Good morning, everybody, welcome to our results webcast. Thank you for taking the time to come and listen. It's our first time that we're broadcasting or releasing our results using this medium, so hopefully it will go okay. I need to bring to your attention just a number of rules that apply. Everybody is in listen-only mode except those who are on the panel. All microphones will remain muted as well throughout the presentation. If there are questions, then you can click in the menu window. You can click on the Questions tab, and then you'll be able to type your question. We'll be reading those questions out after the presentation, and either myself or my two colleagues who are joining me on the panel, Riaan Davel, our CFO, and Jaco Schoeman, who's our Head of Operations, they can assist in answering those questions.
There's also a Handouts tab, which you can click on, and then there you'll see the three documents that accompany this presentation. You'll be able to also follow the presentation as we go along. We'll be clicking from slide to slide and hopefully the computer will listen. To get straight into it. Thank you very much. I've introduced the two other panelists, Jaco and Riaan, joining me on the presentation. For us, this has really been a year of contrasts. I think anybody will know what I'm talking about when I say that it's been a year of unprecedented challenge, having to deal with something that was really unknown, the extent and its impact, very difficult to gauge up front. A year of great uncertainty as to where the COVID pandemic and our response to it was going to take both the country and also our business.
Businesses were tested like never before, when lockdown started, and also now with the restart. I think it was also a time when the values and the priorities of business leaders, and leaders generally, were tested, where the list of priorities, of where the health was prioritized above profit. We saw the manifestation of both the best and the worst in humankind. We saw greed, we saw opportunity, empathy, awareness, care, and in equal measure, I suppose. In terms of DRDGOLD, amidst all of these challenges, I think my two colleagues on the panel will agree with me that the employees of DRDGOLD during this time really stepped up, and they came through admirably. We saw wholesale buy-in, in terms of the health protocols that we implemented, and the dedensification procedures that we implemented. Keeping safe, staying safe, was high on the priority of every single employee.
When we restarted operations initially with between 30% and 50% of total staff, we relied exclusively on volunteers in the first few weeks, and we were oversubscribed, so to speak. We had more volunteers than we had positions at the time. Obviously, because of the performance of the business, we were in a position to pay all of our employees their basic salaries during this time. We were very encouraged with the response from our entire staff. In addition to that, our operating model was such that it showed itself to be resilient and flexible, which meant that we could get back into business quite quickly.
The features of this model, which we'll deal with in more detail as we go through the presentation, of mechanization and automation, really helped the manner in which we deal with information or the digitization of our operating system and the monitoring of that. Still is in good stead. All of this contributed for this to be more of almost a challenge rather than a disruption. Against that backdrop, if we go to the first slide, which is the disclaimer. I'll ask you to read through that because there are some forward-looking statements, and we'll ask you just to be aware of those, and some risk factors. In fact, we also want you to just have a look at the picture in the background, because that's the backbone of our business, is the activity taking place there in the background.
The key features for this year, which as I said earlier, was a year of contrasts, were on the positive side, a very significant increase in revenue. That was on the back of both solid production, the challenges of the lockdown notwithstanding. We saw a 52% increase, in fact, in revenue to above ZAR 4 billion. We saw a 320% increase in our operating profit to above ZAR 1.5 billion. We saw a 9% rise in gold production to just under 5.5 tons of gold produced for the period. Headline earnings came in at ZAR 634 million. For the 13th consecutive year, we managed to pay a dividend, a total dividend, including the interim that was paid earlier, amounted to ZAR 0.85 per share, which was also a very significant increase year-on-year.
That's notwithstanding the fact that there was a substantial issuance of new shares to Sibanye as part of their investment into the company. Our all-in sustaining cost margin was up to just under 30%, and we saw a 33% increase in the average gold price. This, of course, was something that is meaningless unless you're in a position to take advantage of it. I think we took full advantage of that increase in the gold price. In terms of women in mining, this being Women's Month and all, we're proud to say that there was an increase in that regard as well, with women making up 23% of our total staff. These are in positions that are very much on the hard side of the business. These are in core positions.
We're very pleased with the contribution that the women in our operation are making to the progress of the business. Social related capital spend was also up by 23%. This is something that we continue to look at as a business necessity. I think the moment that your social spend becomes part of your marketing, you're on a slippery slope. It's impossible to conduct business in an unstable environment and with angry, hungry people in your immediate vicinity. Social spend, both in terms of managing the current risk and also managing future risk in terms of the availability of skills, those have very much become business imperatives. As I said earlier, they shouldn't be confused with marketing or polishing your reputation. It's a core aspect of business.
Then in terms of dust exceedances, of all the measurements that we took, and we measure this at just under 200 different measuring points, we saw, of all of those measurements, an exceedance in the standards, the regulatory standards of only half a percent. Having said that, though, we are in the dry season yet again, and our environmental containment measures are very much part of a journey. There's still lots of work to be done. During these months, with the high winds just after winter and also lots of fires taking place, there are certain areas where we're not happy with the amount of dust coming off our operations, and that's an ongoing area of focus for the business. Moving on to the next slide. There we go. We're looking firstly at Ergo's operating results.
There you can see how from year on year, half year on half year rather, that there was a decline in total volume throughput at Ergo, the latter six months compared to the earlier six months. This, of course, was in part attributable to the fact that there was a lockdown. I must also point out that notwithstanding the fact that we were technically allowed to go back to business, in fact, not even interrupt production, we elected not to do so. We were very cautious, particularly here in Johannesburg, where the Ergo operations are. We were very cautious in redeploying staff. We wanted to make sure that we could create an environment in terms of which we were able to apply health protocols.
As a consequence, initially, starting up was limited to only a few sites where we could produce, or these were high volume, low grade sites. A lot of the higher grade sites where we relied, for example, on third party transport and so forth, these sites only came on much later. Some of this was self-induced, the reduction in volume throughput. You also see that it came at a bit of a multiple in terms of production because the initial restarting of operations, as I said earlier, was focused on mainly the sites where we could generate higher volumes, but typically of lower quality material. All of those impacted on both the total production and also the yield grade. You could see that those grades are down six months on six months, down from 0.209 gm a ton- 0.184 gm a ton.
It might not look like a lot. In fact, it's within the margin of assay error in your typical, your traditional mining environment. In our environment, it's a lot because everything in our business gets multiplied by 2 million or just north of 2 million. The impact of that is more profound in our operation. On the whole, though, I think the response to the lockdown was responsible. If we'd been offered these numbers at the beginning, I think we would have certainly taken them. Our concern was that they would be considerably lower, that it would be far more disruptive. We were genuinely concerned of rampant infection rates upfront. We didn't know how these infection rates were going to manifest in the workplace. As I said earlier, our staff really came up to scratch.
They managed the infection rates really well, maintained good discipline in that regard. We've had in total 50 infections. At the moment, there are only three instances of employees who have not made a full recovery. On the whole, I think managed to contain this really well. If this is the price we had to pay for it, I think it was a price well worth paying to err on the safe side of caution in the circumstances. In terms of Far West Gold, its operating results, obviously, mining only from one reclamation site at this stage, and with staff living a lot closer to the operations. For them, the disruption was far less significant. You could see that volume throughput was virtually flat almost, and the same also in terms of production and recovery.
Far West Gold took full advantage of the higher gold price following the lockdown and the international economy, the global economy's response to COVID, and returned exceptionally good results. At the moment, there's not a single active positive case of COVID at the Far West operations. They were subjected to two audits early on in the whole process and managed to get through those audits. Audits by the Health and Safety Department of the Department of Mineral Resources and Energy, came through those with flying colors. The same also applied to Ergo. There too, we are very proud of the way that our personnel managed the implementation of safety protocols, and those were borne out by the feedback that we got from the regulator in that regard. A good and very responsible response, we thought, from our entire staff.
There on a consolidated basis, you could see where we ended up in terms of both volume, in terms of yield, and in terms of production. As I said earlier, if we'd been offered these beginning of March, when the whole world looked like it was going to implode, I think we'd have gladly accepted those. A lot of hard work going into this. Moving on to the next slide. There we go. Sorry. Sorry, Riaan, I've now taken your opening slide and gone into the next one. We'll take over from this point onwards, and he'll take you through the financial results for the period.
Thank you very much, Niël. Just want to click one back to start with the Ergo financial results. There we go. Good morning, ladies and gentlemen. It is really my humble privilege to present the financial part of the results with Niël and Jaco. I say humble, because we are very proud of our achievements under difficult circumstances. We do realize that it is a tough economy in the world and locally at the moment. That is why there is a huge humbleness in what I present. At the same time, as Niël has explained, I am also very, very proud of every employee working at DRDGOLD, from any safety, security personnel to someone operating on the reclamation sites 24 hours a day during winter, also the finance team to get us to this place in a virtual world nowadays.
It was quite a challenge, but we're very proud of that achievement. Just the financial side of what Niël has set out. Obviously, the revenue, Niël has mentioned through Ergo, a tough last quarter, where we've seen six months on six months a decline in gold sold of 25%. Averaged out by an increase in the average gold price for the six months of 23%. We know year-over-year, that increased 33%. Still good revenue coming in from that point of view. Obviously, with reduced tons and volume that Niël alluded to, we'll see that the cash operating costs for the second six months of the year also decline in line with that 15% decline in volume, second six months versus first six months. Both those factors contributing still to a very good operating profit performance of Ergo.
In total, ZAR 792.1 million, up a very solid 180% year-on-year. Really, again, as we've talked about the resilience of Ergo in the past, it again showed that resilience under difficult circumstances, as Niël has explained, more challenging vast areas versus Far West Gold together, which is a single site and much closer together. Going on to Far West. Much more stable, as Niël has explained, just a 6% decline in gold sold first six months to the second six months. With that same 23% increase in the average gold price received, boosting that revenue for Far West to just under ZAR 600 million for the second six months. Very stable from a cash operating cost point of view, around ZAR 58 a ton.
So is Ergo, and as you know, that is a measure that we have a close eye on, because that ZAR to ton, which gets multiplied by 2 million plus every month. It's something we're very proud that we contain, and we're very proud that we keep that in check. Stable costs, but increase in revenue flowing through to an operating profit combined of ZAR 770 million for the year. Obviously, everyone would remember that in the comparative period, Far West Phase I just came onto stream. It's just three months of commercial production in the revenue and profit numbers from 1 April 2019, just the last quarter of the last financial year. We were very happy to see that it contributed fully for the full 12 months of the June 2020 financial year.
That all gives us, if you look at the operating profit for the group that Niël alluded to on the first slide, of just over ZAR 1.5 billion, and that is up 320% year-on-year. Looking at the group financial trends as a whole. Obviously assisted year-on-year by the 33% increase in the average ZAR gold price received. The operating margin obviously checks cash operating cost versus that ZAR gold price. Overall, we saw a 3% decline, decrease year-on-year, in the cash operating cost per kilogram, again, assisted by Far West Gold Recoveries, which produced gold at a cash operating cost of only ZAR 244,000 a kilogram. That obviously, as Niël explained, the lower volume and yield decreases due to the challenges in response to the pandemic had an impact, but again, assisted on the ZAR gold price side.
A marvelous change on the operating margin and very healthy at 40.6% in the second half of the year. all-in sustaining costs, a similar trend. As you know, the measure there then that I normally look at is sustaining CapEx, which grew from ZAR 23 million last year to over ZAR 160 million, of which the majority of that was spent in the second half of the year. Again, Far West Gold, with their 12-month contribution, producing at an all-in sustaining cost per kilogram of just under ZAR 300,000 per kilogram, keeps the group costs in check or overall per kilogram in check. That's a very healthy all-in sustaining cost margin and a wonderful trend. On the free cash flow side, also really pleasant reading. Obviously in the ZAR 261 million was mainly our investment in Far West Gold Recoveries Phase I.
That turned out to be, from a timing point of view, such a marvelous investment in that already started contributing, as I've mentioned, towards the end of financial year 2019. With both operations for the full 12 months and an increasing gold price environment, that investment had some handsome returns for us. We're very proud and humble of ZAR 926.4 million of free cash flow generated in the financial year. A healthy Headline Earnings Per Share for the year in total of ZAR 0.824. It's a very nice comparison to what Niël mentioned as our total dividend for the year. Two interim dividends declared, then a final dividend of ZAR 0.35, which gets us to ZAR 0.85 a share, which is very close to the ZAR 0.824 per share Headline Earnings.
Just a brief explanation on the second half why that headline earnings is down. If you had a look or comparatively to the first six months, and that to do with the long-term incentive scheme that was granted to members of senior management already in 2015. It’s a cash-based scheme, and it reflects changes in our share price as that instrument vests over its five-year period. As we get closer to its vesting date, that increase doesn’t all relate to this one-year period. It’s actually over a five-year period of vesting. Again, just to give you a sense, our share price itself just moved from end of December closing price 2019 to 30 June 2020 by ZAR 2.59.
That increase in that share price is reflected, obviously, in the second half as that happens, and that will have an impact on earnings, but I'll show you that number as well in the income statement. Let's move into the income statement. Go one back. Profit or loss for the year there. As Niël mentioned, revenue up 52%, assisted by gold sold, which is up by 10% year-on-year, and the average rand gold price, which increased by 33%. Mentioned we're very comfortable with our cost containment, so that increase in cost of sales mainly attributed to now Far West contributing costs for 12 months of the year, whereas in the previous period, they were only in commercial production for three months. Very healthy, just under 500% increase in gross profit from operating activities to just over ZAR 1.2 billion.
That share-based payment expense that I alluded to, which impacted Headline Earnings Per Share in the second six months, as a result of the increase in the share price that we saw. That's charged through the income statement in this period, although it actually relates to a five-year period. This is the fund through a cash settled scheme that is picked up. That had an impact on earnings. Finance income from the cash balances that we hold, some increase there. The finance expense line, unwinding most of that, of the rehabilitation liability through the income statement. Very healthy profit before tax was just under ZAR 1 billion, which resulted in, even though we used some capital allowances that was carried over from the prior year, which had an impact on the deferred tax charge, a very healthy current tax balance.
I'll point that out in the cash flow statement as well. A direct injection to the fiscus in the form of income tax that DRDGOLD contributed. I'll point that out further on the cash flow statement. Just talking through the statement of financial position. It's always such a privilege for me to talk through this, and I'll just say something at the end, making reference to what I mentioned last year. Just briefly talking through the line items. Property, plant, and equipment, so year- on- year, simplistically, slightly less CapEx than depreciation. That line item decreased slightly. On the non-current investments and other assets, what is included in that line item this year is an increase in the fair value of the Rand Refinery. We show our 11.3% interest in Rand Refinery at fair value through other comprehensive income.
That business has also shown remarkable cash flows and profits with the increase in demand for crude oil and just general increase in the gold price as well. Just under ZAR 180 million is included there. Very important, we still have rehabilitation assets in that line item of ZAR 626 million. I'll allude to that number again when I talk through the provision for environmental rehabilitation later. Cash and cash equivalents, we'll analyze on the next slide. Other current assets, some VAT receivables from SARS in there and just normal working capital cutoff. Equity, I'll also explain on the cash flow statement, it's basically moves in profit. Obviously, the shares we issued to Sibanye in January 2020, less dividends simplistically we've paid. Just want to pause on the provision for environmental rehabilitation and the decrease year-on-year.
It may look quite innocent in this balance sheet, but what I want to point out is the story behind it. Two main reasons for that decrease is under these COVID conditions, obviously, our real rate that we use to discount that liability increased as a result of increase in long-term SA government bond rates, decrease in inflation. The other big impact on that liability is because of the way we look at our assets and the way we rehabilitate those sites. Two more sites came into our formal life of mine based on positive gold price outlooks, which changes the way we rehabilitate those assets. In other words, I want to say the moral of our story is we take what is only a liability and in situ rehabilitation at a huge cost.
Through our infrastructure, pipelines, plant, tailing stands, we're able to relook at the way people see a liability. It's not possibly in situ rehabilitation, but it's a reprocessing and into a red soil for us to then have sustainable land use. I know Niël will talk about that later as well. Just in that small decrease, you can see it's part of our model, and that's why we believe we can do a lot more of that as well. Just the other number that I referred to, our rehabilitation assets is at ZAR 626 million, which is more than our liability at the moment. It's really a good position to be in. The other part of that reason is that we do rehabilitation as we go along.
We don't wait till the end, and we take cash flows as we generate and we rehabilitate throughout the life of mine. On deferred tax, a slight increase, as I've mentioned, utilization of allowances and an increase in the deferred tax rate as a result of forecast taxable profits becoming bigger. A slight increase there. Other non-current liabilities, mostly lease liabilities, and then current liabilities that contains the long-term incentive scheme that I've mentioned in the income statement. If you would allow me just to, again, spend, as I've done last year, I know Niël will elaborate on it later as well. Just to mention, I mentioned when I talked to the balance sheet last year that it very much looked like a launchpad to me, and it still does this year.
I probably couldn't have envisioned last year when I said those words, where we would have ended up and where the year would take us. I really believe that is still the case, and it's a launchpad for us to keep on rolling back the environmental legacy of mining through to various growth opportunities. We obviously have no debt on the balance sheet, no bank debt, which is a really great position for us and strong cash flows. Obviously, some of those growth differentiators is again, what we've shown for 12 months now for Far West, that we've got proven technologies and a tailings reclamation track record, that we can operate these sites. What I refer to as, what I wrote here is sort of a fuel injection, what we saw from the Sibanye share issue and share subscription of just under ZAR 1.1 billion.
I think that really boosted our company further in January, and we will continue to look at synergies and economies of scale in our journey forward. The other bit that excites me, although we have no debt, we can look for growth opportunities and try and look to sustainability financing, green financing, because our model, as I have said, is focusing on environmental cleanup and rolling back that environmental legacy. We have so many opportunities through the wider use of technology, innovation, and also looking at diversification into other metals. It is really a great balance sheet for us to leverage on further. I will refer to the share price in a few slides, but it is just phenomenal in that our share price year on year increased by more than 500%, and our market cap year -on- year grew by 680%.
Again, we're very humble saying that, but we're very proud that the business that's been built up over many years, we're able to launch to those levels. Then just a couple of words to finish off on the cash flow statement, which for me is always the most simple statement, but definitely, in my humble opinion, the most useful, as it just talks to cash. You can see there healthy cash generated by both operations contributing for the full year of just over ZAR 1.3 billion. Some interest received and paid, and then number ZAR 240 million physically in cash paid to the fiscus direct in the form of income tax, which I believe is a great contribution into the fiscus. We'll continue to spend capital.
I think we have an exciting phase ahead of us, but obviously decrease from last year where we had the Phase I expansion. Rehabilitation payments, that will continue, probably increase. As I've mentioned, we do spend cash every year, not wait until the end. That will definitely continue. Sort of jet-fuel boost, as I've mentioned, the capital subscription by Sibanye, the share issue in terms of the option of just under ZAR 1.1 billion. A very healthy margin of the cash that we generate, we physically pay out in cash. Obviously, this is last year's final dividend and then the two interim dividends. Yeah, a very healthy portion in cash that we physically pay out. Yes, very humble to report closing cash of ZAR 1.7 billion. Just a picture of the share price.
As I've mentioned, it's probably not in many years that we'll be able to say this, so I will say it again. Year- on- year share price increased by 500% and our market cap by 680%. It's great that there's support for the price. We're very proud of this. Niël, that's it on the financial review. If I may hand back to you. Over to you.
Thanks, Riaan. Yeah. Riaan would now slip this slide into his part of the presentation, I don't get to say it's all right. I've got some other stuff to talk to. Good. On sustainable development, I think the sustainable development has been a theme of our approach with our strategy for as long as I can remember. What we're seeing now is how the sustainable development objectives, what we're trying to achieve with value creation on a much broader scope, and in terms of more than just financial capital, how that has now found its way into the ESG narrative. I think we're really well-positioned to take that narrative forward.
This is not something that we have to now start thinking about right now because it's been core to how we've been approaching the deployment of capital and resources now for quite some time. Just on the human capital side, I mentioned earlier the trend in women in mining, and obviously we'd want to increase that by quite a bit more. Women in core positions, 14%. There's still room for improvement in that regard as well. Women in management are up slightly to 19%. There too, is room for improvement. There's a slight increase also on the spend in terms of our training courses. Maybe this doesn't quite tell the story in terms of our reach. Our reach goes beyond what the numbers suggest in terms of training.
I may have mentioned in the past, and you may have heard that we offer extra classes, math, science, and accountancy in seven schools in our area of impact. Pretty proud that two of the candidates who actually made use of those courses are now also bursars of the company. I was sent the marks of one of our bursar students the other day. I didn't know it was possible to get 90% for financial accounting at the University of the Free State, but these are the numbers that are coming through. That really says everything about our reach and our efforts in this regard, and we want to see more of that. In terms of natural capital, how we look after the environment and how we track our performance, I did mention earlier that it's a journey. It is not a race or a marathon.
It's not a sprint. There's still lots to be done. Really, I think we would have completed our purpose in terms of what we can do in and around the Johannesburg area when all of these dumps that have been deposited in lower-lying areas, and that have since become encroached through urban development, when all of those have been moved and the residue's been stored on large, modern, well-contained tailings facilities. That's really where we're heading, and that's where we're going. Obviously, we want to do that in a manner that's also conducive to sound environmental practices. We want to limit the impact on the environment of our efforts to roll back the environmental legacy, if that makes sense. We always keep a keen eye on our water usage. This year, we didn't see the reduction in potable water that we saw in the previous years.
We set ourselves the goal to reduce that every year by 10%. Obviously, it's a bigger company now. There's a larger footprint. It was steady, which means that the addition of Far West did not lead to an increase in the use of externally sourced potable water. It stayed flat. With our focus on vegetation of older tailings dams and also on dust suppression, more often than not, the irrigation of those it's required to be done with potable water, and not the recycled grey water that we get from both underground in terms of recycled AMD and also water sourced from sewage water that's pre-treated. I did mention the dust exceedances there too. I think a half a percent is still too high. We don't want any dust to come off our tailings dams.
A lot of progress has been made in this regard since the very first capital work that I remember 14-odd years ago in this regard, where we budgeted ZAR 16 million for the vegetation of the crown tailings. I think we've broken the back on this, but we still want to contain it even further, especially now in the dry months. There's still dust coming off some of the sites, which we want to contain. There was a ZAR 54 million spent on rehabilitation. This is now, as Riaan explained earlier, on that categorized as rehabilitation. We do concurrent rehabilitation, so every ounce that we, every ton that we mine, and I say our average cost for the group is ZAR 100 per ton, is essentially also ZAR 100 per ton spent towards rehabilitation in the longer term. 65 hectares of closed tailings were vegetated this year.
Incrementally, we're also getting there. We're hoping to finish this project in Crown in the foreseeable future, about two years from now, that all of the crown tailings would have been vegetated. Of course, out in the east on Brakpan or the Charles Cilliers facilities we call it now, that will keep up with the rate of rise. Every new bench that's established, cladding takes place on the bench just below that, with interim dust containment measures or netting on the top bench. As we move on to the next one, there's further cladding and vegetation. A lot of that happening, too. 26 hectares of cleared land. This is 26 hectares of land that was previously sterilized because there were tailings dams on top of it or mine dumps on top of it.
These have now been submitted to the DMRE for clearance so that they can be developed and released back into society for use. Right now, also one of the very important aspects of ESG is transparency and governance around tailings management. Also, our relationship with Sibanye obviously requires that we're not the one responsible for embarrassment in the larger group. A lot of focus is going into this. I think line-of-sight management from our office, the executive office, through the office of the operations, head of operations, and through the divisional head. That line of sight has very much been strengthened over the last few years. We've appointed additional in-house staff to also assist in this regard. There's an independent tailings review board, and they take a very keen eye to our governance.
We've got different perspectives of what the different standards should be, so it's healthy debate taking place in this regard. It's certainly not just affirmation for the sake of ticking a box. It's a vibrant and a very energetic group of people. The exchange of ideas is interesting to witness. I think all of it comes together in producing a product that gives a lot of comfort to the board and to management in terms of the standard of governance in managing our tailings. These tailings are enormous. They need to be looked at very carefully. I was asked a question earlier today about what is the safest upstream, downstream, et cetera. Simple fact of the matter is, a downstream dam that's poorly managed is always going to be more unsafe than an upstream dam that is well-managed.
Ultimately, it's the standard of governance, the standard of control, that determines whether or not a tailings dam is safe. These things need to be managed proactively and responsibly, we're certainly taking it very seriously. It's amazing the sort of technologies that are available nowadays, where with satellite imagery, which is what we're introducing now, you can see movements of a millimeter, which just mind boggles considering that these tailings dams, the one in the picture, is more than 200 hectares in size. That's the sort of movement that's picked up. No compromise in that regard. All right. In terms of social capital, this is what's been spent on skills development and project for local communities. A lot was written in the recent past on our Broad-Based Livelihoods program.
That's the urban farming program, and there's a second and a third leg to that as well in terms of management skills and life skills, decision-making skills. We're using this platform now, all 3,000 odd families in different communities, this network, we're using now for the next phase of our social development in bringing knowledge into the development of the informal economy. We've established a relationship with an academic institution or the research arm of an academic institution, and we're hoping to see some interesting information coming out of that as well. We do believe that the informal economy is going to lead the way out of poverty in large sections of community of society. We think that it's under-skilled, that there's huge room for skills development in the informal economy. It is not an unsophisticated economy. It might be informal, but it's anything but unsophisticated.
It also requires very particular skill set. We think that the capitalization of that informal economy of the monthly recapitalization through the social grant system, that that is inadequately leveraged. It could be applied far more effectively. We're going to be driving programs off the existing network that we have, further expanding and building that in collaboration with MCG and hoping to bring value to that as well. As I said earlier, this is the most likely way out of abject poverty in large parts of South Africa, and it will remain a very keen focus area for our organization. In terms of our COVID response, I think we're all relieved with how well in terms of our own organization, we've managed to contain the impact of COVID. I'll jump straight into the last block. 1.9% of our workforce has tested positive.
We haven't had a COVID-related death. Unfortunately, we've lost one colleague who had a comorbidity. In fact, he was really ill and was receiving treatment for his illness and then contracted COVID whilst in hospital and then sadly passed away. In terms, though, of as primary causes of death, COVID. We haven't had any in terms of our own numbers. The three cases out of 52 still alive, and as I said earlier, this bears testimony to the whole sort of buy-in and support and the right sort of attitude amongst our employees in just addressing this issue. This is really the sort of attitude that we want to take to every aspect of the business and our interaction with society as a whole. Right. Then just in terms of some of the relief.
Clearly, a lot of the communities around our operations are on a per day economic cycle. What you eat today, or if you buy what you eat this evening with money that you earn today, either as a car guard or working in somebody's garden, these are the informal settlements. If you then have a strict lockdown and you can't move out, then it means on that day you don't earn anything, which means that evening you don't eat anything. This was a recipe for disaster in terms of just general stability in the areas where we conduct business. I think the response was really quick, and once again, in collaboration with MCG, our personnel got busy. Our security department played a big role in this regard as well as did our human resources. Everybody plugged in. The salary sacrifice towards Solidarity Fund was ZAR 1.6 million.
This freed up capacity on the part of the company to match and further improve on the funding required for the MSE initiative. MSE stands for Merafong, Soweto, and Ekurhuleni, which is where these families were assisted with sustenance packs that provided adequate nutrition for a family of four for a period of about three weeks. There were three cycles of these. Of course, what just came through beautifully was the Broad-Based Livelihoods program during this thing. More than 3,000 families have established these. I think more than 250 of them are, in fact, almost like commercial farmers. A lot of food was produced, which softened the impact of the lockdown for those families considerably and also the communities around them. People could take advantage of that.
Now, in terms of looking ahead, clearly, I think we are well-positioned now to continue to take advantage of this extraordinarily high gold price. The business has shown embedded resilience in terms of dealing with some of the restrictions that resulted from the lockdown. The staff and personnel certainly, they stepped up to the plate, and they made sure that the business is looked after, that our source of livelihood is managed, that it's preserved. We have a platform, as Riaan said, we have a wonderful launchpad or platform for taking what we've got and expanding it further, building on it and expanding it further. Internally, in terms of Ergo, there's a lot to be done in developing its own volume capacity and extending its own life of mine, plenty will happen in that regard this year.
There's a lot of focus on its tailings deposition capacity in terms of the Far West operations. Phase II is now becoming a reality, with construction on the tailings deposition facility probably about 18 months away from now when we will start. In about one year from now, a lot of that will start happening. We've got a fairly good idea of what it is that we're going to have to spend going forward. I think sort of at the top end, we're still somewhere between ZAR 2.5 billion and ZAR 3 billion in terms of capital expenditure. Again, ultimately, it will be determined by and large by the environment into which this has got to be spent. What is going to be the gold price at the time? What is going to be the state of political governance locally?
What's going to be the state generally, in terms of crime, of security, of interference and the ability to fund? Riaan made mention of the fact that we may get some access to or be looking at green bond finance, focused more on the environmental side. All of these things we will consider. Ultimately, the decision as to how much exactly we need to spend will be determined on the sum of all these factors, the sum of all these dynamics. Is it going to be a very large tailings dam, where we've managed to tweak the design in order to address some of the very serious safety aspects that we believe a full liner hold for tailings of this nature? Whether we need to build a much smaller one but with a full liner.
That's going to have an impact on exactly how much money we'll spend. Clearly, we want to build the really big tailings dam, because a really big tailings dam means, in the long term, a complete environmental solution for the entire waste land. All of the tailings in that area could ultimately be then deposited onto this tailings dam. All that needs to happen then beyond that point really is just collaboration between the different role players. That's first prize. A very large plant that can receive 1.2 million and maybe even more tons per month. There's talk of maybe quite a bit more. That could be a reality depending on what the situation is like in a year from now when we take the final decision. The same applies also in terms of just the configuration.
Is it a two-plant configuration, a one-plant configuration? Is it an upgrade of the existing one or is it an entirely new one? We know what the numbers are. We're not going to stretch ourselves, we're not going to overexpose ourselves, and it's going to be a decision that we take with due regard to exactly what the situation is at the time. I'll talk a little bit more about what that time is. For the time being, though, in the near term, there's going to be a lot of focus on making sure that we build on the resilience of our business. We saw how mechanization, automation, and also digitization, how all of that contributed to just the resilience of the business, and we think we need to leverage that.
We want to take some of that, particularly the digitization, the technology aspect, we want to take that into the social aspect of the business as well. Big data is going to be a big theme for us this year. The de-risking of the business, particularly in terms of quality and cost of electricity supply, that's going to be a big focus area for us going forward. There's a lot of internal stuff that needs to take place and that we'll be focusing on. I think Jaco mentioned to me the other day that there are 118 individual projects that he and his team are running with at this stage. Obviously, some of them are very tiny projects, but some of them are really big projects.
We are looking, we're giving each of these the priority that it deserves, and we're building on that to make sure that we're not only taking full advantage of the opportunities to expand, but we also take care of business as it is now, and that we make sure that we do not underoptimize or underexploit our ore body. I mean ultimately, the key strategy for this business is to mine as much of our ore body as we possibly can, and to have the biggest impact that we potentially can in terms of the Johannesburg landscape. Gold production, again, the range based on the same considerations as in the past, between 165,000 and 185,000 ounces for the year, with a total combined cash operating cost of around ZAR 535,000 per kilo.
That's maybe a little bit conservative, but maybe it's not, and that we live in uncertain times. Then, of course, there are the metrics for decision-making that I referred to earlier. We saw that large portion of society had to sort of take a step back in terms of the security of their livelihoods because of the lockdown, and I think that brought about quite a bit of anger. Rather, quite a bit of frustration. Maybe not anger, maybe quite a bit of frustration. When it became apparent, though, that there was also looting of public funds aimed at addressing some of the impacts of the lockdown, I think that frustration turned into anger. It's within that environment that we are running a business.
When anger and frustration and hunger, when all of that spill over, the area or the environment within which you function is inherently unstable. That needs to be reversed. That needs to be stabilized. We buried a very dear colleague late last year. We have no intention of burying another one. The safety of our employees is of paramount importance, and we're not going to be closing our eyes to the realities of the environment in which we expect of our colleagues to operate and in which to work. Obviously, there's been significant increases in the security complement. We're not using this as an excuse not to produce. At the same time, also, you need to react proportionately. There's been quite a bit of an increase in that regard. I think there are certain key perceptions that need to be addressed in South Africa.
We cannot have large sections of society living with this idea that the community doesn't care or that our leaders don't care. I think we're all very encouraged by the words of our president yesterday afternoon when he came out of this very important executive committee meeting saying that corruption is the number one priority and putting down very firm measurables and rules, and I think that's a good first step towards restoring, firstly, the long road towards restoring trust and confidence in the political leadership. There is still a lot that needs to be done, and it needs to find its way into the quality of life of the citizens of our country, the people who live in this country. It needs to find its way into the communities that are really suffering.
Not suffering in having fewer choices, suffering in not having food, not having shelter, not having hope, not having jobs. Those are the things that we need to address. Those programs we need to drive as hard as government does in order to make sure that in the longer term, that we do have an environment where it is safe to invest money. Key considerations for us over and above the economics of the investment that we want to make. Key considerations will remain the integrity of private ownership. It's very hard to justify an investment of capital, especially when you're talking billions, when the integrity of private ownership is compromised. Clarity needs to be given in that regard.
To think that that's farmland and nothing else, and that that wouldn't find its way into the thinking of the investor, in terms of other infrastructure and so forth, I think is naive. The integrity of private ownership is, I think, an important lever to justify additional investment. Political governance is key. One cannot invest money of this nature, which was less than a year ago, the equivalent of our market cap, when criminals can vote out the president only because he poses a risk to them because they're gonna get prosecuted. That's got to be dealt with, and I think the first steps have been taken in that regard, and we're encouraged by that, and we hope to see a lot more. Then social stability and crime. We said quite a bit about that.
We're really encouraged by the reintroduction of the Murder and Robbery Unit. I think that'll go a long way as well in dealing because these are visible and very emotive types of crime. Also the quiet crimes, the ones that we don't see, the pilfering of infrastructure, the theft of copper cable, the destruction of government property, public property. Also those that are cancerous in terms of just the health of our society. The onslaught against women. Our women and children, women in particular, getting brutalized, especially over weekends after drinking and so forth. These are the things in society that need to be fixed, oftentimes they're as a result of deep frustrations, we need to go to the core of those frustrations. That social stability is undoubtedly going to be an important part also of our decision-making matrix, our investment decision-making matrix.
We at DRDGOLD have for long lived by the motto that if you want something done, then you do it yourself. It's working. It's working by and large, but it's working sort of in a localized manner. We need a much broader, wider national environment or climate within which we can make these investment decisions. We are undoubtedly, in my opinion, able to make those investments. We are very keen to make these investments because without them, we're not living out our full purpose. We are keen to live out our full purpose. We're hoping to see those improvements so that the environment is in fact conducive. That, by and large, I think covers what we wanted to present and what we wanted to say. Yeah, that's it. There have been a few questions. I encourage you to ask them.
The difficult ones I'll refer to Riaan and Jaco. The others I'll try to deal with myself. I'm going to try and see if I can read these. The window it's not particularly big, I'm going to scroll through them see if I can open them. Arnold, I knew you were going to ask this question. When will we release the updated operating and CapEx metrics of Far West Gold? Arnold, you'll be the first to know. No, I'm just joking. It's probably going to be in about a year from now. I think I explained the three or four contingencies that we need to take into consideration in that regard. Sort of at the upper end, it's between two and a half and ZAR 3 billion for the super deluxe model.
Right, I'm trying to see what proportion of your share-based payments was as a result of the high gold pricing? What was the proportion based on operational improvements over the last five years? Of course. Yeah. The share-based payment is based entirely on share price. Five years ago, the management of DRDGOLD issued a number of phantom shares, and they matured incrementally over a period of three, four, and five years. That was packaged as the market's reward for whatever effort management put in and hopefully what they managed to achieve over time. Sorry, there's a sound in the background. Somebody who should be on mute is not on mute. Of course, we've now stepped off the phantom share, and it's now more on an incentive share and an equity-based system that's going to be applied from now on.
Somebody here said, "Well done on your very good results." We are very pleased to emphasize and also very grateful for how it all panned out. The unit costs are not 58. It's 58 for Far West Gold. The combined unit cost for the two, the consolidated, is ZAR 100 per ton. If you were to look at the three handouts, that summary, a very good summary, is on the last page of the handout with all those operating results, which breaks it down very nicely. Makes it quite easy to follow. Let me see if I can open this one. This year's awesome DRDGOLD results prove that recovering precious metals from waste dumps is a must. Yeah. Look, I do believe that you haven't fully taken advantage of your ore body if you haven't put your residues through the mills at least once.
Your mine tailings through the mills at least once. That's one of the reasons we say that we are mining South Africa's mineral wealth again, is to get that last bit in. Obviously, and in a changed environment with much higher volume and the precision measurements that we can do through instrumentation and automation, it brings it within reach. Obviously also the changes in the gold price environment within which we function. I think the beauty of the story really lies in the fact that it falls neatly into what has become the contemporary measure for sustainability.
It resonates strongly in terms of people, in terms of planet, the fact that it can be done in a financially sound way, financially sustainable way, that you don't have to bring money from the outside, go to your national stakeholders, namely your taxpayers, and say, "Bring us your taxes so that we can go and fix the remnants of what was done yesteryear." I think that is really what makes this a truly elegant solution for an ongoing problem. It's asked here, is South Africa still scratching the surface when it comes to recovering gold from dumps? No, it's actually been going along quite nicely. We've got to thank Harry Oppenheimer for this. He was the one who, notwithstanding a relatively iffy financial model, decided that he liked it and that he was going to invest in it.
I think he was the pioneer that made others sit up and take notice. The fact is, though, is that because we can do it, we now have a solution for environmental legacy issues that can pay for itself. This is really the arena I think where DRDGOLD can play going forward. The fact that we've developed a system, and not from unique information, it's just a unique combination of different things. We've developed a system where the ESG demands that now require contemporary rehabilitation as opposed to rehabilitation post-mining. That's the sort of value offering I think that we can present. Certain mining companies or certain operators, this is not within their contemplation. The rehabilitation is not within their contemplation. There might be environmental containment, but not final closure. They sell assets before they get to the closure part.
We come in at the back end here, I think we now offer a solution where you don't have to wait until after mining is over. You can start and in parallel with mining, do the rehabilitation so that as and when the revenues dry up, that the rehabilitation is done as well. It's become more than a reputational thing now. I think it's become an impact on the investability. Society just require a different standard also from miners now. Let's see if we can scroll through the rest of these. Are there opportunities to do much more for the good of the people of South Africa? Once again, I think this is an imperative. This is neither a reputational thing nor a marketing thing, and you're not ticking a box.
If charity is the driver here, I'm sorry, you're going to end up on your bum. This is a business imperative. You cannot do business. You can't be an island of business efficiency in an ocean of social instability. It's just not going to work. I've got one little line where I can scroll through this, and hopefully I'm seeing all of these. Is there as much scope in PGMs? I'm trying to open this. Yes. Definitely there is. There's no reason why what we're doing in the gold space can't also be applied in the PGM space. I think our skill set lies really in the logistics and also in the setup of the managing and the monitoring systems.
We don't have any PGM plants right now, but Jaco and his team have made it their business to become familiar with the peculiarities of PGMs recovery. I think we know what we know, and we also know what we don't know and where we need to firm up on skills. Jaco, I don't know if you want to elaborate on that, but I think you've made it your business to really understand the different aspects of PGM recovery. Great. Could and should South Africa Inc. be doing much more to incentivize recovering precious metals from tailings dams and the like, for both financial and environmental points of view? Absolutely. A point that we often stress is that in Johannesburg, the mine didn't come to the people, the people came to the mine.
These tailings dams were built at a time when this was open farmland by and large. The influx of people have had the effect that a lot of people are now living a lot closer to mine dumps than I think is appropriate. It is, in fact, in disregard of some of the recommendations that were made early on in the 1950s, in fact, of how close urbanizations should be, or what the limits are in terms of people living near mine dumps. There's that one aspect of just the simple health and convenience aspect. People are too close. Secondly, there's a profound piece of political legacy, almost, in the Johannesburg landscape, the tailings dams, and then Soweto, traditionally the black townships where a lot of forced movements of people have taken place.
There's a reminder, a stark reminder, not dissimilar to the Berlin Wall of a divided society, and it's still there. That needs to be taken away. I think there's enormous symbolism, and there'll be a lot of healing in removing that artificial barrier between what was, at one stage, a segregated society. Clearly, there's the environmental impacts as well. Many of these tailings dams were built in low-lying areas, in flare lands and wetlands, et cetera. I said earlier how they were built in the Far West over the dolomitic aquifers. They need to be removed in that regard as well. These are three compelling considerations. Societal, just for the healing of our nation, and also environmental, why there shouldn't be tailings dams where they currently are.
Government should be falling over its feet to create an environment that is conducive to investing in the removal of tailings. We're putting up our hand. We'll remove all of them if given the opportunity. If we're given assistance with capital infrastructure, if the taxation regime remains favorable, and if we're given the scope in terms of the regulatory dispensation. That's very much what we could do. There are few things that can contribute to the improvement of the quality of life in and around the Johannesburg area than removal of all of these tailings dams. It could be huge. It could be enormous. Just the commute, for that matter. If these dams are removed and one could build housing development closer to where the workplace is.
If you could save an hour on your commute or half an hour on a commute, mothers and fathers will be spending 10 hours more at home with their families instead of having to leave it in the care of their gogo. Just the societal bonds would be just so much more healthy. I can't emphasize enough how important it is that government actively invests in dealing with the legacy of tailing dams. Financial, environmental, societal. Ticks many boxes. Just to the administrator, those are the only questions that I see, and I've managed, I think, to answer most of them. I don't think there were any real hard questions. Riaan, is there anything that you wanted to add, having had a look at the questions?
Niël, I see a question on just dividend policy. In line with that, I mentioned that earnings-wise, we paid roughly a dividend equaling earnings for the year. Just on that going forward, I don't know if you want me to just talk to that briefly.
Yeah, please. If you would.
Rene, yes, I see that question. We'd very much like to continue our dividend policy. In context of what Niël mentioned around our capital expansion program and decisions that need to be made in the next year on that, it will probably impact the quantum of that dividend. We'd very much still like to continue and pay a dividend that we generate from cash every year. It won't be, as in the past, all the free cash flow or maybe all the earnings going forward. We want to do a combined policy there. I think that's the intention. Guidance on CapEx, Rene, as Niël said, that needs to be firmed up. We have indications, obviously, our Far West model had indications to the market when it was released in the Competent Person's Report.
We'll actually firm that up in the next year and based on the investment decisions.
Jaco, there's a question on automation and how that's helped on efficiency. I don't know if you want to maybe have a look at that. The question is, "Has automation helped your grades improve?" obviously the grades won't improve, but the recoveries may improve. I remember in 2011, you were getting 2.3 gm per ton, but it helped to improve on that in terms of ESG and legacies. Do you think that the mine dumps around Johannesburg will be a thing of the past? Thanks. From Arnold Mokgoro. I think that that's a question I've answered. Jaco, I don't know if you want to talk to the automation question by Arnold and how that is helping us in improving efficiencies.
Arnold, there's a lot of work being done currently on automation, but not necessarily only automation per se. It's also looking at bringing in artificial intelligence. It's looking at bringing in additional technology to review how we do our mine planning, how we do tailings depositioning. The artificial intelligence obviously give you envelopes in which you narrow the envelopes for your parameters to give you the most economic recoveries. Automation doesn't increase your head grade, but it does assist in your overall efficiency of your operation. Obviously, one of the things that we're aiming at is to get as low as possible tail out of the plant, but at the same time, we're also trying to do that as effectively and cost effectively as possible. Looking at all kinds of improvements throughout the circuit.
Okay. There's another question from Arnold. What gold price are you using for Far West Gold? We were running most of these plants at, what, 735. Well, first 625. I think then about 735 a kilo. I don't think we've adjusted any of those. We don't want to adjust any of those. I don't think we're going to be changing anything because it's jumped ZAR two or ZAR 300,000 since then. Maybe we want to be a little bit cautious, err on the side of caution there. Has the required rate of return increased against the backdrop? Yeah, Arnold, it's either a good decision or not, in terms of the backdrop, in terms of the sort of the background noise. I don't think we're going to walk into an unhealthy political governance risk only because there's a potential of a 2% or 3% higher yield.
I don't think I'll be even running a financial model when it comes to that. It's more of an acid test. Jaco, I don't know if you want to maybe comment on that. I mean, clearly, we will look at these numbers and see what sort of headroom there is. I don't recall seeing a very significant increase in gold price assumed for purposes of the sort of the capital models that you are contemplating.
I agree with you, Niël. We're not adjusting the model necessarily because of the gold price or changing the rules like you referred to earlier because of the gold price changing. It's more focused on funding, whether you're doing it internally, what's the requirement in terms of funding and so forth. That's got a bigger role to play when you're looking at the gold price itself. Yes, planning has stayed exactly the same, and we're utilizing a very robust or conservative gold price in models at this point in time.
Good. Thanks, Jaco. There's one final question, I think. I think I've covered most, but there's one last one from Steve. "Good morning, and well done, guys." Thank you, Steve. Would you consider any M&A activity, for example, if you diversified into PGMs? Would you even look at an acquisition to facilitate this? Look, I think primarily or firstly, our focus is on offering a complete tailings solution or tailings management solution. In that regard, it would make sense for us to improve or build our in-house skill set, and then that may have to be done by way of investments in entities that can bring those skills to the fore.
In terms of out and out M&A and in the PGM space, yes, undoubtedly, I think if we are venturing into that, it would be nice to be able to invest in a team not dissimilar to the way that Sibanye-Stillwater has invested in our operating and financial team. Whether we'd be looking at doing this, everything's very expensive now. There would have to be a compelling value proposition in order to pay the sort of premiums that the current climate may command. In principle, yes, but it has to come at the right price. I think I've summarized that accurately. That is more or less how we would look at that, yeah.
That's great. We'll obviously look at non-core assets as you put in your letter in the Sibanye portfolio, surface assets, non-core surface assets in both gold and platinum. We'll definitely be looking in that space. I know, I think Nick just asked that question earlier, but definitely it's in line with what you responded now.
I think that's very much the next obvious step for us, is to see whether we can get involved in more of what Sibanye has and which are not recognized by the market because of just the fact that it might be non-core. I think we've covered everything.
There's a question by Alan, I think it's Alan Scumbi, for me, and it's with regards to battery storage, size of batteries, CapEx and timing, and then as well as a tie-up with Sibanye's Driefontein and Kloof mines.
Yes.
In any case, we're busy with those battery and solar designs. At this point in time, we're still busy with the work, we'll let you know as soon as we've got better indications of size for both the batteries and the solar plant. Obviously, with batteries, you don't require the same amount of regulatory requirements as you do with solar. It does follow. It's one project, but two different processes that we're following. We are looking at possible synergies with Sibanye on the Driefontein and Kloof site, but that's still early stage development.
Jaco, just on that, Alan asked me about what battery technology you're looking at. Are you looking at the sort of the vanadium type or which batteries?
It's still lithium, Niël, but it's the intelligent type batteries where you can charge and discharge at the same time, similar to your cell phone. Older technology, you had to charge and then discharge, wait until you've discharged the battery prior to recharging your batteries. The ones that we're currently looking at are newer technology where you can charge and utilize at the same time. Obviously, the PV plants will be looking at significantly more capacity to be operating while the sun is shining and at the same time recharging batteries so you can discharge in your peak periods.
Excellent. Thanks very much. Riaan, Jaco, do you just want to check with me that we've covered all the questions? I think we have. I don't see anything else here. Let me just go straight to the bottom.
I think we have.
Oh, sorry. Here's the one from Alan. Okay, I didn't see. Thanks, Alan. I hope that answers your question. Okay, good stuff. All right, well, thank you very much, everybody. I encourage you to also have a look at the three handouts. There's a lot of information in that. Once again, thank you for setting aside the time to come and listen to our webinar, and I hope that this was helpful. I certainly enjoyed the medium. We'll probably do something similar again in future. Thank you very much, and goodbye, everyone.