| Thu 17 Nov 2005, 7:00 | | DRDGOLD - Consolidation of the offshore operations |
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DRDGOLD - Consolidation of the offshore operations of DRDGOLD into Emperor Mines
Limited and withdrawal of cautionary announcment
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" or "the company")
CONSOLIDATION OF THE OFFSHORE OPERATIONS OF DRDGOLD INTO EMPEROR MINES LIMITED
("EMPEROR") AND WITHDRAWAL OF CAUTIONARY ANNOUNCMENT
1. INTRODUCTION
Shareholders are referred to the cautionary announcements dated 29 September
2005 and 27 October 2005.
QuestCo (Pty) Limited is authorised to announce that DRDGOLD has concluded a
sale and purchase agreement with Emperor, in terms of which Emperor will acquire
DRDGOLD"s wholly owned subsidiary, DRD (Isle of Man) Limited ("DRDIoM"), which
in turn holds DRDGOLD"s Papua New Guinea ("PNG") assets, comprising a 20%
interest in the Porgera Mines Joint Venture, a 100% interest in the Tolukuma
Gold Mine and all of DRDGOLD"s exploration tenements in PNG ("the gold assets")
("the transaction").
Currently, DRDGOLD, through DRDIoM, holds a 45.33% interest in Emperor, which is
a gold mining company listed on the Australian Stock Exchange Limited.
Emperor"s main asset is the Vatukoula gold mine, located on Fiji"s largest
island, Viti Levu. Emperor also has an advanced stage exploration project,
Tuvatu, located on Viti Levu.
Implementation of the transaction requires DRDGOLD shareholders to approve the
ordinary resolution authorising the restructuring of DRDGOLD"s offshore
operations, whereby DRDGOLD will sell DRDIoM to DRDGOLD"s wholly-owned
subsidiary, DRDGOLD (Offshore) Limited ("DRD Offshore"), in terms of section 228
of the Companies Act 61 of 1973, as amended, ("the Act") ("the restructuring").
The JSE Limited ("the JSE") has advised that the transaction, together with the
restructuring, will be regarded as a Category 3 transaction.
2. PURCHASE CONSIDERATION
The purchase consideration for the gold assets is US$230 million ("the purchase
consideration"), which is subject to certain completion adjustments to reflect
the change in the capital position of both Emperor and DRDIoM between 1 October
2005, which is the effective date, and completion of the transaction.
The purchase consideration will be settled by:
- the issue of 751 879 699 new Emperor shares to DRD Offshore, issued at A$0.35
per share ("new Emperor shares") which currently equates to US$200 million; and
- US$30 million in cash ("the cash consideration").
DRDGOLD intends to utilise the cash consideration for acquisitions and general
working capital purposes.
3. RATIONALE FOR THE TRANSACTION
On 27 October 2005, DRDGOLD announced the establishment of DRDGOLD South African
Operations (Proprietary) Limited ("DRDGOLD SA") in order to consolidate
DRDGOLD"s South African operations. DRDGOLD SA will focus on South African and
African operations and growth opportunities. The sale of the gold assets to
Emperor will result in DRDGOLD holding all of its Australasian assets in a
single listed vehicle ("New Emperor"). New Emperor will therefore focus on
Australasian operations and growth opportunities.
The transaction allows DRDGOLD to establish two discrete management teams
focussing on operations in Africa and Australasia. Consolidating all of the
Australasian assets in a separately listed vehicle allows the geographic source
of capital to match the geographic use of that capital.
Upon completion of the transaction and the issue of the new Emperor shares,
DRDGOLD will hold approximately 90.5% of New Emperor. This majority control
will allow DRDGOLD to make the necessary operational and structural changes to
improve efficiencies and profitability in New Emperor.
DRDGOLD will not exercise its right to compulsorily acquire any of the shares
held by non-associated shareholders arising under section 664A of the Australian
Corporations Act as a result of the new Emperor shares issued to it pursuant to
the transaction.
4. THE RESTRUCTURING
In order to implement the restructuring, DRDIoM will transfer the following
material assets to DRD Offshore:
- its 45.33% interest in Emperor; and
- an A$8 million convertible loan facility which DRDIoM has advanced to
Emperor, in terms of which DRDGOLD can elect to convert such debt facility into
additional Emperor scrip at A$0.30 per Emperor share.
The restructuring involves the sale by DRDGOLD of DRDIoM to DRD Offshore, which
requires DRDGOLD shareholder approval in terms of section 228 of the Act. The
Securities Regulation Panel ("the SRP") has advised that, while the
restructuring is an affected transaction as defined in the SRP Code, an
independent fair and reasonable opinion on the restructuring is not required as
it is an inter-group transaction between two wholly-owned subsidiaries of
DRDGOLD.
5. CONDITIONS PRECEDENT TO THE RESTRUCTURING AND THE TRANSACTION
The restructuring is subject, inter alia, to the following conditions precedent:
- DRDGOLD shareholder approval;
- South African Reserve Bank ("SARB") approval; and
- other regulatory consents.
The transaction is subject, inter alia, to the following conditions precedent:
- the restructuring becoming unconditional,
- approval by the Australian Foreign Investment Review Board;
- SARB approval;
- Emperor shareholder approval;
- there being no material adverse change in either Emperor or the gold assets;
and
- a number of regulatory and banking consents and approvals being obtained.
6. AMENDMENT TO ARTICLES OF ASSOCIATION OF EMPEROR
Subsequent to the transaction, New Emperor will become a subsidiary company of
DRDGOLD as defined in the Act and the articles of association of New Emperor
will therefore be amended to conform to Schedule 10 of the JSE Listings
Requirements.
7. UNAUDITED PRO FORMA FINANCIAL EFFECTS
The unaudited pro forma financial effects set out below have been prepared to
assist shareholders to assess the impact of the restructuring and the
transaction on the earnings, headline earnings, net asset value and tangible net
asset value per DRDGOLD ordinary share. The material assumptions are set out in
the notes following the table. These unaudited pro forma financial effects have
been disclosed in terms of the Listings Requirements of the JSE and do not
constitute a representation of the future financial position of DRDGOLD on
completion of the transaction. The directors are responsible for the unaudited
pro forma financial effects.
Before the After the
transaction transaction
(cents) (cents) Change
Loss per share (200) (5) 98%
Headline loss per share (114) (129) (13%)
Net asset value per share 208 376 81%
Tangible net asset value per share 208 376 81%
Notes:
1. The loss and headline loss per share in the "Before the transaction" column
of the table are based on the audited income statement of DRDGOLD for the
financial year ended 30 June 2005.
2. The loss and headline loss per share in the "After the transaction" column of
the table are based on 257 695 796 DRDGOLD shares in issue (being the weighted
average number of shares in issue for the year ended 30 June 2005), the audited
income statements of Emperor for the year ended 30 June 2005, and the
assumptions that the restructuring and the transaction became effective on 1
July 2004.
3. The net asset value per share and tangible net asset value per share in the
"Before the transaction" column of the table are based on the audited balance
sheet of DRDGOLD at 30 June 2005 and 296 206 048 DRDGOLD shares in issue.
4. The net asset value per share and tangible net asset value per share in the
"After the transaction" column of the table are based on the audited balance
sheets of Emperor at 30 June 2005 and the assumption that the transaction was
completed on 30 June 2005.
5. The pro forma financial effects have been prepared according to South African
Generally Accepted Accounting Practices and have not been audited.
8. NEW EMPEROR CAPITAL RAISING
Emperor has announced its intention to raise approximately US$15 million through
the placement of new shares following completion of the transaction ("the
capital raising"). The capital raising would take place in early 2006 and would
be used for a variety of capital programs across the three mines and to provide
general working capital for New Emperor. The capital raising will allow
institutions to participate in New Emperor and will dilute DRDGOLD"s
shareholding.
9. WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
DRDGOLD shareholders are advised that, having regard for the disclosures made in
this announcement, caution is no longer required when dealing in their DRDGOLD
shares.
10. CIRCULAR TO SHAREHOLDERS
A circular to DRDGOLD shareholders will be issued in due course in terms of the
requirements of the SRP ("the circular").
The circular will include details of the gold assets, the restructuring and the
transaction for information purposes in order to assist DRDGOLD shareholders in
assessing the impact of the restructuring and the transaction.
Johannesburg
17 November 2005
Corporate Advisers
QuestCo
ANZ Investment Bank
Sponsor
Standard Bank
Date: 17/11/2005 07:00:51 AM Produced by the JSE SENS Department
