Media releases

DRDGOLD agrees to sell 60% of Blyvoor to Aurora

Details

Published: Wednesday, 02 December 2009 02:00

Total transaction value of R376 million

DRDGOLD Limited (DRDGOLD) and Aurora Empowerment System (Aurora) announced today that Aurora has made, and DRDGOLD has accepted, a firm offer to acquire from DRDGOLD’s operating subsidiary, DRDGOLD South African Operations (Pty) Limited (DRDGOLD SA), a 60% interest in DRDGOLD SA’s wholly owned Blyvooruitzicht Gold Mining Company Limited (Blyvoor).

The total value of the transaction is R376 million, R296 million of which is payable in cash by 29 June 2010.

In addition, in terms of the offer, Aurora:

• undertakes to provide a facility of up to R80 million to Blyvoor in respect of working capital requirements. Blyvoor will be able to draw down R10 million on the facility at the end of December 2009, and then up to R14 million at each month-end thereafter until the end of May 2010; and
• guarantees from 30 December 2009 a monthly profit share of R2.5 million or 25% of net operating cash profit to DRDGOLD, whichever is the higher, up to and including the end of the month preceding the expected transaction completion date of 29 June 2010.

DRDGOLD CEO Niel Pretorius said: “We are pleased to have reached this agreement with Aurora. The R80 million drawdown facility will provide immediate relief to Blyvoor in terms of its short-term working capital requirements.

“Together with a very encouraging turnaround in performance at Blyvoor between October and November, notably a 116% increase in gold production and a 47% reduction in Rand per kilogram cash costs, this substantially improves prospects for bringing Blyvoor out of its current judicial management sooner rather than later.

“The cash consideration of R296 million re-strengthens DRDGOLD’s balance sheet at a time when our strategic focus is moving increasingly towards lower-risk, lower-cost, higher-margin surface retreatment operations; at the same time, we are able to preserve a 40% interest in Blyvoor’s underground optionality and surface retreatment activities”.

Aurora Managing Director Zondwa Mandela said: “This transaction demonstrates our credibility in the sector and reinforces our strategy of job preservation and opportunity. We believe we can improve safety and harness the full financial potential of operations such as Blyvoor and we look forward to working with DRDGOLD to bring this potential to fruition.”

The offer is subject to fulfilment of a number of conditions precedent. These may include:

• approval by the Boards of DRDGOLD, its black economic empowerment (BEE) partner, Khumo Gold SPV (Pty) Limited, and Aurora;
• approval by the shareholders of DRDGOLD;
• Aurora conducting of a due diligence on Blyvoor and advising DRDGOLD that it is satisfied with the results;
• execution of definitive transaction agreements relating to the offer;
• Blyvoor being taken out of judicial management within a reasonable time from signature of formal agreements, or appointing a further judicial manager nominated by Aurora; and
• DRDGOLD obtaining all South African regulatory approvals, where applicable.

As certain additional information relating to the offer is not yet available, shareholders should exercise caution when trading in their DRDGOLD securities until a full announcement containing such information is released.