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 | Thu, 09 Nov 2006 |
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Elphick defends Letseng deal Posted: Tue, 11 Jul 2006 [miningmx.com] -- AFTER almost a year spent trying to tie up the acquisition of Letseng diamond mine, Clifford Elphick is now talking of aggressively consolidating mining operations elsewhere, especially in Africa. The plan is for his company – GEM Diamond Mining – to buy producing diamond mines and projects near production. Projects facing technical or funding problems would be classic targets. Elphick sits before a disarmingly clean desk – save for a laptop and telephone – but you suspect that the early part of GEM Diamond’s strategy turns Elphick’s reputation and network. A listing on London’s Alternative Investment Market (AIM) has been pencilled in for November or December, but that’s not before having raised $200m, mostly from prestigious London contacts. “I want to grow the company aggressively.” That’s one of the reasons that GEM paid well over the odds for Letseng – an observation against which Elphick rankles. Almost lifting himself off his seat, he asks: “Who are the people who say this? We’re a small grouping but a real collection of talent. When it comes to valuing assets in diamonds, we know as much about the industry as anybody else.” Elphick’s five-man team all have De Beers on their CVs. GEM Diamond is to spend a minimum of R880m buying Letseng and a further R250m to double production, assuming that the plan gets board approval. It might also face renegotiating the Lesotho government’s eventual holding in the mine, which it wants to increase from 24%. The capital cost of buying the mine might also increase, as there’s cash and stock to take into consideration, says Brian Gibson, of JCI, the fallen mining house that sold its 76% stake in Letseng to Elphick. Industry sources say that GEM offered R300m more than the next highest bidder, possibly Trans Hex. “It’s true that we’ve been quite aggressive but we’re trying to build a company,” says Elphick. “Letseng is the flagship, so we’ve had to be aggressive acquiring it. But we’ve also picked up other projects inexpensively, so we needed to balance the portfolio.” The theory is that the sheer cash generative powers of Letseng, plus its expansion potential, will bring uplift to GEM Diamond’s other African prospects when it lists in London. The projects include its 800 sq km property holdings in the Central African Republic. GEM Diamond also has diggings in the Democratic Republic of Congo and Angola.Free news alerts: click here to subscribe
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