Village of the damned?
AS A SHAREHOLDER in dormant mining group Village Main Reef Gold Mining Co (1934) I was hugely disappointed that the interim results to end-June 2006 contained not a single line of directors’ comments. As I’ve explained on numerous occasions in this publication, I’m an unrepentant cash shell addict. I feel that my portfolio (insignificant as it is) should contain at least one cash shell at all times – a kind of excitable distraction from the staid presence of Remgro, Libint or Afrox.
But buying into Village – as I did last year – was not an outright lucky packet option. There seemed sufficient evidence that the listing was set to be transformed with a possible injection of some higher risk/higher reward mining assets. And doesn’t everyone want to catch the next Aflease (Uranium One), Sub-Nigel (now Aflease Gold), Petra Mining (now Petmin) or SA Land & Exploration (now Sallies)?
Naturally, the fact that Harmony Gold Mining in mid-2006 acquired 2,29m shares (for 20c/ share) in Village – representing a chunky 37,8% of the mining shell – fuelled speculation that something was afoot.
I’m not a mining expert, but my helpful colleagues explained market talk was that Village could be used to house Harmony’s more marginal operations – and, more specifically, the mine dump operations in a listing that would recall the old Anglo slime dumps operation, Ergo.
Even though Harmony has been the majority shareholder in Village for around eight months, the gold mining giant has been at pains to downplay shareholders’ expectations at Village. However, giving no comment whatsoever on a set of interim results seems to be a rather extreme step in attempting to snuff out shareholders’ hopes.
Colleague Michael Coulson (who picked Village as one of his stock picks for 2007) tells me that Harmony boss Bernard Swanepoel reiterated at a recent presentation that his company’s buy-in at Village was merely part of a tidying up exercise.
Yet the share price holds at levels far above what Harmony paid for its controlling stake in Village. Maybe Harmony’s silence on Village is golden?
Buying into Village was not an outright lucky packet option.