Even more trust

Finweek English Edition - - INVESTMENT -

ing in­roads, is not just a lo­gis­ti­cal event, but a trans­ac­tion steeped in trust.

Rand Re­fin­ery is only one of f ive com­pa­nies ap­pointed as a ‘good de­liv­ery ref­eree’ by the Lon­don Bul­lion Mar­ket As­so­ci­a­tion that al­lows it to give guar­an­tees on pu­rity of the metal sold as well as se­cu­rity. As in di­a­monds, the sale of pre­cious met­als is highly brand sen­si­tive.

There has also been sig­nif­i­cant fi­nan­cial con­se­quences for the share

hold­ers.

Sibanye has taken a R196.4m write­down on its share of the gold loss, a ma­jor con­trib­u­tor to the com­pany’s 36% de­cline in half-year head­line earn­ings. It may also write-down the R450m loan it has pro­vided the re­fin­ery, while An­gloGold Ashanti said that it had al­ready writ­ten down its share of the loan, equal to some R573.8m.

Apart from Rand Re­fin­ery’s po­si­tion as the largest sin­gle gold re­fin­ery in the world – it ac­cepts gold from nu­mer­ous African coun­tries as well as SA, in­clud­ing Mali and Ghana – it also pro­vides im­por­tant ben­e­fi­ci­a­tion points to the gold pro­duc­ers which they need in terms of meet­ing the prin­ci­ples of the Min­ing Char­ter.

Less af­fected by the re­fin­ery’s woes is Gold Fields, which is the small­est share­holder in the re­fin­ery and only stumped up R37.3m, while Har­mony Gold con­trib­uted R140.4m to the loan. The other gold pro­ducer, DRDGold, hasn’t the fire­power to make a con­tri­bu­tion and stands to have its share­hold­ing in the re­fin­ery di­luted, although CEO Niel Pre­to­rius dis­closes that the com­pany has a ‘claw-back’ op­tion which it can ex­er­cise at a pre­mium.

Neal Frone­man

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