[miningmx.com] — GALAXY Gold has cleared a major obstacle which prevented it from listing on the JSE last year, announcing two empowerment transactions which should enable the group to exceed the mining charter’s 26% equity target.
In a statement released on Tuesday, Galaxy said it signed a R79.4m deal for a 17.8% stake with Bataung Gold, which is the strategic partner of a BEE consortium comprising broad based black economic empowerment companies in Mpumalanga.
The Bataung Group is led by chairperson Billy Modise and MD Kinesh Pather.
A further 8.2% off Galaxy Gold Reefs would be held by an employee share participation scheme. The structure, together with BEE investment holding group Brimstone’s recent acquisition of 6% of Galaxy Gold, would help the company to exceed the mining charter’s 26% black ownership target.
The consortium would subscribe for new shares in Galaxy Gold’s operating subsidiary Galaxy Gold Reefs at R3.00 per share, giving Galaxy Gold an effective value of R446m. Galaxy Gold Reefs would provide vendor finance which would be serviced from dividend receipts. Lock-in provisions during the repayment period would apply.
The JSE in September declined to proceed with Galaxy Gold’s intended listing, citing uncertainties over the group’s mining rights.
Galaxy’s asset is the former Agnes Gold Mine near Barberton, previously owned by Mzi Khumalo’s African Pioneer Mines (APM) which is in liquidation. Galaxy’s founder and former CEO Peter Skeat acquired the mine from APM in 2008.
The conversion of APM’s old order mining rights to new order rights and subsequent transfer to Galaxy Reefs was subject to the company complying with empowerment targets.
“All of the movable and immovable assets (including certain surface rights) were transferred to Galaxy Reefs. The old order mining rights could not be transferred until they had been converted to new order mining rights,” Galaxy said at the time.
Said executive chairperson Ian Watson in a statement issued on Tuesday: “We expect our BEE structure’s broad base and equity compliance to secure the approval of the DMR, facilitating conversion by the DMR of the old order mining right currently held by APM to a new order mining right and its transfer to Galaxy Gold Reefs.’
Company spokesperson James Duncan said the company aimed to list in the fourth quarter of the year.
When Skeat first pursued a listing to raise R400m last year, he said the new capital would be used to push production to 75,000oz of gold annually, from 23,000oz.
He also said the group would fund exploration work intended to increase the gold resource from 1 million oz to 2 million oz.
Galaxy announced in February that Skeat stood down for non-executive chair Ian Watson which had been appointed in a executive capacity.
