Found this interesting DROOY link on Kitco:
moneyweb.co.za
Friday 23 April 1999
DURBAN DEEP RAISES DIVIDEND PROSPECT
by David McKay
DURBAN Roodepoort Deep (Durban Deep) hinted it would resume dividend payments in 18-months if it maintained its impressive run of the last five quarters, and built up a decent cash pile.
The company, which has cut its teeth eeking out profits from so-called marginal gold mines, reported a one third leap in cash operating profit to R22m in the March quarter, its fifth successive increase. Although the company has been paying six-monthly dividends on preference shares, a cash payout for its ordinary shareholders has not been seen for at least 12 years. Chairman Roger Kebble's requirement for a fatter piggy bank is telling. About R240m is wanted, equal to some three months of working costs. There's about R90m currently in hand. The reason is that Durban Deep now knows growth by acquisition in foreign climes, like Australia, will not be achieved solely through a paper deal.
Durban Deep recently put the brakes on a (hostile) takeover of Sydney-listed Emperor Mines following a fairly acrimonious tit for tat battle. Durban Deep's offer of paper was flatly refused. It seems Emperor were keen to have Durban Deep's financial backing. It was even on the prompting of Australian bankers that the South Africans became interested in the first place. The fight broke out when Durban Deep's full intentions became known: operational control of a Fiji gold
mine, Emperor's sole operating asset. But enough already. What is Durban Deep's next move? Suffice to say that Durban Deep effectively has a 17,45% stake in Emperor. The interest will be given
to the group in a special agreement with owner, Brett Kebble's Consolidated African Mining and put in the bottom drawer for later. Now, the group is considering new Australian acquisitions.
In the meantime, Kebble and MD Mike Prinsloo say Durban Deep is wiser for the experience. It knows there are considerable "mining culture" differences between Australia and SA. A process of bringing
Australians to SA to meet the team is underway. Durban Deep is also focusing on establishing a base in Australia. Banking, investor relations, legal and public relations infrastructure has been set up. About R6m has been spent on the move, (appearing on
the income statement as sundry expenditure of R4m after R2m was recouped). The aim, as before, is to buy 100 000 to 150 000 ounce a year producers daunted by the prospect of
having to operate at deep underground levels for the first time. It is Durban Deep's hope, and those of other SA miners, that the risks of deep level mining will persuade the Australians to take SA partners.
Away from the hostile plains of Australia to SA, and Roger Kebble all but admitted he is keen to make another attempt at buying Hartebeestfontein, Avgold's Klerksdorp property. All eyes then on next Wednesday (April 28) when Avgold releases its quarterly results which are billed to be poor for Hartebeestfontein. Hartebeestfontein is an important part of Avgold's future as its gold production is being used to repay a hefty loan to bankers, Chase Manhattan and SBC Warburg. The loan was advanced to develop Target, Avgold's best blue-sky feature. The bankers might start to shift uneasily in their seats if Hartebeestfontein is stuttering and one theory is that Avgold could offer them cash up front by selling Hartebeestfontein to Durban Deep.
Durban Deep is concerned, however, that Avgold's mine is "having the eyes taken out", which is a nice way of saying, it is being raped. It has been a year since Durban Deep last valued Hartebeestfontein, a
re-evaluation is required before a new offer is made, if indeed Avgold wants to sell. It will all depend on the price offered. Durban Deep's last offer of about R200m to R300m will have to be bettered one feels. |
