[miningmx.com] – DRDGOLD has outlined proposals to restructure its empowerment holdings such that it will offer shares worth R147m to Khumo Gold which owns 20% in DRDGold subsidiary Ergo Mining Operations (EMO).
EMO has full control of Ergo Mining, DRDGold’s flagship gold dump retreatment asset and 100% of East Rand Proprietary Mines (ERPM) which contains gold exploration assets and small scale gold mining and recovery operations.
DRDGold said the rationale for the transaction was to make its capital structure more efficient. The transaction also includes the DRDSA Empowerment Trust which has a 6% stake in the subsidiary company and will be issued with 10.5 million DRDGold shares worth R46.2m. All in all, DRDGold will issue 45.5 million shares to its empowerment partners worth just over R200m.
DRDGold said that in addition to providing it with “operational flexibility”, the group’s empowerment partners would be able to sell DRDGold shares after a three year lock-in period. The deal would also “ensure regulatory compliance,” it said.
The Department of Mineral Resources (DMR) is currently conducting company by company audits ahead of a January 2015 deadline for Mining Charter compliance. In essence, mining companies are required to be 26% empowered.
Niel Pretorius, CEO of DRDGold, said the transaction was not related to the audit. “We always intended to roll up the structure at the appropriate time. I think that time has come now,” he said.
Shareholders were required to support the transaction as the deal could not be done at a discount. This was owing to the fact that the initial empowerment deal, completed in about 2004, had been vendor-financed which had dilutory effects for shareholders.
“Implementation of the transaction will result in DRDGOLD acquiring the entire issued share capital of EMO thereby providing DRDGOLD with unfettered control over EMO and its operations and cash flow,” it said in a statement to the JSE.
“Furthermore, assuming that the transaction is successfully implemented, all cash distributions paid by EMO after the signature date shall accrue for DRDGOLD’s benefit furthering its ability to efficiently manage capital within its corporate/operating structures,” it added.
