Stock Monitor: Sibanye Gold Post Earnings Reporting
LONDON, UK / ACCESSWIRE / November 28, 2017 / Active-Investors issued a free report on DRDGOLD Ltd. (NYSE: DRD), which is readily accessible upon registration at www.active-investors.com/registration-sg/?symbol=DRD as the Company's latest news hit the wire. On November 22, 2017, the Company announced that it has entered into an agreement with Sibanye Gold Limited (NYSE: SBGL), trading as Sibanye-Stillwater, to acquire its West Rand Tailings Retreatment Project (WRTRP) assets. DRDGOLD will acquire these WRTRP assets (to be known as WRTRP Proprietary Limited) against 38% of issued share capital of DRDGOLD. Sign up now for our free research reports at: www.active-investors.com/registration-sg.
Active-Investors.com is focused on giving you timely information and the inside line on companies that matter to you. This morning, DRDGOLD most recent news is on our radar and we have decided to include it in our blog post. Today's free coverage on DRD and SBGL are available at:
As per the terms of the agreement, DRDGOLD (NYSE: DRD) plans to issue 265 million shares to Sibanye-Stillwater. The value of each DRDGOLD share is R4.96, the closing price of the Company's share on November 20, 2017. This values the transaction at approximately R1.3 billion. Additionally, DRDGOLD has also entered into an option agreement with Sibanye-Stillwater wherein, Sibanye-Stillwater has the option of increasing its stake in DRDGOLD to 50.1%. This option can be implemented by Sibanye-Stillwater within 24 months of signing of the agreement to acquire WRTRP assets.
The transaction is expected to be completed in Q2 2018 subject to regulatory and shareholders' approval and other closing conditions. The transaction also requires approvals from the Johannesburg Stock Exchange and New York Stock Exchange.
According to Niël Pretorius, CEO of DRDGOLD, the agreements with Sibanye-Stillwater are aimed at creating "an Industry leading surface mining partnership."
Neal Froneman, CEO of Sibanye-Stillwater, added, "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. Sibanye-Stillwater will realize immediate value for underutilized surface infrastructure and TSFs while retaining upside to the West Rand Tailings Retreatment Project and future growth in DRDGOLD."
WRTRP Assets Acquired Under the Agreement
The transaction will allow DRDGOLD to acquire the following WRTRP assets of Sibanye-Stillwater:
- the decommissioned Driefontein 3 and 5, Kloof 1, Ventersdorp North and South and Libanon dumps;
- the currently active Driefontein 1 and 2, Kloof 2 and Leeudoring tailings dams, to be transferred once decommissioned;
- the currently active Driefontein 4 tailings storage facility;
- the Driefontein 2 and 3 surface plants and pilot plant; and
- land for future development of the Central Processing Plant and the RTSF.
DRDGOLD's plans for the acquired assets is to set up infrastructure and a mine plan aimed at mining from the entire resource. The Company would complete the same in two phases. In the first phase will primarily be "design and planning phase." In this phase, the Company plans to leverage existing infrastructure and make a small capital investment so that the assets start to generate cash in the near-term. The Company would evaluate the research data from the vast amount of research already done and move to conduct further tests to verify the ideal blend and engineering design for phase two. In the initial first phase, there are plans in place to upgrade the Driefontein 2 and 3 surface plants to treat between 400 000 and 600 000 tonnes per month (tpm) from a single source.
In the second phase, the Company will focus on the development of central, high-volume processing facility, and new deposition site capable of processing at least 1 million tpm with a blend of material from different combinations of sources to produce a flat, smooth grade profile over life of mine.
Benefits of agreement for DRDGOLD
DRDGOLD already had a network of surface assets that is unrivaled in South Africa and has been working at optimizing these assets to increase gold production and extend its operational life.
- The current deal is expected to increase DRDGOLD's gold reserves by 92% i.e. from 2.99 Moz to 5.75 Moz (6.81 Moz if currently active tailings storage facilities are included).
- The acquisition of surface assets can lead to immediate cash flows in the short term with minimal capital expenditure. This cash flow would support the future growth and development of the project.
- The deal has the potential to increase DRDGOLD's production and in turn increase its revenue and the reserve base, which would help in extending the life of the mine.
- The Regional Tailings Storage Facility (RTSF) acquired as part of the deal can easily accommodate most of the tailings of the West Rand. This would give the Company a competitive advantage in the region.
- The Company can reduce its overhead cost by increasing its production.
- The deal will provide an easy solution to DRDGOLD's single asset operating risk.
- The deal provides a significant long-term growth opportunity in a new geography.
- Improves the market position of the Company to support future growth.
- The deal gives DRDGOLD an opportunity to utilize its expertise to develop the WRTRP assets.
- DRDGOLD gains Sibanye-Stillwater as supportive and majority shareholders with proven transactional capacity and an international footprint, which would further support the Company's development and growth.
Johannesburg, South Africa based DRDGOLD is a mid-tier, unhedged gold producer and a world leader in the recovery of the metal from the retreatment of surface tailings. In FY16, the Company produced 143 457oz of gold and declared mineral resources of 50.67 Moz and mineral reserves of 1.8Moz.
South Africa based Sibanye-Stillwater is an independent, global precious metal mining group, producing a unique mix of metals that includes gold and the platinum group metals (PGMs). It owns and operates a portfolio of high-quality operations and projects in the US and South Africa. Sibanye-Stillwater is the third largest producer of palladium and platinum and features among the world's top ten gold producing Companies.
Stock Performance Snapshot
November 27, 2017 - At Monday's closing bell, DRDGOLD's stock was marginally up 0.71%, ending the trading session at $3.56.
Volume traded for the day: 64.66 thousand shares.
Stock performance in the last month - up 6.12%; previous three-month period - up 5.80%; past six-month period - up 12.86%
After yesterday's close, DRDGOLD's market cap was at $158.52 million.
Price to Earnings (P/E) ratio was at 154.57.
The stock has a dividend yield of 3.38%.
The stock is part of the Basic Materials sector, categorized under the Gold industry.
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