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Christo Wiese goes for gold

Marc Hasenfuss | Thu, 13 Aug 2009 11:12
[miningmx.com] -- FINANCIAL journalism may well be akin to mining. Sometimes (when you are not presented with a press release to cut and paste) you might follow some wild and woolly leads, drill down through the layers of information and then sift a heap of extracted detail to find a story (or not). Data mining, if you will.

And then you have to hope that your market (that's you, dear reader) finds suitable value in what is brought to the surface.

Hopefully I can present a little nugget this week in speculating as to where retail tycoon Christo Wiese - who clearly has a penchant for commodity punts - is looking for opportunities in the resources sector.

Last month, Miningmx broke the news that Wiese (and specialist asset manager Trinity) had sold their major positions in mothballed fluorspar miner, Sallies.

Since then, I have been wondering about Wiese's next move, especially since we reported that selling out of Sallies (at a substantial loss, by the way) would allow him to pursue "other opportunities that had presented themselves".

I have previously referred to Wiese as a "serial risk-taker" in a cover story for Finweek written several years ago at the time of an attempted private equity deal at Shoprite.

Besides his extensive (and highly successful) retail roots in supermarket giant Shoprite and fashion chain Pep Stores, Wiese has - over the years - made clever investments in companies as diverse as Ocean Diamond Mining Holdings, vehicle tracking specialist Digicore and industrial supplies company Invicta Holdings.

Sallies would rank as one of Wiese's less successful investment ventures - although not for lack of trying, with Wiese backing the mining group through several rights issues.

The point, of course, is that for Wiese to bail out of a meaningful 9% position at Sallies at a loss would suggest the serial risk-taker has spotted a scintillating opportunity that could compensate or offset the costly fling with fluorspar.

Wiese declined - in an interview with Miningmx last week - to detail the "opportunities that had presented themselves".

Fair enough. What Wiese is investing in is his private business, and I don't blame him for not wanting to blurt out any strategic investment decisions or plans to the media.

But the market likes to keep tabs on the corporate manoeuvres of investment icons like Bidvest's Brian Joffe, PSG's Jannie Mouton or mining magnate Brian Gilbertson. The same, I reckon, goes for the astute Wiese.

So I started digging.

Thankfully, Miningmx has in-house access to some of the best corporate research data available from our subsidiary, BFA McGregor.

Here I specifically refer to BFA McGregor's rather helpful shareholder identification tool, which covers the share registers of all companies listed on the JSE.

So, after some perusing, I managed to find that Titan Nominees, a company associated with Wiese, is a significant shareholder in White Water Resources (formerly known as Matodzi).

WWR is a small company that holds a number of gold deposits and rights to mineral sands deposits (near Namakwa Sands), as well as a strategic stake in Gold One International.

Interestingly, the controlling shareholder of WWR is resource investment specialist Trinity, which also bailed out of its position (24%) in Sallies at the same time as Wiese.

According to the information provided by McGregor BFA, Wiese holds around 16% (60m shares) of WWR.

More than meets the eye

I have to presume that Wiese has built the stake in WWR only recently, as the company's annual report to end March 2009 does not reflect Titan under its list of major shareholders.

Wiese's meaningful participation at WWR certainly suggests there might be more than meets the eye at this junior mining contender, headquartered in the Cape Town suburb of Tokai rather than the traditional gold fields in and around Johannesburg.

WWR's annual report - which asks questions around the company's ability to continue as a going concern - certainly does not give the impression that great things are in the offing at WWR.

What's more, WWR's shares price, which has traded between 22c and 27c of late, also shows little sign of the speculative flurries that characterise junior mining stocks that are about to come into play.

WWR's annual report states that its main task is to begin consolidating "in earnest" the East Rand gold basin by "a carefully considered acquisition programme of mining assets".

In his annual review, WWR chairperson Sandile Swana noted: "I hold the view that all indicators point to a very lucrative gold market in the next 10 years and the return to South Africa of the status of a premier mining destination."

Presumably, Wiese subscribes to this view - although WWR would not be an obvious starting point for most new gold bulls.

But then again, data gleaned from McGregor BFA also suggests Wiese is a major investor in Brian Gilbertson's Pallinghurst Resources (holding 14.1% through the Titan Pledge Account).

Wiese's WWR position, though, is far more intriguing because in the resources world it's often the things that are marginal or maligned that provide the most excitement - look at what happened to left-for-deads like Aflease, Sub-Nigel, Merafe, Petra Mining, Simmers & Jack and Barplats.

One thing to consider in the meantime, is that WWR's "carefully considered acquisition programme" will need some fresh funding. This makes me wonder if the value that Trinity and Wiese salvaged from Sallies won't shortly find its way into WWR via a rights issue of some sort.



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