[miningmx.com] — DRDGOLD has unveiled plans to restructure its operating assets effectively preparing the way for a demerger, possibly of its underground asset, and a separate listing.
The gold producer announced on Friday that its DRDGold South African Operations had changed its name to Ergo Mining Operations while its sole underground asset, would be housed under an operating division called Blyvooruitzicht Gold Mining Company.
Said Niel Pretorius, DRDGold CEO: “We believe this is a move towards placing two quite different sets of assets under separate brands, in order to ultimately provide separate investment opportunities for two distinct investor types.’
Ergo Mining Operations consisted of the surface mining assets of Ergo Mining (Proprietary) Ltd, Crown Gold Recoveries (Proprietary) Ltd and East Rand Proprietary Mines Ltd. It was 74% held by DRDGOLD Ltd, 20% by Khumo Gold, and 6% by the DRDSA Empowerment Trust.
Blyvooruitzicht Gold Mining Company consists of the single underground asset DRDGold still owns, the Blyvooruitzicht mine. It was previously held 100% by DRDGOLD SA, but is now directly held by DRDGOLD Limited (74%), Khumo Gold (20%) and the Trust (6%).
Pretorius has in private long discussed the possibility of creating a gold company that enjoyed the marginality of the ‘old DRDGold’ which won great favour with the US retail market for windfall profits when the gold price strengthened.
Coming against forecasts by GFMS earlier this week that the price of gold would top $1600/oz, the creation of such a company makes sense.
The question, however, is how Pretorius intended to give scale to the group’s underground gold mining division considering Blyvooruitzicht was mature, to say the least, with a limited life of mine.
It’s possible that in creating a separate company, with a proactive ADR programme in North America, a case could be made for capital raising and an acquisition strategy aimed at giving life to other mature assets in the South African gold mining districts.
If so, DRDGold would join a blossoming band of propositions which include Gold One International, Wits Gold and even Great Basin Gold whose new mine, Burnstone, nonetheless represents the development of a long known gold deposit on the Witwatersrand.
In contrast, DRDGold’s surface operations are profit-making, dividend paying even, but ultimately predictable and not evocative of the gold price leverage for which the DRDGold brand is famed.
