<<Prinsloo axed on back of disastrous Australian campaign>>
The expansion into Australia was a big fiasco and if Prinsloo was responsible for it, he deserves the boot.
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DRD's chief executive resigns, group edges closer to JCI Gold
Mike Prinsloo, Durban Roodepoort Deep's (DRD's) chief executive, has resigned amid a board reshuffle and sharp changes in the company's strategy.
Gone is DRD's plan to develop attributable gold production in Australia. Gone, too, is its search for 'critical mass' in favour of generating as much cash as possible. This is owing to the company's near bankrupt state: "DRD has to make a living even at the current gold price," one market commentator has said.
The announcement of Prinsloo's departure is expected to be made at DRD's September quarter results on Friday (03 November).
DRD will now work towards selling off its less profitable operations, a strategy already partly carried out with the closure of shafts at the Durban Roodepoort Deep and West Wits mines. In addition, DRD will elicit the financial aid of Brett Kebble's JCI Gold in order to compete for mines in the ongoing consolidation of South Africa's mature gold mining industry.
Commenting on the likelihood of working with DRD, Kebble said: "We will definitely support DRD in its bid for any assets that come its way and make sense from a synergistic stand point". Any co-operation with DRD will represent the first step in Kebble's plans to re-invent himself as a resource financier. "We've had a look at the situation and its worth while supporting DRD," he said.
Analysts believe DRD will probably bid for AngloGold's Elandsrand or Deelkraal gold mines. DRD's chairman Mark Wellesley-Wood has previously expressed an interest in growing DRD's asset base in the West Wits gold fields. Elandsrand is contiguous with DRD's Blyvooruitzicht mine.
Prinsloo axed on back of disastrous Australian campaign
DRD is not in a healthy financial position. The company reported a $8.7 million taxed loss in its year to June after a series of write-downs totalling $57 million. Of this, $14 million was from the flooding of Hargraves gold mine, Browns Creek. Hargraves is an Australian company and numbered among a series of financial misfortunes for the group.
Analysts believe DRD's disastrous campaign in Australia ultimately led to the resignation of Prinsloo. An investigation by DRD suggests that chief financial officer and managing director of DRD's Australasian division, Charles Mostert, was involved in siphoning off company monies. Prinsloo's resignation probably refers to his failure to spot Mostert's actions.
By: David McKay |
