aus MINEWEB vom 01.07.05
This is definitely the last rights issue - Kebble
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Posted: '01-JUL-05 10:46' GMT © Mineweb 1997-2004
MINEWEB: We are talking about a quality gold mine this evening, Western Areas, and Gareth Tredway has got some interesting background on the next story, before we pick up with Brett Kebble.
GARETH TREDWAY: Thanks, Alec. Well the quality gold mine you speak of is South Deep – it’s one of the biggest gold deposits in the world, and Western Areas owns half of it. Today they released an annual report and, along with an unqualified audit opinion that contained an “emphasis of matter” paragraph attached to it. Now, according to most definitions an emphasis of matter paragraph points to an important matter in the report, even though it has been disclosed elsewhere, kind of saying that if this issue isn’t resolved, it could be a problem in future. In Western Areas’ case the issue is whether the company can continue as a going concern or, to put it simply, stay in business, because at year-end its current liabilities exceeded its current assets by R394m.
MINEWEB: Wow! Brett Kebble, that doesn’t sound terribly encouraging?
BRETT KEBBLE: Alec, the rights issue which we have announced, or at least alluded to, and the terms of which will be announced shortly, is really what is going to cover the short-term issues at Western Areas. As you know, the capital project was delayed by a period of time and so, in order to cover the liability, we have announced the rights issue.
MINEWEB: You’re going to raise R730m. What kind of commitments do you have from shareholders that they will support you?
BRETT KEBBLE: Well, look, we’ve had discussions with most people, with most of the shareholders, and most of the big shareholders have alluded to the fact that they are likely to follow their rights.
MINEWEB: That means that they will put their money in?
BRETT KEBBLE: Well, I can’t speak for them, obviously, but certainly in our case, that being JCI and the JCI Group, we are going to be very keen to put money into the project at this share price.
MINEWEB: How much will you be injecting, from the JCI perspective?
BRETT KEBBLE: Our commitment is around R290m, of which R200m has already gone in, but we are likely to take quite a lot more than that.
MINEWEB: And no problem in raising that funding?
BRETT KEBBLE: No.
MINEWEB: Where is it coming from, Brett?
BRETT KEBBLE: Well, we have a few assets left in the larder. We have an asset, 50% of the Letsing Mine, which has been doing very well. So we have assets against which we can raise cash to put behind Western Areas.
MINEWEB: It’s been disappointing for Western Areas shareholders, apart from this emphasis of matter statement, which I think you have now explained very well. Since the beginning of May the gold index has gone up strongly, but the Western Areas share price has been bumping along. Do you think that this issue has been the reason?
BRETT KEBBLE: There’s no question that, when you announce a rights issue in a company, you always develop short players, people who will come in, short the shares ahead of the rights issue, and then try and pick them up at a lower level. And I think that that has been a feature of the market in Western Areas for a while. Look, this is definitely the last rights issue that we are going to be having in the company. We have seen a big turnaround in the last quarter, compared with the last quarter, and I think that the mine is on track for much better days.
MINEWEB: Brett Kebble is the chief executive of Western Areas Gold Mine. Wayne McCurrie, just to put it in perspective, if the Western Areas share price had followed the all-gold index, in other words if it hadn’t underperformed since May, that’s only, what, two months, the share price would not be R21 today, it would be R33. It would be 50% higher. So quite a lot of truth in what Brett Kebble had to say.
