Media releases

Ordinary shares issued in connection with RAWAS transaction

I refer to my Chairman’s Statement accompanying the Financial Statements for the year ended June 30 2001 in which I undertook to keep shareholders informed of progress on the above matter. 089/02-jmd

I refer to my Chairman’s Statement accompanying the Financial Statements for the year ended June 30 2001 in which I undertook to keep shareholders informed of progress on the above matter.

Rawas refers to a gold project in Indonesia, which ceased operations in March 2000.

In July and October of 1999, DRD issued a total of 8,252,056 ordinary shares to various creditors of Laverton Gold and its subsidiary, BT Barisan Tropical Mining. The creditors to whom such ordinary shares were issued included CAM and Continental Gold Fields NL. The companies in the CAM group and other CAM related companies received 3.4 million of the shares in question. The shareholders of Laverton included Weston Investments Ltd. (a subsidiary of CAM), who was the principal shareholder, and Continental Goldfields NL.

These ordinary shares were ostensibly issued pursuant to the planned acquisition of Rawas in consideration for, or in anticipation of receiving shares in, and claims against, various companies with ownership interests in Rawas and its associated mining rights.

In connection with this transaction, DRD entered into heads of agreement and a memorandum of understanding, However, in about September 2000, some 15 months later, certain evidence came to light, which, after investigation, revealed that all of those shares had been allotted and issued invalidly, beyond the legal powers of the company and suggested that the ordinary shares were issued as a result of an irregular transaction foisted on the company by certain third parties for their benefit alone. No final formal agreement has been signed by DRD with regard to this transaction.

Since the evidence referred to above came to light, the Company has been investigating the whole transaction with a view to pursuing any rights of recovery it may have against the parties responsible for entering into the transaction.

The full financial effects of the transaction were recognised in the 2000 Financial Statements as a write off of R121million. In addition, DRD has expended approximately R20 million in supporting the mine. The auditors have confirmed that no further adjustments will be necessary.

Under South African law, a Court is permitted to validate an invalid issue of shares upon satisfaction that, given all the circumstances, it would be just and equitable to do so. Consequently, DRD has prepared an Application to Court for validation. However, since the issuance of shares was conducted without the approval of a special resolution of shareholders the Company will first be seeking that approval for the issue in the form of a special resolution.

A Notice convening a Special Meeting will be sent to shareholders shortly.

Mark Wellesley-Wood
Chairman and Chief Executive Officer

Queries:

James Duncan
27 11 82 892 8052 (mobile)

COOKIES: This site uses cookies to enhance your website experience. See our privacy policy for further details.