Uranium One to bid SA gold farewell
Either offshore acquisitions or a reverse takeover
NEAL FRONEMAN, CEO of Aflease Gold, plans to sell the South African gold exploration firm and hopes a merger between it and Randgold & Exploration (R&E) will minimise disruption to its share.
A number of foreign-listed firms have shown interest in Aflease Gold, says Froneman, who’s also CEO of sxr Uranium One (Uranium One), a 68% shareholder in Aflease Gold. That’s because the company has North American type gold deposits, he says.
However, the plan first is to have the merger of JCI and R&E approved, which is currently being negotiated.
Were that to happen, Aflease will bid for R&E principally for its R2bn worth of Gold Fields shares. The outcome would be R4bn in market capitalisation, of which R2bn would be cash.
Though there’s still a lot of water to flow under the bridge, buying R&E would dilute Uranium One’s stake down to around 25%. “It’ll then be much easier to exit the firm,” says Froneman. “A lot less disruption.”
Aflease Gold’s principal asset is East Modder, east of Johannesburg. It’s slated to be the East Rand’s first new gold mine in 28 years, with projected output of 100 000oz/year. Its relatively shallow and cheap-to-mine gold ounces are not at all like other assets owned by SA’s gold junior mining companies, says Froneman.
It’s also for that reason that Aflease Gold has no interest in the assets of DRDGOLD, which is selling its international arm in favour of a home strategy. Some say that the plan may expose DRDGOLD to an asset strip or a hostile takeover.
But what’s Plan B for Aflease Gold should Uranium One fail to implement its takeover strategy? Uranium One CFO Jean Nortier says: “We’ve got quite a number of alternatives to the R&E deal.” One is to “engineer” the takeover of Aflease Gold by a foreign-listed mining company; the other is to add slightly more “critical mass” to Aflease Gold by way of acquisitions. Those would be deals done via paper, enabling the dilution of Uranium One in the same way as the R&E transaction would.
“There are a number of assets in other jurisdictions that are appropriately priced for Aflease Gold,” says Nortier. The promise of corporate activity is more good news for shareholders in the gold company, which have so far benefited from the strong run in the gold price. Aflease Gold’s share price has gained 63% over the past 12 months.
Avoiding disruption. Neal Froneman
Has a number of
options. Jean Nortier