Two-tiered black empowerment transaction “unique in South Africa”
Durban Roodepoort Deep, Limited’s Mark Wellesley-Wood and Khumo Bathong Holdings’ Dr Paseka Ncholo today (Wednesday, 13 February, 2002) jointly announced a ground-breaking partnership between their respective companies.
In terms of the arrangement, DRD will sell to KBH:
While Crown will continue to be managed by DRD, a skills transfer process to KBH is part of the arrangement. Ncholo has been invited to join the DRD board.
“The contiguity of KBH’s ERPM operation and DRD’s Crown operation makes the logic of this new partnership compelling,” Ncholo said. “Also, the two companies share experience of turning around deep-level gold mining operations; KBH has successfully put ERPM – a hot, deep mine with water challenges – back in profits.”
The Industrial Development Corporation (IDC) has agreed to provide KBH with the required funding.
The IDC’s Head of Entrepreneurial Mining and Beneficiation, Muvhango Netshitangani, said: “This is yet another, true empowerment story in the South African mining industry in which the IDC has been involved. We are excited about the prospects of creating a meaningful participation by black entrepreneurs in the resources business. This is a leveraged transaction, which means that KBH will immediately become the rightful owner of shares in DRD. Taking into account the devaluation of the rand, this is an ideal time to do such a deal.”
In respect of the equity stake in DRD, DRD will issue to KBH 4 794 889 new DRD ordinary shares at R14.19 per share. This represents a 10% discount to the 30-day trade weighted average price per DRD share on the JSE at the close of trade on 18 January.
“Crown is a very high volume, fixed cost business, and DRD now wants to focus on expanding its cheaper, underground gold resources,” said Wellesley-Wood.
DRD will use the cash proceeds from the transaction to further enhance its balance sheet and to accelerate its hedge buy-back programme.
The transaction is subject to certain conditions, including the conclusion of formal agreements between the parties and the approval of the South African Competition Commission and other regulatory bodies.
Please note: A joint briefing on the transaction will take place at 12:15 today (Wednesday, 13 February 2001) upstairs at Five Flies Restaurant, 14-16 Keerom Street, Cape Town. Transport will be available to and from The All African Mining Investment Conference venue.
Queries:
For DRD:
James Duncan
082 892 8052 (c)
011 880 3924 (o)
Janice Dempsey
082 376 2327 (c)
011 888 3924 (o)
For KBH:
Dr Paseka Ncholo
082 902 4813 (c)
011 917 9827 (o)
For IDC:
Muvhango Netshitangani
082 371 5711 (c)
011 269 3475 (o)
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