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Radio > Classic Mining
Southern Pt responds
By: Belinda Anderson
Posted: '27-JAN-05 10:08' GMT © Mineweb 1997-2004
MINEWEB: Well we’re going to have a look at that right now with Patrick Evans, CEO of SouthernEra. My colleague Barry Sergeant did some work on your company, Patrick, and he put together a rather scathing article on the company. You have taken the opportunity to respond to this under the story – and that’s something that we give an opportunity to all readers of Moneyweb and Mineweb to do – and I see you are not very happy. Let’s go through some of the issues, remembering that we don’t have too much time to go into a lot of detail, but one of the issues that Barry brings up is the level of your debt. Is it true the company’s in something of a debt crisis?
PATRICK EVANS: Hello Belinda, it’s good to join you this evening. No, like much of what Barry reported in his article, it’s not true, the company’s not in a debt crisis. The company borrowed R345m in 2001, we’ve repaid R150m last year, and that debt was structured around an exchange rate of approximately R10.50 to the dollar. Clearly, with an exchange in the R6 range we have to restructure the payment schedule to enable the mine to meet its debt payments. We’ve been engaged with our lenders for a period of many months to do this, and they’ve been very supportive. We’re very close to concluding an agreement with them that will result in the restructuring of the payment schedule. Barry’s comments are quite inflammatory, I think quite ignorant, and have been quite damaging for our company.
MINEWEB: So the banking consortium led by RMB is not putting pressure on you. You’re in a stage of negotiations, and you’re getting close to finalising these?
PATRICK EVANS: That’s correct.
MINEWEB: Now, what about costs? Barry says in his article you were quoted as saying that your operation Voorspoed is operationally profitable at R5 to the dollar. Barry was saying that’s rather closer to R8 to the dollar. What’s the truth?
PATRICK EVANS: Well the truth is what is contained in a news release that we put out on 2nd December. The mine reported its first operating profit in November. We’re only part way to full production, about two-thirds of the way to full production – and that was at R6 to the dollar. I suspect that our chief financial officer and our mine general manager know a great deal more about Messina’s ability to perform than Barry Sergeant, who hasn’t spoken to either myself or any other representative of our company for a matter of many months, if not for more than a year. So it’s a complete mystery to me and to my colleagues where Barry Sergeant gets his facts from, but they are patently wrong.
MINEWEB: You are the chief executive of SouthernEra, which owns 91.5% of Messina. The stock is, of course, as a result of that, not very liquid. So it’s not a true reflection of the performance the way that the share has bounced around, but as the major shareholder you can’t be very happy with what the share price has done.
PATRICK EVANS: I don’t understand the logic of that argument, Belinda. We would only be interested in what the share price of Messina is if we were sellers of Messina, which we’re clearly not. On the contrary we’re buyers of Messina. In 2000 we bought 54% of the company and over two or three years following that we increased our shareholding to 70%. And then last year we bought a further 20% block to take us to 91.5%. I would assume that if you’re a buyer of a stock you want it cheaply, not expensively, and we’re not a seller so the share price is irrelevant to us. And you and your colleague made the comment earlier – absolutely right, we control 91.5%. There’s another shareholder who controls 6%, and the free float of Messina is a little over two or 3%. It simply doesn’t trade. So for an experienced financial journalist like Barry to make a comment like that leading his article yesterday is just completely mischievous. What he should do of course is look at the share price of Southern Platinum on the Toronto Stock Exchange, which only has one asset basically, and that’s Messina, which is completely liquid and which has a market cap which is more reflective of the value of the Messina asset. But I really don’t think it was Barry’s intention to convey to the readers in Miningweb what the state of our company was – I think he had an entirely different objective, which probably has more to do with a personal relationship he has with a former disgruntled employee of ours.
MINEWEB: Barry’s done a lot of work on the company and the article is up on the site, along with your entire response, I think, for anyone who wants to go and have a look at that. It’s all up for them to see. But perhaps just to finish off with, Patrick, why remain listed if the free float is so small?
PATRICK EVANS: We have to meet the black economic empowerment requirements of the charter, and our strategy has been to accommodate black economic empowerment at Messina at the asset level, the unlisted asset level. We’ve been partially successful in doing that. We have Mvelaphanda as a 50% shareholder in one of the properties adjoining Messina, but that doesn’t get us to the 15% requirement of five years. Now we’re in discussions with a variety of black empowerment companies – not just one as Barry would like the readers to believe – to make sure that we are able to accommodate black economic empowerment, and we may need the listed vehicle, Messina Limited, for that purpose. And until we know definitively that we do not need the listed vehicle Messina Limited we will not delist it. If we do not need the company Messina Limited, then the likelihood is that we’ll follow Aquarius Platinum’s path and get a secondary listing for Southern Platinum on the JSE, and swap out the remaining Messina minorities for Southern Platinum shares.
MINEWEB: Patrick Evans, CEO of SouthernEra, which is the biggest shareholder in Messina. David, he’s not a happy man.
DAVID SHAPIRO: No, I really can’t comment on it, because it’s not a company that one follows – simply for the reason that it’s not tradable. And for that reason it’s difficult to follow the fortunes. But if Barry has misrepresented it, then he’s entitled to his views which I think came across quite strongly today. But I’d like to see Southern Platinum come on. I love to encourage South African companies or those with South African assets like Aquarius back onto our market, because that makes a lot of sense. At the moment Aquarius is not trading because most of the shares are held offshore, but there is the opportunity now to expand the assets and to issues shares here – and we’d like to see that, we’d like to see it getting back to becoming a mining base once more.
MINEWEB: Well for anyone interested in any of the detail, that story is still up on Moneyweb at the moment with the full response of Patrick Evans underneath it. It’s called Platinum Donkey. |
