| Wed 23 Jul 2003, 10:03 | | JCI, Matodzi offer R1 for DRD's costly mines |
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JCI, Matodzi offer R1 for DRD's costly mines
July 23, 2003
By Sherilee Bridge
Johannesburg - In an ironic twist of fate, the Kebble family's JCI Limited and empowerment firm Matodzi Mining have offered Durban Roodepoort Deep (DRD) a token payment of R1 to take over the Hartebeesfontein and Buffelsfontein gold mines.
"We are able to take them over today," said Brett Kebble, the chairman of JCI.
DRD announced on Monday it might have to retrench 13 000 miners if it decided to close Hartebeesfontein and Buffelsfontein, in the North West province.
In a JSE Securities Exchange notice, DRD said profit margins at its mines had been slashed because of the sustained strength of the local currency against the dollar, making the two mines, which account for more than half of DRD's gold output, increasingly unprofitable.
"You do not require a weakening of the rand to run these operations," said Kebble, who added that the offer would entail JCI and Matodzi taking on the mines' debts.
Kebble estimated that the operations were losing R37 million a quarter at present. If closed, they would face a retrenchment and closure bill in excess of R400 million.
"It's about getting back to basics. I believe this can be done fairly quickly," Kebble said
.
Kebble's father, Roger, the former chairman of DRD, is said to have an intimate knowledge of the mining operations.
Sello Rasethaba, an executive director of Matodzi Resources, said the mines had reserves of about 7 million ounces.
If properly managed, the mines could have at least a 10-year life span.
The North West operations have yielded close on 450 000 ounces of gold this year, about 3 percent of South Africa's annual production.
But analysis shows that about half of the underground production during the course of this year has been produced at a cash cost in excess of the spot gold price.
Besides, Kebble said, the loss of 13 000 jobs would have a devastating effect on the West Rand, where each breadwinner is said to support between four and nine people.
But DRD may not be eager to sell the mines, which are still under a 60-day review.
Kebble said DRD's response had been: "The assets are not for sale."
But Ilja Graulich, the spokesperson for DRD, said any written offers would be considered.
