     
for the year                                                     0.6         (0.3)   
Total comprehensive income for the year                          7.1          13.4   
Basic earnings per share(1)                          3           1.5           3.2   
Diluted earnings per share(1)                        3           1.5           3.2   

(1) All per share financial information is presented in South African cents per share (cps) and
    is rounded to the nearest one decimal point based on the results as presented, which is
    rounded to the nearest million Rand.

CONDENSED CONSOLIDATED
STATEMENT OF FINANCIAL POSITION

                                                               As at         As at   
                                                         30 Jun 2018   30 Jun 2017   
                                                            Reviewed       Audited   
                                                 Notes            Rm            Rm   
Assets                                                                               
Non-current assets                                           1 734.1       1 739.1   
Property, plant and equipment                                1 452.7       1 497.6   
Investments in rehabilitation                                                        
obligation funds                                               244.0         227.7   
Other non-current asset                              5          19.3             -   
Investments in other entities                                    9.4           8.8   
Deferred tax assets                                              8.7           5.0   
Current assets                                                 626.3         548.3   
Inventories                                                    233.0         180.3   
Trade and other receivables                                     91.2         114.3   
Cash and cash equivalents                            4         302.1         253.7   
Total assets                                                 2 360.4       2 287.4   
Equity and Liabilities                                                               
Equity                                                       1 267.3       1 302.4   
Non-current liabilities                                        772.5         728.1   
Provision for environmental rehabilitation                     553.5         531.8   
Deferred tax liability                                         163.7         140.5   
Employee benefits                                    2          40.6          39.0   
Finance lease obligation                                        14.7          16.8   
Current liabilities                                            320.6         256.9   
Trade and other payables                                       303.2         251.7   
Current tax liability                                            4.2           5.2   
Employee benefits                                    2          13.2             -   
Total liabilities                                            1 093.1         985.0   
Total equity and liabilities                                 2 360.4       2 287.4   

CONDENSED CONSOLIDATED
STATEMENT OF CHANGES IN EQUITY

                                                          Year ended    Year ended   
                                                         30 Jun 2018   30 Jun 2017   
                                                            Reviewed       Audited   
                                                                  Rm            Rm   
Balance at the beginning of the year                         1 302.4       1 339.6   
Total comprehensive income                                                           
Profit for the year                                              6.5          13.7   
Other comprehensive income                                       0.6         (0.3)   
Transactions with the owners of the parent                                           
Dividends paid                                                (42.2)        (50.6)   
Balance as at the end of the year                            1 267.3       1 302.4   

The accompanying notes are an integral part of the condensed
consolidated financial statements.

These condensed consolidated financial statements for the year ended
30 June 2018 have been prepared under the supervision of DRDGOLD's
Chief Financial Officer, Mr AJ Davel CA(SA). The condensed consolidated
financial statements were authorised for issue by the directors on
31 August 2018.

CONDENSED CONSOLIDATED
STATEMENT OF CASH FLOWS

                                                          Year ended    Year ended   
                                                         30 Jun 2018   30 Jun 2017   
                                                            Reviewed       Audited   
                                                 Notes            Rm            Rm   
Net cash inflow from operating activities                      233.8          51.6   
Cash generated by operations                                   222.9          21.5   
Interest received                                               21.9          23.8   
Interest paid                                                  (3.5)         (3.7)   
Income tax (paid)/received                                     (7.5)          10.0   
Net cash outflow from investing activities                   (140.4)        (96.7)   
Acquisition of property, plant and                                                   
equipment                                                    (125.9)       (110.6)   
Proceeds on disposal of property, plant                                              
and equipment                                                    7.0          20.5   
Environmental rehabilitation payments                         (21.5)        (11.6)   
Other                                                              -           5.0   
Net cash outflow from financing activities                    (45.0)        (53.0)   
Repayment of finance lease obligation                          (2.8)         (2.4)   
Dividends paid on ordinary share capital                      (42.2)        (50.6)   
Increase/(decrease) in cash and cash                                                 
equivalents                                                     48.4        (98.1)   
Opening cash and cash equivalents                              253.7         351.8   
Closing cash and cash equivalents                    4         302.1         253.7   
Reconciliation of cash inflow from                                                   
operations                                                                           
Profit/(loss) before tax                                        32.4        (36.7)   
Adjusted for:                                                                        
Depreciation                                                   168.0         179.8   
Movement in gold in process                                   (24.5)         (4.8)   
Environmental rehabilitation payments                          (3.4)         (7.9)   
Movement in provision for environmental                                              
rehabilitation                                                 (2.9)           0.6   
Profit on disposal of property, plant and                                            
equipment included in other income                                 -        (12.9)   
Loss on disposal of property, plant and                                              
equipment included in administration                                                 
expenses and other costs                                         0.6             -   
Share-based payment expense                          2          17.2          10.0   
Finance income                                                (38.8)        (40.0)   
Finance expenses                                                58.4          52.2   
Other non-cash items                                             1.3         (1.0)   
Working capital changes                                         14.6       (117.8)   
Change in trade and other receivables                           22.2        (57.6)   
Change in other non-current asset                             (27.4)             -   
Change in inventories                                         (28.2)        (14,8)   
Change in trade and other payables                              48.0        (45.4)   
Cash generated by operations                                   222.9          21.5   

The accompanying notes are an integral part of the condensed consolidated
financial statements.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. BASIS OF PREPARATION

The condensed consolidated financial statements are prepared in accordance
with the requirements of the JSE Limited Listings Requirements ("Listings
Requirements") for provisional reports and the requirements of the
Companies Act of South Africa. The Listings Requirements require provisional
reports to be prepared in accordance with the framework concepts and
the measurement and recognition requirements of International Financial
Reporting Standards (IFRS) and the SAICA Financial Reporting Guides as
issued by the Accounting Practices Committee and Financial Reporting
Pronouncements as issued by the Financial Reporting Standards Council and
to also, at a minimum, contain the information required by IAS 34 Interim
Financial Reporting. The accounting policies applied in the preparation of the
condensed consolidated financial statements are in terms of IFRS and are
consistent with those applied in the previous annual consolidated financial statements.

2. RESULTS FROM OPERATING ACTIVITIES

Results from operating activities includes the following:

                                                          Year ended    Year ended   
                                                         30 Jun 2018   30 Jun 2017   
                                                            Reviewed       Audited   
                                                                  Rm            Rm   
A. INCREASE IN LONG TERM INCENTIVE                                                 
   SCHEME ("LTI") LIABILITY                                                             
The liability for employee benefits consists mainly             17.2          10.0   
of the LTI liability. The increase in the share based                                
payment expense for the current reporting year is                                    
mainly due to the continued amortisation of the LTI                                  
liability over the vesting period. The decrease in the                               
seven day volume weighted average price (VWAP)                                       
of DRDGOLD during the current financial year from                                    
R3.82 at 30 June 2017 to R3.71 at reporting date                                     
did not have a significant impact on the LTI liability                               
or expense. 

B. TRANSACTION COSTS                                                                
Costs incurred related to the acquisition of the                                     
West Rand Tailings Retreatment Project Assets.                   9.0             -   

C. DEFERRED TAX RATE ADJUSTMENT                                                     
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. The formula for                                      
determining the South African gold mining tax rate                                   
for the years ended 30 June 2018 and 30 June 2017                                    
is: Y = 34 - 170/X where Y is the percentage rate of                                 
tax payable and X is the ratio of taxable income, net                                
of any qualifying capital expenditure that bears to                                  
mining income derived, expressed as a percentage.                                    
For deferred tax purposes the Group applies a                                        
forecast weighted average tax rate considering                                       
the expected timing of the reversal of temporary                                     
differences.                                                                         
Due to the forecast weighted average tax rate                                        
being based on the expected future profitability,                                    
the tax rate can vary significantly year on year                                     
and can move contrary to current year financial                                      
performance.                                                                         
The forecast weighted average deferred tax rate                                      
increased from 18.6% to 20.3% as a result of a                                       
increase in forecast profitability of Ergo.                                          
Tax charge/(benefit) due to the change in the                                        
forecast weighted tax rate:                                     12.8        (37.5)   

3. EARNINGS PER SHARE                                                                
Reconciliation of headline earnings                                                  
Profit for the year                                              6.5          13.7   
Adjusted for:                                                                        
Loss/(profit) on disposal of property, plant                                         
and equipment, net of tax                                        0.5        (12.9)   
Headline earnings                                                7.0           0.8   
Weighted average number of ordinary shares in                                        
issue adjusted for treasury shares                       422 068 696   422 068 696   
Diluted weighted average number of ordinary                                          
shares adjusted for treasury shares                      422 068 696   422 068 696   
Earnings per share(1)                                            1.5           3.2   
Diluted earnings per share(1)                                    1.5           3.2   
Headline earnings per share(1)                                   1.7           0.2   
Diluted headline earnings per share(1)                           1.7           0.2   

(1) All per share financial information is presented in South African cents per share (cps) and
    is rounded to the nearest one decimal point based on the results as presented which is
    rounded to the nearest million Rand

4. CASH AND CASH EQUIVALENTS

                                                          Year ended    Year ended   
                                                         30 Jun 2018   30 Jun 2017   
                                                            Reviewed       Audited   
                                                                  Rm            Rm   
Included in cash and cash equivalents is restricted                                  
cash of:                                                                             
Cash held in escrow (including interest) relating                                    
to the electricity dispute with Ekurhuleni                                           
Metropolitan Municipality (refer note 5 and 7)                 114.2          92.7   
Guarantees                                                      17.2          16.1   

5. OTHER NON-CURRENT ASSET 

The payments made under protest to the Municipality (refer note 7) of
R22.5 million (excluding VAT), as well as the subsequent payments made
to the Municipality comprising the difference between the J-tariff in
addition to the Eskom tariff in the amount of R4.9 million is recognised as
a non-current asset.

This asset was recognised initially at fair value of R18.6 million, resulting
in a difference at initial recognition of R8.8 million, accounted for in
finance costs.

The fair value was determined using the income approach present value
technique. The calculation was based on the following assumptions:

- discount rate: 11.68% representing the Municipality maximum cost
  of borrowing on bank loans as disclosed in the 30 June 2017 annual
  report; and

- discount period: 3 years representing management's best estimate of
  the date of conclusion of the Main Application.

During the year, finance income of R0.7 million was recognised to
account for the effect of unwinding.

6. CONTINGENT LIABILITY: SILICOSIS

The DRDGOLD Respondents (together with each of the Working Group
companies) served a notice of appeal to petition the Supreme Court
of Appeal ("SCA") against the certification of the Silicosis class and
Tuberculosis class and the transmissibility of damage, ordered by the
High Court of South Africa in May 2016. The appeal to the SCA was
set down for hearing from 19 to 23 March 2018, but was subsequently
postponed indefinitely in January 2018, by agreement between the
former mineworkers and dependents of the deceased mineworkers
("Applicants") and the Respondent companies. The SCA endorsed and
upheld the postponement.

The remaining members of the Working Group have all raised accounting
provisions due to progress made by the Working Group towards
settlement of the claims. In May 2018, the Working Group announced
that a settlement agreement had been reached, subject to certain
suspensive conditions, including the approval by the South African High
Court after which an effective date of the agreement will be set.

DRDGOLD withdrew from the Working Group in January 2016 and
maintains the view that it is too early to consider settlement of the
matter, mainly for the following reasons:
  
- the Applicants have as yet not issued and served a summons (claim) in
  the matter;
  
- there is no indication of the number of potential claimants that may
  join the class action against the DRDGOLD respondents;

- many principles upon which legal responsibility is founded, are
  required to be substantially developed by the trial court (and possibly
  subsequent courts of appeal) to establish liability on the bases alleged
  by the applicants.

In light of the above there is inadequate information to determine if
a sufficient legal and factual basis exists to establish liability, and to
quantify such potential liability.

7. CONTINGENT LIABILITY AND CONTINGENT ASSET:
   EKURHULENI METROPOLITAN MUNICIPALITY ELECTRICITY DISPUTE

In December 2014, Ergo Mining (Proprietary) Limited ("Ergo") instituted
legal proceedings by way of an application ("Main Application") against
the Ekurhuleni Metropolitan Municipality ("Municipality") and Eskom for
an order declaring that Ergo is not supplied electricity by the Municipality
and that the Municipality is not authorised to levy a surcharge of 40%
("the D-tariff") to the rate which Eskom ordinarily charges Ergo on its
Mega flex rate ("Eskom tariff"). Ergo also instituted a counterclaim against
the Municipality for the recovery of the surcharges which were erroneously
paid to the Municipality in the bona fide belief that they were due and
payable prior to the Main Application of approximately R43 million (these
surcharges were expensed).

Consequently, and pending a final determination of the Main Application
by the High Court, Ergo stopped paying the surcharges to the Municipality,
paying and expensing only the Eskom tariff and depositing the difference
comprising the D-tariff into its attorneys' trust account as security
in favour of the Municipality in the event that the court rules against
Ergo. These surcharges were not expensed but recognised under cash
and cash equivalents as restricted cash (refer note 4). The Municipality
threatened to (effectively instruct Eskom as they cannot do so on their
own) discontinue power supply, as a result of which Ergo brought an
application for an interim interdict to prohibit the Municipality and/or
Eskom from interfering with or causing the power supply to Ergo to be
interrupted before the Main Application is adjudicated. In May 2016, the
Gauteng Local Division, Johannesburg found in favour of Ergo. On appeal
by the Municipality, the Supreme Court of Appeal overturned the interdict
in August 2017, following which Ergo petitioned the Constitutional Court
for relief in December 2017.

In January 2018, the Constitutional Court rejected (and refused to hear)
Ergo's petition for a further appeal.

On the date of the Constitutional Court ruling, the money held in Ergo's
attorneys' trust account amounted to approximately R126 million.
In February 2018, Ergo paid R25.2 million (including VAT) from the trust
account to the Municipality, under protest and without prejudice and/
or admission of liability (refer note 5). This amount was the difference
between the surcharge of 11% ("the J-tariff") over the Eskom tarrif which
was recently introduced by the Municipality "for bulk supplies at medium
and high voltage situated in a position designated by the Municipality as
close-coupled to the Eskom grid". The J-tariff, which Ergo still deems to
be irregular and disproportionate in accordance with the provisions of
the Local Government: Municipal Systems Act, 32 of 2002 ("Systems
Act"), was significantly lower than the previously imposed "D-Tariff".
The balance, following the payment of the R25.2 million, remains in
the trust account of Ergo's attorneys of record. Subsequently, Ergo pays
monthly to the Municipality, the amount calculated at J-tariff in respect
of its electricity consumption, under protest and without prejudice and/or
admission of liability (refer note 5).

Ergo's legal team is confident about the prospects of success in the
Main Application as it will demonstrate that the Municipality does not
supply electricity to Ergo or in any manner add value to Eskom's supply of
electricity to Ergo. Ergo is furthermore, in terms of the Main Application, in
addition to its contention that the Municipality does not supply electricity
to it and not licensed to supply it, challenging the imposition of the J-tariff
and D-tariff on the grounds that they are, inter alia, ultra vires and beyond
the scope of the Municipality's Electricity By-Laws, the Systems Acts as
well the Credit Control and Debt Collection By-Laws.

The Main Application has been set down for hearing on 5 December 2018.
Based on the probability of outflows, no liability for surcharges claimed
has been recognised.

8. FINANCIAL RISK MANAGEMENT FRAMEWORK

Commodity price sensitivity 

The Group's profitability and cash flows are primarily affected by
changes in the market price of gold which is sold in US Dollar and then
converted to Rand.

Gold is sold at spot prices. Forward sales of gold production, as well
as derivatives or other hedging arrangements to establish a price in
advance for the sale of future gold production are not entered into at
30 June 2018.

9. FAIR VALUES

The Group's assets that are measured at fair value at reporting date consist
of available for sale financial instruments and are included in Investments
in other entities on the statement of financial position. Of this line item,
R9.2 million (30 June 2017: R8.6 million) relate to fair value hierarchy
Level 1 instruments and R0.2 million (30 June 2017: R0.2 million) relate to
fair value hierarchy Level 3 instruments.

10. SUBSEQUENT EVENTS

On 31 July 2018, the acquisition of the West Rand Tailings Retreatment
Project Assets became unconditional. 265 million shares were issued
to Sibanye-Stillwater as settlement of the purchase consideration.
A Revolving Credit Facility amounting to R300 million was subsequently
secured with ABSA Bank Limited (acting through its Corporate and
Investment Banking division), replacing the overdraft facility amounting
to R100 million that was in place previously.

The Board has approved Rand gold price protection to manage the
short-term liquidity risk that will arise from the anticipated increase in
borrowings to fund the development of Phase 1 of FWGR.

11. REVIEW REPORT OF THE INDEPENDENT AUDITOR

These condensed consolidated financial statements for the year ended
30 June 2018 have been reviewed by KPMG Inc, who expressed an
unmodified review conclusion. The auditor's review report does not
necessarily report on all of the information contained in these condensed
consolidated provisional results. Shareholders are therefore advised that
in order to obtain a full understanding of the nature of the auditor's
review engagement they should obtain a copy of the auditor's review
report together with the accompanying financial information from the
issuer's registered office.

12. OPERATING SEGMENTS

The following summary describes the operations in the Group's
reportable operating segment:

- Ergo is a surface retreatment operation and treats old slime and sand
  dumps to the south of Johannesburg's central business district as well
  as the East and Central Rand goldfields. The operation comprises three
  plants. The Ergo and Knights plants continue to operate as metallurgical
  plants. The City Deep plant continues to operate as a pump/milling
  station feeding the metallurgical plants. The Crown plant operated as a
  pump/milling station feeding the metallurgical plants until March 2017
  when it ceased all operations.

Corporate office and other reconciling items are taken into consideration
in the strategic decision-making process of the chief operating decision
maker and are therefore included in the disclosure here, even though
they do not earn revenue. They do not represent a separate segment.

                                                                       Year ended 30 Jun 2018                         Year ended 30 Jun 2017
                                                                               Reviewed                                     Audited            
                                                                                 Corporate                                  Corporate               
                                                                          office and other                           office and other               
                                                                               reconciling                                reconciling               
                                                                   Ergo              items       Total         Ergo             items       Total   
                                                                     Rm                 Rm          Rm           Rm                Rm          Rm   
Revenue (external)                                              2 490.4                  -     2 490.4      2 339.9                 -     2 339.9   
Cash operating costs                                          (2 159.7)                  -   (2 159.7)    (2 087.9)                 -   (2 087.9)   
Movement in gold in process                                        24.5                  -        24.5          4.8                 -         4.8   
Operating profit                                                  355.2                  -       355.2        256.8                 -       256.8   
Retrenchment costs                                                    -                  -           -       (23.0)                 -      (23.0)   
Administration expenses and general costs                        (11.5)             (78.6)      (90.1)        (4.5)            (64.9)      (69.4)   
Interest income                                                     9.5               12.3        21.8          6.8              16.8        23.6   
Interest expense(1)                                               (3.1)              (1.0)       (4.1)        (3.3)             (2.4)       (5.7)   
Income tax(2)                                                     (2.9)              (3.6)       (6.5)        (1.9)                 -       (1.9)   
Working profit before capital expenditure                         347.2             (70.9)       276.3        230.9            (50.5)       180.4   
Additions to property, plant and equipment                      (125.2)              (0.9)     (126.1)      (116.2)             (0.1)     (116.3)   
Additions to listed investments                                       -                  -           -            -             (0.1)       (0.1)   
Working profit after capital expenditure and additions            222.0             (71.8)       150.2        114.7            (50.7)        64.0   

(1) Interest expense excludes the fair value adjustment on                                                                                   
    the initial recognition of the other non-current asset                                                      
(2) Income tax excludes deferred tax                                                                                                  

Reconciliation of profit for the period                                                                                                             
Working profit before capital expenditure                         347.2             (70.9)       276.3        230.9            (50.5)       180.4   
Depreciation                                                    (167.4)              (0.6)     (168.0)      (179.7)             (0.1)     (179.8)   
Movement in provision for environmental rehabilitation              2.5                0.4         2.9        (0.6)                 -       (0.6)   
(Loss)/profit on disposal of property, plant and equipment        (0.6)                  -       (0.6)          0.2              12.7        12.9   
Growth in environmental rehabilitation trust funds and                                                                                              
reimbursive right                                                  10.1                6.2        16.3         10.9               5.5        16.4   
Unwinding of provision for environmental rehabilitation          (44.3)              (1.3)      (45.6)       (45.3)             (1.2)      (46.5)   
Fair value adjustment on the initial recognition of non-                                                                                            
current receivable including subsequent unwinding                 (8.1)                  -       (8.1)            -                 -           -   
Ongoing rehabilitation expenditure                               (26.7)                  -      (26.7)       (22.4)                 -      (22.4)   
Other operating (costs)/income including care                                                                                                       
and maintenance costs                                            (36.2)               15.6      (20.6)       (30.3)              31.3         1.0   
Deferred tax                                                     (23.2)                3.8      (19.4)         54.2             (1.9)        52.3   
Profit/(loss) for the year                                         53.3             (46.8)         6.5         17.9             (4.2)        13.7   


                                                                                                  Year ended 30 Jun 2018   Year ended 30 Jun 2017   
                                                                                                              Unreviewed                Unaudited   
OPERATIONAL PERFORMANCE                                                                                                                             
Ore milled                                                                                                                                          
Metric (000't)                                                                                                    24 281                   24 958   
Yield                                                                                                                                               
Metric (g/t)                                                                                                       0.193                    0.171   
Cash operating costs                                                                                                                                
(R/t)                                                                                                                 88                       84   
(US$/t)                                                                                                                6                        6   
Reconciliation of All-in sustaining costs                                                                                                           
(All amounts presented in R million unless otherwise indicated)                                                                                     
Cash operating costs                                                                                           (2 159.7)                (2 087.9)   
Movement in gold in process                                                                                         24.5                      4.8   
Administration expenses and other costs (sustaining)                                                              (81.1)                   (69.4)   
Other operating costs excluding care and                                                                                                            
maintenance costs                                                                                                 (12.5)                      8.1   
Movement in provision for environmental rehabilitation                                                               2.9                    (0.6)   
Unwinding of provision for environmental rehabilitation                                                           (45.6)                   (46.5)   
Capital expenditure (sustaining)                                                                                  (81.3)                   (72.9)   
All-in sustaining costs                                                                                        (2 352.8)                (2 264.4)   
Care and maintenance costs                                                                                         (8.1)                    (7.1)   
Retrenchment costs                                                                                                     -                   (23.0)   
Ongoing rehabilitation expenditure                                                                                (26.7)                   (22.4)   
Administration expenses and other costs                                                                                                             
(non-sustaining)                                                                                                   (9.0)                        -   
Capital expenditure (non-sustaining)                                                                              (44.7)                   (43.4)   
Capital recoupment                                                                                                     -                      5.0   
All-in costs                                                                                                   (2 441.3)                (2 355.3)   
Cash operating costs                   R per kg                                                                  458 866                  489 549   
Cash operating costs                   US$ per oz                                                                  1 118                    1 122   
All-in sustaining costs                R per kg                                                                  505 622                  530 930   
All-in sustaining costs                US$ per oz                                                                  1 258                    1 216   
All-in cost*                           R per kg                                                                  524 651                  552 243   
All-in cost*                           US$ per oz                                                                  1 298                    1 264   

* All-in cost definitions based on the guidance note on non-GAAP Metrics issued by the World Gold Council on 27 June 2013

MINERAL RESOURCES AND MINERAL RESERVES

DRDGOLD's Mineral Resources from surface decreased by 38% from 11.8Moz (1 565.0Mt @ 0.23g/t Au) in FY2017 to 7.3Moz (873.1Mt @ 0.26g/t
Au) in FY2018 mainly due to the exclusion of the Brakpan/Withok tailings deposition facility from Inferred Mineral Resources. The Brakpan/Withok
tailings deposition facility is the current deposition site for retreated tailings and will remain so for the life of the Ergo operation. A decision was
taken to exclude the Brakpan/Withok tailings deposition facility from the active drilling programme as reprocessing of this material is unlikely in the
foreseeable future.

Mineral Reserves increased by 10% from 3.0Moz (299.2Mt @ 0.31g/t Au) in FY2017 to 3.3Moz (332.2Mt @ 0.31g/t Au) in FY2018 due to additional
drilling performed on the Rooikraal tailings deposition facility.

The technical information referred to in this report has been reviewed by Messrs Mpfariseni Mudau (SACNASP) and Gary Viljoen (SACG), both are
independent contractors of DRDGOLD. They approved this information in writing before the publication of the report.

DIRECTORS (*British)(**American)

Executives:
DJ Pretorius (Chief Executive Officer)
AJ Davel (Chief Financial Officer)

Independent Non-executives:
GC Campbell*
(Non-executive Chairman)
EA Jeneker
J Turk **
JA Holtzhausen
TVBN Mnyango

Company Secretary:
R Masemene

Sponsor:
One Capital

FOR FURTHER INFORMATION
CONTACT NIËL PRETORIUS:

Tel: (+27) (0) 11 470 2600
Fax: (+27) (0) 11 470 2618
Website: www.drdgold.com

1 Sixty Jan Smuts Building
2nd Floor - North Tower
160 Jan Smuts Avenue
Rosebank, 2196
South Africa
PO Box 390, Maraisburg, 1700,
South Africa

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