Finweek English Edition - - Companies & markets - DAVID MCKAY

IT WILL BE WORTH keep­ing an eye on the ever-en­ter­pris­ing Har­mony Gold over the next month or so. Deal junkie Bernard Swanepoel, the com­pany’s creative CEO, is at it again with plans to sell off the com­pany’s mar­ginal mines from which he now strug­gles to make money.

Swanepoel won’t com­ment di­rectly on new plans for his old strat­egy. “At the right price, less strate­gic shorter life as­sets will be up for sale. But such a process would be sub­ject to a full due dili­gence,” he says, in­di­cat­ing the sale of mar­ginal ounces will be nei­ther quick nor easy. How­ever, spec­u­la­tion is that Har­mony’s Orkney shafts, sit­u­ated near Klerks­dorp, are be­ing pre­pared for Pamodzi Gold.

Pamodzi is a newly listed gold ju­nior with plans to be­come a 400 000oz/year pro­ducer by the end of this year. It cer­tainly needs the gold from Orkney af­ter ow­ing up ear­lier this month to de­vel­op­ment prob­lems at its Pe­trex mines on the East Rand. A de­bil­i­tat­ing hedge book, which Pamodzi is at­tempt­ing to dis­solve, is com­pound­ing the re­de­vel­op­ment of those mines.

“Did we re­alise the ex­tent of de­vel­op­ment we’d need to catch up on? No, but we’re work­ing on that and we will bring it right,” Pamodzi CEO Ken Steenkamp told Min­ingmx on 13 April. Pamodzi fore­cast 169 000oz this year from its Pe­trex mines, bought from Cana­dian firm Bema Gold last year.

Swanepoel de­clined to con­firm whether the Orkney shafts (Num­bers 2, 4 and 7) are head­ing to Pamodzi Gold.

If Pamodzi is in for Har­mony’s Orkney shafts, it’ll be a mas­sive coup for the gold ju­nior. The shafts yielded about 162 000oz last year, enough to take Pamodzi to­wards its magic 400 000oz/ year tar­get.

Yet there are prob­lems. Ac­cord­ing to one mar­ket com­men­ta­tor, the shafts are di­a­monds one month and a dog’s din­ner the next. They pro­duced profit of R54,1m in the De­cem­ber quar­ter, a vast im­prove­ment on the R7m in the end-Septem­ber quar­ter.

We’ll bring it right. Ken Steenkamp

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