DRDGOLD says it will apply to the high court for a judicial management order in a bid to save its Carletonville-based Blyvoor mine in South Africa from liquidation.
The mine suffered after being unable to cope with monthly losses of $3.62m due to high power tariffs, DRDGOLD CEO Niel Pretorius said.
The losses were attributed to Eskom’s higher winter tariffs in the coming months and a 16% drop in the average rand gold price on account of the strengthening of the rand against the dollar.
Blyvoor’s operations could not continue against the backdrop of Eskom’s planned hikes unless the rand-gold price did not increase, Pretorius said.
“Restructuring at Blyvoor flowing from the recent consultation process in terms of section 189A of the Labour Relations Act is not delivering the expected turnaround as rapidly as we had hoped, and the mine is also finding it very hard to shake off the effects of the recent four-week strike; we now need a rescue plan that holds real promise of saving Blyvoor from insolvency,” Pretorius said.
The company registered a R63.3m net loss for the September quarter due to disruptions to underground operations caused by strikes, earth tremors and a strong rand.
The National Union of Mineworkers’ strike caused a production loss of 8,000oz valued at R60m.
Higher-grade underground production areas experienced severe damage due to seismic activity in May with complete renovation likely to be concluded in March 2010.
“In terms of a judicial management order, the court appoints a judicial manager who has a wide range of powers at his or her disposal to take such actions he or she deems necessary to save the business,” Pretorius said.
The measures may involve providing temporary preference to certain creditors and deciding to compromise with creditors without liquidating the mine.
DRDGold predicted that Blyvoor mine would remain under judicial management until after regaining access to the seismicity-damaged, higher-grade areas at number five shaft, Pretorius said.
“In addition to the R75m we have committed to saving Blyvoor over the past three months, we will provide the judicial manager with whatever assistance required to obtain additional rescue finance from appropriate institutions, such as the Industrial Development Corporation,” Pretorius said.