Every Friday morning, SAfm’s AMLive’s radio anchor Sakina Kamwendo speaks to Martin Creamer, publishing editor of Engineering News and Mining Weekly. Reported here is this Friday’s At the Coalface transcript:
Kamwendo: A new gold project being fast-tracked following the successful raising of capital in London and Johannesburg.
Creamer: This is fantastic, people are going to turn dumps to gold. We have these legacies, they are ugly and environmentally bad, but you can see how quickly they can raise funds to turn them to account. They did that in both Johannesburg and London and have already raised R1-billion from Rand Merchant Bank.
They need another R700-million. They went to their shareholders with a share placement and in half a day they got that and it was oversubscribed. This is Pan African Resources, a company listed in London and Johannesburg headed by Cobus Loots. They are becoming synonymous with turning gold around from dumps.
This is their third attempt and it is in Evander, again in Mpumalanga. This is the second one in Evander. When you look at the profit margins they are absolutely mouthwatering. It is not like the deep, dark, dangerous gold mining that we are used to, this is all mined on surface. You can see that they are talking about an all-in cash cost, that is all-in, $527 an ounce. We know that gold is running at $1 270 an ounce, so that means we are talking about a 100 and plenty percent profit. The sooner they can do it the better, that is why they want to fast track this.
Earthworks are going to begin imminently and first gold very quickly around about 2019. Here we are saying pay off in two years. Everything about this project is brilliant. We can see that this is an opportunity South Africans can take in this tough time in the economy where you can see shareholders in London and Joburg prepared to put their money where their mouth is and let this thing go. That is with Pan African listed in London and Johannesburg.
Kamwendo: A new aspirant mining champion has stepped up to the plate with a R2.3-billion debut deal.
Creamer: This is very good news for South Africa, because we have some of the big guns like Anglo American wanting to withdraw from South Africa. They are withdrawing in the bulk commodities, those are coal and iron-ore. Up pops Seriti and it is led by Mike Teke’s Masimong Group with 25%. The other shareholder is Vusi Khanyile’s Thebe Investments. The other 25% shareholder Sandile Zungu with Zungu Investment Company.
Then the fourth 25% to make the 100% is Dr Anna Mokgokong’s Community Investment Holdings. So, you can’t get better then 79% black ownership. We are talking about 79% black ownership that ticks every box. It must tick the Eskom box, the Department of Mineral Resources box. We see a little bit of angst coming out of Eskom. We hope that it doesn’t hold up this deal, which is R2.3-billion for the Anglo American’s Eskom-tied coal mines.
Those are coal mines that just supply Eskom and nothing else. Now, look at Mike Teke, a 52-year-old born in KawThema, Springs. Started work as a 19-year-old as a R76-a-week labourer. He has had this meteoric rise up the ladder. He is just also ticked every box, he has been president of the Chamber of Mines, chairman of the Richards Bay Coal Terminal. Now, he has begun Masimong Group. What does he say? I have ambitions to be the biggest mining company in South Africa. I want to do this for South Africa and I am coming here backed well 79% black ownership.
This should be the starting point where we take over these three coal mines, New Vaal, New Denmark and Kriel from Anglo American listed in London, and their four closed collieries, which we believe we can reopen. So, there is potential, but see this as our starting point, because we have big ambitions and also looking to get other assets from Anglo.
In fact their New Largo asset, which will be the coal that you have to spend a lot of money on to make sure that it can supply the new Kusile Power Station that is under construction and going up pretty fast if you fly over there. But, let’s start with a R2,3-billion deal and get it through first. It has got to get the backing from Eskom and Eskom is the only slight sticking point at the moment. At the moment their spokesperson made statements saying these are tied mines and not on their balance sheet, but they do own some of the assets so you will have to talk to us one-on-one.
They think it is surmountable, Seriti believes it is surmountable that it will go through. This will be the next Mr Big on the mining front. We know that Mike Teke also made the point of not ignoring at the last Mining Indaba in Cape Town the big part that mining played in apartheid.
He said that we have got to get the apartheid monkey right off mining’s back and we must renounce apartheid in the strongest terms and do what has to be done. Apartheid was associated almost synonymously with mining. I think it was a very big, important statement for him to make on behalf of the mining, at the last Mining Indaba in Cape Town.
Kamwendo: Money is being raised to revive a once thriving copper-mining area in the Northern Cape.
Creamer: You have got to give it to these Australians, they spot things ahead of the South Africans. They have been popping around the Northern Cape and, of course, zinc is a very good product at the moment, price is high. They looked at the old Prieska area, which is synonymous with copper and zinc.
A lot of mining took place there by the old Anglovaal mining company, which today is Patrice Motsepe’s Africa Rainbow Minerals. He didn’t take over this particular asset. Now these Aussies have come in, listed in Australia, called Orion Gold. They have got their clutches on this prospecting right around copper in the Prieska area. They’ve seen potential to revive the old working.
Prieska copper mine closed in the early nineties, because things were uncertain at that stage, but we can see that it has done a huge amount, hundreds of thousands of tons of copper have been produced and a million tons of zinc. It is an important area, but these Australians, under Orion, say this is just the starting point. In fact, they have got an agreement to work over 1 600 square kilometers and also have permission now to go underground. This has been given to them by the Department of Mineral Resources.
They can go underground and survey those old workings in the old shafts in the hope that they can get things going again in zinc and copper. They are proud to announce that they have linked up with a big London company called Tembo Capital, which is a private equity company, which has taken 19% of this and has not only the ability to raise funds, and they have already raised R30-million, but also has a lot of geological know how, which will be needed.
This could be a big revival point for the old Prieska area in the Northern Cape.
Kamwendo: Thanks very much. Martin Creamer is publishing editor of Engineering News and Mining Weekly.