| Thu 1 Sep 2005, 17:07 | | DRDGold Limited - Simmer And Jack Takes Over At Fo |
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DRDGold Limited - Simmer And Jack Takes Over At Former North West Operations
DRDGOLD Limited
(Formerly Durban Roodepoort Deep, Limited)
(Incorporated in the Republic of South Africa)
(Registration number 1895/000926/06)
Share code: DRD
ISIN: ZAE000058723
ARB number: 086 277 616
(`DRDGOLD`)
SIMMER AND JACK TAKES OVER AT FORMER NORTH WEST OPERATIONS
DRDGOLD has concluded an agreement with Simmer and Jack Mines Limited (`Simmer
and Jack`) for the sale of its shareholding in Buffelsfontein Gold Mines Limited
(`Buffelsfontein`) (`the agreement`), which is currently in provisional
liquidation.
The agreement is conditional on:
- the acceptance by the court and the majority of Buffelsfontein`s creditors of
a scheme of arrangement proposed by Simmer and Jack;
- approval by the Competition Commission; and
- the Department of Water Affairs and Forestry agreeing to substitute DRDGOLD
with Simmer and Jack in the underground water pumping directives that currently
regulate the proportionate contribution of the surrounding mines to the costs
and maintenance of pumping.
Buffelsfontein, known as DRDGOLD`s North West Operations (`NWO`), was placed in
provisional liquidation on 22 March 2005, following continued financial losses
and a earthquake on 9 March 2005, which caused irreparable damage to No. 5
Shaft.
Simmer and Jack has made proposals that could revive the NWO, albeit on a
smaller scale and with vastly different cost structures and obligations. DRDGOLD
has supported Simmer and Jack in this acquisition and is pleased to see the
resumption of mining in the area.
Simmer and Jack`s scheme of arrangement involves payment of R45 million to the
provisional liquidators and the fresh appointment of employees without
assumption of any accumulated pre-liquidation employee benefits.
Simmer and Jack said that it was appreciative of the support DRDGOLD had shown
throughout the process and would like to conclude the transaction as speedily as
possible so that underground operations could resume and the company could begin
re-employing some of the workers from the surrounding community.
The preferred bidder for the assets, Simmer and Jack currently:
- manages NWO;
- pays its holding costs in terms of an interim agreement with the
provisional liquidators; and
- conducts limited mining of surface dumps.
Simmer and Jack may offset up to R20 million of its contribution to holding
costs against the proposed payment to the provisional liquidators of R45
million.
In exchange for the transfer of its holdings in Buffelsfontein, Simmer and Jack
will pay DRDGOLD R1.00, and will indemnify DRDGOLD against any liabilities or
obligations which could arise against it in connection with the environmental
rehabilitation of Buffelsfontein, as well as the management and pumping of
underground water. Simmer and Jack will have the benefit, however, of drawing
down against the rehabilitation trust fund, which was transferred to the
Department of Minerals and Energy (`DME`) upon the provisional liquidation of
Buffelsfontein.
DRDGOLD remains committed to the R9 million social fund established to help any
NWO employees who may be retrenched as a result of the liquidation. In total,
DRDGOLD has provided R47.9m, post-liquidation, to assist the NWO`s liquidators,
most of which was used to pay workers` wages.
DRDGOLD remains Buffelsfontein`s largest debtor with some R1 billion owing.
The provisional liquidators of Buffelsfontein are pursuing a valid, but as yet
unquantified insurance claim for damage and losses incurred in the March
earthquake. The proceeds of this claim are not included in the scheme proposed
by Simmer & Jack.
DRDGOLD has said it will support a DME initiative to conduct further scientific
research into seismicity and its relationship with mining. The March earthquake
was a 1 in 50-year event and the company believes there are significant lessons
to be learnt for the benefit of the industry as a whole.
Queries:
South Africa
Investor and Media Relations
Ilja Graulich, DRDGOLD
+27 11 381 7826 (office)
+27 83 604 0820 (mobile)
James Duncan, Russell & Associates
+27 11 880 3924 (office)
+27 82 892 8052 (mobile)
North America
Investor and Media Relations
Barbara Cano, Breakstone Group
+1 646 452 2334 (office)
Australasia
Investor and Media Relations
Paul Downie, Porter Novelli
+61 893 861 233 (office)
+61 414 947 129 (mobile)
United Kingdom/Europe
Investor and Media Relations
Phil Dexter, St James`s Corporate Services
+44 20 7499 3916 (office)
+44 779 863 4398
Date: 01/09/2005 04:46:16 PM
Produced by the JSE SENS Department
