Interview with MIKE PRINSLOO - Tuesday, 27 July 1999
moneyweb.co.za
AH: Mike Prinsloo joins us now, he's the chief executive of Durban Roodepoort Deep. Financial results came out today – cash profit down just over R2 million from R18,8 million to R16,5 million. Mike, I noticed that your capital expenditure is still high, R25 million the last quarter, from R32 million in the previous quarter. How much cash do you still have in the bank?
MIKE PRINSLOO: Alec, we still have R61 million in the bank and we will conclude our capital programmes in this next financial year. That's to stabilise the production at the 700 000-ounce level.
AH: Now, with R61 million in the bank, I guess that wouldn't really put you close to the bidding for Harties, which Anglovaal is keen to sell – or would it?
MIKE PRINSLOO: It would. We have been involved in the process, and we are under confidentiality regarding that issue, but we have done a due diligence on Harties, and we will be looking at it as an opportunity.
AH: And when might that be finalised, or at least there be some finalisation of that?
MIKE PRINSLOO: I think the process would evolve over the next week to ten days.
AH: Randfontein? You're going to be doing something with that business, as well?
MIKE PRINSLOO: Well, in terms of Randfontein, or all our neighbours, we're really looking at whether there is any synergy between ourselves and the neighbouring mines. There are always synergies, plant synergies, there are opportunities underground where some of the lease area is being mined on tribute, so we're looking at where the price is at this stage. One has to look at any opportunity to see how you can strengthen the business, and that would equally be across the fence, for Randfontein, or any of our other neighbours.
AH: Mike, some criticism that came through from analysts I spoke with today is that you're still mining unprofitable areas. With the gold price weakening, with a drain on your resources through your high capital expenditure programme, would it not be more sensible to perhaps cut back on the mining in areas like Buffels?
MIKE PRINSLOO: Absolutely. You know, if we know that the price is going to stay at these levels, we would cut back on all our loss-makers underground. But the Buffels opportunity for us is more in the team that we've built up there over the last few years, and with Harties being our neighbour, it would be a real trauma if we had to close underground at Buffels, and Harties came up as an opportunity.
AH: So that's part of the reason then, you keep Buffels going, and perhaps you can pick up Harties as well – and then make good profit out of both of them.
MIKE PRINSLOO: That's right. And also, we've got a critical mass that we are using for acquisition in Australia as well, and any cuts on that critical mass now would really affect our balance sheet and would put us in a weaker position.
AH: But if the gold price keeps falling, wouldn't that put you under intense pressure?
MIKE PRINSLOO: Sure, it would, but we did take some protection to protect those marginal ounces. We took protection for our capital programmes and, as you saw in the results, we received a gold price of R56 000 a kilogram, where spot is sitting at R50 000 a kilogram today. So we've got a R6 000-a-kilogram protection.
AH: Mike, finally, other expansion plans in Australia? You have been vocal about your desire to be a big player there?
MIKE PRINSLOO: Yes, on the 12th July we made a bid for Hargraves Mine. We own 19,9% of Hargraves and we've made a full bid for Hargraves. That process should conclude towards the end of September.
AH: That's the word from Mike Prinsloo, chief executive of Durban Deep. Tough times, but they're managing pretty well.
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