Sibanye and DRDGOLD establish surface mining partnership

Sibanye-Stillwater has entered into various agreements with DRDGOLD where Sibanye will exchange selected surface gold processing assets and tailings storage facilities (TSF), for newly issued DRDGOLD shares.

DRDGOLD has issued 265 million new shares, which will be owned by Sibanye. This will result in Sibanye-Stillwater holding 38% of the issued share capital of DRDGOLD, after the transaction. At the current DRDGOLD share price of R4.96 (DRDGOLD’s closing share price on 20 November 2017), the shares are worth about R1.3-billion of crystallised value.

Image credit: DRDGOLD

The agreement includes Driefontein 3, 4 and 5, Kloof 1, Venterspost North and South and Libanon. In addition, DRDGOLD will have access to land required for the future development of a central processing plant (CPP), a regional tailings storage facility (RTSF) and return water dam.

In addition, the Driefontein 2 and 3 plants and the WRTRP pilot plant will be transferred to DRDGOLD. Other active TSFs (including Driefontein 1 and 2, Kloof 2 and Leeudoorn) forms part of the agreement.  The processing plants, together with the active TSFs have probable gold mineral reserves of 3.82 million ounces and probable uranium mineral reserves of 42.9 million pounds.

The transaction excludes the Cooke uranium and gold assets which comprise of the Cooke TSF, Millsite TSF, the Cooke surface gold plant and the Ezulwini gold and uranium plant and associated Ezulwini 4 TSF. The Cooke and Ezulwini TSFs contain probable gold reserves of 2.401 million ounces and Probable uranium reserves of 54.26 million pounds. Sibanye retains full ownership of these assets and the right to process and deposit this material onto the RTSF, subject to contributing their proportionate capital and operating costs. Sibanye therefore retains full exposure in a higher uranium price environment.

Sibanye and DRDGOLD have simultaneously entered into an option agreement in terms of which, Sibanye-Stillwater will have the option to subscribe for a sufficient number of DRDGOLD ordinary shares to attain a 50.1% shareholding in DRDGOLD for up to 24 months after the transaction has been completed. The option must be exercised in whole, anytime within the option period.

This partnership creates an opportunity to leverage off DRDGOLD’s proven surface retreatment capabilities with the potential to capitalise on further growth opportunities both locally and abroad. DRDGOLD has significant experience in TSF reclamation and has a proven track record of optimising innovative technology driven processing. In addition, DRDGOLD also has proven project management expertise for the execution and implementation of surface processing infrastructure development.

“We are excited about the inherent potential in the investment and look forward to partnering with DRDGOLD in growing an international, industry leading, surface retreatment business,” says Neal Froneman, CEO of Sibanye-Stillwater.

DRDGOLD has a network of surface assets that is unrivalled in South Africa and is focused on optimising these assets to increase gold production and extend its operational life. DRDGOLD intends developing the selected assets through a phased approach. The first phase will include upgrading the existing Driefontein 2 and 3 plants to process tailings from the high grade Driefontein 5 TSF. phase 1 must be completed within 24 months after the closing of the transaction while commissioning is expected to take 12 months.

Outputs from phase 1 will enable DRDGOLD to refine the original WRTRP process and engineering design as well as financial and capital models for phase 2. Phase 2 will deliver a central, high-volume, CPP capable of processing at least one million tonnes per month of tailings and development of a new RTSF including associated pipeline infrastructure, within an additional 24-month period.

“Sibanye-Stillwater will realise immediate value for underutilised surface infrastructure and TSFs, while retaining upside to the West Rand Tailings Retreatment Project and future growth in DRDGOLD. Our stakeholders in the region also stand to benefit from the future development of this long-life surface reclamation project,” concludes Froneman. The transaction is expected to close in the second quarter of the 2018 calendar year.



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