Durban Roodepoort Deep, Limited (JSE: DUR; NASDAQ: DROOY; ASX: DRD), announced today (14 October 2003) that it has reached agreement with Oil Search Limited (OSL) to acquire that company’s 20% interest in the Porgera Gold Mine (Porgera) in Papua New Guinea (PNG).
The purchase price of US$73.8 million is comprised of US$52.7 million in cash and US$21.1 million in DRD shares. DRD can elect to pay part or all of the equity component in cash at a 10% discount to the value of the scrip.
DRD intends to fund the cash portion of the acquisition price from cash on hand, including monies raised from the issue of 27 million shares to the Investec Group.
DRD Chairman and Chief Executive Officer Mark Wellesley-Wood said today that the acquisition of the 20% interest in Porgera was in line with DRD’s Australasian growth strategy.
“It will lower DRD’s risk profile by the addition of lower cost gold production, without placing any stretch on existing management.
"Further, it will boost DRD's cash flow outside of South Africa, provide diversification out of the Rand and provide critical mass for our Australasian operations," Wellesley-Wood said.
He also noted that the 20% Porgera interest would provide DRD with an additional 1.25 million ounces of reserves and 2.59 million ounces of resources.
After completion of the acquisition, DRD will have representation on the Porgera Joint Venture Committee.
Porgera, managed by 75% shareholder Placer Dome Inc, has produced more than 10 million ounces of gold since operations began in 1990. The remaining 5% of the operation is owned by Mineral Resources Enga (MRE), on behalf of the Enga Provincial Government and landowners in PNG.
As part of the acquisition and subject to the amalgamation occurring, DRD has agreed to offer a 5% direct interest in the Porgera Joint Venture to MRE, on reasonable commercial terms referable to DRD’s acquisition cost of the 5% interest, recognising reasonable transaction costs of the acquisition and on-sale of the 5% interest.
DRD's presence in Australasia includes 100% ownership of the 85 000 ounces a year Tolukuma Gold Mine in PNG and 19.8% of Emperor Mines Limited (ASX: EMP), which owns the 120 000 ounces a year Vatukoula Gold Mine in Fiji.
The acquisition of the interest in Porgera will be implemented by way of an amalgamation under the law of PNG. The transaction documentation was executed by the parties on 14 October 2003 and the acquisition is scheduled for completion immediately upon receipt of regulatory approvals which are expected within the next six weeks.
DRD is one of the largest gold producers in the world. Its South African production last year – from the deep-level underground Blyvooruitzicht mine and the North West Operations, and from a 40% share of Crown Gold Recoveries, comprising both underground and tailings retreatment operations – totaled almost one million ounces. The miner has specialized in extending the operating lives of older mines.
Ilja Graulich, Durban Roodepoort Deep, Limited
+27 11 381 7826 (office)
+27 83 604 0820 (mobile)
James Duncan, Russell & Associates
+27 11 880 3924 (office)
+27 82 892 8052 (mobile)
Paul Downie, Porter Novelli
+61 893 861 233 (office)
+61 414 947 129 (mobile)
Cautionary note to US investors: the United States Securities and Exchange Commission permits mining companies, in their filings with the SEC, to disclose only those mineral deposits that a company can economically and legally extract or produce. We use the term "resources" (which includes "measured", "indicated", and "inferred") in our media releases, which the SEC guidelines strictly prohibit us from including in our filing with the SEC. US investors are urged to consider closely the disclosure in our Form 20-F, File No. 0-28800, available from us at 45 Empire Road, Parktown, Johannesburg, 2193, South Africa. You can also obtain this form from the SEC website at http://www.sec.gov/edgar.shtml