spoiler crashes drd’s emperor close

Spoiler crashes DRD’s Emperor close
By: Peter Gonnella
Posted: '14-JUL-04 10:15' GMT © Mineweb 1997-2004



PERTH (Mineweb.com) -- An Aussie broking firm has been buying shares in Durban Roodepoort Deep’s [Nasdaq:DROOY,JSE:DUR,ASE:DRD] takeover target, Emperor Mines [ASX:EMP], for an unidentified group that’s built up a potentially spoiling stake.

While DRD’s shareholding in Emperor swelled to about 44 percent by this evening, the (previous) official close-off of its offer, mum’s the word at the eastern states-based Austock, who since the start of the week has bought about 9.9 million shares on behalf of its client.

The possible rival to DRD has paid an average of about A$0.87 per Emperor share to build the significant equity position, which represents just under nine percent of Emperor’s issued capital and is about A$0.06/share or roughly 7.5 percent higher than the current see-through price of DRD’s offer.

There’s been plenty of speculation in the market as to who would be brave enough to want to acquire – if a takeover of Emperor is the motive – what probably won’t be an easy core asset, the Vatukoula underground gold mine in Fiji, to tame.

“Austock isn’t talking to anyone or giving any indication who it might be,” a DRD spokesperson told Mineweb. But the broker’s caginess is academic because the anonymous buyer today (Wednesday) went above the five percent threshold that under corporations law triggers the requirement to lodge a substantial shareholders notice to the ASX within 48 hours. In other words, all must be revealed in the next couple of days.

The strategy of the new player has confused but not bothered DRD. “If it’s a new bid, that’s strange, and if it’s someone greenmailing that’s equally strange,” said the DRD spokesperson. He added, however, that “if there’s a counterbid presented, we may even sell.”

At Emperor’s latest closing price of A$0.86, DRD’s 44 percent interest is worth about A$50 million, which if it did sell to a higher offer would not only likely result in a handy profit on the investment but would also give the South African-based gold producer a handy cash platform to look at alternative opportunities to grow its Australasian business.

DRD has made it abundantly clear that if it doesn’t achieve full ownership of Emperor a rights issue to raise capital to complete the expansion of Vatukoula would be undertaken, which means remaining Emperor shareholders would be asked to cough up.

As expected DRD, which last week removed all conditions from its five DRD shares for 22 Emperor shares offer, has elected to again extend the bid period, until 30 July. Emperor shareholders will receive their DRD stock within seven days of acceptance.