MVELA TO EXIT GOLD INVESTMENTS
THERE WAS a minor stink last year when this publication quoted Mvela Resources management as expressing a desire to exit its R4bn plus investment in Gold Fields. The suggestion came, however, at an awkward time, when the gold producer was applying for new order mining licences. Empowerment is a condition of such applications so the timing of the statement was inopportune for Gold Fields.
Now, however, Mvela Resources is more fullsome on its plans for its 15% stake in Gold Fields’s SA mines (which converts into about 6% of equity in 2009). “The reality of the investment is that we’ll never benefit from the gold premium,” says Pienaar. Gold investors just don’t get the leverage of a gold stock in Mvela Resources so they prefer Gold Fields if they think the gold price will run.
Pienaar says a value decision will be made at the time, but all things being equal, Mvela Resources will be out of gold by 2015 at the latest, and probably much earlier.
There’s now an added dimension to Mvela’s long-term strategic interest in Gold Fields or lack thereof.
The investment by Afripalm Resources in Mvela represents a R1,5bn cash injection, and investment by Lazarus Zim’s company that will require servicing at some point. Pienaar believes Afripalm, as Mvela’s largest shareholder, would benefit from a special dividend that would flow from liquidating the Gold Fields stake. “We have to consider Afripalm’s situation,” says Pienaar.