PADENGA DIVERSIFIES OPERATIONS:
CROCODILE breeder Padenga Holdings Limited, has revealed plans to venture into gold production as the firm looks forward to diversify its operations away from the traditional crocodile skin products business.
Padenga is eyeing 9 036 shares of Dallaglio Investments (Private)limited, a gold mining firm. This represents 50,1 percent equity shareholding in the company.
Dallaglio Investments (Private) limited owns Pickstone Peerless Mine near Chegutu, Eureka Mine near Guruve and Giant Mine, a future gold mining project.
Based on the estimation work performed, the valuation range for the entire issued share capital of Dallaglio is believed to be between US$50 million and US$55 million.
The firm noted significant client concentration risk and highly concentrated export business hence need to broaden the business scope.
At least 79 percent of the company’s 2018 sales were all acquired by one luxury goods company in Europe presenting slim base of commodity procurers.
In a statement, the company’s chairman Thembinkosi Sibanda indicated that the firm was angling for a long-term business venture like gold mining, particularly considering the worldwide demand of the commodity.
He indicated that his firm was also pinning on gold production’s ability to generate foreign currency, which has been infrequent in the country lately.
“In the interests of Padenga stakeholders, the Padenga board would like to diversify the company exposure away from a reliance solely on the production of crocodilian skins.
“Padenga seeks to reduce this concentration risk through diversification into alternative, export oriented businesses and has identified the gold mining sector as attractive from a long term perspective, particularly in respect of the historic worldwide demand for gold and the capacity for mining to produce hard currency that is not readily available in the local Zimbabwe market.
“In light of the above Padenga has offered to acquire 50,1 percent equity shareholding in a gold mining business called Dallaglio Investments (Pvt) Ltd,” said Mr Sibanda.
Broadening of the firm’s business scope would enhance Padenga’s profitability given currently growing restrictions on the sales volume for crocodile skins where the company’s sole buyer can take approximately 46 000 skins per annum.
Earlier this year Padenga indicated that it harboured the idea of growing its exports base complementing the traditional crocodile skins and meat business, which already is mainly export centric.
Padenga had also indicated it would venture into agriculture, with particular interest towards avocado and macadamia production in the Eastern Highlands.