In the media

Mandela's Aurora buys 60% of DRDGOLD's troubled Blyvoor for R376m

[Miningweekly] - Gold aspirant Aurora Empowerment Systems has secured its fourth gold-mining asset in virtually as many months in acquiring 60% of DRDGOLD’s troubled Blyvooruitzicht mine for R376-million./

JOHANNESBURG (miningweekly.com) - Gold aspirant Aurora Empowerment Systems has secured its fourth gold-mining asset in virtually as many months in acquiring 60% of DRDGOLD’s troubled Blyvooruitzicht mine for R376-million.

Aurora MD Zondwa Mandela told Mining Weekly Online on Wednesday that Aurora - which now owns the Orkney, Grootvlei, Primrose and Blyvoor gold assets - was continuing to prepare for a listing on the JSE. Mandela is the grandson of Nelson Mandela and Aurora acquires on the basis of full staff retention.

"The work towards our listing is progressing positively," he told Mining Weekly Online.

JSE-listed DRDGOLD said that R296-million of the R376-million that it had accepted from Aurora for 60% of Blyvoor would be paid in cash by June 29.

Aurora undertook further to provide to Blyvoor, which is Blyvoor in judicial management, a working-capital facility of up to R80-million.

"The deal symbolises our ability to work cooperatively with far larger gold companies. We’re not at Blyvoor to reinvent the wheel, but to give it a capital injection so that safety can be enhanced, problems can be solved and potential opened up," Mandela told Mining Weekly Online.

Mandela said that the Orkney gold mine was producing well; that Grootvlei had attained a monthly production level of 150 kg; and the far smaller Primrose was producing enough gold to sustain itself, while also serving as a platform for the development of personnel for larger operations.

"Our focus is to join hands with larger companies and to build relationships for the long term," he added.

DRDGOLD said that Blyvoor would be able to draw down R10-million on the facility that it had obtained from Aurora at the end of December, and then up to R14-million at each month-end thereafter until the end of May.

DRDGOLD said that it was guaranteed a monthly profit share of R2,5-million, or 25% of net operating cash profit, whichever was the higher, up to the expected end-June transaction completion date.

DRDGOLD CEO Niël Pretorius said that the R80-million drawdown facility would provide immediate relief and would augment an "encouraging turnaround in performance at Blyvoor between October and November, made up of a 116% increase in gold production and a 47% reduction in rand-per-kilogram cash costs.

"This substantially improves the prospects for bringing Blyvoor out of its current judicial management sooner," Pretorius added.

The R296-million strengthened DRDGOLD’s balance sheet at a time when its focus was moving increasingly towards lower-cost, higher-margin surface retreatment operations.

"At the same time, we’re able to preserve a 40% interest in Blyvoor’s underground optionality and surface retreatment activities," Pretorius said.