Finweek English Edition - - Companies & markets -

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.

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