Media releases

DRDGOLD SUSPENDS FINANCIAL ASSISTANCE TO BLYVOOR

Johannesburg, South Africa. 23 June 2011. DRDGOLD Limited (DRDGOLD; JSE: DRD; NASDAQ: DROOY) announced today that its Board of Directors has decided to suspend financial assistance to DRDGOLD’s 74%-owned subsidiary, Blyvooruitzicht Gold Mining Company Limited (Blyvoor).

Johannesburg, South Africa. 23 June 2011. DRDGOLD Limited (DRDGOLD; JSE: DRD; NASDAQ: DROOY) announced today that its Board of Directors has decided to suspend financial assistance to DRDGOLD’s 74%-owned subsidiary, Blyvooruitzicht Gold Mining Company Limited (Blyvoor).

The decision follows the promulgation of the new Companies Act which requires directors of parent companies to seek the consent of the parent company shareholders and then to consider the effects on the solvency and liquidity of the parent company as conditions precedent to the provision of financial assistance to subsidiaries.

Blyvoor’s production has been trending down as a result of a drop in grade, public holiday interruptions and seismicity-related work stoppages, while costs have increased due mainly to higher electricity charges, and particularly power utility Eskom’s winter tariff which adds R11m a month to overhead costs.

Blyvoor requires an estimated R80 million in financial assistance through to December 2011. DRDGOLD has maintained an internal revolving credit facility for Blyvoor since it came out of judicial management in April 2010, but this facility is now fully drawn down.

The Board of Directors of Blyvoor has, in response to the DRDGOLD Board’s decision, resolved to begin business rescue proceedings for Blyvoor in terms of Chapter 6 of the Act. The business rescue process provided for in Chapter 6 replaces the judicial management process in the previous Act.

The DRDGOLD Board supports the decision of the Blyvoor Board, and has expressed the view that business rescue proceedings are an improvement on judicial management in a number of key respects. Most notable is the fact that the business rescue practitioner is a professional – appointed by the distressed company from a pool of certified rescue practitioners – with the function of rescuing the business. Judicial managers, by contrast, were appointed by the Master of the High Court from a pool of people whose main business involved the liquidation of companies.

The new Act also provides clear guidelines on the business rescue process, which is designed to run for a pre-determined three-month period, unless extended by a court application. During this time, the rescue practitioner must formulate and implement a rescue plan with the co-operation of the distressed company’s board of directors. Blyvoor would enjoy a moratorium against civil claims while under business rescue proceedings.

Blyvoor’s Board of Directors will appoint the business rescue practitioner as soon as it receives a list of accredited practitioners from the Commissioner of Companies.

Commenting on DRDGOLD’s previously-announced intention to dispose in whole or in part of its 74% interest in Blyvoor, Chief Executive Officer Niël Pretorius said that discussions are ongoing with three parties, and that business rescue proceedings will not interfere with these.

“In fact, the business rescue process will preserve the asset while it seeks a solution for its cash flow issues. It will also provide Blyvoor with an opportunity to make submissions to the IDC for development capital; to canvass Eskom to consider cancellation or deferral of winter tariffs; and to continue negotiations with neighbouring mines on the development of shared opportunities,” Pretorius said.

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