[miningmx.com] – CENTRAL Rand Gold (CRG) said it had signed a second Memorandum of Understanding (MoU) to sell its South African subsidiary with a decision on the divestment due by March.
The MoU appears nearly identical to a first offer lodged 10 days ago on November 11 by Hong Kong registered Hiria Group, a subsidiary of a diversified company with its roots in vehicle and yacht hire, and which is bidding $150m.
The second MoU, announced today, is for $148m and is with Beijing Ankong Investment, a subsidiary of Hong Kong registered Phoenix Tree which as invested in the automotive, media and chemical sectors.
As with the MoU between CRG and Hiria Group, the Ankong MoU requires for a due diligence between the two parties.
CRG said it was “… in the process of establishing a virtual data room that will be made equally available to Hiria and Ankong in order that both interested parties are treated equitably and will have access to identical information,” it said.
Interestingly, the MOUs with Hiria and Ankong have both been entered into on a non exclusive basis suggesting CRG would be partial to other expressions of interest.
The bids are unusual because CRG is not an easy company to manage given its legacy issues with mine water at its workings which are situated in some of the oldest parts of Johannesburg’s gold mining territory.
For instance, CRG said in November it had suspended underground mining at its operations owing to the level of flooding. The government-owned Trans Caledon Tunnel Authority manages dewatering facilities and has made progress in decanting the water.
Instead, CRG will focus on surface ore and was also involved in “commercial discussions” with other parties regarding the likelihood of operating outside its immediate lease area, it said.
Since water levels in hits shafts had made underground mining difficult, the company was “actively reviewing” its balance sheet and capital requirements, it said.
Another feature marking the bids of the two Chinese companies out is the extremely difficult trading conditions in which the gold industry finds itself.
Gold Fields CEO, Nick Holland, told Bloomberg News earlier this week that roughly half of the global gold mining sector was operating at a loss assuming a gold price of $1,100 per ounce and post the payment of interest on debt.
