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environmental rehabilitation on Crown’s decommissioned Diepkloof tailings dam with the 3A2 sand reclamation site in the background
DRDGOLD Sustainable Development Report 2012 4
• DRDGOLDisamid-tier,unhedgedgoldproducer.
• Weareoneoftheworld’slargestgoldproducersfrom surface retreatment.
• DRDGOLDhasacurrentsurfacegoldresourceof 11 million ounces – sufficient to sustain operations for many years to come.
DRDGOLD Sustainable Development Report 2012 5
DRDGOLD is headquartered in Johannesburg and has its primary
listing on the JSE in South Africa. In FY2012, the company transferred
its secondary listing from NASDAQ to the New York Stock Exchange.
The company’s shares are also traded on the Marché Libre in Paris,
the Regulated Unofficial Market of the Frankfurt Stock Exchange,
the Berlin and Stuttgart over-the-counter markets, as well as
Euronext Brussels in the form of International Depository Receipts.
At the end of June 2012, the company had 385 383 767 shares in
issue and a market capitalisation of R2.1 billion (US$252.4 million).
The majority of DRDGOLD’s shareholders (54%) reside in the US,
South Africa (32%), UK and Europe (14%).
Our strategyDRDGOLD’s strategy is to enhance shareholder value by reducing
risk, controlling costs, managing margins and taking a disciplined
approach to growth in the highly competitive mining environment.
Key and specific among the company’s objectives are to:
• consolidate itspositionasaworld leader intheproductionof
gold from the retreatment of surface sand and slimes material
through its Ergo operation;
• realise value for shareholders from its remainingunderground
gold resources associated with the ERPM Extensions 1 and 2
exploration areas in South Africa; and
• establish, fromongoingjointventure(JV)explorationactivity,
the viability of alluvial and near-surface gold mining in
Zimbabwe.
An immediate priority is to extract as much gold as possible from
Ergo’s current 11Moz surface resource at the lowest possible
cost through:
• optimisationof existinghumancapital, plants, pump stations,
pipelines, deposition capacity and other infrastructure –
together, an unassailable advantage; and
• fast-track development, commissioning and build-up of
production from its new R250 million flotation/fine-grind circuit,
expected to increase gold recovery by between 16% to 20%.
Longer term, it is anticipated that the Ergo resource can also be
exploited for uranium, potentially through the addition of cost-
effective resin-in-pulp technology to the flotation/fine-grind circuit.
Our structureThe company holds a 74% interest in Ergo Mining Operations
Proprietary Limited (EMO). The balance is held by black economic
empowerment (BEE) partner Khumo Gold SPV Proprietary Limited
(Khumo Gold) (20%) and the DRDSA Empowerment Trust (6%),
ensuring that the company complies with the equity ownership
requirements of South African minerals legislation.
To improve synergies and save costs, the company created a
new strategic model and restructured its surface operations to
consolidate these operations into a single entity, Ergo Mining
Proprietary Limited (Ergo). Ergo and ERPM are wholly-owned by
EMO. The new structure came into full effect on 1 July 2012.
DRDGOLD is also a 50% partner in an early-stage gold exploration
project on Zimbabwe’s greenstone belt.
During FY2012, DRDGOLD disposed of its underground
operation, Blyvoor, to support its shift to becoming a surface
retreatment company.
Our value chainDRDGOLD is a very different kind of gold company. Sometimes
referred to as a gold “factory”, DRDGOLD is involved in the
retreatment of gold tailings or waste material above ground.
Our business
US 54%
South Africa 32%
Belgium 5%
Luxembourg 4%
United Kingdom 2%
Europe and other 3%
Geographical distribution of shareholders as at 30 June 2012
At the end of FY2012, the company employed 2 222 people (792 permanent employees and 1 430 contractors) and produced 232 353 ounces of gold generating R3 billion in revenue. Some R333.2 million was spent on capital projects.
DRDGOLD Sustainable Development Report 2012 6
Around Johannesburg, on the surface of the central, eastern and
western basins of the Witwatersrand, South Africa’s 140-year
mining history is still clearly evident. Mine dumps comprising the
waste material from earlier gold mining activities lie in an arc
around the city. These dumps – vast quantities of sand and slime
which also contain minute particles of gold – litter the landscape;
all created by mining companies that have, in most instances, long
since closed down.
These vast deposits not only occupy potentially valuable real estate
but they can also create nuisance dust for surrounding communities.
By processing these dumps and depositing the waste according to
an approved environmental management programme, DRDGOLD is
able to release the cleared land for use, and at the same time “clean
up” a potentially harmful environmental legacy.
DRDGOLD is in the unique position of owning the plant, pipeline
and deposition infrastructure, as well as the rights to mine many
of the dumps or reclamation sites surrounding Johannesburg. The
business achieves three important objectives for shareholders
and stakeholders:
• producingouncesandbringingpreviouslyunaccountedforgold
to account;
• removing old waste dumps and, in so doing, sources of dust
and, in some instances, contamination. The new waste material
created is deposited according to strict environmental, health
and safety guidelines; and
• returningprime land into theeconomyonce thedumpshave
been removed.
Results of the most recent research and development, conducted
in-house by DRDGOLD, promise to increase gold recovery yields
even further.
The retreated waste material yields gold bars of approximately
85% gold and 7% to 8% silver with the balance comprising
copper and other common elements. These bars are delivered to
Rand Refinery Proprietary Limited (Rand Refinery) where the silver
and other elements are removed and the gold is refined into troy
ounce bars (purified to 99.9%), meeting the standards of the
London Bullion Market Association (LBMA). On the same day as the
delivery takes place, Rand Refinery sells the gold. It does this on
behalf of DRDGOLD at the afternoon US$ price fixed by the London
Metal Exchange (LME). DRDGOLD has an interest in and plays an
active role in Rand Refinery, one of the world’s foremost refiners
and home of the Kruger Rand.
Engaging with our stakeholdersDRDGOLD understands that it has a responsibility to be a sustainable
business and must ensure that it reports relevant information
to stakeholders in a timely and transparent manner. As a group
DRDGOLD communicates extensively with all stakeholders –
internally and externally. These stakeholders include shareholders
and their investment advisers, employees, unions, communities,
government, regulators and non-governmental organisations.
Stakeholder engagement is addressed in more detail throughout
this report, particularly in the Engaging with our stakeholders
section on page 11 of this report.
Chizim Gold
EMO
DRDGOLD50% 74%
100% 100%
20%
6%
Ergo ERPM
Khumo Gold
DRDSA Empowerment Trust
Group structure
DRDGOLD Sustainable Development Report 2012 7
Our product
Remarkable and enduring goldGold is a remarkable precious metal with many uses. It is highly conductive, does not tarnish, is easy to work, can be drawn into wire and hammered into thin sheets, combined into alloys with many other metals, melted and cast into complicated shapes and has an alluring colour and lustre.
Throughout history, gold has been held in high esteem and seen as a symbol of enduring value. From the ancient pharaohs to Spanish explorers of the New World to modern European monarchies, gold has been used to symbolise power, beauty, purity and accomplishment. Today, we still turn to gold to make our wedding rings, Olympic medals, Oscars, money, religious icons and other
symbols of major importance.
South Africa and gold
South Africa has dominated the world’s gold mining industry for over a century. Since records of production were first collected in 1884, the South African gold mining sector has produced almost 52 000 tonnes of gold.
An estimated 40 000 tonnes of gold is still believed to be contained
below ground in the world renowned Witwatersrand basin – 8 000
to 10 000 tonnes of which are considered economically recoverable.
Two decades ago, South Africa was the leading global gold producer.
Today the country produces approximately a quarter of what it
did at its peak, having fallen behind China, Australia and the US.
South Africa and Russia are in close competition for fourth place.
Production has been cut back in recent years as mining depth has
increased and grades have declined, and as material input costs,
such as labour, steel and energy have increased significantly.
While South Africa’s gold production has steadily declined in recent
years, it remains one of the world’s most important producers and
repositories of gold.
Gold and its usesJewellery: The properties of gold make it perfect for manufacturing
jewellery; alloyed with other metals such as copper, silver and
platinum to increase durability. Some 70% of annual demand for
DRDGOLD is engaged in an expansive gold production process: exploration, surface retreatment, refining and rehabilitation. The company takes its responsibility towards its product very seriously in each area of the production process.
Gold recovered at ergo is purified at Rand Refinery. Photograph: Rand Refinery
DRDGOLD Sustainable Development Report 2012 8
gold is from the jewellery industry; making it far and away the
largest end-user of the precious metal.
investment and coins: Some 13% of the annual demand for gold
comprises investment in the form of bars and coins. Governments,
individuals and institutions hold gold investments in the convenient
form of bullion. Gold coins issued in specific weights are popular
among people who want to own small volumes of gold for investment.
The South African Mint Company Proprietary Limited also issues gold
coins as commemorative items and these coins have a collectable
and precious metal value.
electronics: The industrial sector accounts for some 11% of
annual demand for gold. The most important industrial use is the
manufacture of electronics. Electronic devices use very low voltages
and currents which are easily interrupted by corrosion or tarnish
at contact points. Gold is a highly efficient conductor that can
carry these tiny currents and remain corrosion free. A small amount
of gold is used in almost every sophisticated electronic device,
including cell phones, calculators and global positioning systems.
It is also used in television sets and computers.
Dentistry and medicine: Gold is used in dentistry because of its
superior performance and aesthetic appeal. It is also chemically
inert, non-allergenic and easy to work with.
Gold is used to treat a small number of medical conditions including
rheumatoid arthritis and certain cancers. Radioactive gold is used in
the diagnosis of cancer; injected in a colloidal solution that can be
tracked as a beta emitter as it passes through the body.
Aerospace: Gold is used extensively in every spacecraft launched
by the National Aeronautics and Space Administration in the US.
It is used in circuitry and parts of the spacecraft are fitted with gold-
coated polyester film which reflects infrared radiation and hence
stabilises the spacecraft’s temperature.
Responsible goldGold is a benign metal and there are few, if any, health and safety
impacts associated with the final product. Gold is seldom wasted
because it is precious and basically indestructible and lends
itself to recycling.
DRDGOLD does not produce the final product of a gold bar
of 99.9% purity. DRDGOLD produces doré bars which are
approximately 85% pure. These doré bars are then further refined at
Rand Refinery to achieve the 99.99% purity required by the LBMA.
Most of the fine gold produced by Rand Refinery goes into gold bars
– either 400 ounce good delivery bars, kilo bars or smaller. The gold
is then marketed and sold by Rand Refinery, on behalf of DRDGOLD,
to customers around the world.
DRDGOLD is therefore not involved with the end-users of its
product, and does not undertake any customer satisfaction surveys
or provide product information or labelling.
DRDGOLD Sustainable Development Report 2012 9
Dear stakeholder
In this, our fourth Sustainable Development Report, we present
a company that has changed tremendously during the past year.
Our strategy to transform DRDGOLD into a lower-risk, less labour-
intensive surface operation has largely been achieved with the sale
of Blyvoor during the year.
The sustainability of the business continues to be driven by factors
both beyond and within our control. From an external perspective,
we have little or no influence on the gold price, the exchange rate or
the value shareholders attach to our stock in these straitened times.
By ensuring that we steadily optimise our production, manage our
costs and limit our liabilities, we will continue to mitigate these
external risks.
The primary internal areas of concern for the business continue
to be:
• Ensuringthehealthandsafetyofouremployees.Ourexemplary
safety performance was marred by the death of Emanuel Zama
Rikhotoso on 12 April 2012. Our board and management extend
sincere sympathies to his family and colleagues. See page 24.
• Turning to account our significant, yet low grade resources
profitably and responsibly remains our key challenge. See our
Integrated Report, and page 36 and 37 for further details.
• Maintaining our licence to operate and, in particular,
meeting our obligations and commitments in respect of the
Mining Charter.
• Attractingandsecuringtheskillsweneed.Ourflagshipproject,
the Ergo Business Development Academy (EBDA) – which we
established in FY2009 to help address the critical shortage
of skills in the country across all sectors of the economy
and to create jobs – has continued to deliver an outstanding
performance.
• Acid mine drainage (AMD) from the western basin of the
Witwatersrand goldfields is a risk facing a number of mining
companies, including DRDGOLD. Since 2005, we have been
involved in industry-wide initiatives to find a solution to the
problem as outlined on page 41.
• Dust isoneofDRDGOLD’sgreatestenvironmentalchallenges
because many of our current and future resources are located
in urban areas and have an impact on our neighbours. The issue
is managed through continuous remediation measures and dust
monitoring. There are times – and will be in the future – when
our operations can and will affect our neighbours; the most
significant being the generation of nuisance dust from operating
and fallow dumps, particularly during windy periods. It is our
intention to:
• mitigate dust and other impacts on surrounding communities
through proper planning;
• prevent dust generation through the application of best
practice – through rehabilitation or other measures;
• remediate any impact that we have on our surrounding
communities;
• engagewiththesecommunities,listentoandaddresstheir
concerns, and communicate with them in a manner that is
open and transparent; and
• ensure that – through our employment practices and
training and development, and through our local economic
development programmes – we have a positive impact on
our employees and communities.
DRDGOLD is a high-volume, low-margin operation. Its success
depends on the responsible management of our resources so we
must extract the greatest value from each and every one of our
assets, in a way that ensures our licence to operate is maintained.
DRDGOLD has resources that will enable the business to operate
for many years to come. We want to ensure that – on balance – we
leave behind a positive legacy.
We trust that this report will provide some insight into the way
we conduct our business and our relationships with society. It has
been produced in line with the guidelines of the Global Reporting
Initiative to which we subscribe. Please also read our second
Integrated Report which is available at www.drdgold.com and
provides an holistic picture of our business.
niël Pretorius
Chief executive officer
17 September 2012
Niël Pretorius
Letter from our CEO
DRDGOLD Sustainable Development Report 2012 10
Engaging with our stakeholders
The company timeously reports information that is relevant
and meaningful. DRDGOLD has a sustained programme of
communication with stakeholders including shareholders and
their advisors, employees, unions, communities, government
and regulators.
Stakeholders are identified as individuals, groups and entities directly
affected, positively and negatively, by the activities of the company.
DRDGOLD believes that its ability to conduct its day-to-day business
is influenced by its capacity to develop and maintain long-standing
relationships with its stakeholders.
Stakeholder concerns are raised in various ways, including formal
concerns or queries lodged in writing with the company and concerns
raised during stakeholder forums or informal discussion. DRDGOLD
responds to these concerns appropriately and timeously.
DRDGOLD’s operations are located in close proximity to local
communities, and the economic, environmental and social impacts
of these operations can have a significant impact on the communities
concerned. The company therefore engages on an on-going basis
with these communities through local councillors and community
leadership structures. DRDGOLD engages on a formal and regular
basis with local authorities, including the Ekurhuleni Metropolitan
Municipality and the Johannesburg Metropolitan Municipality.
The company regularly consults with regulatory authorities, including the Department of Mineral Resources (DMR), the Department of Water Affairs (DWA), the Department of Environmental Affairs (DEA), the Department of Agriculture and Rural Development and the National Nuclear Regulator (NNR).
DRDGOLD participates in a number of public groups, including the Ekurhuleni Business Forum, Blesbok Spruit Forum, Klip River Forum, Rand Water Catchment Quality Forum, Heriotdale Business Forum and the Wonderfontein Spruit Forum.
A major priority for DRDGOLD is controlling dust emissions from tailings storage facilities. This is particularly problematic when wind speeds increase, especially during the dry, winter season. Quarterly dust meetings are held with the relevant authorities, including local municipalities, ward councillors, business forums and interested and affected parties (I&APs) to discuss dust fall out figures, new legislation and mitigation measures.
Before any project that might affect stakeholders commences, DRDGOLD engages in public participation processes with I&APs.
DRDGOLD identifies and engages with external and internal stakeholders at a number of different levels. Extensive and ongoing engagement, formal and informal, is undertaken by various disciplines
and in various ways.
The table below illustrates some of these interactions.
Discipline Comment Reference
Shareholders DRDGOLD knows that the key priority of any shareholder is to maximise investment returns in a sustainable manner. The company works diligently to provide information on operating, financial and other performance in a timely and equitable manner. This is done by making the relevant announcements on the JSE’s Stock Exchange News Service (SENS) and the NYSE, accompanied by almost simultaneous website postings, web alerts to a database of registered users and the distribution of an explanatory press release to a second database of analysts, investors and media.
See the financial capital section of this report on page 18.
DRDGOLD ensures that the principles of openness, integrity and accountability are adopted at every level of engagement with identified stakeholders.
DRDGOLD Sustainable Development Report 2012 11
Dust suppression sprays on the 3A2 reclamation site
Discipline Comment Reference
employees Relations with employees and organised labour at DRDGOLD are governed by recognition agreements and conditions of employment by legislation. The company supports the rights of all employees to freedom of association and acts in accordance with the South African Constitution, prescribed legislation, industry compacts and recognition agreements with unions. The company encourages open communication and consultation. Conflict is dealt with as necessary in workplace forums. DRDGOLD is aware that a successful business is a sustainable business, and works conscientiously to empower its employees, and to implement programmes and job opportunities that benefit the communities in which it operates. Employees and employee representatives are briefed through formal and informal structures as needed, including a quarterly printed newsletter. Entitled Asikhulume which means “let’s talk”, this publication is distributed to all operations staffed by DRDGOLD employees. Copies are available at designated pick-up points and each edition is preceded by “teaser” posters – along the lines of a newspaper placard. Selected articles in each issue are translated into isiXhosa, SeSotho and isiZulu, and the English articles are easy to understand. The disposal of Blyvoor during FY2012 has resulted in changes to the size and profile of the DRDGOLD workforce. The company will review the Asikhulume format in FY2013 in order to ensure that the publication remains relevant.
For more information on how the company manages and engages with employees, see the human capital and manufactured capital sections of this report on pages 22 and 43 respectively.
Communities DRDGOLD is committed to making a difference to the communities which surround its operations. Social and Labour Plans (SLPs) and Local Economic Development (LED) programmes are in place, and have been developed in compliance with the requirements of South African mining legislation. The company ensures that the projects and commitments it undertakes are in line with the local municipalities’ Integrated Development Plans. DRDGOLD engages on a formal and regular basis with local authorities, including the Ekurhuleni Metropolitan Municipality and the Johannesburg Metropolitan Municipality. Operational management has regular, formal and informal interaction with surrounding communities as well as formal consultations with I&APs.
See the social capital section on page 29 of this report.
In identifying its stakeholders, DRDGOLD developed a matrix
of groups/individuals who are directly and indirectly associated
with the company. Employees, shareholders, suppliers, unions and
neighbours are directly affected; indirectly affected stakeholders
include community members.
The main stakeholders identified by DRDGOLD, their key concerns
and the process DRDGOLD follows when engaging with them, are
listed on page 13.
Commitment to external initiativesDRDGOLD is a member of the Chamber of Mines of South Africa.
The Chamber is a voluntary membership, private sector employer
organisation and is the principal advocate of major policy positions
endorsed by mining employers. It represents members in various
organs of South African national and provincial government, and
other relevant policy-making and opinion-forming entities, within
the country and abroad. The Chamber also works closely with various
employee organisations in formulating positions where appropriate.
Engaging with our stakeholders (continued)
DRDGOLD Sustainable Development Report 2012 12
Stakeholder group Key concerns engagement process
Shareholders and investors
Operating and financial performance, share price performance and dividends, and issues relating to the overall sustainability of the company, particularly risk mitigation, nationalisation and safety
Annual general meetings, roadshows, one-on-one investor meetings, preliminary and annual results presentations, investor site visits, company announcements, company website, annual reports and sustainable development reports
employees Job security, training and development, remuneration, health and safety, personal growth
Company policies, collective bargaining practices, team briefings, two-way manager-employee communication, Asikhulume and campaigns
Suppliers and contractors
Sustainability of company, company’s financial performance, employment practices, local procurement practices, business training and support, quality control, preferential procurement practices
Company practices and policies, preferential procurement programmes, open days and dialogue
Government and regulating authorities
Licence to operate, employment, education and training, LED programmes, environmental impact and rehabilitation
Formal processes, participation in industry associations, SLPs, dialogue, company reports, open days and site visits
Communities and nGOs LED, employment and local job creation, corporate social investment (CSI) practices, health issues particularly HIV/AIDS, environmental impact and rehabilitation, skills development programmes
Community forums, stakeholder forums, industry partnerships, community engagement programmes, wellness campaigns (particularly HIV/AIDS awareness), youth development programmes, dialogue, company announcements and advertising in local newspapers
Media Financial results, corporate activity, environmental issues, marketing, community-related topics
Company announcements, company website, online presentations, media site visits, company reports, interviews and articles in local publications
DRDGOLD Sustainable Development Report 2012 13
Dust netting and bio wind breaks on the Diepkloof tailings dam have proved successful in mitigating dust
Our governance
DRDGOLD has set up systems and controls to promote discipline,
transparency, accountability, responsibility and fairness for the
protection of the interests of shareholders, employees and the
communities in which the company operates.
DRDGOLD’s shares are quoted on the JSE, which is its primary listing.
DRDGOLD is also registered with the SEC in the US and its ordinary
shares are quoted on the NYSE in the form of an American Depositary
Receipt Programme, administered by the Bank of New York Mellon
Corporation. Accordingly, DRDGOLD is subject to compliance with
the Sarbanes-Oxley Act of 2002 (SOX), which is documented in the
company’s Form 20-F, filed annually with the SEC.
Role of the boardThe board is responsible for setting the direction of DRDGOLD
through the establishment of strategic objectives and key policies.
It monitors the implementation of strategies through a structured
approach to reporting and clear mandates to management for the
detailed planning and implementation of such objectives.
The board currently comprises two executive directors and four
non-executive directors. The board charter sets out the directors’
responsibilities and serves as a standing guideline for the benefit
of directors. The majority of DRDGOLD’s directors are independent
in accordance with the JSE Listing Requirements. The roles of the
chairman and CEO are separate.
A number of committees have been established to enable the board
to discharge its duties and responsibilities properly, and to carry out
its decision-making functions effectively. Each committee acts within
written terms of reference approved by the board. Each committee
has defined purposes, membership requirements, duties and reporting
procedures. The committees are subject to regular board evaluation
with respect to performance and effectiveness.
Our board ensures that the principles of good corporate governance are upheld and implemented.
Sustainability governanceThe Social and Ethics Committee of the board was established to:
• promote transformation within the company and economic
empowerment of previously disadvantaged communities,
particularly within the areas where the company conducts
business;
• strive towards removing barriers and achieving equal
opportunities in a manner consistent with the values which
underpin the South African Constitution at all levels in the
company and its subsidiaries; and
• conductbusiness inamannerconducivetotheattainmentof
internationally acceptable environmental and sustainability
standards.
DRDGOLD Sustainable Development Report 2012 14
The Social and Ethics Committee is chaired by an independent,
non-executive director and has quarterly meetings during the year.
Sustainability issues also fall within the ambit of the Audit, Risk,
Remuneration and Nominations committees. The Audit Committee
comprises of non-executive directors – all independent.
Risk managementResponsibility for the quality, integrity and reliability of the company’s
risk management rests with the Risk Committee which facilitates
communication between the board, the Audit Committee, internal
auditors and other parties engaged in risk-management activities.
Requirements of King III and the Integrated Framework from the
Committee of Sponsoring Organisations of the Treadway Commission
have been incorporated into the company’s processes so that they
also comply with SOX Section 404 which deals with a company’s
internal control systems. The Risk Committee meets every quarter
and reports back to the board.
Quarterly risk assessments are carried out where all the key risks are
analysed and new risks identified. Each risk is ranked and allocated
to an individual who is then responsible for the implementation of
actions to mitigate the risk. All risks are included in a centralised
database from which data is taken to draw up risk maps for each
operation or division. These are then presented to management and
the Risk Committee.
Risk assessment for the operations is based on three levels:
preventative risks, strategic risks and external risks.
Conflicts of interestThe company expects employees to perform their duties in
accordance with the best interests of the company and not to use
their position or knowledge gained through their employment with
the company for their private or personal advantage. Directors are
required to declare any conflict of interest which may have an impact
on their ability to perform their duties in a manner that complies
with good corporate governance practices.
Significant legal issues or finesDRDGOLD did not incur any material fines during the year under
review in respect of non-compliance with laws and regulations.
It did however, receive a directive from the DWA to rehabilitate a
contaminated water resource, and undertake monitoring as a follow
up measure.
Code of EthicsDRDGOLD is committed to the highest ethical standards. The
company’s Code of Ethics governs the relationship between the
company and its stakeholders. The code applies to directors, officers,
employees, contractors, communities and suppliers. The Code of
Ethics can be found on the website. www.drdgold.com
DRDGOLD Sustainable Development Report 2012 15