The odd cou­ple

Finweek English Edition - - Openers - DAVID MCKAY

THE COM­BI­NA­TION OF Mark Welles­leyWood and Mzi Khu­malo looks in­ter­est­ing to say the least. Throw in Zim­babwe and you’ve got a broth of heady redo­lence. That’s the propo­si­tion Lon­don in­vestors will face if plans to fi­nally list Me­tal­lon Gold – Khu­malo chairs Me­tal­lon Cor­po­ra­tion – get off the ground.

For­mer DRDGOLD CEO Welles­ley- Wood is con­sid­er­ing an of­fer to run Me­tal­lon Gold, which owns 150 000 oz/year of gold pro­duc­tion in Zim­babwe and is cur­rently a sub­sidiary of the pri­vately held Me­tal­lon Cor­po­ra­tion.

Speak­ing from Lon­don, where he’s mulling over Khu­malo’s of­fer, Welles­ley-Wood said he was quite set on a quiet life of red wine and books.

“I was hap­pily build­ing my own house in Cape Town. But then we broke bread and had a few whiskies.”

The thought of Welles­ley-Wood pad­ding around the house in slip­pers doesn’t quite work. The com­bi­na­tion was be­ing worked on a while back. The two were most re­cently spot­ted in Sand­ton Square at a well-known restau­rant. But the deal was shaped well

be­fore that.

Both Welles­ley-Wood and Khu­malo were in Cape Town in Fe­bru­ary at­tend­ing the Min­ing Ind­aba con­fer­ence. While there, Welles­ley-Wood cut a lonely fig­ure with­out his beloved DRDGOLD, from which he was fi­nally ejected in De­cem­ber. Clearly, he couldn’t wait to get back into the fray.

Khu­malo turned down an in­ter­view, as is usual. Buf­feted by me­dia, he’s sus­pi­cious of pub­lic an­nounce­ments. By con­trast, Welles­ley-Wood feels bul­let­proof. To­gether, you can see they make a good team.

In Welles­ley-Wood, Khu­malo has the per­fect mouth­piece for what would be a hellishly dif­fi­cult sell. Zim­babwe is on its knees and, by all ac­counts, the Me­tal­lon Gold as­sets have been slum­ming it.

For­mer Me­tal­lon Gold CEO Greg Hunter de­clined to com­ment on the pro­posed list­ing, one he was re­peat­edly frus­trated in achiev­ing. He’s got his own (listed) com­pany now, Cen­tral African Gold (CAG), which has bought mines in Zim­babwe. Com­ment­ing on the coun­try, Hunter says: “The last cou­ple of weeks the cur­rency has weak­ened ter­ri­bly. Peo­ple are ner­vous.”

But Hunter knows the po­ten­tial pay­off is mas­sive of first-mover ad­van­tage should Zim­babwe even­tu­ally fall on its feet.

Banro Cor­po­ra­tion, a Toronto-listed firm, bought gold-bear­ing prop­erty in the Congo well be­fore its demo­cratic elec­tions and finds it­self un­shack­led by any of the ten­ure squab­bles cur­rently un­der way in that coun­try.

Will Me­tal­lon Gold and CAG fare the same in Zim­babwe? “There’s the pos­si­bil­ity of first-mover ad­van­tage and it’s all about risk and re­ward,” says Mark Smith, an an­a­lyst at RBC Cap­i­tal Mar­kets. “But will those com­pa­nies be able to re­tain se­cu­rity of ten­ure if and when Zim­babwe re­struc­tures it­self?”

It’s also worth not­ing how in­vestors cur­rently treat in­vest­ments held by Im­pala Plati-

num and Aquar­ius Plat­inum in Zim­babwe. “They don’t get any recog­ni­tion for it,” says Smith.

Feel­ing bul­let­proof. Mark Welles­ley-

Wood

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