NIËL Pretorius is sailing DRDGold into unchartered waters with the proposed deal by which Sibanye-Stillwater will end up with a 38% stake in his firm in return for handing over the gold-bearing surface gold slimes dams at the Libanon and Driefontein mines near Carletonville on the West Rand. Sibanye-Stillwater would get immediate board representation, and also have an option to lift its stake in DRDGold to 50.1% during the 24 months following implementation of the deal. This is despite making a condition precedent that it does not have to extend a mandatory offer to all DRDGold shareholders. Pretorius stresses the positives of the deal: it will nearly double DRDGold’s gold reserves; remove the company’s single-asset risk situation, and provide potential to increase production and revenues. Against that must be weighed the prospect of being effectively controlled by Neal ‘Pacman’ Froneman’s burgeoning gold/platinum empire in which DRDGold will constitute a very small cog. Corporate history has shown time and again that big organisations frequently do not pay sufficient attention to the minnows in their asset portfolios. DRDGold’s great attraction to many investors is precisely because it is a small, independent gold producer which is highly leveraged to movements in the gold price. Pretorius could have a “hard sell” on his hands getting shareholders to approve this one. But we think he’ll do it.
LIFE OF NIËL
Pretorius has shown a canny ability to close good deals for DRDGold: his creeping takeover of the resurrected East Rand Gold and Uranium operation at Springs has been the shining example. DRDGold took up extra equity at every opportunity in return for bankrolling struggling Australian junior Mintails, which initially controlled the project. DRDGold’s fortunes are focused on the operation of that plant, although it remains to be seen how the latest deal to get control of Sibanye’s dump resources on the West Rand plays out. Pretorius joined DRDGold as legal counsel in May 2003; became GM of corporate services in 2005 and CEO in 2009.
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