WATCH: Sibanye-Stillwater to pay R1billion to raise its stake in DRDGold to 50.1%
JOHANNESBURG - Sibanye-Stillwater will pay R1 billion to boost its shareholding in DRDGold, the JSE-listed specialist in gold recovery, to 50.1 percent from 38 percent after being the company’s controlling shareholder for more than a year.
Sibanye-Stillwater, the precious metal producer, said on Friday it would buy an additional 12 percent stake in DRDGold by subscribing for 168 million new ordinary shares later this month as part of its consolidation of the South African mining industry.
It said the acquisition was part of a 2017 deal in which it sold selected gold processing and tailings plants to DRDGold in exchange for a 38 percent stake in the company. At the time, Sibanye-Stillwater was given an option to acquire an additional 12 percent in DRDGold within two years.
Sibanye-Stillwater chief executive Neal Froneman said on Friday that, by securing the majority holding in DRDGold, the company would continue to create value for all its stakeholders.
“We are thrilled that the value of our initial shareholding has already increased by 147 percent over 17 months. The DRDGold team has a proven track record and has successfully implemented the Far West Rand Gold Recoveries (FWGR) project, having reached its 500000 ton per month planned capacity for Phase 1,” Froneman said. Sibanye-Stillwater has previously said the partnership with DRDGold aimed to grow an international, industry-leading, surface retreatment business.
Sibanye-Stillwater has consolidated the South African mining industry by snapping up platinum producers including Lonmin, Aquarius Platinum and Anglo American Platinum’s Rustenburg operations.
DRDGold, which subsequently renamed these assets FWGR, said the assets had boosted its mineral reserves by about 82 percent.
DRDGold chief executive Nië* Pretorius said the transaction marked the single largest investment that has been made by an individual shareholder in the capital of the company.
“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,” Pretorius said, adding that Sibanye-Stillwater’s support had been invaluable in the success of the company’s implementation of the first phase of the development of the project.
DRDGold said it had pumped R330.7 million into Phase 1 development, which entailed the upgrading of the existing Driefontein 2 plant to retrieve 500 000 tons per month 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 last April, and planned throughput of 500 000 tons per month during the first quarter of the 2020 financial year. Phase 2 had begun with conceptual studies to evaluate options to treat the remaining reserves acquired from Sibanye-Stillwater.
The Sibanye shares closed 0.67 percent lower at R35.68 on the JSE on Friday.