South African gold producer DRDGOLD Limited (JSE:DRD) (NYSE:DRD) said Friday that it was on track to produce the higher end of its guidance of 190,000 ounces for the full year to end June as it also revealed that mining major Sibanye-Stillwater had exercised an option to acquire a further 12% of the group.
In a statement, DRDGOLD said it had generated over three tonnes of gold (3,037kg) from its Ergo and Far West Gold Recoveries (FWGR) oeprations in the six months to end of 2019.
This is a 33% increase on the 2,280 kg it produced for the six months to the end of 2018 mainly due to the increased contribution by the tailings project, Far West Gold Recoveries, it said.
DRDGOLD acquired the gold assets of Sibanye-Stillwater’s West Rand Tailings Retreatment project, now known as FWGR, in July 2018 in return for a 38.1% stake in DRDGOLD. The move increased DRDGOLD's total reserves by around 82%.
Sibanye also had a 24-month option to acquire a further 12%, which it has now carried out, giving it a total stake in the smaller company of 50.1%.
Sibanye-Stillwater will subscribe for over 168 million new DRDGOLD shares at R6.46 per share, which is a 10% discount to the 30-day volume weighted average price on the day immediately prior to the date of exercise of the option.
"Sibanye-Stillwater has been our largest shareholder for just over 17 months now and its support has been invaluable in the success of our implementation of the first phase of development of FWGR," said DRDGOLD CEO Niël Pretorius in a statement.
"This latest transaction marks the single largest investment that has ever been made by an individual shareholder in the capital of our company, and it bears testimony to a shared vision for the future of our enterprise.
"It will come in very handy in accelerating the further unlocking of value in DRDGOLD’s business and will go a long way to fund the early-stage development of FWGR Phase 2," he added.
First phase of work
The first phase of the work at FWGR saw the upgrade of the existing Driefontein 2 plant to retreat 500,000 tpm of material reclaimed from the Driefontein 5 tailings dam and of the Driefontein 4 tailings storage facility. It reached commercial production on April 1 last year and throughput of 500 000 tpm during the first quarter of full year 2020, within budget.
DRDGOLD said that Phase 2 had now begun with conceptual studies to evaluate options to treat the remaining reserves acquired from Sibanye-Stillwater.
"One option is to construct a new retreatment plant and tailings storage facility to exploit a larger, regional mineral resource, producing more gold over a longer period and rehabilitating a much larger footprint," the company told investors.
DRDGOLD shares in New York added around 10% to US$6.04..
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