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South African miner DRDGOLD completes acquisition of Sibanye-Stillwater’s WRTRP assets

The new West Rand crown jewel virtually doubles the Johannesburg-based miner’s gold reserves
The miner's Ergo operation
In March, DRDGOLD shareholders voted in favor of the miner’s acquisition of Sibanye’s WRTRP assets

Johannesburg-based DRDGOLD Ltd (NYSE:DRD JSE:DRDRGOLD) announced Wednesday that it had completed its acquisition of gold and platinum miner Sibanye-Stillwater’s West Rand Tailings Retreatment Project (WRTRP) assets.

In March this year, DRDGOLD shareholders voted in favor of the miner’s proposed acquisition of Sibanye’s WRTRP assets.

The miner received the green light from its shareholders to issue 265 million shares to Sibanye-Stillwater in return for its WRTRP assets, resulting in Sibanye holding 38% of DRDGOLD.

The transaction, valued at R1.3bn (roughly US$110mln), also gives Sibanye-Stillwater the option to buy another 12.1% of DRDGOLD shares.

BIG PICTURE: DRDGOLD glitters with vast reserves in its flagship Ergo and Sibanye-Stillwater West Rand Project

With the WRTP acquisition under its belt, DRDGOLD plans to build a large plant to process a million tons a month, and a tailings storage facility which could act as a catalyst to consolidating more dumps west of Johannesburg.

“This acquisition is key to DRDGOLD’s growth strategy, increasing our gold reserves by 90%. The way is now clear for us to expedite Phase 1 of our phased plan for the development of WRTRP, to be known going forward as Far West Gold Recoveries,” lawyer turned DRDGOLD CEO Niel Pretorius said in a statement.

The West Rand Tailings Retreatment Project will nearly double the miner’s gold reserves from 2.99 million ounces to 5.9 million ounces. That is just one part of the good news for investors.

In more good news, Sibanye’s Driefontein and Kloof mines near Carletonville are relatively rich in gold compared with what it has been mining so far to the east.

“We may get a higher yield based on the amount of gold we produce per ton,” Pretorius earlier told Proactive Investors.  

“If done properly, the West Rand tailings retreatment project could deliver 43 tons of gold over the next 15 to 20 years, adding to the 40 tons that would come from the Ergo plant over the same time frame,” he added.

DRDGOLD wants to bring the high-grade tailings dumps into production by early 2019.

“We have secured a R300mln revolving credit facility from a South African Financial Institution for Phase 1, confirmed orders for most of the long lead items, and expect to be in production in the first quarter of calendar year 2019,” said Pretorius.

According to Pretorius, phase 1 involves upgrading the Driefontein 2 plant to process tailings from “the Driefontein 5 dump at a rate of between 400,000 and 600,000tpm and depositing the residue on the Driefontein 4 tailings dam.”

With the WRTP acquisition under its belt, DRDGOLD plans to build a large plant to process a million tons a month, and a tailings storage facility which could act as a catalyst to consolidating more dumps west of Johannesburg.

The West Rand assets currently include a range of gold-bearing dumps near Carletonville west of Johannesburg, as well as three processing plants.

According to analysts, the acquisition transforms DRDGOLD in one stroke giving it a platform from which to grow aggressively into Africa and other commodities. It also cuts overhead unit costs through increased production and puts an end to DRDGOLD’S single asset operating risk.

Contact Uttara Choudhury at [email protected]

Follow her on Twitter@UttaraProactive 

 

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