30 April 1999, Possible restructuring boosts JCI Gold.
Randgold Resources said to be vehicle for simplified, Kebble-owned group
Message 9240756
Ilja Graulich
SHARES in JCI Gold surged from 527c to 600c on the Johannesburg Stock Exchange yesterday ahead of a possible restructuring and shift of control to London.
The rise also triggered talk of insider trading.
Analysts said it seemed that London-listed Randgold Resources was set to be the vehicle that would carry the new simplified structure. Randgold Resources is controlled by Roger Kebble. His son Brett Kebble heads Consolidated African Mines (CAM) which owns 64% of JCI Gold.
The rumours were backed up by a cautionary late last night, issued by companies ultimately controlled by Brett Kebble: CAM, JCI Gold, Western Areas, Randfontein Estates, Randgold & Exploration Company, Randgold Resources, Barnato Exploration and Free State Development and Investment Corporations.
Some of these companies also saw good gains on the market.
Talk of restructuring is nothing new, but a point in the cautionary may have cleared up some previously unanswered questions.
The cautionary said: "It is anticipated that further announcements regarding the proposed restructuring will be made by the end of July 1999."
Analysts said the length of this time period almost certainly indicates that Randgold Resources will in future hold all the existing companies in one group. Unofficial sources close to the company did not deny this was a possibility.
The analysts said a local restructuring should not take this long, and that with a London listing, the conventional view is that the raising of future capital should be much easier.
One thing analysts agree on, and this has been stated by the companies involved, is that the new structure will be simplified.
At present, through a complex structure, Randgold Exploration and CAM, both listed locally, control Randgold Resources and Western Areas. Randgold Exploration is in turn controlled by Roger Kebble, while CAM is controlled by his son Brett.
CAM also has a direct 6% stake in Randgold Resources.
Analysts said neither of the Kebbles would be willing to give up control and the new structure would maintain this status quo.
Various stages in the pyramid will have to be eliminated before the new structure can be implemented. JCI Gold, Western Areas, CAM and Randfontein Estates will have to be collapsed.
Some analysts said the $235m paid by Canada's Placer Dome for a 50% interest in Western Areas was becoming increasingly important. This money had not yet been remitted to SA and remained in hard currency offshore. Some Western Areas shareholders would want to be compensated for their stake in the companies.
The analysts were unsure what paper would be exchanged in the buy-out, although if Randgold Resources was the vehicle for the new structure, shares in the company would be coupled with some form of cash payment, possibly out of the $235m.
Sources close to the group said the money would also be used for expansion into Africa. Randgold Resources has one mine operational in Mali and a second, Morila, has just been given the go-ahead after a feasibility study endorsed the company's high expectations of the project.
However, the project still needs funding. While NM Rothschild & Sons have agreed to provide outside project finance, the $235m is available. The project's capital cost would be between $75m and $111m to develop, leaving at least $120m in the bank.
Analysts noted Western Areas had a significant stake in Barnato Exploration, a company involved in exploration in Africa. With Randgold Resources's foothold in Africa, this would be ideal for further expansion on the continent.
Randgold Resources MD Mark Bristow has said he is keen to expand in Africa and the group is looking at other projects in Mali and Côte d'Ivoire.
Regardless of what vehicle will be used for the new structure, CAM and JCI Gold have said they are selling their proposed non-gold interests to New Mining Corporation, an empowerment group born out of the old Wit Nigel.
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