Cardinal Resources

Sibanye-Stillwater, a 38% shareholder in DRDGOLD, has exercised its option to acquire an additional 12% interest in DRDGOLD, and will hold a controlling 50.1% in the JSE- and NYSE-listed surface gold tailings retreatment company.

DRDGOLD acquired the gold assets of Sibanye-Stillwater’s West Rand Tailings Retreatment Project – now known as Far West Gold Recoveries (FWGR) – in July 2018 in return for a 38.1% stake in DRDGOLD. Sibanye-Stillwater had a 24-month option to acquire an additional 12%.

READ MORE: Sibanye-Stillwater: Grounded in gold, flourishing in PGMs

Sibanye-Stillwater will now subscribe for 168 158 944 new ordinary shares at an aggregate subscription price of R1 085 590 116, on 22 January 2020.

The shares will be allotted and issued at a price of R6.46 per share, being a 10% discount to the 30- day volume weighted average traded price of a share 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,” says DRDGOLD CEO Niël Pretorius.

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“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.”

Commenting on the exercise of the option, Sibanye-Stillwater CEO Neal Froneman says that by securing the majority holding in DRDGOLD, “we continue to create value for all stakeholders in line with our vision.

“We are thrilled that the value of our initial shareholding has already increased by 147% over 17 months. The DRDGOLD team has a proven track-record and has successfully implemented the Far West Rand Recoveries project, having reached its 500 000 tonne per month planned capacity for Phase 1. We look forward to further value creation as DRDGOLD completes its detailed planning and possible implementation of Phase 2”.

Far West Gold Recoveries project

The FWGR acquisition increased DRDGOLD total mineral reserves at the time by approximately 82%.

READ MORE: Far West Gold Recoveries solidifies sustainability for DRDGOLD

Its Phase 1 development, costing R330.7 million, entailed the upgrading 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 to cater for additional volumes.

Phase 1 reached commercial production on 1 April 2019 and planned throughput of 500 000 tpm during the first quarter of FY2020, within budget and time parameters.

Phase 2 has 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.