South Africa’s Sibanye-Stillwater (JSE:SGL) (NYSE:SBGL) has exercised an option to acquire an additional 12% interest in DRDGOLD (JSE, NYSE:DRD), bringing the total stake in the gold tailings retreatment company to 50.1%.
The deal is the single largest investment ever made by an individual shareholder in DRDGOLD, chief executive Niël Pretorius said in a separate statement.
DRDGOLD acquired the gold assets of Sibanye-Stillwater’s West Rand Tailings Retreatment Project — now known as Far West Gold Recoveries (FWGR) — in early 2018. In return, Sibanye took a 38.1% stake in the company and was given two years to buy an additional 12%.
Pretorius said the proceeds of Sibanye’s stake purchase would be used to funding the early-stage development of phase 2 of its large-scale, long-life surface tailings retreatment project, expected to handle about 1.2 million tonnes of material a month.
FWGR’s first phase, launched in Dec. 2018, has reached a processing rate of 500,000 tonnes per month.
Sibanye-Stillwater chief executive, Neal Froneman, said that securing the majority holding in DRDGOLD was part of the miner’s strategy to create value for all stakeholders.
“We are thrilled that the value of our initial shareholding has already increased by 147% over 17 months,” Froneman said. “We look forward to further value creation as DRDGOLD completes its detailed planning and possible implementation of Phase 2.”
DRDGOLD focuses on the recovery of lower-risk, higher-margin ounces, primarily from its flagship Ergo metallurgical plant, located about 50km east of Johannesburg in Brakpan. The company has established itself as one of South Africa’s top gold tailings retreatment operators.
Sibanye-Stillwater is South Africa’s largest gold producer and the world’s third largest producer of palladium and platinum.