[Miningweekly] - JSE-listed DRDGOLD has agreed to acquire Australian-miner Mintails’ remaining 35% stake in their Elsburg joint venture (JV) for R177-million, thereby getting full management control over the operation.
JOHANNESBURG (miningweekly.com) - JSE-listed DRDGOLD has agreed to acquire Australian-miner Mintails’ remaining 35% stake in their Elsburg joint venture (JV) for R177-million, thereby getting full management control over the operation.
DRDGOLD said acquiring control over the Elsburg JV would accelerate the advancement of the project, and would allow for greater flexibility and optimisation of all dump retreatment operations by the group.
“During these times of steeply rising underground production costs, coupled with the safety concerns associated with deep level mining, the acquisition of low-cost surface dump retreatment assets and operations in South Africa is seen as having significant strategic advantages to the DRDGOLD group,” the company stated.
The Elsburg venture was established in June 2007 as a 50:50 JV to process tailings on the East Rand to recover gold. In November last year, the two companies formed the larger Ergo JV, which contains up to 1,7-billion tons of surface gold, uranium and sulphur bearing tailings from the East and Central Rand goldfields of South Africa.
In October, DRDGOLD raised its stake in Elsburg to 65% by buying a 15% stake in the venture for R100-million.
At the time, Mintails granted DRDGOLD a conditional option to acquire a further 11,4% interest in the Elsburg JV. If this option was exercised first, the purchase price of R177-million would be reduced by some R23,8-million, to recognise funds already advanced under the option agreement.
Meanwhile, Mintails said that the deal with DRDGOLD would not only provide significant cash resources, but also allow it to retain its 50% stake in the larger Ergo venture.
The Australian-based company is also developing the West Rand Gold & Uranium (Wergo) project, which it had to delay owing to a lack of funds.
The first phase of Wergo would produce about 60 000 oz/y of gold and 1,1-million pounds a year of uranium.
Mintails said that it had engaged with traditional providers of equity and debt to arrange new lines of funding, but that it had been unsuccessful due to the current world economic and financial limitations.
“The sale of Mintails’ residual Elsburg interest, apart from providing significant funding in a difficult capital markets environment, enables Mintails to maintain its 50% Ergo Mines JV interest, and all its existing assets and resources on the West Rand,“ it stated.
Mintails would now concentrate its efforts on facilitation regulatory approval for the Witfontein deposition site, near Randfontein, which it saw as becoming the catalyst for consolidation and commercially successful tailings treatment on the West Rand.