DRDGold gets extension of judicial management

I-Net Bridge | Tue, 16 Mar 2010 15:15

[miningmx.com] -- South African marginal gold producer DRDGold on Tuesday reported that it had been granted an extension of the Blyvooruitzicht (Blyvoor) provisional judicial management order.

The company said the High Court had extended the provisional judicial management order granted in November 2009 to April 13, 2010, to enable the judicial managers to compile and file a report on the affairs of Blyvoor.

Four provisional judicial managers which were appointed by the master of the High Court had until Tuesday to submit an interim report.

In a bid to save Blyvoor from liquidation, DRDGold announced its intention to apply for a judicial management order in early November last year.

At the time, DRDGold CEO Niel Pretorius said the application had been prompted by Blyvoor's inability to continue to sustain losses which had now reached R27m a month.

The company also indicated that besides the R75m it had by then spent on trying to make the mine work, the mine might require additional 'rescue finance'.

Among the reasons listed for Blyvoor's blues is South African power utility Eskom's higher tariffs with DRDGold warning that further increases would compound the mine's problems.

DRDGold warned in October that it might be forced to shut down its underground operations at Blyvoor if Eskom's proposed tariff increases are pushed through.

Eskom has proposed a 45% increase in each of the next three years, this was later reduced to 35% a year and the National Energy Regulator of South Africa in February approved of increases of between 25% and 26% over the next three years.

Besides the higher cost of power, circumstances leading to DRDGold's move included the 16% drop in the average rand gold price received between April 1, 2009 and end September 2009 due to the strengthening of the rand against the US dollar.

At 12:37 shares in DRDGold were trading 5% or 20c firmer at R4.20 on the JSE.