Giyani pri­vate eq­uity

Finweek English Edition - - INVESTMENT -

Giyani Gold’s an­nounce­ment on 11 Fe­bru­ary that its ac­qui­si­tion strateg y re­mained in­tact was per­haps only co­in­ci­den­tally a day af­ter An­gloGold Ashanti an­nounced that it would sell its Navachab mine in Namibia to pri­vate eq­uity firm QKR, for about $110m.

The spec­u­la­tion was that Giyani Gold had thrown its hat into the ring for Navachab, al­though head of com­mu­ni­ca­tions Luke Vigeant de­clined to say ei­ther way. “We don’t nor­mally com­ment on that kind of thing,” he told Min­ingmx on 12 Fe­bru­ary.

To be fair, the only voiced opin­ion con­nect­ing Giyani and Navachab is Giyani Gold pres­i­dent Duane Parn­ham’s some­what non-com­mit­tal view last year that Navachab was an ‘in­ter­est­ing’ as­set.

If there was a bid, how­ever, Giyani Gold must be feel­ing a bit piqued. Per­haps it of­fered more for the as­set than Lloyd Pengilly’s QKR, but An­gloGold just pre­ferred pri­vate eq­uity to money raised through the pub­licly traded mar­kets, or debt cap­i­tal.

Said Parn­ham: “Our list­ings in South Africa, Namibia, and Toronto pro­vide a strate­gic and com­pet­i­tive ad­van­tage for Giyani Gold that gives us the f lex­i­bil­ity to trade, raise cap­i­tal, and seek ac­qui­si­tions on a broad scale through­out Africa.

“I have led com­pa­nies through these types of down-mar­kets in the past, and my team and I have a his­tory of main­tain­ing and gen­er­at­ing value in both good and bad mar­kets.”

Vigeant says Giyani Gold has a shop­ping list cur­rently in the gold mar­ket.

That does sound a tad de­fen­sive, and it must be hard to be a ju­nior in the cur­rent mar­ket – one that Parn­ham said would con­tinue for 2014 – which is why pri­vate eq­uity is emerg­ing as a real fund­ing al­ter­na­tive for new ac­qui­si­tions.

(Not all agree. A for­mer gold min­ing ex­ec­u­tive at­tend­ing the Min­ing Ind­aba in Cape Town last week said on the side­lines of the con­fer­ence that the pri­vate eq­uity in­ter­est was a whole lot of froth.)

Giyani Gold, far from be­ing the green­fields ex­plo­ration play it first seemed when list­ing in Jo­han­nes­burg and Namibia, is keen on ac­qui­si­tions nonethe­less.

Vigeant said that just be­cause the firm doesn’t have any­thing im­mi­nent to an­nounce doesn’t mean there aren’t dis­cus­sions... or words to that ef­fect.

One lit­tle worry for Giyani Gold is the fact that the State-owned com­pany Cor­ri­dor Min­ing Re­sources (CMR) has so far not stumped up its R2.5m share of 2013 op­er­at­ing ex­penses it shares with Giyani Gold on ex­plo­ration.

Giyani Gold said that “an additional up­date sur­round­ing the 2014 ex­plo­ration pro­gramme will be made at such time that Giyani Gold and CMR have re­solved all pay­ment and bud­getary items”.

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