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DRDGOLD locks in R324m on Emperor Posted: Tue, 18 Sep 2007 [miningmx.com] -- DRDGOLD has been guaranteed a minimum return of A$54m (R324m) in cash on the proposed sale of its 78.7% stake in Emperor Mines, an Australian-listed firm that is to merge with Intrepid Mines, it said today in an announcement. The merger of Intrepid and Emperor, however, is conditional on DRDGOLD selling its stake first. There were no prospective buyers yet, said Niel Pretorius, MD of DRDGOLD SA, the South African subsidiary of DRDGOLD. “There is about A$70m in value were there to be a cash distribution from Emperor Mines,” said Pretorius in an interview. “Emperor has said it will preserve value to not lower than A$54m which is tantamount to a guarantee,” he said. A write-down of Tolukuma, Emperor Mines’ only operating asset, to nil would ensure there was no more value leakage in the company, said Pretorius. Tolukuma, a mine in Papua New Guinea, continued to operate at a loss, he said. DRDGOLD had retained a broker to find a buyer. “It would be a party that believed in the value of the Interpid merger,” said Pretorius. DRDGOLD said on August 31 that it wanted to sell its stake in Emperor Mines in order to focus exclusively on its South African assets. “Their [Emperor’s] strategy isn’t ours,” said Sayers after the presentation of the company’s 2007 financial year and June quarter operating and financial results. “We are debating whether DRDGOLD needs to remain involved there anymore, regardless of whether we sell Tolukuma,” he said. It now appears as if there was no buyer for Tolukuma. This is notwithstanding some 6,000 square kilometres of exploration ground. The mine was unprofitable under DRDGOLD’s management and reported cash operating costs of $868/oz in the 2007 financial year. Emperor Mines had sold most of its assets to tackle mounting debt, including its 20% stake in the Porgera joint venture for $250m to Barrick Gold. Another mine, Vatakoula was sold for no profit to Westech, an Australian firm which has taken up the rehabilitation costs associated with the mine. Commenting on the future for DRDGOLD, Sayers said in August the company had no debt and cash resources of just under R1bn. “It’s a very different DRDGOLD. It’s balance sheet is a different kettle of fish.” Click Here to subscribe to our daily newsletter
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