OPERATING AND FINANCIAL REVIEW AND PROSPECTS
This section 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 IFRS Accounting Standards as
issued by the 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.
Comparison of financial performance for the fiscal year ended June 30, 2025 with fiscal year ended June 30, 2024
This comparison analysis can be found in Item 5 of the Company's annual report on Form 20-F for the fiscal year ended June 30, 2025
filed with the United States Securities and Exchange Commission on October 30, 2025 (SEC File no. 0-28800).
5A. OPERATING RESULTS
Business overview
We are a South African gold mining company engaged in surface gold tailings retreatment, including exploration, extraction,
processing and smelting. All our surface tailings retreatment operations, including the requisite infrastructure and metallurgical
processing plants, are located in South Africa.
The success of DRDGOLD's long-term goal to extract as much gold from its assets as possible, depends to a large extent, on how
effectively it continues to manage its resources.
Recovery of gold from gold tailings deposits is done with precision, using technology and processes refined over more than two
decades of surface retreatment. Part of our strategy is that we perform concurrent rehabilitation so that there is only limited
rehabilitation required once a site has been depleted of gold-bearing material. Sites are mined until all mine waste is removed, and
process water returned by way of a closed circuit to the reclamation sites. Our processing facilities are primarily powered by electricity
supplied by Eskom, supplemented by energy generated from our solar plant and BESS.
As a tailings deposit is reclaimed and cleared, the land beneath it becomes available for rehabilitation. We re-contour, re-vegetate and
re-establish the ground. Over time, what was a tailings storage facility becomes rehabilitated land available for redevelopment.
Our profit for fiscal year 2026 increased compared to fiscal year 2025, mainly due to, inter alia, the following:
•the average Rand gold price received increased by 40%; and
•the increase in average yield by 2% to 0.193g/t.
Key drivers of our operating results and principal factors affecting our operating results
•the price of gold, which fluctuates both in terms of Dollars and Rands;
•our production tonnages and gold content thereof, impacting on the amount of gold we produce at our operations;
•our cost of producing gold, including the effects of mining efficiencies;
•general economic factors, such as exchange rate fluctuations and inflation, and factors affecting mining operations in South Africa;
•obtaining the relevant regulatory permits timeously to mine sites and build assets such as our TSFs; and
•government policies that could materially impact our operations.
Gold price
Our revenues are derived primarily from the sale of gold produced at our surface tailings retreatment operations. We generally take full
exposure to the US Dollar spot price of gold and Rand/Dollar exchange rate. The higher the gold price, the higher our profit margin
and vice versa, subject to exchange rate fluctuations. As a result, our operating results are directly impacted by the price of gold,
which can fluctuate widely and is affected by numerous factors beyond our control. The average gold price for fiscal year 2026
reached record highs due to policies instituted by the US government, including the imposition of significant tariffs on various
countries including South Africa changes in foreign policy and global economic uncertainty. Refer to "Item 4B. "Business Overview -
Gold Market" for a description of the factors influencing the gold price.
The following table indicates data relating to the Dollar gold spot prices for the 2026 and 2025 fiscal years:
2026 fiscal year |
2025 fiscal year |
Change | ||
$ per ounce |
$ per ounce |
% | ||
Closing gold spot price |
4,007 |
3,303 | ||
Lowest gold spot price during the fiscal year |
3,275 |
2,329 | ||
Highest gold spot price during the fiscal year |
5,399 |
3,432 | ||
Average gold spot price for the fiscal year |
4,238 |
2,818 |
All our operations and gold production are based in South Africa, and as a result, the impact of movements in relevant exchange rates
is significant to our operating results. The average gold price in Rand (based on average spot prices for the year) increased from
R51,147 per ounce in 2025, by 39% to R71,537 per ounce in 2026.
An increase/(decrease) of 20% in the US Dollar gold price throughout fiscal year 2026 would have increased/(decreased) revenue by
approximately R2,227.4 million (2025: R1,575.6 million).
An increase/(decrease) of 10% in the Rand to US Dollar exchange rate throughout fiscal year 2026 would have increased/
(decreased) revenue by approximately R1,113.7 million (2025: R787.8 million).
DRDGOLD Limited Form 20-F 2026 | ||
Gold production
In fiscal year 2026, gold production increased to 155,577 ounces (produced from 25.1 million tonnes milled at an average yield
0.193g/t) from 155,288 ounces in fiscal year 2025 (produced from 25.6 million tonnes milled at an average yield of 0.189g/t). This was
mainly due to Ergo's gold production which increased to 112,879 ounces in fiscal year 2026 (produced from 19.0 million tonnes milled
at an average yield of 0.185g/t) from 111,657 ounces in fiscal year 2025 (produced from 19.5 million tonnes milled at an average yield
of 0.178g/t). The increase in gold production, at Ergo, is mainly due to the increase in average yield despite a decrease in tonnage
throughput. The higher yield resulted from the processing of higher-grade material, as Ergo prioritized such material in response to
deposition constraints and delays in obtaining regulatory approvals for new reclamation sites. FWGR's production decreased to
42,695 ounces in fiscal year 2026 (produced from 6.10 million tonnes milled at an average yield of 0.218g/t) from 43,628 ounces in
fiscal year 2025 (produced from 6.13 million tonnes milled at an average yield of 0.222g/t), due to lower grade material being mined at
Driefontein 3 and depletion of higher grade material from Driefontein 5.
Cash operating costs
Cash operating costs is a non-IFRS financial measure of performance that is reported to the group's chief operating decision maker
("CODM") and is used to monitor performance - refer to "Item 18. Financial Statements - Note 23 - Operating segments". For a
reconciliation of this measure see "Item 5A. Reconciliation of cash operating costs, cash operating costs per kilogram, all-in sustaining
costs, all-in sustaining costs per kilogram, all-in costs and all-in costs per kilogram".
Cash operating costs include consumables, labor, specialized service providers, electricity and other related costs incurred in the
production of gold. Consumables, water and electricity, labor, specialized service providers and other costs are the largest
components of cash operating costs. A breakdown of cash operating costs into these costs is described in "Item 5A. Comparison of
financial performance for the fiscal year ended June 30, 2026 with fiscal year ended June 30, 2025".
General economic factors
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 are subject to the inherent risks and uncertainties of the industry.
Effect of exchange rate fluctuations
For the fiscal years 2026 and 2025, all of our revenues were generated from South African operations, all of our operating costs were
denominated in Rand and we derived all of our revenues in dollars before being translated to Rands. As the price of gold is
denominated in Dollars which is then translated into Rands, the appreciation of the Dollar against the Rand increases our profitability,
whereas the depreciation of the Dollar against the Rand reduces our profitability.
In fiscal year 2026 the average Rand gold price received increased by 40% compared to fiscal year 2025. This was a result of the
combined impact of the average Dollar gold price which increased by 50% and the average exchange rate of the Rand against the
Dollar that strengthened by 7%.
In line with our long-term strategy of being an unhedged gold producer, we generally do not enter into forward gold sales contracts to
reduce our exposure to market fluctuations in the Dollar gold price or the exchange rate movements. If revenue from gold sales falls
for a substantial period below our cost of production at our operations, we could determine that it is not economically feasible to
continue commercial production at any or all of our plants or to continue the development of some or all of our projects. However,
during periods when medium-term debt is incurred to fund growth projects and hence introduce liquidity risk to the Group, we may
mitigate this liquidity risk by entering into hedging instruments to achieve price protection. Refer to "Item 11. Quantitative and
Qualitative Disclosures About Market Risk - General".
Effect of inflation and exchange rates
In the past, our operations have been materially adversely affected by inflation. If there is a significant increase in inflation in South
Africa, our costs will increase and if such a cost increase is not offset by an increase in the Rand price of gold, this will negatively
affect our operating results.
The movements in the Rand/Dollar exchange rate, based upon average rates during the periods presented, and the local annual
inflation rate for the periods presented, as measured by the South African Consumer Price Index ("CPI"), are set out in the table
below:
2026 |
2025 | |||
Fiscal year |
(%) |
(%) | ||
The average rand/dollar exchange rate weakened/(strengthened) by: |
(7) |
(3) | ||
CPI (inflation rate) |
5.0 |
3.5 |
Obtaining the relevant regulatory permits timeously to mine sites and construct assets such as our TSFs
Before commissioning a reclamation site for re-mining, certain regulatory permits must be obtained. These typically include an
environmental authorization ("EA") which is issued by the DMPR and a water use license ("WUL") issued by the Department of Water
and Sanitation ("DWS"). Delays in obtaining these licenses may affect production. For example, in the current year, more material had
to be trucked at Ergo to replace material from reclamation sites where regulatory permits were delayed. Trucking of material is
significantly more expensive than the hydraulic mining of material.
Furthermore, tailings storage facilities are highly regulated in South Africa. Regulatory permits to construct a tailings storage facility
require an extensive process of engagement with various stakeholders, and relevant government departments. Typical permits
required are EAs, waste management license ("WML") and WULs. We are currently in the process of obtaining permits for the
construction of Withok TSF at Ergo and obtaining licenses to early deposit on RTSF whilst construction is in progress. If we experience
delays in obtaining these permits, production could be impacted.
DRDGOLD Limited Form 20-F 2026 | ||
Government policies that could materially impact operations
The South African mining industry is extensively regulated through legislation and regulations administered by various government
authorities. Regulatory uncertainty remains a concern for the industry and has been identified by the Fraser Institute as a factor
affecting South Africa's investment attractiveness. Although the industry's successful challenge, of Mining Charter III, in the High
Court, that set aside certain provisions of the charter on the basis that it was purported legislation (as opposed to policy) provided
greater clarity on aspects of the regulatory framework, delays in obtaining permits, licenses and regulatory approvals continue to
affect the timely execution of capital projects.
The draft MPRD Bill, gazetted for public comment on May 20, 2025, could materially affect DRDGOLD's operations by reclassifying
historic mine residue stockpiles as minerals and requiring mining rights for their reclamation, making B-BBEE and transformation
codes enforceable, and introducing ministerial powers over local beneficiation. The proposed changes could restrict access to these
resources and delay project approvals and commissioning. DRDGOLD and the Minerals Council South Africa have submitted
representations to the DMPR on these proposals.
In addition, increasing stakeholder expectations regarding ESG matters continue to raise the standards of transparency, sustainability
and corporate accountability expected of mining companies. Enhanced regulatory scrutiny and growing expectations from investors,
lenders, communities and other stakeholders may result in additional compliance requirements and increased operating costs. For a
more detailed discussion of government policies that may impact our operations, please refer to "Item 4B. Business Overview -
Governmental regulations and their effects on our business."
Key financial and operating indicators
The table below presents the key performance measurement data for the past two fiscal years. The financial results for the fiscal years
below are stated in accordance with IFRS Accounting Standards as issued by the IASB. The table includes the key performance
measures for our business and its profitability, which are revenue, gold production, gold prices, operating costs, cash operating costs
per kilogram, all-in sustaining costs per kilogram and all-in costs per kilogram, capital expenditure (additions to property, plant and
equipment).
Fiscal year |
2026 |
2025 | ||
Revenue (R'm) |
11,159.0 |
7,878.2 | ||
Gold production (ounces) |
155,577 |
155,288 | ||
Gold production (kilograms) |
4,839 |
4,830 | ||
Gold sold (ounces) |
156,413 |
154,902 | ||
Gold sold (kilograms) |
4,865 |
4,818 | ||
Average spot gold price (R/kilogram) |
2,299,929 |
1,644,366 | ||
Average gold price received (R/kilogram) |
2,289,250 |
1,632,275 | ||
Cost of sales (R'm) |
5,193.9 |
4,747.7 | ||
Operating costs (R'm) |
4,735.2 |
4,404.6 | ||
Cash operating costs (R'm) (1) |
4,712.4 |
4,372.7 | ||
Cash operating costs (R/kilogram) (1) |
967,523 |
903,824 | ||
All-in sustaining costs (R/kilogram) (1) |
1,078,068 |
1,001,214 | ||
All-in costs (R/kilogram) (1) |
1,795,930 |
1,399,869 | ||
Additions to property, plant and equipment (R'm) |
3,736.9 |
2,200.0 |
(1)Cash operating costs, cash operating costs per kilogram, all-in sustaining costs, all-in sustaining costs per kilogram and all-in costs and all-in costs
per kilogram are non-IFRS financial measures of performance that we use to monitor performance. A reconciliation of these measures to the
nearest IFRS Accounting Standards measure is included in "Item 5A. Operating Results - Reconciliation of cash operating costs, cash operating
costs per kilogram, all-in sustaining costs, all-in sustaining costs per kilogram, all-in costs and all-in costs per kilogram".
Revenue
Revenue increased by 42% to R11,159.0 million in fiscal year 2026 from R7,878.2 million in fiscal year 2025 mainly due to the average
Rand gold price received that increased by 40% to R2,289,250 per kilogram and a 47kg increase in gold sold from 4,818 kilograms in
fiscal 2025 to 4,865 kilograms in fiscal 2026.
Refer to "Item 5A. Operating results - Key drivers of our operating results and principal factors affecting our operating results" for a
discussion regarding the gold price received and sales volumes.
Additions to property, plant and equipment
During fiscal year 2026 capital expenditure increased by R1,536.9 million to R3,736.9 million from R2,200.0 million in fiscal year 2025.
Ergo's capital expenditure during fiscal year 2026 increased by R393.9 million to R999.6 million from R605.7 million in fiscal year 2025.
This was mainly due to expenditure relating to the Daggafontein TSF infrastructure and pipelines being incurred in the current year.
FWGR's capital expenditure during fiscal year 2026 increased by R1,142.7 million to R2,735.8 million from R1,593.1 million in fiscal
year 2025. This was mainly due to the construction of the RTSF (and its related infrastructure) and DP2 plant expansion.
DRDGOLD Limited Form 20-F 2026 | ||
Comparison of financial performance for the fiscal year ended June 30, 2026 with fiscal year ended June 30, 2025
Gold revenue
The following table illustrates the year-on-year change in gold revenue (excluding silver revenue) for fiscal year 2026 in comparison to
fiscal year 2025:
R million |
Total | Impact of change
in amount of gold
sold |
Impact of change
in gold price | Net change |
Total | |
gold revenue |
gold revenue | |||||
2025 |
2026 | |||||
Ergo |
5,659.9 |
90.4 |
2,309.6 |
2,400.0 |
8,059.9 | |
FWGR |
2,204.4 |
(13.2) |
886.1 |
872.9 |
3,077.3 | |
Total |
7,864.3 |
77.2 |
3,195.7 |
3,272.9 |
11,137.2 |
Gold revenue increased by R3,272.9 million, or 42%, to R11,137.2 million during fiscal year 2026. This was mainly due to the average
Rand gold price received which increased by 40% to R2,289,250 per kilogram and an increase in gold sold from 154,902 ounces to
156,413 ounces.
Cost of sales
Cost of sales amounted to R5,193.9 million in fiscal year 2026, consisting mainly of operating costs of R4,735.2 million, depreciation of
R477.2 million, a positive movement in gold in process of R5.4 million and a positive movement in the change in estimate of
environmental rehabilitation of R13.1 million. These are discussed as follows:
Operating costs
Operating costs increased by 8% to R4,735.2 million for fiscal year 2026 compared to R4,404.6 million for fiscal year 2025.
The increase in operating cost at Ergo is driven by fuel costs incurred by the trucking of higher-grade material from various "clean-up"
sites and a higher reagent cost as a result of the continuing sodium cyanide shortage in South Africa. At FWGR the increase was
driven by electricity cost increases due to both higher tariffs and a marginal increase in consumption. Higher reagent costs also
impacted FWGR.
Depreciation
Depreciation charges were R477.2 million for fiscal year 2026 compared to R459.2 million for fiscal year 2025. Depreciation charges
increased as a result of the inclusion of a full year of depreciation for the Solar plant and BESS at Ergo compared to fiscal year 2025
as well as new reclamation sites which have come on line at Ergo.
Movements in gold in process
Movement in gold in process in fiscal year 2026 amounted to a credit of R5.4 million recognized in profit or loss mainly due to an
increase in the lock up of gold in process at the plants and finished inventories - Gold Bullion.
Change in estimate of environmental rehabilitation
As of June 30, 2026, we estimate our total environmental rehabilitation provision, being the discounted estimate of future costs, to be
R721.4 million as compared to R558.7 million at June 30, 2025. The increase was as a result of a R34.7 million increase in the
provision due to the addition of the Kloof 2 TSF and a R114.9 million increase in the provision recognized to property, plant and
equipment, due to inflationary increases in rehabilitation costs, higher demolition rates for plant infrastructure and the expansion of
FWGR infrastructure. Additionally, the environmental rehabilitation unwound by R51.0 million for the fiscal year. The increase was
offset by a change in estimate of environmental rehabilitation, resulting in a R13.1 million decrease in the provision being recognized
in profit or loss, primarily due to the rescheduling of non-viable TSFs at Ergo.
A total of R841.5 million (2025: R765.0 million) is invested in fixed income and hedge investment funds to secure financial guarantees
provided to the DMPR through an insurance cell captive company, the Guardrisk Cell Captive. The increase is attributable to growth
of R76.5 million on these funds during fiscal year 2026. As at June 30, 2026, guarantees amounting to R943.1 million were in issue to
the DMPR (2025: R941.3 million). Any shortfall between the invested funds and the estimated provisions is expected to be financed by
contributions to the Guardrisk Cell Captive from time to time as required over the remaining production life of the respective mining
operations and, at the time of mine closure, the proceeds on the disposal of remaining assets and gold from plant clean-up.
Administration expenses and general costs
Administration expenses and general costs increased by R18.9 million from R213.8 million in fiscal year 2025 to R232.7 million in fiscal
year 2026, mainly as a result of inflationary increases, increase in cash portion of single incentive scheme and an increase in the
share-based payment expense.
Finance income
Finance income increased from R223.8 million in fiscal year 2025 to R245.5 million in fiscal year 2026, mainly due to higher cash and
cash equivalents balances throughout the year.
Finance expense
Finance expenses increased from R73.4 million in fiscal year 2025 to R100.0 million in fiscal year 2026, mainly attributable to change
in estimate of the payments made under protest resulting in a discount of R37.8 million compared to R3.3 million in fiscal year 2025.
Income tax
Income tax amounted to a charge of R1,627.0 million for fiscal year 2026 (2025: charge of R824.4 million) and consists of a current tax
charge of R496.2 million (2025: nil) and a deferred tax charge of R1,130.8 million (2025: deferred tax charge of R824.4 million).
The current tax increased to R496.2 in fiscal year 2026 from nil in fiscal year 2025, driven by the increase in the gold price and Ergo
having utilized all of its capital allowances and therefore moving into a tax paying position.
DRDGOLD Limited Form 20-F 2026 | ||
The forecast weighted average deferred tax rate of Ergo increased to 27% for fiscal year 2026 compared to 25% for fiscal year 2025.
The forecast weighted average deferred tax rate of FWGR increased to 30% for fiscal year 2026 compared to 29% for fiscal year
2025. Refer to "Item 10E. Taxation - Income Tax and Withholding Tax on Dividends" for a detailed explanation on changes in taxation
laws and regulations.
Non-IFRS Measures
Set forth below is a discussion of non-IFRS measures presented in this report, including a reconciliation of such measures from the
nearest measure under IFRS Accounting Standards, as well as an explanation as to why we believe that presentation of such
information provides useful information to investors and additional purposes, if any, for which we use such measures.
Adjusted earnings before interest, tax, depreciation and amortization ("Adjusted EBITDA")
Set forth below is a presentation of our Adjusted EBITDA, which is a non-IFRS measure, including the items included in this measure
and a reconciliation from profit for the year. Our calculation of Adjusted EBITDA is based on the calculation of this measure as
included in our Nedbank RCF agreement, which was put in place during July 2024. The Group considers the presentation of Adjusted
EBITDA as relevant to our investors as our holding company, Sibanye-Stillwater, who consolidates our results, discloses a similar non-
IFRS measure to its investors. Adjusted EBITDA may not be comparable to similarly titled measures of other companies. Adjusted
EBITDA is not a measure of performance under IFRS Accounting Standards and should be considered in addition to, and not as a
substitute for, other measures of financial performance and liquidity.
Year ended | ||||
Reconciliation of adjusted EBITDA |
2026 |
2025 | ||
Profit for the year |
4,255.5 |
2,242.7 | ||
Income tax |
1,627.0 |
824.4 | ||
Profit before tax |
5,882.5 |
3,067.1 | ||
Finance expense |
100.0 |
73.4 | ||
Finance income |
(245.5) |
(223.8) | ||
Results from operating activities |
5,737.0 |
2,916.7 | ||
Depreciation |
477.2 |
459.2 | ||
Loss on disposal of subsidiary |
4.8 |
- | ||
Retrenchment costs |
- |
16.2 | ||
Adjusted EBITDA per RCF Agreement |
6,219.0 |
3,392.1 | ||
Share-based payment expense |
41.7 |
30.1 | ||
Change in estimate of environmental rehabilitation recognized in profit or loss |
(13.1) |
(98.0) | ||
Gain on disposal of property, plant and equipment |
(0.3) |
(3.7) | ||
IFRS 16 Lease payments |
(8.1) |
(12.1) | ||
Exploration and project related costs |
5.5 |
9.2 | ||
Adjusted earnings before interest, tax depreciation and amortization ("Adjusted
EBITDA") 1 | 6,244.7 |
3,317.6 | ||
1See Glossary of Terms for definitions.
Cash operating costs, cash operating costs per kilogram, sustaining capital expenditure, all-in sustaining costs, growth
capital expenditure and all-in costs per kilogram
Cash operating costs, cash operating costs per kilogram, sustaining capital expenditure, all-in sustaining costs, growth capital
expenditure and all-in costs per kilogram are non-IFRS financial measures that should not be considered by investors in isolation or as
alternatives to operating costs, cash generated from operating activities, profit/(loss) for the year and other items or any other measure
of financial performance presented in accordance with IFRS Accounting Standards or as an indicator of our performance. While the
World Gold Council has provided guidance for the calculation of cash operating costs, cash operating costs per kilogram, all-in
sustaining costs and all-in costs per kilogram as well as classification of capital expenditure between sustaining capital expenditure
and growth capital expenditure, such measurements may vary significantly among gold mining companies, and these definitions by
themselves do not necessarily provide a basis for comparison with other gold mining companies. However, we believe that these
measures are useful indicators to investors and our management of an individual mine's performance and of the performance of our
operations as a whole as they provide:
•an indication of a mine's profitability and efficiency;
•the trend in costs;
•a measure of margin per kilogram, by comparison of the cash operating costs per kilogram to the price of gold; and
•a benchmark of performance to allow for comparison against other mines and mining companies.
For fiscal year 2026, consolidated cash operating costs per kilogram increased by 7% to R967,523 per kilogram from R903,824 per
kilogram in fiscal year 2025. Consolidated all-in sustaining costs per kilogram increased by 8% to R1,078,068 per kilogram in fiscal
year 2026 from R1,001,214 per kilogram in fiscal year 2025. Consolidated all-in costs per kilogram increased by 28% to R1,795,930
per kilogram of gold in fiscal year 2026 from R1,399,869 per kilogram of gold in fiscal year 2025.
DRDGOLD Limited Form 20-F 2026 | ||
The increase in consolidated cash operating costs per kilogram was mainly due to higher fuel costs incurred combined with
increased trucking activities associated with the processing of higher-grade material at Ergo. At FWGR the increase was driven by
electricity cost increases due to both higher tariffs and a marginal increase in consumption. The continued shortage of sodium
cyanide in South Africa and higher diesel prices amid the Middle East conflict also had an impact on cash operating cost for both
operations.
The increase in all-in sustaining costs per kilogram was mainly due to the increase in cash operating costs detailed above as well as a
reduction in gold produced. The increase was moderated by a decrease in sustaining capex in fiscal year 2026 to R279.5 million from
R300.6 million in fiscal year 2025. The increase in all-in costs per kilogram was due to the increase in cash operating costs detailed
above as well as a significant increase in growth capital expenditure from R1,899.4 million in fiscal year 2025 to R3,457.4 million in
fiscal year 2026. Growth capital expenditure related to the Daggafontein TSF pipeline at Ergo and the RTSF construction (and related
infrastructure) and DP 2 expansion at FWGR.
Reconciliation of cash operating costs, cash operating costs per kilogram, all-in sustaining costs, all-in sustaining costs per
kilogram, all-in costs and all-in costs per kilogram
R millions |
2026 |
2025 | ||
Cost of sales |
5,193.9 |
4,747.7 | ||
Depreciation |
(477.2) |
(459.2) | ||
Change in estimate of environmental rehabilitation recognized to profit or loss |
13.1 |
98.0 | ||
Movement in gold in process and finished inventories - Gold Bullion |
5.4 |
18.1 | ||
Operating costs |
4,735.2 |
4,404.6 | ||
Ongoing rehabilitation expenditure |
(19.7) |
(19.2) | ||
Care and maintenance costs |
(0.2) |
0.8 | ||
Other operating costs |
(2.9) |
(13.5) | ||
Cash operating costs 1 |
4,712.4 |
4,372.7 | ||
Movement in gold in process |
(5.4) |
(18.1) | ||
Administration expenses and other costs excluding non-recurring items 1 |
216.8 |
208.1 | ||
Other operating costs |
3.6 |
(2.0) | ||
Change in estimate of environmental rehabilitation |
(13.1) |
(98.0) | ||
Unwinding of rehabilitation provision |
51.0 |
58.6 | ||
Sustaining capital expenditure 1 |
279.5 |
300.6 | ||
All-in sustaining costs 1 |
5,244.8 |
4,821.9 | ||
Care and maintenance costs |
0.2 |
(0.8) | ||
Ongoing rehabilitation expenditure |
19.7 |
19.2 | ||
Exploration expenses and transaction costs |
15.1 |
2.7 | ||
Growth capital expenditure 1 |
3,457.4 |
1,899.5 | ||
All-in costs 1 |
8,737.2 |
6,742.5 | ||
Gold produced (kilograms) |
4,839 |
4,830 | ||
Cash operating costs per kilogram (R per kilogram) |
967,523 |
903,824 | ||
All-in sustaining costs per kilogram (R per kilogram) |
1,078,068 |
1,001,214 | ||
All-in costs per kilogram (R per kilogram) |
1,795,930 |
1,399,869 | ||
Reconciliation of sustaining capital expenditure and growth capital expenditure | ||||
Additions - property, plant and equipment owned |
3,736.9 |
2,200.0 | ||
Less: Growth capital expenditure 1 |
3,457.4 |
1,899.4 | ||
Sustaining capital expenditure 1 |
279.5 |
300.6 |
1See Glossary of Terms for definitions.
DRDGOLD Limited Form 20-F 2026 | ||
Cash operating costs
Cash operating costs are linked directly to the level of throughput of a specific fiscal year.
The following table illustrates the year-on-year change in cash operating costs for fiscal year 2026 in comparison with fiscal year 2025.
R million | Cash operating
costs |
Impact of change
in
throughput |
Impact of change
in costs | Net change | Cash operating
costs | |
2025 |
2026 | |||||
Ergo |
3,699.2 |
(97.6) |
367.2 |
269.6 |
3,968.8 | |
FWGR |
673.5 |
(3.2) |
73.3 |
70.1 |
743.6 | |
Total |
4,372.7 |
(100.8) |
440.5 |
339.7 |
4,712.4 |
Cash operating costs in fiscal year 2026 increased by R339.7 million to R4,712.4 million compared to cash operating costs of
R4,372.7 million in fiscal year 2025. The increase in Ergo's cash operating costs was mainly due to higher fuel costs incurred
combined with increased trucking activities associated with the processing of higher-grade material at Ergo. This was in response to
deposition constraints and delays in obtaining regulatory approvals for new reclamation sites, both of which constrained tonnage
throughput. At FWGR, the increase in cash operating cost was largely due to electricity cost increases due to both higher tariffs and a
marginal increase in consumption.
The following table lists the major components of cash operating costs for the Group for each operation and fiscal year set forth below
respectively:
Ergo |
FWGR | |||||||||
Year ended |
Year ended | |||||||||
Costs |
2026 |
2025 |
Costs |
2026 |
2025 | |||||
Consumables |
32% |
31% |
Consumables |
33% |
33% | |||||
Labor |
16% |
17% |
Labor |
17% |
18% | |||||
Electricity, water and gas |
11% |
13% |
Electricity, water and gas |
19% |
19% | |||||
Specialized service providers |
25% |
23% |
Specialized service providers |
6% |
6% | |||||
Machine hire |
4% |
4% |
Machine hire |
3% |
3% | |||||
Security expenses |
4% |
4% |
Security expenses |
5% |
5% | |||||
Other costs |
8% |
8% |
Other costs |
16% |
15% | |||||
5B. LIQUIDITY AND CAPITAL RESOURCES
Cash flows from operating activities
Net cash inflow from operating activities amounted to R5,675.3 million for fiscal year 2026 (fiscal year 2025: R3,511.1 million).
Cash generated from operating activities increased during fiscal year 2026 mostly due to a 40% increase in the average Rand gold
price received to R2,289,250 per kilogram and offset by a 7% increase in cash operating costs to R967,523 per kilogram. Net
movement in working capital (changes in trade and other receivables, consumable stores and stockpiles and trade and other
payables) amounted to a cash outflow of R219.8 million in fiscal year 2026 compared to R79.0 million cash inflow in fiscal year 2025.
The increase in cash inflows from cash generated from operations was offset by current tax paid. In fiscal year 2025, a tax refund of
R25.7 million was received compared to tax paid of R489.1 million during fiscal year 2026.
Cash flows from investing activities
Net cash utilized by investing activities amounted to R3,408.9 million in fiscal year 2026 compared to R2,283.3 million in fiscal year
2025.
In fiscal year 2026, net cash utilized by investing activities consisted mainly of R3,531.6 million cash spent on additions to property,
plant and equipment, R147.5 million cash proceeds from the sale of Stellar and R24.8 million cash spent on environmental
rehabilitation payments to reduce environmental liabilities with a related asset.
In fiscal year 2025, net cash utilized by investing activities consisted mainly of R2,254.9 million cash spent on additions to property,
plant and equipment, and R26.1 million cash spent on environmental rehabilitation payments to reduce environmental liabilities with a
related asset.
Cash flows from financing activities
Net cash outflow from financing activities was R802.6 million in fiscal year 2026 compared to net cash outflows of R443.1 million in
fiscal year 2025.
During fiscal year 2026, the net cash outflow consisted mostly of dividends paid on ordinary shares amounting to R779.3 million.
During fiscal year 2025, the net cash outflow consisted mostly of dividends paid on ordinary shares amounting to R431.0 million.
DRDGOLD Limited Form 20-F 2026 | ||
Cash and cash equivalents
Cash and cash equivalents as at June 30, 2026 amounted to R2,770.0 million compared to R1,306.2 million at the end of fiscal year
2025. Substantially all of our cash and cash equivalents balances were denominated in South African rand.
Cash and cash equivalents as at June 30, 2026 includes restricted cash related to guarantees of R14.1 million compared to
R13.2 million at the end of fiscal year 2025.
Borrowings and funding
At June 30, 2026, we had no drawn external borrowings. To fund the significant capital expansion program at both operations, on
June 28, 2024, DRDGOLD secured a R500 million General Bank Facility ("GBF") with Nedbank Limited. The GBF was increased to
include guarantees facility of R181 million (R120 million in FY2025 and further increased by R61 million in FY2026), bringing the total
GBF facility to R681 million (FY2025: R 620 million). The revolving credit facility ("RCF") of R1 billion, with an accordion facility of R500
million, is secured with Nedbank. Other than the guarantees facility that has been fully utilized, both the GBF and RCF remain undrawn
as at June 30, 2026 and June 30, 2025.
Anticipated funding requirements and sources
Our cash and cash equivalents are set out above under "Cash and cash equivalents". Management believes that existing cash
resources, existing bank facilities, net cash generated from operations and long-term finance options available for long-term capital
projects will be sufficient to meet the anticipated commitments of our existing operations for fiscal year 2027 of R3 billion, which are
mainly for growth capital expenditure. Approximately R5.3 billion of the R10 billion planned total capital growth investment forecast,
pertaining mainly to the FWGR Phase 2 project, the Daggafontein TSF pipeline construction and recommissioning of the Withok TSF
was spent at June 30, 2026.
5C. RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES, ETC.
DRDGOLD has a dedicated team that looks at ways and means of improving recoveries. While the team remains active with an
ongoing focus on improving extraction efficiencies, the projects undertaken during the year ended June 30, 2026 were focused on
optimizing the existing facilities rather than implementing new technologies to improve extraction efficiencies. We have no registered
patents or licenses.
5D. TREND INFORMATION
Any sustained decline in the market price of gold from the current elevated gold price levels would adversely affect us, and any
decline in the price of gold below the cost of production could result in the closure of some or all of our operations which would result
in significant costs and expenditure, such as, incurring retrenchment costs earlier than expected which could lead to a decline in
profits, or losses. In addition, as most of our production costs are in Rands, while gold is sold in Dollars and then converted to Rands,
our results of operation and financial condition have been and could be in the future materially affected by an appreciation in the value
of the rand. Accordingly, any sustained decline in the Dollar price of gold and/or the strengthening of the South African Rand against
the Dollar would negatively and adversely affect our business, operating results and financial condition.
For the fiscal year 2027, we are planning Group gold production of between 160,000 (4,976kg) to 170,000 (5,288kg) ounces at a cash
operating unit cost of approximately R1,099,000 per kilogram and expected planned total capital growth investment forecast is
around R3 billion with an all-in sustaining cost of approximately R1,230,000/kg.
Reconciliation of budgeted cost of sales to budgeted cash operating costs |
R'million | |
Cost of sales |
6,248.2 | |
Reconciling items1 |
(615.9) | |
Cash operating costs2 |
5,632.3 |
1Includes expected depreciation of R596.4 million and ongoing environmental expenses of R18.9 million.
2See glossary of terms for definition.
Rounding of figures may result in computational discrepancies
Our ability to meet the full year's production target could be impacted in a number of ways, including stoppages in production due to
power interruptions and other risks (refer to "Item 3D. Risk Factors-Risks related to our business and operations and - Forward
Looking Statements"). We are also subject to cost pressures in the event of above inflation increases in labor, key consumables,
diesel, steel and cyanide. Unforeseen changes in ore grades and recoveries, unexpected changes in the quality or quantity of
reserves and resources, technical production issues, environmental and industrial accidents, gold theft, environmental factors and
pollution, and delays in obtaining permits for beneficial occupation for the RTSF at FWGR could adversely impact the production,
sales and cash operating costs for fiscal year 2027 and cause us to fail to meet our targets for the year.
Refer to "Item 5A. Key drivers of our operating results and principal factors affecting our operating results" for a discussion of the
trends in the US Dollar gold price as well as exchange rates impacting our business.
5E. CRITICAL ACCOUNTING ESTIMATES
For more information on environmental rehabilitation obligations, refer to Note 2 - "Use of accounting assumptions, estimates and
judgements" under "Item 18. Financial Statements".
DRDGOLD Limited Form 20-F 2026 | ||