| Mon 9 Nov 2009, 12:00 | | DRD - DRDGold Limited - Blyvooruitzicht Gold Mining Company Limited (Blyvoor) |
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DRD
DRDD
DRD - DRDGold Limited - Blyvooruitzicht Gold Mining Company Limited ("Blyvoor")
Rescue Bid: DRDGold to Seek Judicial Management Order
DRDGOLD LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1895/000926/06)
JSE share code: DRD
ISIN: ZAE000058723
Issuer code: DUSM
Nasdaq trading symbol: DROOY
("DRDGOLD" or "the company")
BLYVOORUITZICHT GOLD MINING COMPANY LIMITED ("BLYVOOR") RESCUE BID: DRDGOLD TO
SEEK JUDICIAL MANAGEMENT ORDER
DRDGOLD has announced that - in a bid to save its 74%- owned Blyvoor mine from
liquidation - it intends applying to the High Court of South Africa for a
judicial management order over the struggling operation.
DRDGOLD CEO, Niel Pretorius, said today that the application, in terms of the
provisions of Section 427 of the South African Companies Act, had been prompted
by Blyvoor`s inability to continue to sustain losses which had now reached R27
million a month.
"Restructuring at Blyvoor flowing from the recent consultation process in terms
of Section 189A of the Labour Relations Act is not delivering the expected
turnaround as rapidly as we had hoped, and the mine is also finding it very hard
to shake off the effects of the recent four-week strike; we now need a rescue
plan that holds real promise of saving Blyvoor from insolvency," Pretorius said.
"Judicial management is the only appropriate course of action for us to take in
the face of the combined negative impact of circumstances beyond the control of
the board of directors and management."
These circumstances, which had seen Blyvoor plummet into sustained losses from
`a period of handsome profits` which lasted until April this year, included:
the 16% drop in the average Rand gold price received between 1 April 2009 and 30
September 2009 due to the strengthening of the Rand against the US Dollar;
extensive damage caused during May 2009 to higher-grade underground production
areas at No 5 Shaft by seismic activity, restoration of which is expected to
take until March 2010 to complete;
power utility Eskom`s higher winter tariffs, compounded by a 32% price increase
effective from 1 July 2009, and the likelihood of further increases in coming
months; and
the wage strike by the National Union of Mineworkers, which resulted in the loss
of 8 000 ounces of production worth R60 million.
"In terms of a judicial management order, the court appoints a judicial manager
who has a wide range of powers at his/her disposal to take such actions he/she
deems necessary to save the business," Pretorius said.
These could, for example, include giving certain creditors temporary preference
over others and agreeing compromises with creditors without the risk of
committing an act of insolvency and thereby exposing the mine to liquidation.
DRDGOLD envisaged Blyvoor remaining under judicial management until after access
to the seismicity-damaged, higher-grade areas at No 5 Shaft had been regained,
Pretorius said.
"In addition to the R75 million we have committed to saving Blyvoor over the
past three months, we will provide the judicial manager with whatever assistance
he/she may require to obtain additional `rescue finance` from appropriate
institutions, such as the Industrial Development Corporation."
Randburg
09 November 2009
Sponsor
QuestCo Sponsors
Date: 09/11/2009 12:00:01 Produced by the JSE SENS Department.
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