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Gold/Mining/Energy : SOUTH AFRICAN MINING
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To: POLARBEAR who wrote (88)8/2/1998 8:58:00 PM
From: baystock  Read Replies (1) of 472
 
PB,

The $25 million IFC loan is not what I am referring to since it is a loan to Randgold Resources (RR). RANGY has a $48 million loan at 7 1/2% interest that is due in the year 2001. The bulk of the proceeds from this loan I believe was lent to Randgold Resources to build up their company. RANGY currently owns around 57% of Randgold resources, but is going to convert their loan into additional shares of Randgold Resources in November 1998. The London stock exchange made them wait until November to satisfy the rights of minority shareholders who will also be given the right to put in more money for additional shares in Randgold Resources (ie. a rights issue). The other shareholders wanted to wait till November to decide whether to pony up more money or be diluted because the SYAMA project's progress will be known by then. If the other shareholders are negative towards Gold shares and don't exercise their rights in November, then RANGY's stake in Randgold Resources will increase from 57% to maybe 75% (just a rough guess) which is positive. The real negative though is that it is not clear to me how they are going to pay back their $48 million loan due 2001. I think they are going to have to liquidate their DROOY and Harmony holdings and their mineral rights, but even that is not enough at the current low POG. That debt burden is probably why RANGY appears to be so cheap...it is greater than the market cap of the whole company, and was IMO a major flaw in your RANGY analysis that it was not included in the discussion.

Ram
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