DRDGOLD LIMITED
Constantia Office Park
Cnr 14th Avenue and Hendrik Potgieter Road
Cycad House, Building 17, Ground Floor
Weltevreden Park 1709
South Africa
John Coleman
Karl Hiller
Division of Corporation Finance
Office of Energy and Transportation
U.S. Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549-4628
April 3, 2023
Re: DRDGOLD Limited
Form 20-F for the Fiscal Year ended June 30, 2022
Filed October 28, 2022
File No. 001-35387
Dear Mr. Coleman and Mr. Hiller:
Set forth below are the responses of DRDGOLD Limited (the
) to the comments received from
the staff (the “
Staff
”) of the Division of Corporate Finance of the Securities and Exchange Commission (the
“
Commission
”) by letter to Mr. Riaan Davel, dated March 2, 2023 (the
“Comment Letter”
), relating to the
Company’s Annual Report on Form 20-F for the fiscal year ended June 30, 2022 (the
“Annual Report”
).
For your convenience the text of the Staff’s Comments is set forth in bold below, followed immediately in
each case by the Company’s response. Unless otherwise indicated, all page, graph and item number references in the
responses set forth below, are the page, graph and item numbers of the clean copy of the Technical Report Summary.
Comment:
Form 20-F for the Fiscal Year ended June 30, 2022
Item 19 - Exhibits
Exhibit 96.1 Technical Report Summary and Certification – FWGR.
We note that disclosures under Economic Assessment, on pages 117 and 119 of the
Technical Report Summary, include graphs illustrating gold sales quantities and life-of mine cash flows
although without distinct numerical or line item details.
Please discuss this observation with the qualified persons and arrange to obtain and file a revised Technical
Report Summary that includes the entire discounted cash flow analysis, including annual cash flow forecasts
based on an annual production schedule for the life of project, to comply with Item 601(b)(96)(iii)(B)(19)(ii) of
Regulation S-K.
U.S. Securities and Exchange Commission
April 3, 2023
Page 2
-1 000
-500
0
500
1 000
1 500
2 000
2 500
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
2041
2042
NPV10 (ZAR M)
Financial Year
Post Tax Discounted Cashflow
Cumulative Cashflow
262
459
-509
-136
84
-249
-499
83
570
275
210
167
152
64
136
173
115
101
91
25
-1 000
-500
0
500
1 000
1 500
2 000
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
2041
2042
NPV10 (ZAR M)
Financial Year
Post Tax Discounted Cashflow
Cumulative Cashflow
Company’s Response:
In response to the Staff's comment the Technical Report Summary will be revised as illustrated below, to comply with
the requirements of Item 601(b)(96)(iii)(B)(19)(ii) of Regulation S-K. The Company proposes to add Appendix 1 to
Item 19.2 and amend the endnote below Graph 12 on page 117 of the Technical Report Summary as illustrated below.
Furthermore, numerical figures have been added to Graph 14 on page 119.
Graph 12 presents the post -tax cashflow for an operation that excludes the benefits that would eventually be derived from the Available TSFs
(refer to
Appendix 1).
Graph 12: Post-tax Discounted Cashflows
Source: Sound Mining, 2022
The cumulative post-tax cashflows over the LoM remain positive. When assuming a discount rate of 10% the unleveraged operation reflects a Net Present
Value (NPV) of ZAR2.32 Billion with.
applicable.
U.S. Securities and Exchange Commission
April 3, 2023
Page 3
Description
Unit
Total/
Average
2023
FY
2024
FY
2025
FY
2026
FY
2027
FY
2028
FY
2029
FY
2030
FY
2031
FY
2032
FY
2033
FY
2034
FY
2035
FY
2036
FY
2037
FY
2038
FY
2039
FY
2040
FY
2041
FY
2042
FY
Reclaimed Tonnes
kt
229.371
6,044
6,044
6,044
7,546
9,048
9,048
9,048
11,148
14,400
14,400
14,400
14,400
14,400
14,400
14,400
14,400
14,400
14,400
14,400
7,000
Head Grade
g/t
0.33
0.48
0.47
0.47
0.41
0.36
0.36
0.36
0.37
0.37
0.37
0.32
0.30
0.30
0.30
0.30
0.30
0.28
0.27
0.27
0.27
Recovery
%
53%
50%
54%
57%
55%
53%
53%
53%
53%
53%
53%
51%
49%
49%
49%
54%
58%
55%
55%
55%
55%
Gold Sold
kg
40,409
1,404
1,528
1,592
1,674
1,740
1,740
1,740
2,216
2,840
2,840
2,369
2,105
2,105
2,105
2,322
2,532
2,190
2,159
2,159
1,049
Revenue
ZAR M
36,946
1,284
1,397
1,455
1,531
1,591
1,591
1,591
2,026
2,597
2,597
2,166
1,924
1,924
1,924
2,123
2,315
2,003
1,974
1,974
959
Operating Costs
ZAR M
19,550
838
538
538
773
868
868
868
995
1,168
1,168
1,168
1,168
1,168
1,168
1,168
1,168
1,168
1,168
1,168
717
Capital Expenditure
ZAR M
6,767
326
61
1,595
957
300
589
1,120
565
18
402
146
18
18
416
152
18
18
18
18
20
Post-tax Free
Cashflow
ZAR M
7,338
288
555
(678)
(199)
424
118
(397)
404
987
714
600
525
525
242
567
794
579
559
559
171
Cumulative Post-tax
Free Cashflow
ZAR M
7,338
288
843
165
(34)
389
507
110
514
1,501
2,216
2,816
3,341
3,867
4,108
4,675
5,469
6,049
6,608
7,167
7,338
Post-tax Discounted
Cashflow
ZAR M
2,318
262
459
(509)
(136)
263
66
(204)
189
419
275
210
167
152
64
136
173
115
101
91
25
Cumulative Post-tax
Discounted Cashflow
ZAR M
2,318
262
721
211
75
338
405
201
389
808
1,083
1,294
1,461
1,613
1,677
1,813
1,986
2,100
2,201
2,292
2,318
Appendix 1: Summary of the DCF Model (excluding liner)
Notes: Apparent computational errors due to rounding
U.S. Securities and Exchange Commission
April 3, 2023
Page 4
Comment:
2.
We note that disclosures under Reliance on Information Provided by the Registrant, on
page 136 of the Technical Report Summary, include categories of information beyond
those that are permissible under Item 1302(f)(1) of Regulation S-K.
For example, in the last two bullet points of this section, the qualified persons indicate
there has been reliance with regard to certain cost estimates and technical evaluations
provided by FWGR or its consultants or associates.
Please discuss this observation with the qualified persons and arrange to obtain and file
a revised Technical Report Summary that is consistent with the requirements in Item
1302(f)(2) of Regulation S-K.
We generally anticipate that qualified persons would validate and discuss information
utilized in preparing the report that is not within the categories listed in the guidance
referenced above, in an alternate and corresponding section of the report.
Company’s Response:
In response to the Staff's comment, Item 25 of the Technical Report Summary will be revised as
illustrated below to comply with the requirements of Item 1302(f)(2) of Regulation S-K, by having
the qualified persons conduct their own research where feasible and remove non-compliant
disclosures on page 135 of the Technical Report Summary. Furthermore, the following items of the
Technical Report Summary will be amended to indicate that some information contained therein was
supplied by a third party: Items 2.3, 14, 15.1, 15.2.3, 16.1 and 17.4.
Item 25
The information and conclusions within this TRS are based on information made available to the QPs by DRDGOLD and FWGR at the time of
the preparation of this TRS
. The QPs have relied on this information with respect to legal matters (Item 3),
the gold
price (Item 16.1),
Environmental
or social and labor planning aspects
Studies, Permitting, or Agreements with Locals, Individuals or Groups
(Item 17) and
the
economic
assumptions (
Assessment (
Item 19). The QPs have
not independently conducted any title or litigation searches
but have relied upon FWGR for information on the property title, agreements and other pertinent conditions (throughout Item 3).
The QPs have
reviewed this information at face value and are satisfied that it is both reasonable and appropriate.
The
QPs
consider it
believe
that it is
since
as identified in this item because
intimately more
familiar
with the operations and ongoing progress of FWGR since inception, and as a consequence
enjoy
this provides the QPs with
level of comfort with respect to
the
management
,
conducted
at FWGR.
Additional information provided by FWGR included technical reports supplied by its consultants and associates and the relevant published
data, as listed below:
•
the QPs have not independently conducted any title or litigation searches but have relied upon FWGR for information on the property
title, agreements and other pertinent conditions;
•
these studies were undertaken by Digby Wells Environmental (South Africa) (Proprietary) Limited (Digby Wells) and Sound Mining has
relied on the findings of these studies;
•
DRA SA (Proprietary) Limited were responsible for the detailed design and associated cost estimates for the expansion of DP2 and
associated piping and pumping infrastructure. Beric Robinson Tailings (Proprietary) Limited (Beric Robinson Tailings) were responsible for
the design of the RTSF which was also costed by DRA. The QPs have relied on Spargo Consult as an independent expert for the review of this
work; and
U.S. Securities and Exchange Commission
April 3, 2023
Page 5
Leeudoorn TSF; and the QPs have relied on the findings of this study.
Item 2.3
The QPs also relied on reports from:
DRA SA (Proprietary) Limited
(DRA);
Geo Tail SA (Proprietary) Limited’s (GTSA);
Beric Robinson Tailings (Proprietary) Limited (Beric Robinson Tailings); and
Digby Wells Environmental (South Africa) (Proprietary) Limited (Digby Wells).
Item 14
An expansion of the currently operating DP2 processing plant is planned to facilitate an increase in processing throughput from the
current TSF Mineral Reserve inventory.
DRA were responsible for the detailed design and associated cost estimates for the expansion of
DP2 as well as the piping and pumping infrastructure. The QPs appointed Spargo Consult, as an independent expert, to assist with the
review of the metallurgical aspects.
Item 15.1
Leeudoorn Facility
The Leeudoorn TSF is located 7km north-east of Fochville on the West Rand, Gauteng Province. Sibanye Gold have, after a detailed, joint
technical review, agreed in principle that FWGR may, with effect from January 2026, deposit up to 500ktm of tailings onto the Leeudoorn
TSF provided FWGR paid the capital cost to convert the TSF to cyclone depositioning.
The QPs have relied on the findings of Geo Tail SA (Proprietary) Limited’s (GTSA) Leeudoorn TSF Cyclone Conversion Design and technical
evaluation for an understanding of the planned conversion of the current day wall TSF to a cyclone-based deposition system. The design
has been developed to accommodate the required deposition plan. While the QP has not interrogated the voracity of this work in detail, it
has been benchmarked against other similar conversion projects and has been found to be within proven operational practice and
acceptable risk levels.
Item 15.2.3
Sound Mining has reviewed the
FWGR
and design
(costed by
DRA)
following the principles and design strategy outlined in the report, the chances of a TSF failure will be unlikely. However, cognizance needs
to be taken of the uncertainties discussed subjectively below.
Item 16.1
The QP considered a five-year period of historical analysis to form an opinion of the gold price and exchange rate to be expected going
forward because the QP is of the opinion that a five-year period sufficiently covers the market volatility seen in the international gold
market. This is also consistent with the five-year period of consensus pricing relied on for the price forecast. The gold price increased in
2020 due to uncertainties related to the outbreak of Covid-19. It then steadily declined to a spot price of ~ZAR945,295/kg (i.e.,
USD1,806.89/oz at ZAR16.27/USD) as at 30 June 2022 (Graph 5).
After interrogating the gold price, the QPs are of the opinion that a gold
price of ZAR914,294/kg, provided by FWGR, is appropriate for use in the economic assessment.
U.S. Securities and Exchange Commission
April 3, 2023
Page 6
Item 17.4
Environmental Closure Liability Estimate
Sound Mining has relied on environmental closure liability estimates provided by Digby Wells. They are experts in this field and were
commissioned for the purpose
. A review of the closure estimate and associated plans
covered
•
discussion of the methodology used to derive the costs for demolition, closure and rehabilitation; and
•
comment on the adequacy of the financial provisions made for the operation.
* * *
Should the Staff have any questions or comments, please contact me on +27 11 470
2600 or at riaan.davel@drdgold.com.
Sincerely,
Riaan Davel
Chief Financial Officer
cc:
DRDGOLD Limited
Skadden Arps, Slate, Meagher & Flom (UK) LLP