Johannesburg - DRDGold [JSE:DRD], South Africa's fourth-largest gold producer, said on Thursday that it was suspending financial assistance to its troubled Blyvoor mine which it has also been trying to sell.
It also said in a statement that the mine would begin business rescue proceedings as a result. Under this process the distressed company can appoint a certified rescue practitioner whose function is to save the business.
It said the process would not interfere with its plans to sell all or part of its 74% stake in Blyvoor.
"Chief executive officer Niel Pretorius said that discussions are ongoing with three parties, and that business rescue proceedings will not interfere with these," it said.
DRDGold said that Blyvoor requires R80m in financial assistance through to December 2011.
"DRDGold has maintained an internal revolving credit facility for Blyvoor since it came out of judicial management in April 2010, but this facility is now fully drawn down," it said.
It said the mine's production had been trending down as its grades declined, seismic events forced work stoppages and power costs soared.
It said in April that it wanted to sell Blyvoor, which is a deep-level mining operation. The company has been trying to move away from this area because of the high risks and costs.
One of the advisers on the transaction is Beijing Axis, a China-focused advisory firm, which could suggest DRDGold is looking East. The other is Royal Bank of Canada.
Its share price extended gains on the news to trade 2.61% higher at R3.15.
It also said in a statement that the mine would begin business rescue proceedings as a result. Under this process the distressed company can appoint a certified rescue practitioner whose function is to save the business.
It said the process would not interfere with its plans to sell all or part of its 74% stake in Blyvoor.
"Chief executive officer Niel Pretorius said that discussions are ongoing with three parties, and that business rescue proceedings will not interfere with these," it said.
DRDGold said that Blyvoor requires R80m in financial assistance through to December 2011.
"DRDGold has maintained an internal revolving credit facility for Blyvoor since it came out of judicial management in April 2010, but this facility is now fully drawn down," it said.
It said the mine's production had been trending down as its grades declined, seismic events forced work stoppages and power costs soared.
It said in April that it wanted to sell Blyvoor, which is a deep-level mining operation. The company has been trying to move away from this area because of the high risks and costs.
One of the advisers on the transaction is Beijing Axis, a China-focused advisory firm, which could suggest DRDGold is looking East. The other is Royal Bank of Canada.
Its share price extended gains on the news to trade 2.61% higher at R3.15.