[miningmx.com] — RECENT announcements by DRDGOLD to the Johannesburg Stock Exchange News Service (Sens) have made for some interesting reading. One reads: “Military presence at Vatukoula mine’; another reads: “Power disruption at Porgera joint venture’; and yet a third: “Announcement of KPMG as auditors of Emperor Mines’.
All testify to the problems at the group’s Australasian ventures which are likely to delay publication of the interim financial and operating results for at least a fortnight from the customary, and scheduled, mid-February.
So it must have been a relief to be able to put out some positive news about the local business.
Last August-September, DRDGOLD arranged facilities with a local institution (unnamed in the January 11 announcement, but it’s Investec) for a revolving R50m and up to another $33m.
It has drawn down R340m of this, in part to finance the three-year, R292m capital expenditure programme mentioned in the 2006 annual report, meet restructuring costs, and finance the redemption of notes last November. It has already repaid about R150m, exercising its option to do so by share issues.
To be precise, it’s issued 18.3 million shares at an average price of 827.93 South African cents/share, which grosses up to R151.5m. This is not bad going.
When I last wrote about DRDGOLD, the share price was down to 600c, and is still pretty much there. Though dates of issue of the seven tranches of shares are not given, it’s clear they were being put out all the way down.
That does leave almost a further R190m to be repaid, and I doubt that DRDGOLD will be so keen to meet this by share issues at the present price, but it’s certainly made the burden more manageable.
The shares constitute more than 5% of DRDGOLD’s equity, but not by much, as at latest count I’m told there were just over 330 million shares in issue. The facilities were provided by Investec’s corporate finance division, not its asset management side, so Investec won’t have become a long-term holder.
Indeed, the shares have probably already mostly been warehoused, either through the market or by being placed with other institutions, some of whom will thus be sitting on sizable losses.
Remarkably, even though it’s hovering around its 12-month low, DRDGOLD still has a market capitalisation in excess of R2bn. As I commented last month, some people obviously remain optimistic. But I for one will want to see the interim report before making up my mind.
Michael Coulson is a columnist for fin24.co.za
