Media releases

DRD Black Empowerment SENS

Details

Published: Wednesday, 13 February 2002 02:00

The Board of Directors of DRD is pleased to announce that DRD has reached agreement with KBH, the mining company led by Dr Paseka Ncholo, and The Industrial Development Corporation of South Africa Limited (“the IDC”)

Durban Roodepoort Deep, Limited
(Incorporated in the Republic of South Africa)
(Registration number 1895/000926/06)
(Share code: DUR)
(ISIN: ZAE 000015079)
(ARBN number 086 277 616)
(NASDAQ Trading Symbol: DROOY)
(“DRD” or “the Company”)

BLACK EMPOWERMENT JOINT VENTURE WITH KHUMO BATHONG HOLDINGS (PROPRIETARY) LIMITED (“KBH”) IN RESPECT OF CROWN GOLD RECOVERIES (PROPRIETARY) LIMITED (“CROWN”) AND ACQUISITION BY KBH OF A STRATEGIC EQUITY STAKE IN DRD

Introduction

The Board of Directors of DRD is pleased to announce that DRD has reached agreement with KBH, the mining company led by Dr Paseka Ncholo, and The Industrial Development Corporation of South Africa Limited (“the IDC”), regarding:

1. the sale of 60% of the issued share capital of and the cession of certain claims against Crown in return for a cash consideration of R105 531 000; and
2. the subscription by KBH for 4 794 889 new DRD ordinary shares (“the new DRD shares”) for a cash consideration of R68 027 000, referred to collectively henceforth as “the Transaction”.

The IDC’s Board of Directors has given its approval to finance the Transaction.

Rationale for the Transaction

The Transaction establishes an empowerment partnership between DRD and KBH. DRD has determined synergies between itself and KBH due to the contiguous nature of their respective operations, Crown and East Rand Proprietary Mines Limited. In addition, DRD believes that the value of Crown will be enhanced by this transaction. The Transaction provides KBH with exposure to assets that generate significant cash flows and, through an equity stake in DRD, to DRD’s other strategic assets. While DRD will continue to manage Crown, skills transfer to KBH will take place. Dr Ncholo has been invited to join the DRD Board.

Issue of shares for cash

DRD is to issue to KBH, in terms of a general issue of shares for cash, 4 794 889 new DRD ordinary shares for a cash consideration of R68 027 000. The issue price of R14.19 represents a 10 percent discount to the 30-day trade-weighted average price per DRD ordinary share on The JSE Securities Exchange South Africa at the close of trade on 18 January 2002, being the date agreed to by DRD, KBH and the IDC.

Conditions precedent to the Transaction

The implementation of the Transaction is subject to, inter alia, the fulfillment of the following conditions precedent:

1. DRD, KBH and the IDC concluding formal agreements to give effect to the Transaction; and
2. the requisite approvals of the South African Competition Commission and other relevant regulatory bodies being obtained.

Financial effects

The financial effects of the Transaction on the basic loss, headline loss, net asset value and tangible net asset value per DRD share are set out in the table below.

Notes:

1. The basic loss and headline loss per DRD share, as set out in the “Before the Transaction” column of the table, are based upon the audited financial results of DRD for the year ended 30 June 2001 and 154 529 578 shares in issue. The basic loss and headline loss per DRD share, as set out in the “After the Transaction” column of the table, are based upon the assumptions that the Transaction was effective on 1 July 2000, that the new DRD shares were issued in full on that date (resulting in a weighted average of 142 555 051 DRD shares in issue) and that the Transaction proceeds earned interest at the prime interest rate as quoted by The Standard Bank of South Africa Limited.
2. The net asset value and tangible net asset value per DRD share, as set out in the “Before the Transaction” column of the table, are based upon the audited balance sheet of DRD at 30 June 2001. The net asset value and tangible net asset value per DRD share, as set out in the “After the Transaction” column of the table, have been based on the assumptions that the Transaction was effective on 30 June 2001 and that the new DRD shares were issued in full on that date at an issue price of R14.19 per new DRD share, resulting in a total of 159 324 467 DRD shares in issue at 30 June 2001.

Application of the cash proceeds of the Transaction

DRD intends to use the cash proceeds to further enhance its balance sheet and to accelerate its hedge buyback programme.

Johannesburg

13 February 2002

Corporate adviser
The Corner House (Pty) Limited
(Registration number 1978/01915/21) 

Attorneys
Bowman Gilfillan Inc
(Registration number 1997/08185/07

Sponsor
Standard Corporate & Merchant Bank
A division of The Standard Bank of South Africa Limited
(Registration number 1962/000738/06)