[miningmx.com] – VILLAGE Main Reef (VMR) said it would consider selling more assets, including its West Rand mine Tau Lekoa and distributing the proceeds to shareholders, or even the entire company, if it received a compelling offer.
The R416m company has been through restructuring over the last 18 months in which it had closed its Buffelsfontein and Blyvooruitzicht gold mines and signed an agreement to sell Consolidated Murchison for $15m to Stibium, a privately-owned Australian company.
VMR also said in September that it would allow its 19% stake in Continental Coal, a Sydney-listed coal development firm, to be diluted as it did not intend to support the firm’s A$35m rights offer aimed at recapitalising the faltering company.
While VMR was still interested in becoming an investment holding company, it did not intend to invest in any more deep level mines, and would consider the sale of its 110,000 ounce-a-year Tau Lekoa gold mine on the West Rand of Johannesburg, as well as its Lesego platinum prospect.
It had also applied to the Johannesburg Stock Exchange to de-register a proposed R1bn domestic medium term note program first planned in December 2012.
“Our focus is extracting optimal value for our shareholders, which could include the acquisition of value-enhancing assets,” the company said in commentary to its year-end results in which headline share earnings per share from continuing operations fell 34.7% to 26.12 cents.
“Furthermore, should it result in the disposal of Tau Lekoa or even of Village itself as a going concern, so be it. As we move into the future Village’s asset portfolio will be different from its present one,” it said.
Adding to these comments, Ferdi Dippenaar, CEO of VMR, told Miningmx that VMR was “… not actively pursuing this sale strategy at the moment”.
Asked to explain how realistic this option, he said: “These are the questions we get faced with from shareholders as to whether we are doing our best to extract value. So either we use Tau Lekoa or get the best value out of it by selling Tau and giving it back as a dividend”.
He added that VMR’s platinum prospect, Lesego, could also be sold or put into a joint venture as the company did not have sufficient skills or capital to develop it alone.
Lesego had been re-scoped into a smaller mine of 100,000 tonnes/month of ore compared to previous studies indicating a 300,000 tonnes/month operation. “A formal process for selling part or all of the asset would start in a few months,” Dippenaar said.
However, there were still some contingent liabilities VMR had to work through including litigation brought by the Department of Environmental Affairs (DEA) regarding Blyvoor.
Dippenaar said the matter – which had not resulted in formal charges as yet – had been motivated by environmental activitist Mariette Liefferink and brought against other gold miners in the region including DRDGold, AngloGold Ashanti and Harmony Gold.
“While there was a period that we managed and operated Blyvoor as contractors, there has been no significant environmental offence that we are aware of,” said Dippenaar.
VMR said in its year-end commentary, however, that its directors and the company’s previous directors, both in their personal and professional capacities “… have been notified of criminal investigations having been initiated and draft charges having been formulated (by the DEA) for alleged statutory contraventions”.
VMR was also in arbitration with DRDGold over whether shares it issued for the purchase of Blyvoor from the company, and held in escrow, ought to be paid over to DRDGold amid a disagreement on whether conditions precedent were met.
Some R150m in shares in the company were issued to DRDGold – equal to R1,75 per VMR share – in the first tranche of the deal with the balancing 20 million shares held in escrow pending completion. The 20 million shares are now worth R8m versus R35m when first issued.
Dippenaar said the company may consider cancelling the shares if it was proved DRDGold was responsible for not meeting the conditions precedent.
