DRDGold cuts off funds to Blyvoor

Finance

Publishing Date: 23 Jun 2011 5:12pm GMT
Author: Mining Journal

DRDGold Ltd has stopped providing financial assistance to its 74%-owned Blyvooruitzicht gold mine, attributing the decision to South Africa’s new Companies Act.

The new law “requires directors of parent companies to seek the consent of the parent company shareholders” before providing financial assistance.

DRDGold says a credit facility provided to Blyvoor since it came out of judicial management in April has been completely drawn down and that the operation requires R80 million (US$11.8 million) in financial assistance through to December.

Blyvoor’s board has decided to begin “business rescue proceedings” which include the appointment of a certified practitioner whose function is to rescue the business (rather than experts in liquidations under the judicial management process).

DRDGold's chief executive, Niel Pretorius, said: 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.”