Sam Jonah, entrepreneur extraordinaire
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Africa's Jonah invests in R380m drilling deal
Brendan Ryan
Posted: Wed, 01 Mar 2006

[miningmx.com] -- SCHARRIG Mining is the fourth mining company of which Sam Jonah has become chairman since leaving AngloGold Ashanti in June last year, allegedly in search of a more relaxed lifestyle. This time, Jonah is ploughing his own money into the venture.

Jonah's raison d'etre into Scharrig is its diversification from contract coal mining in South Africa into exploration drilling throughout Africa. This is being achieved through the takeover of the privately-owned drilling companies Geosearch International and Transbor.

The exploration drilling business is booming as more resource companies target Africa. According to Jonah, in the period from 2002 to 2004, Africa moved from seventh to third place in terms of exploration funding. It is now equal to Australia and ahead of Canada and the US in the dollar value of exploration funding spend.
My job is to double the share price
Since last June, Jonah has been appointed executive chairman of Equator Oil, listed on the Alternative Investment Market in London, a firm exploring for oil in the Gulf of Guinea off west Africa.

He has also become the non-executive chairman of Australian and Canadian-listed Moto Goldmines which is exploring for gold in the Democratic Republic of Congo (DRC). He is also non-executive chairman of Australian and Canadian-listed Equinox Minerals which is developing copper mines in Zambia.

Jonah has built up a 13.3% stake (equal to 18.2 million shares) in Scharrig over the past year through his Sankofa Trust. Scharrig has now agreed to sell another 15 million shares to Sankofa at 5.25c/share.

That’s a 12% discount to the 30-day volume weighted average trading price as at February 1 when Scharrig issued its cautionary notice. The end result is that Jonah will become a "cornerstone" investor in the operation.

Scharrig wants Jonah on board because of his contacts in Africa. Scharrig’s no-nonsense MD, Cas Scharrighuisen, spelt out why he wanted Jonah on board in down-to-earth fashion in a February 28 presentation in Johannesburg. It must have left Scharrig's public relations consultants, College Hill, cringing.

"Business is all about connections. Sam has the connections in Africa. You need to be able to call the right person and tell them that you are effing around with my contractor," Scharrighuisen declared.

Scharrighuisen also came out with some strong views on staff motivation when questioned about whether enlarging the highly-successful existing mining contracting operation might result in lower efficiencies and profits.

Said Scharrighausen: "Don’t you worry about the staff. I will put the right people in there. Sam and I come from the same culture. We are always out there screaming.

"I scream 363 days out of every year, and I will be out there screaming today (on March 01, a public holiday in South Africa).

"My job is to double the share price by this time next year. That’s what the shareholders want," Scharrighuisen said.

This may well explain the undoubted success of the company’s contract coal mining operations where earnings a share have grown from 4.5c in financial 2001 to 51.3c in financial 2005, and 31.0c at the interim stage in financial 2006. The share price has risen from a low of just 11c in June 1999 to an all-time high of 820c on Monday afternoon.

The terms of the transaction is that Scharrig is buying the assets of Geosearch International and Transbor using two holding companies - "holdcos" - which will be 80% owned by Scharrig and 20% owned by the management of Geosearch.

Payment will be in three instalments through to 2007 on a formula linked to the profits to be made by Geosearch International and Transbor duing 2006 and 2007. There’s a cap in that the total acquisition amount may not exceed R380m.

Jonah, who remains president of AngloGold Ashanti, sits on a string of boards of private and public companies: he is a member of the presidential advisory boards of several African countries, and is a professor at the Wits University Business School. But he does not see a problem in fulfilling his commitments.
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"It’s all about time management," he said.

Jonah also doubted he would have any conflict-of-interest problems such as the fact that he is chairman of Moto GoldMines which uses Geosearch to do its exploration drilling work.

"Conflicts of interest arise where there is no disclosure or transparency. I have an obligation to make disclosures and that’s what I intend to do. That’s what good corporate governance is all about," he said.