South Africa-based gold producer Sibanye-Stillwater has signed various agreements to acquire a stake in gold tailings retreatment firm DRDGOLD.
Under the agreement, Sibanye-Stillwater will offer certain West Rand tailings retreatment project (WRTRP) surface gold processing assets and tailings storage facilities (TSF) in exchange for around 265 million newly issued DRDGOLD shares.
The transaction will see the company acquire a 38% stake in DRDGOLD, with an option to further increase the equity ownership to 50.1% within two years.
DRDGOLD is required to undertake a phased development of the WRTRP, resulting in the development of a central processing plant (CPP) and a regional tailings storage facility (RTSF).
Sibanye-Stillwater CEO Neal Froneman said: “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 realise immediate value for under-utilised surface infrastructure and TSFs, while retaining upside to the West Rand Tailings Retreatment Project and future growth in DRDGOLD.”
Through the deal, the company intends to crystallise about ZAR1.3bn ($93.43m) in value from the selected assets and pursue further development of the WRTRP in partnership with DRDGOLD.
Furthermore, the miner is planning to benefit from DRDGOLD’s surface retreatment capabilities with the potential for growth opportunities.
The selected assets under the swap deal, along with the currently active TSFs, are said to have probable gold mineral reserves of 3.82 million ounces and probable uranium mineral reserves of 42.9 million pounds.
The transaction does not include Sibanye-Stillwater’s Cooke uranium and gold assets.
The deal is expected to be complete in the second quarter of next year, subject to customary closing conditions, including the receipt of regulatory and shareholder approvals.