Sibanye-DRDGold deal turns dead weight into a dead cert
Suddenly tailings regarded as a longer term liability were transformed into a stake worth R900m
Now that Sibanye-Stillwater (https://www.sharenet.co.za/v3/quickshare.php?scode=SGL) is the controlling shareholder in DRDGold (https://www.sharenet.co.za/v3/quickshare.php?scode=DRD), what will it do with its stake in SA’s highly specialised and largest gold tailings retreatment company?
Conventional wisdom is that it should take over DRDGold entirely and have it as a wholly owned subsidiary within the company. However, standing back and looking carefully at the two transactions that brought Sibanye in as a 50.1% owner of DRDGold, a couple of arguments can be made against this rather simplistic approach.
Sibanye vended tailings that had little to no value in the market’s eyes into DRDGold in exchange for a 38% stake in the tailings processing specialist. Suddenly tailings regarded as a longer term liability on Sibanye’s books were transformed into a stake in DRDGold worth R900m...