JOHANNESBURG (miningweekly.com) – Gold mining company DRDGold’s subsidiary, Ergo Mining, will pay R126-million to the Ekurhuleni metropolitan municipality (EMM) to ensure continued electricity supply to Ergo, reducing DRDGold’s cash balance of R295-million as at December 31.
Ergo has been engaged in a legal dispute with EMM since December 2014 regarding the payment of surcharges on the supply of electricity and maintains that it is supplied electricity directly by State-owned Eskom, and therefore liable to pay only Eskom rates.
However, in May 2016, EMM threatened to cut off Ergo’s electricity supply unless it paid its arrears.
Ergo was granted an interdict by the High Court, preventing the municipality from enforcing payment pending the court’s ruling on the main dispute between Ergo and EMM.
The R126-million, which has been held in an attorneys trust account pending the resolution of the dispute, will be paid following a ruling by the Constitutional Court, in response to a petition by Ergo for it to intervene.
“Ergo will seek to recover the amount of R126-million, all surcharge payments made between now and the High Court ruling, and a further amount of around R42-million in overpayments made to EMM prior to December 2015,” DRDGold said in a statement.
DRDGold stressed that the ruling would not affect the company’s approach to the payment of dividends.
The case between Ergo and EMM is scheduled to be heard in the High Court on December 5.