JOHANNESBURG (miningweekly.com) – A new strategic partnership and a major shareholding by a Chinese consortium, would position JSE- and ASX-listed Gold One as an active participant in the consolidation of the gold mining industry, CEO Neal Froneman said on Monday.
The consortium comprises Baiyin Non-Ferrous Group, the China Africa Development Fund (CADFund), which is also part of the consortium that recently acquired JSE-listed Wesizwe Platinum, and Long March Capital Group.
The Chinese consortium is offering shareholders wishing to exit A$0,55, or R4,08, in cash and plans to secure a 60% to 75% shareholding in Gold One, which operates mines in South Africa.
The consortium, which acquired about 18% of Gold One through the purchase of shares previously held by African Global Capital through Nevada Trading, has injected A$150-million (R1,1-billion) into the company.
The capitalblast furnace slag aggregate crushing plant injection would allow Gold One to accelerate growth plans, which included assisting with financing the acquisition of Rand Uranium.
Froneman said that the consortium was committed to the partnership, that would deliver a wealth of technical and mining experience to supplement Gold One’s technical team. The large network of consortium partners would provide Gold One with exposure to a greater number of new acquisition opportunities.
Froneman and CFO Christopher Chadwick would remain at the helm of Gold One, while the Chinese consortium would appoint a chairperson what is a slag milland two nominees to the board. Three existing Gold One nonexecutive directors, of which one would be the lead independent director, and three nonexecutives nominated by the consortium would also sit on the board.
Froneman said Gold One’s management would remain incentivised for the next three to five years.
“Should the consortium wish to manage the business in the years to come, then the dynamics of the board structure could change.
“But this is a strategic partnership and it will continue to represent all partners in a business model that represents such a partnership – it’s about working as a team anprimary impact stone crusher in indiad that is the plan for the future,” he told Mining Weekly Online when asked if the board would continue to have strong South African representation.
Baiyin chairperson Li Peixing said that the Gold One deal formed part of its global strategy to invest in precious-metals assets, particularly in Africa.
“We identified Gold One as a well-managed gold company, offering significant growth prospects and a strong team. Our investment strategy focuses on securing companies with high-quality resources, low cash costs and experienced operational teams that can deploy our capital effectively, such as Gold One,” he added.
CADfund chairperson Jianping Zhao described the partnership as a “perfect model” and expressed his wish to see Gold One become one of the largest gold companies.
With regard to Chinese investment in South Africa’s mining industry, Froneman said that the Chinese have made it clear that they have an agenda to aggressively access commodities such as copper and nickel and an affinity for Africa, and South Africa remained a springboard through which they could aggressively pursue opportunities throughout Africa.
RAND URANIUM
Gold One’s deal with the Chinese consortium follows hot on the heels of the gold junior buying Rand Uranium for $250-million.
Froneman said that the acquisition of Rand Uranium fitted Gold One’s strategic profile and business model.
The acquisition would see the South Africa-based company becoming the largest midtier gold miner on the JSE and the third largest midtier company on the ASX, based on resources, and excluding major miners. This positioning in the market would be based on Rand Uranium’s production for 2011 being fully attributable to Gold One.
The company would create separate surface and underground business units and restructure and refocus the underground operations by enhancing mining efficiencies and optimising the mining mix.
Gold One expects gold and uranium production from the Cooke Dump by 2015, and to treat all ore at the plant within 12 months. Further, it aims to complete the processing of Dump 20, not initially part of Rand Uranium’s plan, and implement a uranium coproduct resource optimisation strategy.
He said there was “no rush to produce uranium” as the company did not wish to incur any further debt. “The focus on uranium is as a co-product and not a revenue item.”
The Gold One turnaround and uranium co-product strategy would re-establish Randfontein as a high-quality operation, he explained.
Froneman told Mining Weekly Online that uranium could possibly become a future revenue-generating item, but for now the company’s business model was based on precious metals.
“This acquisition would be in line with Gold One becoming a leading player in the South African gold and uranium sectors, and will substantially increase our production profile and diversify the company’s operational and commodity risk,” he explained.
There were many opportunities to enhance efficiency at Rand Uranium.