| Mon 7 Apr 2003, 12:19 | | DRD stays aloof from Khumo Bathong row |
|
April 7, 2003
By Sherilee Bridge
Johannesburg - The possible liquidation of Khumo Bathong Holdings, the unlisted mining investment company that owns a 4 percent stake of Durban Roodepoort Deep (DRD), seems unlikely to affect DRD.
An application for the liquidation of the black empowerment company, which is also DRD's 60 percent joint-venture partner in Crown Gold Recoveries and East Rand Proprietary Mines (ERPM), was lodged in the Johannesburg high court last week.
The Baird Trust, a 33.33 percent shareholder in Khumo Bathong, wanted the court to either wind up Khumo Bathong or secure a fair price for its stake in the company.
As reported in the Business Report On Sunday, the Baird Trust is also fighting demands by the Ncholo Trust, Khumo Bathong's only other shareholder, that a dividend of R7 million that was paid out to the company's shareholders in July be paid back.
Mahlangu Nkomo attorneys, acting for Khumo Bathong and the Ncholo Trust, said last week that they would contest the application, but a court decision to wind up Khumo Bathong could force it to sell its mining investments.
Ilja Graulich who is in charge of investor relations at DRD, said yesterday that DRD would not be damaged by the application or its result.
He said the empowerment joint venture was structured so that Crown Gold Recoveries and ERPM were autonomous operations.
"We understand that Khumo Bathong intends to contest the application by the Baird Trust. Any comment by us would be premature and therefore inappropriate," DRD said.
But the application comes at a bad time in the history of both companies
. Production has only just returned to normal at ERPM after a month-long underground fire ravaged profits.
"The estimated cost of the fire to Crown Gold Recoveries was R15.2 million. A total of 130kg of gold production was lost," DRD, the country's fifth-largest gold producer, said last week.
DRD confirmed that the lost production and the stronger rand would squeeze profits, which would be reported along with its quarterly results at the end of April.
The company has also been haunted by corporate governance ghosts. DRD's company secretary and legal adviser recently resigned, and the head of the Argonaut project was fired for allegedly passing information to Roger Kebble, the former chairman of DRD.
But Clive Roffey, a gold chartist, said he was not fazed by the goings-on.
"Of far greater concern are the gold price and the proposed new Mineral and Petroleum Royalty Bill that seeks to impose a royalty from 2 percent to 8 percent on the revenues of mining groups," Roffey said.
Roffey wrote an article last month in which he said that, as a marginal mine, DRD would "probably benefit" from the bill's new exemptions.
"Whereas the large non-marginal mines will be subject to the finally agreed royalty, DRD could end up being exempt or with a much lower royalty and far better off than its competitors in the South African gold mining industry," he said.
DRD's stock price dropped to R33.23 in January from a June high of R56.50. The shares closed 43c, or 2.3 percent, higher at R19.23 on Friday, a gain of R1.93 on the week.
