Randgold & Exploration’s low-key JSE return

[miningmx.com] — RANDGOLD & Exploration, the mining company plundered by Brett Kebble and other directors, has relisted on the JSE after five years and the directors want to chart a new future for the company that remains in resources and fits a niche role in the sector.

In extremely thin trade, the shares, which were suspended at R8.90 five years ago, reached as high as R18 before falling back to R15, off a day low of R14.50. Just after midday South African time, there had been just 12 deals with 17,500 shares traded.

It has more than 2,000 shareholders on its books.

Randgold, which is not to be confused with the successful London-listed Randgold Resources, is a tale of unbridled greed, convoluted dealings and corporate theft that beggars the imagination.

Nearly R20bn in value was removed from the company, the bulk of it being the illegal distribution of Randgold Resources shares held by the Johannesburg-based Randgold under the stewardship of Kebble to prop up sister company JCI. At today’s prices, the Randgold Resources shares would have been worth R17bn.

Kebble, some fellow directors and company officials as well as various associates, siphoned off another R2.25bn to R2.75bn.

Marais Steyn, Randgold CEO, is keen to put all that behind the company, but it’s impossible to talk about the future of the company without referring to its fraught history.

The relisting means these matters have largely been untangled and Randgold has chased down and secured as much money as it can from various sources that benefited from Kebble’s deals. The company has collected some R215m, including R41m from the deceased Brett Kebble’s estate. Randgold has claimed nearly R2.8bn.

There are a number of legal disputes still running, the largest of which is Randgold’s R7.6bn claim against PricewaterhouseCoopers (PwC), which audited Randgold up to December 2004. The matter is being contended in the High Court of South Africa.

Randgold had a claim of R19bn against JCI, on the basis that JCI allegedly misappropriated listed shares owned by Randgold. However, JCI’s value was around R1.4bn, which meant a compromise had to be thrashed out. Kebble headed both companies and set up mind-bogglingly complicated transactions to fund various interests.

As part of the settlement reached between JCI and Randgold there will be a transfer of 6.05 million Gold Fields shares to Randgold from JCI. Randgold will receive 1.56 billion new JCI shares, representing around 44% of JCI’s enlarged issue of shares. The value of the transfers is R1bn.

Randgold will subsequently distribute Gold Fields shares to its shareholders as well as JCI shares. The distribution will take place on 5 July and Steyn valued it at R14 per Randgold share.

According to a JCI circular, the company does not have enough working capital to see it through another 12 months. This means it may have to resume its listing and raise capital, sell assets or seek funding. It’s not entirely clear at this point whether JCI will resume trading on the JSE.

JCI has a stake in the Boschendal property in Cape Town and preference shares in an outfit called Jaganda. These shares could be converted to shares in gold miner Simmer & Jack.

Randgold, on the other hand, will have R500m in assets and four key prospecting rights in gold, platinum and iron ore. Steyn reckoned R7/share worth of liquidity is in Randgold, 60% of which is cash and 40% its remaining shares in Gold Fields after the distribution.

“We will have to be creative in our growth strategy,’ Steyn told Miningmx, arguing that R500m doesn’t go far in the resources sector. “We’re keen to build the company up again. I believe there is a massive space between banks and true equity players for us to step into.’

“We don’t want to raise massive expectations in the market given our history,’ he said at a very low-key meeting with a few journalists to mark the resumption of trade on the JSE.

The resumption of the listing will not be used to raise cash for Randgold. “We see it as a way of cleansing the company and liberating small shareholders so that they can trade and realise value after all this time,’ Steyn said.

Steyn said having cash meant Randgold could become an incubator for junior resources companies looking to start projects. He’s not enamoured with gold. “I don’t think gold is the best place to go. We are not able to get our minds around the risks involved.’

In iron ore, Randgold has the Kameelhoek prospect, which borders Kumba Iron Ore’s Sishen South project. Randgold is in talks with Kumba about incorporating its prospect into the Sishen South project because it is too small to stand alone as a mine.

Randgold owns the Doornbosch platinum prospect next to the Modikwa mine jointly run by Anglo Platinum and African Rainbow Minerals. Doornbosch has an indicated resource of 157,000 oz of the four platinum group elements. Again the resource is too small to stand alone and Randgold is talking to Anglo Platinum.

The Du Preez Leger gold prospect has four exploration areas in the Free State gold fields and is near Harmony Gold’s St Helena, Merrispruit and Unisel mines and Gold Fields’ Beatrix mine. Randgold said a number of parties are interested in the properties and talks are underway.

Randgold wants to further drill the properties this year and next, in a R5.4m programme. The prospect is currently valued at around R241m.

Another prospect called Weltevreden is adjacent to Harmony’s Tshepong mine. There is also the Jeanette project, which has three farms and which, if consolidated with adjoining ground, could become a standalone mine.