[miningmx.com] – CHINESE investors have swooped on South African precious metal assets for the second time in a week after Central Rand Gold (CRG) said it was considering a $150m takeover offer by Hong Kong-registered Hiria Group.
The Chinese firm, a subsidiary of a vehicle and yacht leasing business, Marsa, is currently conducting a due diligence on CRG which operates underground and surface gold mining activities in historic mining areas of central Johannesburg.
CRG will also conduct a due diligence on Hiria Group in order to ascertain whether it has the financial means to conclude the transaction, currently captured in a memorandum of understanding (MoU).
In addition to due diligences, the transaction also requires the approval of the Chinese and South African governments – a condition that may prove complex, especially for the South African government given the ecological liabilities CRG carries.
As an operator of long-standing gold assets, in some of the oldest known mining areas of Johannesburg, CRG requires significant government assistance in dewatering its shafts of acid mine drainage.
On October 15, China National Arts & Crafts Corporation withdrew a $37m offer to buy the Sheba’s Ridge platinum assets owned by Aquarius Platinum because it could not secure the blessing of the South African government which objected to black economic empowerment aspects of the transaction.
China has stepped up its interest in South African mining assets lately, perhaps an indication of the position in the mining cycle.
On November 7, Eastern Platinum said it had agreed to sell its South African platinum assets to Chinese company, Hebei Zhongbo, in a cash deal worth $225m.
CRG said it hoped to conclude a transaction with Hiria Group by March, 2015. It added that its MoU with the Chinese registered firm was not exclusive. The Board will continue to engage with other parties who have recently expressed an interest to better understand the assets of Central Rand Gold,” it said in an announcement to the JSE.
In the meantime, CRG said 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.
Since water levels in hits shafts had made underground mining difficult, the company was “actively reviewing” its balance sheet and capital requirements, it said.
