| Thu 10 May 2007, 16:27 | | DRD - DRDGOLD - Disposal By Emperor Mines Limited |
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DRD
DRDD
DRD - DRDGOLD - Disposal By Emperor Mines Limited ("Emperor") Of Its
Interest In The Porgera Gold Mine Joint Venture ("The PJV")
And Extension Of Cautionary
DRDGOLD LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1895/000926/06)
ARBN: 086 277 616
JSE trading symbol: DRD
ISIN: ZAE000058723
Issuer code: DUSM
Nasdaq trading symbol: DROOY
("DRDGOLD" or "the company")
DISPOSAL BY EMPEROR MINES LIMITED ("EMPEROR") OF ITS INTEREST IN THE
PORGERA GOLD MINE JOINT VENTURE ("THE PJV") AND EXTENSION OF CAUTIONARY
INTRODUCTION
Further to the cautionary announcement dated 12 February 2007 and various
other announcements respectively dated 1 February 2007, 6 March 2007 and 23
March 2007 relating to the restructuring of DRDGOLD`s off-shore interests,
on 12 April 2007 the company announced that Emperor (the company`s 78.72%-
held, Australian-listed subsidiary) had entered into an agreement relating
to the disposal of its 20% interest in the PJV ("the PJV interest") ("the
disposal"). The PJV interest is held through DRD (Porgera) Limited ("DRD
Porgera") of Papua New Guinea, a wholly-owned subsidiary of DRD (Isle of
Man) Limited, in turn a wholly-owned subsidiary of Emperor. This
announcement should be read in conjunction with the previous announcements.
TERMS OF THE DISPOSAL
DRD (Porgera) will dispose of the PJV interest to Barrick (Niugini) Limited
("Barrick (Niugini)") of Papua New Guinea (a wholly-owned subsidiary of
Barrick Gold Corporation of Canada ("Barrick")), for a consideration of
US$250 million plus an additional adjustment amount, to be paid in cash.
The adjustment amount is equal to US$37,671 for each day from the effective
date of the disposal, being 1 April 2007, ("the effective date") through to
the date of completion. Completion is expected to occur within four months
from the effective date, subject to the timing of the receipt of the
relevant regulatory approvals.
As part of the disposal, Barrick has been granted an option to subscribe
for 153,325,943 shares in Emperor ("the option"). The option is
exercisable at any time within ten days of the Emperor shareholders`
meeting to approve the disposal, with a subscription price determined by
the volume weighted average price of Emperor shares over the prior five
trading days.
RATIONALE FOR THE DISPOSAL AND APPLICATION OF PROCEEDS
The disposal is in line with the restructuring plan for the Emperor
operations.
The proceeds from the disposal will be used to settle Emperor`s outstanding
debt obligations. This will return Emperor to a positive cash position.
NATURE OF BUSINESS OF THE PJV
The PJV owns the Porgera gold mine which is located in Enga Province in the
highlands of Papua New Guinea, some 600km north west of the capital, Port
Moresby. The Barrick group is the majority shareholder in the PJV and has
operating rights over the mine. The PJV attributable gold production for
the quarter ended 31 March 2007 was 214 000t at a recovered grade of
2.69g/t, producing 18 526 ounces at a cash operating cost of US$597/ounce.
As at December 2006, the PJV had an estimated amount of 9 405 000 ounces of
proven and probable reserves and in addition, 3 576 000 ounces of
resources.
PRO FORMA FINANCIAL EFFECTS
The pro forma financial effects set out below have been prepared to assist
shareholders in assessing the impact of the disposal on the earnings per
ordinary share and headline earnings per ordinary share of DRDGOLD for the
six months ended 31 December 2006 and the net asset value ("NAV") and net
tangible asset value ("NTAV") per ordinary share at that date. These pro
forma financial effects have been prepared in terms of the JSE Limited
Listings Requirements ("the Listings Requirements") for illustrative
purposes only in order to provide information on how the disposal might
have affected the results, changes in equity and financial position of
DRDGOLD and, because of their nature, may not give a true reflection of the
actual financial effects of the disposal. The directors are responsible
for the preparation of the pro forma financial effects.
Before the After the Change
disposal disposal
(cents) (cents) (%)
(Loss)/profit per ordinary
share for continuing
operations (22.1) 226.1 1 123
Headline loss per ordinary
share for continuing
operations (24.5) (135.0) (451)
NAV per ordinary share 23.0 246.8 973
NTAV per ordinary share 23.0 246.8 973
Weighted average number of
ordinary shares in issue
for the period ended 31 325 172 488 325 172 488 -
December 2006
Number of ordinary shares
in issue at 31 December 334 823 654 334 823 654 -
2006
Notes:
1. The loss and headline loss per ordinary share for continuing operations,
as set out in the "Before the disposal" column of the table, are based on
the unaudited financial results of DRDGOLD for the six months ended 31
December 2006.
2. The profit and headline loss per ordinary share for continuing
operations for the six months ended 31 December 2006, as set out in the
"After the disposal" column of the table, are based on the following
assumptions:
a) the disposal was effective on 1 July 2006;
b) a portion of the proceeds from the disposal was immediately applied to
settle Emperor`s debt obligations to Australia and New Zealand Banking
Group Limited ("ANZ Bank");
c) the cash received by Emperor, less the ANZ Bank debt settlement, earned
interest for the period at the rate of 6% per annum;
d) taxation of 30% (being the Australian taxation rate) was calculated on
the interest earned; and
e) a Papua New Guinea withholding tax at the rate of 10% was applied on the
retained earnings of DRD (Porgera).
3. The NAV and NTAV per ordinary share, as set out in the "Before the
disposal" column of the table, are based on the unaudited balance sheet of
DRDGOLD at 31 December 2006.
4. The NAV and NTAV per ordinary share, as set out in the "After the
disposal" column of the table, are based on the assumption that the
disposal was effective on 31 December 2006.
The pro forma financial information included in this announcement does not
purport to be in compliance with Regulation S-X of the rules and
regulations of the United States Securities Exchange Commission.
CONDITIONS PRECEDENT
The disposal is subject to, inter alia, the fulfilment or waiver (where
possible) of the following conditions precedent:
- the passing and, where necessary, registration of all such shareholder
resolutions of DRDGOLD and Emperor as may be necessary to implement the
disposal;
- the approval of ANZ Bank;
- the waiver by Mineral Resources Enga Limited ("MRE") of Papua New Guinea,
which holds a 5% interest in the PJV, of its pre-emptive rights over the
PJV interest. (If MRE elects to exercise its pre-emptive rights, Emperor
will proceed to complete the sale of the PJV interest to both Barrick
(Niugini) and MRE in accordance with the PJV pre-emptive rights process);
and
- the requisite approvals of all relevant regulatory and statutory bodies
in South Africa and Papua New Guinea including the JSE Limited ("the JSE")
and the South African Reserve Bank as well as the Bank of Papua New Guinea
and the Papua New Guinea Mining Advisory Council.
DOCUMENTATION
The Securities Regulation Panel has ruled that Section 228 of the South
African Companies Act, 1973 (Act 61 of 1973), as amended, should not apply
to the disposal as it does not constitute an affected transaction at the
DRDGOLD level. However, the disposal is classified as a Category 1
transaction in terms of the Listings Requirements and the company must
therefore obtain the approval of its shareholders in general meeting. A
circular, which is subject to approval by the JSE, will therefore be posted
to DRDGOLD shareholders within 28 days of this announcement or so soon
thereafter as is practicable.
EXTENSION OF CAUTIONARY
Further to the latest cautionary announcement dated 12 April 2007,
shareholders are advised that negotiations are still in progress relating
to the further restructuring of DRDGOLD`s non-South African interests
which, if successfully concluded, may have a material effect on the price
of the company`s ordinary shares. Accordingly, shareholders are advised to
continue exercising caution when dealing in the company`s ordinary shares
until a full announcement is made.
10 May 2007
Corporate adviser
QuestCo (Pty) Limited
Sponsor
Standard Bank
Attorneys
Feinsteins
(Levy, Feinsteins & Associates Incorporated - Reg No
1995/001716/21)
Date: 10/05/2007 16:27:06 Produced by the JSE SENS Department.
