DRDGOLD bids for Mintails

Brendan Ryan | Mon, 29 Jun 2009 19:05
[miningmx.com] -- DRDGOLD has confirmed it is bidding to buy the South African assets of dump retreatment partner Mintails which is listed on the Australian Stock Exchange as was first suggested by Miningmx last week.

A DRDGOLD statement released late on Monday said “DRDGOLD views the implementation of the offer as an opportunity to consolidate and grow the surface mining potential of its Crown Gold Recoveries and Ergo operations in the Central and East Rand with that of Mintails in the West Rand.”

It added that Mintails had “conditionally accepted” the offer.

The deal specifically excludes Mintails' stake in ASX-listed underground explorer West Wits Mining (West Wits). DRDGold is a JV partner with West Wits which is looking at underground projects on the West Rand.

DRDGOLD CEO Niel Pretorius was not immediately available for further comment.

Payment for the assets will be in DRDGOLD shares but the statement puts no specific value to the deal at this stage.

It said the price would be determined by the 30 day VWAP (volume weighted average price) of Mintails over the 30 trading days to June 24 less the value of Mintail’s holding in West Wits based on the West Wits VWAP over the same period.

The value of the DRDGOLD shares to be allocated will also be calculated on their VWAP over that 30 day period.

The deal is subject to a string of conditions precedent including approvals by the Mintails and DRDGOLD boards as well as by Mintails shareholders and DRDGOLD shareholders “to the extent necessary”.

“Definitive transaction agreements” for the agreement have to be executed by August 31.

Mintails halted trading in its shares on Wednesday after “being approached by a gold producer with South African operations with a view to acquiring the South African assets of the company.”

According to Mintails chairman Pat Smyth the trading suspension is likely to continue while Mintails consults with its shareholders on the deal and gets rulings from the ASX.

Mintails is involved in joint ventures with DRDGold to recover gold from tailings dumps on the East and West Rand. The company’s assets include a 50% stake in more than 1.5 billion tonnes of dump material which can be retreated to recover gold, uranium and sulphuric acid.

Mintails also owns the potential Witfontein deposition site on the West Rand which could be a strategic asset in any future consolidation of uranium operations in the region.

The writer owns shares in Mintails and DRDGOLD.