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Mix-Ansicht- Ein weiterer Goldproduzent schliesst sein Hedgebuch: DROOY!!! - Tofir, 20.05.2002, 22:36
- Re: Ein weiterer Goldproduzent schliesst sein Hedgebuch: DROOY!!! - spieler, 20.05.2002, 23:09
Ein weiterer Goldproduzent schliesst sein Hedgebuch: DROOY!!!
DRD to issue shares for hedge
By: David McKay
Posted: 2002/05/20 Mon 20:21 ZE2 | © Miningweb 1997-2002
JOHANNESBURG -
Durban Roodepoort Deep [NASDAQROOY], the South African gold producer, is to confirm later this week it privately placed 7 million new shares, about 4.6 percent of its total shares in issue, in an effort to finally remove its hedge book. Proceeds of about one million shares will be used to fund the expansion of DRD`s Papua New Guinea gold mine, Tolukuma, as well as related exploration near the mine.
The private placement is being completed today (20 May) through CIBC World Markets. DRD has promised to remove its hedge book by June 30, its financial year-end.
DRD also confirmed it was considering plans to upgrade to a full Australian Stock Exchange (ASX) listing in a move that could be interpreted as preparation to improve its asset base in the region. DRD did not enjoy its last round of attempted investments in Australia which was characterised by Browns` Creek, a mine DRD bought but which flooded barely days after it took ownership. Returning to Australia will be a bold step but perhaps hints that DRD feels strong enough to return to a growth-by-acquisition strategy.
However, one South African analyst was unimpressed with a potential move to Australia saying it did not make sense unless the company already had a significant asset base in the region."Harmony Gold (a rival South African producer) produces 500 000 ounces from Australia and yet has not decided to take a full listing. There are a number of associated costs with a full listing including establishing an office there. It`s also well known that quite apart from stringent regulations, it`s a major hassle to conduct a full listing in a different time zone," he said.
Mark Wellesley-Wood, DRD`s chairman and chief executive, said DRD was the 97th largest company in Australia and taking a full listing and moving into the top 100 companies would attract the attention of the tracker funds. This would mean the company`s stock would become a"must buy" in Australia. Wellesley-Wood may well be aware of DRD`s mature and relatively low quality asset base in South Africa.
New shares issued
The decision to issue new shares to pay down the hedge book - which currently has a mark-to-market value of about $70 million - probably makes sense because it`s a cheaper way of raising money than using loan finance which DRD said it was hoping to arrange. Less of the loan finance would be used.
Wellesley-Wood said the rationale was simply that the rand was strengthening against the dollar quicker than the dollar gold price was rising, a development that was taking the rand gold price down to its lowest level since December. This means the company would prefer to deliver into its hedged positions as quickly as possible:"On balance we don`t want to miss the hedge clock," Wellesley-Wood said. The loan has not yet been ratified.
The issue of 7 million shares with an average broker`s commission of 5 percent would mean DRD was raising about R297.5 million assuming the shares were placed at DRD`s closing price on the Johannesburg Stock Exchange today of R44.10 a share. This would enable the company to close out about 150 000 ounces of gold, out of a total remaining hedge book of 370,000 ounces.
No doubt a concern for shareholders will be that the issuing of new shares echoes previous company misdeeds. DRD issued roughly half of its existing shares during the a few years prior to Wellesley-Wood joining the company. The resulting massive dilution proved fruitless as the capital raised was wasted on poor investments, mainly in Australia. But Wellesley-Wood argues that there`s"nothing criminal in issuing new shares"; only in eroding shareholder value:"I would argue that adding R35 per ounce to the revenue line is in the interests of shareholders," he said. The market appeared concerned, however. DRD normally trades up amid a stronger gold price but today it shed 2 percent on a day when the gold price raced to $216 per ounce. Gold pushed the rest of the Johannesburg gold index 2.3 percent higher.
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