AngloGold Ashanti has decided to sell about 390,000 square meters of its Savuka mining area to Blyvooruitzicht Gold Mining. The deal will bring cash to the tune of 35 million Rand (US$5.1 million) allowing the company to deal with their operating cash flow problems in the distressed DRDGold unit.
The Chief Executive Officer of DRDGold, Niel Pretorius said that they were grateful to AngloGold Ashanti for this show of good neighbourliness and pragmatism. He added that he believed there may be potential for Blyvoor to generate significant free cash flow by mining the Savuka ground, which will help to restore its 'going concern' status, an important consideration for prospective lenders and suitors.
The sale is subject to regulatory approval from the South African government. If it does come through it will be a shot in the arm for DRDGold which has suspended financial help to the 74% owned subsidiary that it is hoping to sell since June. It will allow the unit a good chance to get back on its feet. It would avoid the potential loss in jobs in the community.
The area that is being offered for sale is not in the boundaries of the current mine that AngloGold Ashanti is operating in the region. Blyvoor will mine the area under a contract. AngloGold Ashanti released a statement saying that it believes that the transaction offers a 'win win' for both companies and the communities in which they operate.