DRD: DRDGOLD LIMITED - Proposed Acquisition of the WRTRP Assets from Sibanye-Stillwater, Waiver Of Mandatory Offer and Cautionary

22 November 2017

DRD: DRDGOLD LIMITED - Proposed Acquisition of the WRTRP Assets from Sibanye-Stillwater, Waiver Of Mandatory Offer and Cautionary

DRD: DRDGOLD LIMITED - Proposed Acquisition of the WRTRP Assets from Sibanye-Stillwater, Waiver Of Mandatory Offer and Cautionary
Proposed Acquisition of the WRTRP Assets from Sibanye-Stillwater, Waiver Of Mandatory Offer and Cautionary

DRDGOLD LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1895/000926/06)
JSE share code: DRD
ISIN: ZAE000058723
NYSE trading symbol: DRD
('DRDGOLD' or the 'Company')

PROPOSED TRANSACTION TO ACQUIRE THE WRTRP ASSETS FROM SIBANYE-STILLWATER, WAIVER OF MANDATORY OFFER 
AND CAUTIONARY ANNOUNCEMENT

Key highlights:
-    Creation of an industry-leading surface mining company in partnership with Sibanye-Stillwater
-    Increase in gold reserves by 92%, from 2.99 Moz to 5.75 Moz
-    Increased production, revenue and extended life of mine
-    Regional Tailings Storage Facility ('RTSF') large enough to receive most of the tailings of the
     West Rand providing regional competitive advantage
-    Platform for long-term growth in a new operating region
-    Introduce substantial shareholder with proven transactional capacity and an international footprint
     as a precious metals mining group

1.   Introduction

     DRDGOLD shareholders ('Shareholders') are advised that on 22 November 2017 ('Signature
     Date'), DRDGOLD and Sibanye Gold Limited, trading as Sibanye-Stillwater, ('Sibanye-
     Stillwater') (collectively, the 'Parties') entered into an exchange agreement ('DRD Exchange
     Agreement') in terms of which DRDGOLD will acquire selected surface processing plants and
     tailings assets ('WRTRP Assets'), by way of the acquisition of a 100% shareholding in a special
     purpose vehicle, K2017449061 (South Africa) Proprietary Limited (to be renamed WRTRP
     Proprietary Limited) ('WRTRP') from Sibanye-Stillwater ('Proposed Acquisition').
     Pursuant to the implementation of the Proposed Acquisition, DRDGOLD will allot and issue so
     many new ordinary shares in the share capital of DRDGOLD ('Consideration Shares') as will
     result in Sibanye-Stillwater holding approximately 38% of all ordinary shares in the share capital
     of DRDGOLD ('DRDGOLD Shares') in issue (including treasury shares) following the issue of
     the Consideration Shares.
     Simultaneously, DRDGOLD and Sibanye-Stillwater have entered into an option agreement
     ('Option Agreement') in terms of which DRDGOLD will grant to Sibanye-Stillwater an
     irrevocable right and option to subscribe for so many new DRDGOLD Shares ('Option Shares')
     as will result in Sibanye-Stillwater holding 50.1% of all DRDGOLD Shares in issue (including
     treasury shares) following the issue of the Consideration Shares and the Option Shares
     ('Option').

2.   Background and rationale for the Proposed Transaction

     The Proposed Acquisition is in line with DRDGOLD´s strategy of growing its gold surface tailings
     retreatment operations and to continue to optimally and sustainably mine its resources. This
     represents a meaningful entry to the West Rand region and provides DRDGOLD with the
     opportunity to apply the industry specific expertise and experience gained over the years to the
     WRTRP Assets.
     The Proposed Acquisition and Option (collectively, the 'Proposed Transaction') are expected to
     provide the following benefits to DRDGOLD:
      -   an increase of about 92% in gold reserves from 2.99 million ounces ('Moz') to 5.75 Moz;
      -   the acquisition of surface assets capable of providing cash flows in the short term, with low
          initial capital expenditure, to support future growth and development of the project;
      -   the potential to increase production, revenue and increase DRDGOLD´s reserve base which
          extends the life of mine;
      -   RTSF large enough to receive most of the tailings of the West Rand providing a competitive
          advantage in the region;
      -   a reduction in overhead unit costs through increased production;
      -   addressing the Company´s single asset operating risk;
      -   securing significant long-term growth in a new operating region;
      -   providing strategic positioning for further growth;
      -   providing an opportunity to leverage proven experience to optimally develop the West Rand
          Tailings Retreatment Project;
      -   in Sibanye-Stillwater, the introduction of a supportive and substantial shareholder with
          proven transactional capacity and an international footprint, to enhance further corporate
          development and growth; and
      -   the Option (if exercised) will provide additional capital.

3.   Overview of WRTRP

     WRTRP is a special purpose vehicle newly incorporated to house the selected surface
     processing assets and tailing storage facilities and through which the Proposed Acquisition will
     be implemented. Following the implementation of the Proposed Acquisition, WRTRP will be a
     wholly-owned subsidiary of DRDGOLD and its primary purpose will be to operate the WRTRP
     Assets.
     The Company will ensure that the provisions of WRTRP´s memorandum of incorporation do not
     frustrate or relieve the Company in any way from compliance with its obligations in terms of the
     JSE Limited Listings Requirements ('Listings Requirements').

4.   Overview of the WRTRP Assets

     The WRTRP Assets, inter alia, comprises the following:

Asset                        Description
Additional tailings    Movable surface tailings dams which form part of the gold assets of
dams                   the WRTRP Assets and which include Driefontein Dumps 3 and 5,
                       Kloof 1, Venterspost North and South and Libanon Dump.

DP2 Plant              The Driefontein 2 Plant which is located on Portion 6 of Farm
                       Blyvooruitzicht No 116 Registration Division I.Q. and Remainder of
                       Portion 1 of the Farm Driefontein No 113, Registration Division
                       I.Q., Gauteng Province.
                       The DP2 Plant processes surface rock dumps ('SRD') material,
                       which is delivered by rail and truck. Throughput is achieved
                       through two Semi-Autogenous Grinding ('SAG') mills and a ball
                       milling circuit, cyanide leaching and a Cleaning-in-place ('CIP')
                       plant. A Carbon-in-leach circuit was commissioned in 2014 at DP2
                       Plant to improve recoveries by replacing the aging CIP circuit.

DP3 Plant              The Driefontein 3 Plant which is located on Portion 6 of Farm
                       Blyvooruitzicht No 116, Registration Division I.Q., Gauteng
                       Province.
                       The DP3 Plant was originally designed as a uranium plant, but was
                       converted to process low-grade surface rock in 1998. Similar to
                       DP2 Plant, SRD ore is delivered by rail and truck. This plant has
                       four SAG mills followed by cyanide leaching and a CIP circuit.

Driefontein 4          The moveable working surface tailing dump which forms part of the
                       gold assets of the WRTRP Assets.

Pilot Plant            The moveable LogiProc pilot plant established to test the
                       processes, techniques and assumptions made in the definitive
                       level design of the full scale retreatment of dumps as part of the
                       WRTRP Assets and located at Driefontein 1 Plant.

Plan and Materials     Any and all drawings, plans, studies (including feasibility studies of
                       a geological or geotechnical nature), surveys, reports (including
                       sampling and assaying reports), maps (including geophysical,
                       geological and / or drill maps), statements, schedules and other
                       data in whatever form of a financial, technical, labour, marketing,
                       administrative, accounting or other matters pertaining to the
                       WRTRP Assets.

Transferring Land      The land upon which:
                       -    the proposed Central Processing Plant ('CPP') will be located
                            after the subdivision of the Farm Rietfontein No 347
                            Registration Division I.Q. Portion 35 and 73, Gauteng
                            Province; and
                       -    the Regional Tailing Storage Facility and Return Water Dam
                            will be located and which is proposed to form part of the
                            WRTRP Assets.

Active Tailings Dams   The following currently active tailings dams will also be transferred,
                       for no additional consideration, once they have been
                       decommissioned by Sibanye-Stillwater:
                       -    Driefontein 1 and 2
                       -    Kloof 2
                       -    Leeudoorn

Licences to Operate    All the licences, permits, permissions, management plans and
                       reports, as well as amendments, variations or modifications thereof
                       from time to time necessary for Sibanye-Stillwater to operate the
                       WRTRP Assets lawfully.

Access Rights          The grant of access to DRDGOLD of the:
                       -   Kloof 10 shaft located in the Kloof mining area that is subject
                           to the Kloof Mining Right, for the purpose of pumping and
                           supplying, at the cost of WRTRP, the required quantities of
                           water, as licenced, for the WRTRP Assets;
                       -   rights, servitudes and agreements for installation, supply and
                           distribution and maintenance of power supply; existing and
                           proposed pipeline routes; servitudes; wayleaves and surface
                           right permits; and
                       -   Driefontein 1 Gold Plant for the purpose of accessing the Pilot
                           Plant.

     *Capitalised terms herein should be read as definitions according to the content of this announcement

5.   DRDGOLD and its strategy for the WRTRP Assets

     DRDGOLD has a network of surface assets that is unrivalled in South Africa and is focused on
     optimising these assets in order to increase gold production and extend its operational life.
     DRDGOLD intends on developing the WRTRP Assets through a phased approach. The first
     phase ('Phase 1') will include upgrading the existing DP2 Plant and DP3 Plant to process tailings
     from the Driefontein 5 dump. Phase 1 is estimated to be commissioned within 12 months after
     implementation of the Proposed Transaction and will provide for:

     -      the construction of a reclamation pump station and slurry pipeline at the Driefontein 5 dump
            and associated process water pump station and pipeline;
     -      the upgrading of the DP2 Plant and DP3 Plant from their name plate capacity of 315 000
            tonnes per month ('tpm') to between 400 000 tpm and 600 000 tpm to treat additional slime;
     -      the potential upgrading of the Driefontein 4 for additional tailings storage capacity; and
     -      the refurbishment of conventional Carbon-in-leach ('CIL') treatment plants (DP2 Plant and
            DP3 Plant).
     
     Further evaluation of all dumps through the pilot plant will occur within 24 months. The evaluation
     of each resource will include:
     -      Bulk samples to be trucked to DP3 Plant for evaluation
     -      CIL, milling, flotation and concentrate leaching
     -      Blending of various resources to determine the optimal combination and ratio
     
     Phase 1 is expected to be cash generative with minimal upfront capital investment required.
     These cash flows will be prioritised for the development of subsequent phases. Outputs from
     Phase 1 will enable DRDGOLD to refine the original WRTRP process and engineering design as
     well as financial and capital models for Phase 2.
     Phase 2 will deliver a central, high-volume, CPP capable of processing at least 1 million tpm of
     tailings and development of a new RTSF including associated pipeline infrastructure, within an
     additional 24 month period.

6.     Salient terms of the Proposed Transaction

6.1.   Salient terms of the Proposed Acquisition
       
       The Proposed Acquisition consists of, inter alia, two separate, but indivisible,
       simultaneous transactions as set out below:
       -   A disposal by Sibanye-Stillwater of the WRTRP Assets to WRTRP, a wholly-owned
           subsidiary of Sibanye-Stillwater, in exchange for additional ordinary shares in the
           share capital of WRTRP ('WRTRP Shares'), in terms of an exchange agreement
           entered into between Sibanye-Stillwater, WRTRP and DRDGOLD, dated 22
           November 2017 ('First Exchange Agreement').

       -   The subsequent acquisition by DRDGOLD of all the WRTRP Shares held by Sibanye-
           Stillwater, constituting 100% of the issued ordinary shares of WRTRP, in exchange for
           the Consideration Shares, in terms of the DRD Exchange Agreement.
       
       Each of the above transactions are inter-conditional and will be implemented as an
       asset-for-share transaction, as contemplated in section 42 of the Income Tax Act, No. 58
       of 1962.
       
       The total purchase consideration payable by DRDGOLD to Sibanye-Stillwater, pursuant to
       the implementation of the Proposed Acquisition, amounts to approximately R1.3 billion,
       based on:
       -   the issue of approximately 265 million DRDGOLD Shares, which will result in
           Sibanye-Stillwater holding approximately 38% of all DRDGOLD Shares in issue
           (including treasury shares) following the issue of the Consideration Shares; and
       -   the closing price of a DRDGOLD Share on the exchange operated by the JSE Limited
           ('JSE') immediately prior to the Signature Date of R4.96 per DRDGOLD Share.
       
       The Consideration Shares amount to approximately 63% of the DRDGOLD Shares
       currently in issue (excluding treasury shares). Accordingly, the Proposed Acquisition is
       considered to be a category 1 transaction, as contemplated in paragraph 9.5(b) of the
       Listings Requirements.
       The Proposed Acquisition will be subject to the fulfilment or waiver of the conditions
       precedent as set out in paragraph 7.1 below.

6.2.   Salient terms of the Option
       
       In terms of the Option Agreement, DRDGOLD will grant Sibanye-Stillwater an irrevocable
       right and option to subscribe for the Option Shares, which if exercised, will result in
       Sibanye-Stillwater holding 50.1% of DRDGOLD, at a cash price per Option Share
       calculated with reference to a maximum of a 10% discount to the 30 day volume weighted
       average price of a DRDGOLD Share on the JSE immediately preceding the date on which
       the Option is exercised.
       
       Sibanye-Stillwater shall be entitled, subject to Sibanye-Stillwater not having disposed of all
       or any of the Consideration Shares, to exercise the Option at any time during the period
       commencing on the date of implementation of the Proposed Acquisition and expiring 24
       months thereafter.
       
       The Option (if exercised) will constitute a specific issue of shares for cash by DRDGOLD,
       as contemplated in paragraph 5.51 of the Listings Requirements ('Specific Issue'). In the
       event that the Option is exercised, it is intended that the cash proceeds received by
       DRDGOLD pursuant to the Specific Issue will be utilised for purposes of funding
       DRDGOLD´s capital requirements to develop the WRTRP Assets as envisaged in
       paragraph 5 above.
       
       The Specific Issue will be subject to the fulfilment or waiver of the conditions precedent as
       set out in paragraph 7.2 below.

6.3.   Ancillary arrangements
       
       Pursuant to the implementation of the Proposed Acquisition, DRDGOLD has issued a
       guarantee to and in favour of Sibanye-Stillwater in terms of which, with effect from the
       date the Proposed Acquisition is implemented, DRD guarantees the performance of the
       obligations of WRTRP to Sibanye-Stillwater.

6.4.   Appointment to the Board
            
       Shareholders are advised that subject to the implementation of the Proposed Acquisition
       and the fulfilment of certain conditions precedent, a representative of Sibanye-Stillwater,
       will be appointed as a director of the board of directors of DRDGOLD ('Board').

7.   Conditions Precedent

     7.1.   Proposed Acquisition

            The implementation of the Proposed Acquisition is subject to the fulfilment or waiver (to
            the extent permitted) of, inter alia, the following conditions precedent:

             -   all agreements governing the Proposed Transaction are executed and become
                 unconditional in accordance with their terms;
             -   the approval by Shareholders of all ordinary and special resolutions required to
                 implement the Proposed Acquisition at a general meeting of Shareholders ('General
                 Meeting');
             -   the Shareholders, by way of an ordinary resolution at the General Meeting, in
                 accordance with the provisions of regulation 86 of the Companies Regulations, 2011,
                 waiving the benefit of a mandatory offer which would ordinarily flow from the issue of
                 the Consideration Shares to Sibanye-Stillwater, further details of which are set out in
                 paragraph 8 below;
             -   The Licences to Operate having been granted to Sibanye-Stillwater;
             -   the receipt of all approvals, consents or waivers from those South African regulatory
                 authorities as may be necessary to implement the Proposed Transaction; and
             -   on the date of fulfilment of the last of the above conditions precedent, no
                 circumstance, event or matter or combination thereof, which has a material adverse
                 effect on the affairs, business, financial condition, operations or property of
                 DRDGOLD shall have occurred, save for certain excluded instances.

     7.2.   Specific Issue

            The Specific Issue is subject to the fulfilment or waiver (to the extent permitted) of, inter
            alia, the following conditions precedent:
             -   the Proposed Acquisition   becoming wholly unconditional   and   thus   being
                 implemented;
             -   the approval by Shareholders of the Specific Issue at the General Meeting;
             -   Sibanye-Stillwater exercising the Option; and
             -   the receipt of all approvals, consents or waivers from those South African regulatory
                 authorities as may be necessary to implement the Specific Issue.

8.   Waiver of Mandatory Offer

     As at the date of this announcement, Sibanye-Stillwater does not hold any DRDGOLD Shares.
     Following the issue of the Consideration Shares, pursuant to the implementation of the Proposed
     Acquisition, Sibanye-Stillwater will hold approximately 38% of all the DRDGOLD Shares in issue
     (including treasury shares).

     Accordingly, Sibanye-Stillwater will, following the implementation of the Proposed Acquisition,
     hold in excess of 35% of the voting securities of the Company and, in accordance with section
     123 of the Companies Act, No. 71 of 2008, be required to extend a mandatory offer to the
     remaining Shareholders to acquire any DRDGOLD Shares held by such persons ('Mandatory
     Offer').

     In the circumstances, the Proposed Acquisition will be subject to Shareholders waiving the
     benefit of the Mandatory Offer by way of ordinary resolution at the General Meeting.

9.   Circular

     A circular to Shareholders, including revised listings particulars, setting out the full terms and
     conditions of the Proposed Transaction and including the notice convening the General Meeting
     will be posted to Shareholders in due course.

10. Cautionary announcement

     The pro forma financial effects of the Proposed Transaction are still being finalised. In the
     circumstances, Shareholders are advised to exercise caution when dealing in the Company´s
     securities until a further announcement is made.



Johannesburg
22 November 2017

Sponsor
One Capital

Legal advisor
Malan Scholes Incorporated

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