* Looks to sell deep-level Blyvoor mine
* Most likely suitor would be from S.Africa's "Big 3"
* Headline earnings per share rise 44 percent
(Recasts with background, analyst, CEO comment)
By Ed Stoddard
JOHANNESBURG, April 19 DRDGold (DRDJ.J), South
Africa's fourth-largest gold producer, said on Tuesday it
planned to sell its Blyvoor mine in a move that could bring it
needed cash but may be an asset that only a few would want.
The mid-tier miner also said output fell as expected in the
March quarter, while headline earnings per share rose because of
a deferred tax credit.
The Blyvoor mine, which was distressed and loss-making in
2009 and on the verge of liquidation, has returned to
profitability but the company said the operation no longer
fitted its core strategic focus.
Blyvoor is a deep-level mining operation and the company has
been trying to move away from this area because of the high
risks and costs.
That might mean its only serious suitors could come from
miners with deep-level experience, namely South Africa's "Big 3"
gold producers: AngloGold Ashanti (ANGJ.J), Gold Fields (GFIJ.J)
and Harmony Gold Mining Co. (HARJ.J).
But they have also been trying to diversify their operations
outside of the country, in part because of the costs and risks
involved in plunging deeper into the earth to extract gold.
But one of the advisers on the transaction is Beijing Axis,
which could suggest DRDGold is looking East. The other is Royal
Bank of Canada.
"The Chinese won't shy away from things like that but if you
talk about experience with deep levels then it is South African
miners," said Abri du Plessis, chief investment officer with
Gryphon Asset Management.
Some analysts said they were unsure how to value the mine,
which was severely damaged by seismic activity in 2009.
"There are so many variables. It should be positive for the
company if they can realise a fair value because it will
significantly reduce their risk profile, and it will give them
cash which they can apply elsewhere," said a Johannesburg-based
The projected life of the mine is until 2030 and it had
attributable reserves in 2010 of 5.3 million ounces.
NOT GIVING IT AWAY
DRDGold's chief executive said the company, while keen for
strategic reasons to part with the asset, was not planning on
giving it away.
"If we don't find the right buyer there won't be a sale,"
Niel Pretorius said on a conference call.
Chief Financial Officer Craig Barnes said a higher rand gold
price so far this quarter was promising but he declined to give
a specific earnings forecast going ahead.
Total group gold production was down 3 percent at 67,387
ounces but the miner had said earlier this month it expected
this to be the case.
South African miners often see lower production in the March
quarter because of spill-over from the Christmas holidays.
Headline earnings for the three months to end-March totalled
12.5 cents per share, up 44 percent from the previous three
months. Headline earnings are the main profit gauge in South
Africa and exclude certain one-time items.
(Additional reporting by Ruona Agbroko; Editing by David