Black ownership beats empowerment

27 November, 2006 at 10:57 am | Posted in Companies | Leave a comment

Black empowerment is no longer enough; these days black control is the new aspiration. That will be evident when South Africa’s first black-controlled gold mining company lists on the JSE on December 11.

Pamodzi Gold non-executive chairman Ndaba Ntsele, executive director Kobus du Plooy and chief executive Ken Steenkamp have indicated that black control is not just nice to have, but an integral part of their listing strategy. Pamodzi Gold sees itself as a consolidation vehicle for stranded gold assets. It will use its black control to confer empowerment on the underempowered and help the majors to earn credits for facilitating black economic empowerment by selling Pamodzi Gold their non-core assets.

Steenkamp said Pamodzi Gold, formerly Bema, would be 50.1 percent black owned, giving it the highest empowerment credentials of its peer group on the gold mining sector of the JSE’s main board. The company’s gold operations on the West and East Rand produce at a rate of 200 000 ounces a year, which Steenkamp predicted would double within a year of listing.

Ntsele pointed out that the company would be listing without any debt and with a restructured balance sheet. It would have R75 million to complete specific projects, fund immediate working capital and explore the large resource bases at the Middelvlei opencast mine near Randfontein and at Grootvlei, Cons Modder and Nigel, near Springs.

The R75 million prelisting funding will be invested to ensure that the company is 50.1 percent black owned at the time of listing. Thereafter, a mechanism is in place to maintain black control into the future, with Pamodzi Resources having the option to acquire additional shares to retain a 50.1 percent holding. The amount to be raised on listing is expected to be between R150 million and R200 million, with the initial 20 percent of shares in free float increasing as scrip is issued to finance acquisition opportunities.

A negative aspect is a hedge that covers 183 000 ounces at a gold price of $350 an ounce, extending over seven years, which management wants to unwind whenever feasible.

Pamodzi Gold operates under Pamodzi Resources as a member of Pamodzi Investment Holdings, a black group with investments in food, technology, financial services and resources.

Pamodzi dates back to the 1970s, when Ntsele and Solly Sithole launched it as a construction company in Soweto.

Pamodzi Resources and subsidiary Middelvlei Gold Investments hold the 50.1 percent. Middelvlei Gold Investments is a joint venture between Pamodzi Resources (50 percent plus one share) and Superior Mining International, which is listed on the Toronto Stock Exchange’s venture exchange.

The other major shareholder, at 29.9 percent, is Bema Gold Corporation, also listed on the Toronto Stock Exchange.



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