Johannesburg - The details provided this week by Anglovaal Mining (Avmin) that it is examining ways to restructure debt and that it may have secured a buyer for Chambishi Metals signal that the company is preparing for its next growth phase.
Julian Gwillim, the vice-president of Avmin, said the company would, once these two issues were out the way, focus once more on its growth potential.
Projects earmarked for this phase include development of the Two Rivers platinum mine, expansion at its Nkomati nickel operation and the expansion by Avgold, which is a 56 percent held Avmin subsidiary, on the properties north of its Target mine.
Avgold said in its March quarterly that grades at Target had improved to 10.36g a ton after operational problems were resolved. Costs were kept to R47 723 a kilogram.
The company said earlier this week that there had been significant interest in Target, which is one of the country's lowest-cost gold operations.
"The mine is in its final build-up phase and is almost operating at intended design levels, producing 350 000 ounces of gold a year.
"Both Avmin and Avgold have indicated a preference to introduce a major gold operator as a partner," said Gwillim of plans to expand Target.
Capitalising on the sterling performance of the Free State mine, Avmin said it would take advantage of the rand-dollar exchange rate to resolve its debts of about $140 million.
This, Gwillim said, could be done by Avmin placing a portion of its Avgold stake offshore to raise dollars.
Avmin on Tuesday also announced that it had signed a memorandum of understanding to potentially sell Chambishi Metals to J&W Holding, the largest investor in the mining and natural resources sector in the former Soviet Union.
Avmin has a 90 percent stake in the Zambian cobalt and copper refining and tolling company. The Zambian government, through ZCCM Investments Holdings, has a 10 percent stake.
Rick Menell, the chairman of Avmin, said the operation required additional capital.
"Since it is already overcapitalised due to delays in reaching full production and a decline in the cobalt price, Avmin does not wish to invest further funds and has decided that the sale of Chambishi is in the company's best interests as it will allow Avmin to focus on new growth opportunities in South Africa," Menell said.
J&W was successful in its bid for the assets of the former Ramcoz mines, which will feed concentrate to Chambishi.
Avmin was also a bidder for Ramcoz.
Its decision to exit its Zambian investment reduces its risk exposure at a time that the Zambian Copper Belt is still battling to get back on its feet.
Anglo American pulled out of its Konkola Zambian investment last year after it said the low copper price meant it could not cut production costs enough to make a profit.
A Bloomberg report this week said Konkola Copper Mines, which earns more than half of Zambia's foreign currency, reported a loss of $159 million because of depressed copper prices and the cost of refurbishing smelters.
Gwillim said Anglo American, Avmin's largest shareholder, was evaluating ways of participating in the development of the Northern Cape iron ore fields.
Avmin, through Assmang, produces about 5 million tons a year of iron ore and may participate in the eventual outcome of talks to synergise mining in the region.
Avmin shares were unchanged at R37 yesterday.