Gold One embarks on share liquidity drive

[] — GOLD One International has embarked on its first roadshow following a change of control transaction with China’s Jintu-consortium in 2011, a process which would culminate in the group’s proposed listing on the Hong Kong Stock Exchange, pencilled in for March next year.

CEO Neal Froneman said the foremost aim of the roadshow was to improve liquidity in the stock, after the Jintu-consortium acquired 89% of Gold One’s shares in last year’s transaction.

“The single biggest challenge we face at a corporate level is the lack in liquidity of our share,’ Froneman told Miningmx. “Until we find a solution for that you won’t see the share reflecting the proper value of the company.’

Froneman said that while the company wouldn’t necessarily raise capital as part of the build-up to the listing, the Jintu-consortium also wouldn’t be against its shareholding being diluted.

“For us there are two ways of addressing that [liquidity],’ he said. “The one is using your equity in some material transaction. Up until now we’ve used cash, so we haven’t been able to put liquidity back into the market.

“The other way is looking to raise some capital, but that is very dependent on market conditions.

“In fact, there is a third way: getting the market to recognise your shares are under-valued and through that process they’ll make the right offers and the tightly held shares will flow back into trading.’

Whether or not the company would eventually raise capital would be decided at a later stage, Froneman said.

“We haven’t made up our minds. It can be a combination [of the three strategies], but there’s no doubt that before we go to Hong Kong there’s a need to improve liquidity.

“It was never the Chinese’s intention to hold more than 75% of the company. They currently hold 90%. So this is something that is done with their full support.’

Froneman said Gold One’s recent spate of transactions – including the proposed acquisition of Pamodzi Gold’s East Rand assets (R70m) and First Uranium’s Ezulwini mine ($70m) – have been provided for from existing resources, but that the company has no shortage of opportunities to justify the proceeds of a capital raising.

Such projects include the proposed construction of an uranium plant at the Cooke operations of Rand Uranium, estimated at between $350m and $400m, as well as the Ventersburg gold project in the Free State. The project is currently is the feasibility study phase, but Froneman estimated the development cost to be around $200m.

Asked whether Gold One’s lacklustre share price performance shouldn’t be attributed to the market’s general discounting of South Africa’s gold producers, Froneman said a listing in Hong Kong would change this.

“Hong Kong is focused on earnings and growth,’ he said. “As long as you can show earnings and growth the Hong Kong market does not really care where your ounces come from.’

He said Gold One was alone in the position among South Africa’s gold miners to pursue a Hong Kong listing, by way of its association with the Jintu consortium.

“That is why we believe Gold One ticks all the boxes,’ he said. “We have a high quality Chinese brand, assets that are high margin and a strong growth profile.’