DRDGOLD Ltd announced today that it is to acquire from Sibanye Gold Ltd trading as Sibanye-Stillwater (Sibanye-Stillwater) portions of the latter’s West Rand Tailings Retreatment Project (WRTRP) assets – to be known as WRTRP Proprietary Ltd – in exchange for approximately 38% of DRDGOLD’s ordinary share capital, valued at approximately ZAR1.3 billion. In addition, DRDGOLD and Sibanye-Stillwater have entered into an option agreement in terms of which Sibanye-Stillwater will be granted an option to increase its shareholding in DRDGOLD to 50.1% during the 24 months following implementation of the acquisition.

DRDGOLD CEO Niël Pretorius says the acquisition and option are moves towards creating “an industry leading surface mining partnership.” For DRDGOLD, he says, the rationale for the acquisition and option includes:

– an increase of about 92% in gold reserves from 2.99 Moz to 5.75 Moz (6.81 Moz if currently active
tailings storage facilities are included);
– the acquisition of surface assets capable of providing cash flows in the short term, with low initial capital
expenditure, to support future growth and development of the project;
– the potential to increase production, revenue and increase DRDGOLD’s reserve base which extends
the life of mine;
– the Regional Tailings Storage Facility (RTSF) large enough to receive most of the tailings of the West
Rand providing a competitive advantage in the region;
– a reduction in overhead unit costs through increased production;
– addressing DRDGOLD’s single asset operating risk;
– securing significant long-term growth in a new operating region;
– providing strategic positioning for further growth;
– providing an opportunity to leverage proven experience to optimally develop the WRTRP; and
– in Sibanye-Stillwater, the introduction of a supportive and substantial shareholder with proven
transactional capacity and an international footprint, to enhance further corporate development and growth.

The assets to comprise WRTRP are:

– 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, which are 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.

Pretorius says the ultimate goal is to set up infrastructure and a mine plan designed to mine the entire resource. This is expected to take place over two phases. The first phase will be a low-volume, self-sustaining “design and planning phase” aimed at:

– leveraging existing infrastructure with relatively low initial capital expenditure to start generating
cash flows in the near term; and
– studying the vast amount of research already done, and conducting further test work to verify the
ideal blend and engineering design for phase two.

As part of phase 1, it is planned to upgrade the Driefontein 2 and 3 surface plants to treat between 400,000 and 600,000 tonnes per month (t/mth) from a single source. Phase two, Pretorius says, will involve the development of a central, high-volume processing facility and new deposition site capable of processing at least 1 Mt/mth with a blend of material from different combinations of sources so as to produce a flat, smooth grade profile over life of mine.