[miningmx.com] — DRDGOLD would not indefinitely stay a minority
shareholder in Village Main Reef once the Blyvoor transaction has been completed,
according to DRDGold CEO Niel Pretorius.
The two companies announced on Monday they have reached a binding agreement
over the sale of DRDGold’s 74% stake in Blyvoor to Village; a transaction of which
the value has already escalated from an initial R150m to R194m. The 30%-odd
increase was in line with the rise in Village’s share price since an announcement in
November that the parties were in discussions over a possible deal.
In terms of the deal, Village would buy the struggling Blyvoor underground mine from
DRDGold in exchange for just under 86 million new shares at an issue price of R1.75
per share – giving DRDGold an effective stake of around 9% in Village. Village was
trading at R2.28 per share on Monday, up 5.56% for the day.
“The market is already much closer to our valuation of Village,’ Pretorius told
Miningmx. “The idea is not to be a minority shareholder in Village in the long
run.’
“Obviously we don’t want to create an overhang in the market (of Village shares), so
when the timing is right we’ll start selling those in drips and drabs. We’ll look to place
those shares with existing shareholders.’
The transaction would take place in two parts.
The first part is mainly dependent on the Competition Commission’s approval of the
deal, as well as the conclusion of the sale of AngloGold Ashanti’s West Wits mining
right at Savuka to Blyvoor.
In July, AngloGold agreed to sell Blyvoor some 390,000 square metres of its
neighbouring Savuka mining area for R35m, after DRDGold initiated business rescue
proceedings in June.
Village CEO Bernard Swanepoel said the inclusion of the Savuka portion was an
integral part of the deal, and that he was confident AngloGold would be keen to
complete the transaction.
“I should think that commercial common sense will prevail,’ Swanepoel said. “Blyvoor
pumps some 20 million litres [of water] on Savuka’s behalf so they cannot allow
Blyvoor to come to a standstill.’
The deadline for this first part of the deal is May 30, whereafter DRDGold would
receive some 66 million of the 86 million issued shares. The balance would be held in
escrow for up to two years until the Department of Mineral Resources has granted
the conversion of Blyvoor’s old-order mining right, and another year for the transfer
of the right from DRDGold to Village.
The transaction has various clauses to deal with a situation in the event that
DRDGold should fail to convert the mining right.
Pretorius said Village would assume operational control following the completion of
the first part of the transaction.
Blyvoor is the third deep-level, marginal gold mine that Swanepoel has acquired since
launching his comeback to gold mining through the takeover of Village in 2008. The
other two are Buffelsfontein and nearby Tau Lekoa, which Village acquired through
an asset takeover of Simmer and Jack Mines (Simmers) in March 2011.
Blyvoor was the last of DRDGold’s underground assets and had struggled over the
years to contain costs and impose efficiencies. The group fully wrote down the mine
in its 2011 financial year. DRDGold announced week it would embark on a Section 189
process which might affect 1,800 of Blyvoor’s 4,300-strong workforce.
