DRDGOLD agrees to acquire remaining 35% interest in Elsburg Joint Venture
09 December 2008
Johannesburg, South Africa, 9 December 2008. The DRDGOLD Limited (JSE: DRD; NASDAQ: DROO) group (DRDGOLD) has agreed to acquire from the Mintails Limited group (Mintails) the remaining 35% interest in the Elsburg Joint Venture (Elsburg JV), the gold recovery component of the two parties’ Ergo Joint Venture (Ergo JV), for R177 million.
Implementation of the agreement will result in the DRDGOLD group owning 100% of the Elsburg JV.
DRDGOLD CEO-Designate Niel Pretorius said the acquisition of low-cost surface retreatment assets and operations in south Africa such as Elsburg has significant strategic advantages for the DRDGOLD group at a time of steeply rising underground production costs, coupled with safety concerns associated with deep level mining.
“This acquisition will result in DRDGOLD having outright management control over the Elsburg JV, which will expedite the advancement of the project and will allow for greater flexibility and optimisation of all of the DRDGOLD group’s surface retreatment operations”.
“The DRDGOLD group will be entitled to 100% of the gold produced and cash flows from the retreatment of tailings by the Elsburg JV, which has a 12-year life of mine. This will assist us in positioning ourselves to take advantage of further growth opportunities,” Pretorius said.
In October this year DRDGOLD and Mintails agreed DRDGOLD’s acquisition of a further 15% interest in the Elsburg JV for R100 million, taking DRDGOLD’s interest to 65%. This transaction is awaiting Competition Commission approval.
At the time of the October agreement, Mintails granted DRDGOLD a conditional option to acquire a further 11.4% interest in the Elsburg JV. If this option is exercised first, the purchase price of R177 million agreed in terms of the latest agreement will be reduced by approximately R23.8 million, to recognise funds already advanced under the option agreement. The acquisition is subject to various conditions precedent, including no significant adverse changes in respect of the Elsburg JV, the gold price or DRDGOLD’s market capitalisation prior to its completion.
Ergo Mining (Pty) Limited, better known as the Ergo JV was created by DRDGOLD and Mintails in November 2007 to explore, evaluate and process up to 1.7 billion tonnes of surface gold-, uranium-and sulphur-bearing tailings from the East and Central Rand goldfields of South Africa. The Ergo JV interests of DRDGOLD and Mintails are not affected by the Elsburg JV acquisition.
James Duncan, Russell & Associates
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Barbara Cano, Breakstone Group International
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Many factors could cause the actual results, performance or achievements to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements, including, among others, adverse changes or uncertainties in general economic conditions in the markets we serve, a drop in the gold price, a continuing strengthening of the rand against the dollar, regulatory developments adverse to DRDGOLD or difficulties in maintaining necessary licences or other governmental approvals, changes in DRDGOLD’s competitive position, changes in business strategy, any major disruption in production at key facilities or adverse changes in foreign exchange rates and various other factors.
These risks include, without limitation, those described in the section entitled "Risk Factors" included in our annual report for the fiscal year ended 30 June 2007, which we filed with the United States Securities and Exchange Commission on 14 December 2007 on Form 20-F. You should not place undue reliance on these forward-looking statements, which speak only as of the date thereof. We do not undertake any obligation to publicly update or revise these forward-looking statements to reflect events or circumstances after the date of this report or to the occurrence of unanticipated events.