DRDGOLD upbeat about Far West Gold Recoveries commercial success
31 October 2018
“Our share could evolve into a growth stock”
Johannesburg, South Africa. 31 October 2018 DRDGOLD Limited (DRDGOLD; JSE,NYSE: DRD) says it believes the commercial success of its new Far West Gold Recoveries project may lift the company’s profile in the investment domain, positioning it for growth and evolving its share into a “growth” stock.
DRDGOLD concluded its acquisition of the Far West Gold Recoveries assets from Sibanye-Stillwater on 31 July 2018.
In its integrated annual report for the year ended 30 June 2018 released today, CEO Niël Pretorius says: “The improved performance in our share price enabled us to pitch an offer to Sibanye-Stillwater for their West Rand surface gold portfolio at a share exchange ratio that struck a good balance between what we should be paying for the asset, and what they were asking for it.
How big or small the inflow of capital might be should Sibanye-Stillwater choose to exercise its option to increase its stake in DRDGOLD from 38% to 50.1% is entirely up to DRDGOLD shareholders who ultimately determine the share price,” Pretorius says.
DRDGOLD chairman Geoffrey Campbell says: “Not only does the transaction add significant longevity to our operations but also the dumps that we have acquired are of a higher grade than our existing dumps and therefore we expect the operations to be more profitable than our existing operations.
This will make DRDGOLD more resilient to a lower gold price, which is always a good thing.”
Development of Far West Gold Recoveries, which is expected to increase DRDGOLD’s reserves to approximately 6 million ounces, is planned in two phases.
Phase 1 development, already well under way, involves upgrading of the Driefontein 2 plant to treat material from the Driefontein 5 dam at a rate of 500 000 tonnes per month from early in calendar 2019.
Of the R300 million loan secured to finance Phase 1, Campbell says: “Our ability to borrow money at a time of dull gold price performance in a sector that is not attracting capital is further demonstration of DRDGOLD’s positive reputation.”
Phase 2, which involves consolidation of what remains of Phase 1 material and the remaining tonnes of material acquired, envisages a monthly production rate of 1.2 million tonnes and is planned to be enacted within 24 months after the start of Phase 1 production.
Key features of Phase 2, feasibility of which will be tested over the next two years, are the construction of a large, centralised plant and an ultra-high volume deposition facility.
Phase 2, Campbell says, has the potential to be “hugely significant” not just for DRDGOLD but for South Africa as a whole.
“With the right gold price and forward-looking government policies to support a fair and stable business environment to attract the necessary long-term capital, we could be looking at a much larger operation.
“Phase 2 would require substantial development and the resulting investment would not just pay shareholders’ dividends for many years to come but also provide skilled jobs and training, tax payments, community development and extensive environmental clean-up.”
Note to editors:
DRDGOLD’s integrated annual report for the year ended 30 June 2018 can be accessed on the company’s website, www.drdgold.com
Other points of interest in the report:
- Regulations and their effects on our business: page 22
- Strategic objectives: page 31
- Review of operations: page 44
- Social and relationship capital: broad-based agricultural project; Crown complex vegetation programme; education our communities – maths, science, accountancy: page 53
- R51.6 million environmental management expenditure: page 57
*High-resolution photographs and high definition video footage are available on request.
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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 2018, which we filed with the United States Securities and Exchange Commission on 31 October 2018 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.