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 | Thu, 07 Dec 2006 |
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Mvela, Anglo Pt alliance taking strain Posted: Wed, 27 Sep 2006 [miningmx.com] -- IS the tide turning for Mvelaphanda Resources (Mvela Resources)? Having spent a couple of years in deal limbo, it’s been back in vogue lately. That followed improvements to its shareholder structure and imminent increase in its black ownership and news that it will benefit from Gold Fields’ spectacular $2.5bn takeover of the South Deep mine. By dint of its option to convert or “flip up” a 15% stake in Gold Fields’ South African assets into Gold Fields Ltd shares, Mvela Resources has effectively become South Deep’s black empowerment partner. And Mvela Resources isn’t required to pay cash upfront for its South Deep exposure. However, it does face the dilutionary effects of shares Gold Fields must issue to finance part of the South Deep deal. Let’s hope the gold price doesn’t move against any of the parties. If not, by 2009 Mvela Resources will have converted its shares in Gold Fields’ SA assets, and while it may hold a lesser percentage of Gold Fields Ltd shares (owing to the share issues) the hope is for more value per share. Meanwhile, Mvela Resources has been prepping the market for a deal speculated to involve assets and some cash from an undisclosed empowerment consortium in return for Mvela Resources shares. And by paying with its own shares, Mvela Resources will take its empowerment ratio to more than 50% from its current around 30%. “We may not close out the deal at the end of September exactly, but it’s certainly imminent,” says James Wellsted, Mvela Resources GM investor relations. “We’re just finalising terms.” In any event, that may create enough empowerment in Mvela Resources to enable it to sell its stake in the Booysendal platinum project in return for raising its stake in Northam Platinum to 33% from its current 21.9%. Establishing control over Northam has been a strategic goal of Mvela Resources for many moons and it will come as a major relief to conclude the Booysendal transaction as the first step. But there’s also been extra intrigue in finalising it. Anglo Platinum has a call option on 17% of Mvela Resources' stake in Northam, a fact it has recorded in the past without making a song and dance about it. In fact, Anglo Platinum made mention of the call option in its 2005 annual report. But it was strikingly more open about its call option in its interim results announcement earlier this year. The statement duly attracted investor interrogation, with particular emphasis on why Mvela Resources hadn’t disclosed the risk of Anglo calling on the shares. For example, Deutsche Securities suggested in a recent report that Mvela Resources' board was remiss in its fiduciary duties. Theoretically, there’s a chunky bit of lucre at stake, as Anglo Platinum could exercise the call at R8.60 per Northam share. Given that Northam’s price is now at R35/share, the R1bn difference is a big deal. To be fair to Mvela Resources, Anglo Platinum has already twice extended the call option. Furthermore, it imputed no value to it in its financial accounts. That clearly suggests Anglo Platinum was barely serious about exercising it. Nonetheless, one espies a hint of bad vibes between Anglo Platinum and Mvela Resources. Did Anglo Platinum deliberately stir up Mvela by making the risk of its call option more obvious to investors?Free news alerts: click here to subscribe
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