| Mon 7 Feb 2005, 11:27 | | Western Areas seeks fortune in New York |
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Western Areas seeks fortune in New York
John Fraser
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Resources Editor
LOCAL mining company Western Areas was to list on the New York Stock Exchange with an American Depositary Receipt (ADR) programme today, CE Brett Kebble announced on Friday.
He said that the move would expand the investor base of the company, and should lead to a boost in the share price.
Kebble was speaking at the South Deep mine near Westonaria at the official commissioning of the R4bn twin shafts complex.
The project took 10 years and seven months to complete, and consists of a main shaft and a ventilation shaft.
South Deep is a joint venture between Western Areas and Placer Dome of Canada, and at about 55,6-million ounces is one of the world’s largest identified gold reserves .
“Some US investors, including certain mutual funds, are precluded from investing directly in foreign securities,” said Kebble.
“ADRs provide them with the opportunity to invest in Western Areas, which is emerging from a long period of capital investment at the South Deep mine.”
The ADRs are also likely to attract investors seeking alternatives to their current holdings in SA’s marginal mines. “This should enhance demand for Western Areas equity and increase the share price,” Kebble said
He welcomed the completion of the Twin Shafts project, which was two years behind schedule.
“The project will stop absorbing cash, and will start releasing cash, and that is a great relief,” he said.
South Deep CE John Bredenhann described the reserve, which will be more easily exploited thanks to the new shaft, as “the last and largest piece of gold real estate left on God’s earth”.
“The Twin Shafts will provide better access to the ore body, and will extend the mine’s life by four to five decades. This also makes mechanised mining easier.”
He said an impressive achievement had been the absence of fatalities during the construction.
Western Areas chairman Mafika Mkwanazi said that the South Deep mine had the potential to be one of the world’s low-cost producers. He noted, however, that Western Areas had a hedge book which was selling some of its gold at a loss — and this would need to be restructured.
Output from South Deep is estimated at 490000oz this year, rising to 560000oz next year — with a further jump to 800000oz by 2009.
Placer Dome CE Peter Tomsett, who was in SA for the commissioning of the Twin Shafts project, acknowledged that his firm would be required to tackle the empowerment issue in order to retain its mining rights under the mining charter.
“It is early days. There are a whole range of options,” he said.
He confirmed though that Placer Dome was in SA to stay, and noted the company had invested $500m over the past five years.
Deputy President Jacob Zuma, who opened the complex, said the transformation of the mining industry was “immensely critical and urgent”.
