Gold tailings partnership established with Sibanye-Stillwater
22 November 2017
Johannesburg, South Africa. 22 November 2017. DRDGOLD Limited (DRDGOLD; JSE, NYSE: DRD) announced today that it is to acquire from Sibanye Gold Limited trading as Sibanye-Stillwater (Sibanye-Stillwater) portions of the latter’s West Rand Tailings Retreatment Project (WRTRP) assets – to be known as WRTRP Proprietary Limited – in exchange for approximately 38% of DRDGOLD’s ordinary share capital, valued at approximately R1.3 billion*.
In addition, DRDGOLD and Sibanye-Stillwater have entered into an option agreement in terms of which Sibanye-Stillwater will be granted an option to increase its shareholding in DRDGOLD to 50.1% during the 24 months following implementation of the acquisition.
DRDGOLD CEO Niël Pretorius says the acquisition and option are moves towards creating “an Industry leading surface mining partnership”.
For DRDGOLD, he says, the rationale for the acquisition and option includes:
- an increase of about 92% in gold reserves from 2.99 Moz to 5.75 Moz (6.81 Moz if currently active tailings storage facilities are included);
- the acquisition of surface assets capable of providing cash flows in the short term, with low initial capital expenditure, to support future growth and development of the project;
- the potential to increase production, revenue and increase DRDGOLD’s reserve base which extends the life of mine;
- the Regional Tailings Storage Facility (RTSF) large enough to receive most of the tailings of the West Rand providing a competitive advantage in the region;
- a reduction in overhead unit costs through increased production;
- addressing DRDGOLD’s single asset operating risk;
- securing significant long-term growth in a new operating region;
- providing strategic positioning for further growth;
- providing an opportunity to leverage proven experience to optimally develop the WRTRP; and
- in Sibanye-Stillwater, the introduction of a supportive and substantial shareholder with proven transactional capacity and an international footprint, to enhance further corporate development and growth.
The assets to comprise WRTRP are:
- the decommissioned Driefontein 3 and 5, Kloof 1, Ventersdorp North and South and Libanon dumps;
- the currently active Driefontein 1 and 2, Kloof 2 and Leeudoring tailings dams, which are to be transferred once decommissioned;
- the currently active Driefontein 4 tailings storage facility;
- the Driefontein 2 and 3 surface plants and pilot plant; and
- land for future development of the Central Processing Plant and the RTSF.
Pretorius says the ultimate goal is to set up infrastructure and a mine plan designed to mine the entire resource. This is expected to take place over two phases.
The first phase will be a low-volume, self-sustaining "design and planning phase” aimed at:
- leveraging existing infrastructure with relatively low initial capital expenditure to start generating cash flows in the near term; and
- studying the vast amount of research already done, and conducting further test work to verify the ideal blend and engineering design for phase two.
As part of phase 1, it is planned to upgrade the Driefontein 2 and 3 surface plants to treat between 400 000 and 600 000 tonnes per month (tpm) from a single source.
Phase two, Pretorius says, will involve the development of a central, high-volume processing facility and new deposition site capable of processing at least 1 million tpm with a blend of material from different combinations of sources so as to produce a flat, smooth grade profile over life of mine.
*DRDGOLD’s closing share price of R4.96 on 20 November 2017 multiplied by the 265 million shares to be issued to Sibanye-Stillwater
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Forward looking Statements
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 sustained strengthening of the Rand against the Dollar, regulatory developments adverse to DRDGOLD or difficulties in maintaining necessary licenses 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 2017, which we filed with the United States Securities and Exchange Commission on 31 October 2017 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. Any forward-looking statements included in this release have not been reviewed and reported on by DRDGOLD’s auditors.