Swanepoel sells out of Delta Mining

Brendan Ryan | Tue, 02 Mar 2010 13:25

[miningmx.com] -- CONTROVERSIAL mining entrepreneurs Andrew Groves and Phil Edmonds have bought out the stake held by Bernard Swanepoel in unlisted SA coal junior Delta Mining Corporation (DMC).

Subject to negotiations under way in Johannesburg this week, DMC may be listed in London through Groves and Edmonds’ new AIM-listed vehicle Sable Mining Africa (Sable).

Swanepoel had indicated at the end of January that DMC was to be listed on the JSE.

DMC CEO Heine van Nierkerk told Miningmx the company would be listed on both the JSE and AIM, but it was not yet decided which bourse would have the primary listing.

Groves and Edmonds are the founders of the former Central African Mining and Exploration (Camec). They achieved notoriety through the manner in which Camec picked up platinum mineral rights in Zimbabwe that used to form part of Anglo Platinum’s Unki project.

As part of that deal, Camec loaned $100m to the Zimbabwe government which, sources allege, was used in part to fund President Robert Mugabe’s election campaign against the Movement for Democratic Change (MDC).

That has been denied by Groves, who also dismissed threats by the MDC to “undo” the deal when the party came into power.

Camec was taken over late last year by Kazakh resource heavyweight Eurasian Natural Resources Corporation (ENRC).

Speaking to Miningmx, Van Niekerk confirmed that Sable had bought the 21% stake in DMC held by Swanepoel’s To The Point company, plus additional stakes from various minority shareholders.

Sable announced on February 17 that it had acquired 29.33% of DMC, which it then increased to 35.99% according to a subsequent statement released on February 24.

Groves said: “We have raised our stake in DMC to increase our exposure to what we believe is an exciting and well-defined coal portfolio.

“We see strong potential in the development of DMC’s assets, and will actively support a strategy to fast track their development which should translate into value appreciation.”

DMC has four coal projects in South Africa and Botswana, of which the most important is the Rietkuil coal deposit near Delmas in Mpumalanga.

This contains a metallurgical and thermal coal resource of about 200 million tonnes, (mt) which could be brought into production in the short-term.

DMC also controls the Springbok Flats project, This has in situ gross tonnages “modelled at over 2 billion tonnes of metallurgical and thermal coal”, while the Limpopo project has a “provisional gross in situ tonnage estimate in excess of 135mt” of metallurgical and thermal coal.

In Botswana, DMC has 12 greenfield concession blocks covering 8,682 sq km straddling known coal-bearing sediments in the east of the country.

Van Niekerk said DMC welcomed the involvement of Groves and Edmonds.

He said: “Losing Bernard was a heavy blow but we are pleased that they see value in DMC. They have moved in very quickly, which is a positive for an exploration company and they appreciate the technical team we have built up. Their involvement can only result in a win-win situation for DMC.”

Swanepoel could not be reached for comment. On January 28 he seemed gung ho on DMC when he confirmed plans to list the company on the JSE this year.

He told Miningmx: “We estimate 70% of the value will be represented by the Rietkuil project. We are looking at this stage on how it should be developed.

“Do we go big from the outset, setting up a mine to produce around 3mt/year, or do we take a more selective approach and start up with a smaller operation?

“It’s on our wish list to set up an operation that would sell coal both to Eskom as well as the export markets.”

Swanepoel’s links to Groves and Edmonds go back to early 2008, when he formed To The Point and consulted to Camec on some of its operations in the Democratic Republic of Congo.