SA miner in talks to sell Zim assets

HARARE - South Africa-based miner DRDGold Limited (DRDGold) says it is in negotiations with potential buyers of its Zimbabwean assets.

Niël Pretorius, the group’s chief executive, said the company — which had considered various options, such as partnerships and joint ventures or even the unbundling and development of a new mining firm — is disposing of the local assets to unlock shareholder value.

“Expressions of interest have been received and negotiations to conclude the sale are continuing,” he said.

Early this year, the New York and Johannesburg stock exchanges-listed counter warned that it was planning to sell its last two deep mining gold assets in Zimbabwe, possibly by year-end.

The resources group is currently undertaking exploration drilling at various alluvial deposits, and the investment had been aimed at establishing the viability of alluvial and near-surface gold opportunities.

Pretorius said DRDGold, which recently discussed the possibility of packaging its current exploration operations in Zimbabwe after four of the five prospects indicated underground mining opportunities, has placed its small Cason underground operation on care and maintenance.

The mining company noted that underground prospects did not align with its surface-mining strategy.

Meanwhile, the dump gold miner has reported a nine percent increase in operating profit to R679,3 million for the financial year ended June 30, 2013 compared with the previous period.

Consequently the group achieved a 11 percent increase in headline earnings per share to 68 South African cents.

DRDGold declared a final dividend of 14 cents per share, contributing to a total distribution for the year of 28 cents, up 180 percent on the previous year.

Gold production for the year was eight percent higher at 146 381ounces, reflecting an eight percent increase in ore milled to 23 254 000 tonnes and a slight increase in recovered grade, from 0,195g/t to 0,196g/t.

Revenue increased by 18 percent to R2 076,5 million, a consequence both of higher gold production and a nine percent improvement in the average rand gold price received to R458 084/kg.

All-in sustaining unit costs, as defined by the World Gold Council, rose by 10 percent to R365 569/kg. Key contributors were the costs associated with the mining of additional sand resources at the Knights plant and above-inflation increases in the cost of labour, electricity and reagents.

The all-in sustaining costs margin was steady at 20 percent.

Capital expenditure was 13 percent higher at R361,5 million, due mainly to continued development of the flotation/fine-grind circuit at Ergo’s Brakpan plant.

While higher capital expenditure and a 10 percent drop in the average rand gold price received during the fourth quarter resulted in a 53 percent decline in free cash flow generated to R97,9 million, this cash — together with debt raised during the year of R165 million — resulted in an increase in cash and cash equivalents to R377,2 million.

Pretorius said commissioning of the flotation/fine-grind circuit at Ergo’s Brakpan plant will continue, with a view to achieving completion and stable production by December 2013.

By selling the Zimbabwean assets DRDGold will become a pure surface-treatment operation.

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