South Africa’s DRDGold plans Blyvoor Mine sale

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DRDGold, South Africa’s fourth-largest gold producer, on Tuesday said it planned to sell its Blyvoor Mine in a move that could bring it needed cash.

It also said output had fallen as expected in the March quarter, while headline earnings per share rose because of a deferred tax credit.

The Blyvoor mine has returned to profitability but the company said the operation no longer fitted its core strategic focus.

It is a deep-level mining operation and the company has been trying to move away from this area because of the high risks and costs involved.

Chief Financial Officer Craig Barnes, in a phone interview with Reuters, declined to say how much the company hoped to get for Blyvoor. The company said it had appointed Royal Bank of Canada and Beijing Axis to advise on the transaction.

Some analysts said they were unsure how to value the mine, which was severely damaged by seismic activity in 2009.

“It is tough to put a figure on it. There are so many variables. It should be positive for the company if they can realise a fair value because it will significantly reduce their risk profile, and it will give them cash which they can apply elsewhere,” said one Johannesburg-based analyst.

Barnes said a higher rand gold price so far this quarter was promising but he declined to give a specific earnings forecast going ahead. Gold has been scaling record highs while the rand has lost some ground against the dollar this month. Both trends lift the rand gold price for domestic producers.

“We can’t give a specific forecast but there has been a higher rand gold price so far this quarter,” Barnes said. “But we see production steady and in June the winter tariffs will have an impact on costs.”