Vil­lage of the damned?

Finweek English Edition - - Companies & markets - MARC HASENFUSS

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.

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