Here's todays news - Quote Mintails gets new SA boss Brendan Ryan Posted: Tue, 21 Apr 2009 [miningmx.com] -- SOUTH African businessman and investor Patrick Smyth was this week appointed chairman of ASX-listed Mintails after the resignation of Australian Bryan Frost in March.
Mintails is involved in dump retreatment operations to recover gold on both the East and West Rand. The East Rand operations involve a 50-50 partnership with DRDGOLD.
The departure of Frost and his partner Richard Revelins from Mintails follows nearly a year of shareholder discontent over the future of the company.
This focused on the severe underperformance of the Mintails share price and shareholder concerns that the largely Australian-based board was not close enough to the company’s wholly South African operations.
There was also criticism that overhead costs at Mintails’ Australian head office were way too high.
A Mintails statement released on March 16 said the new board will now be “aligned with operational and executive management”, while “consolidating the executive and non-executive industry leadership in the company’s place of operations will avoid management disconnects and improve communication”.
The statement added the restructuring of the board would “significantly reduce operating expenses at the Australian office, and the Australian-related costs will be limited to that (sic) of maintaining the ASX listing, financial reporting and compliance”.
The conflict between shareholders and Frost-Revelins first became public in July 2008, when the two executives visited South Africa to meet with a group of dissident shareholders led by Smyth.
At the time, Frost accused various unidentified parties of launching a bear raid on Mintails and trying to remove both himself and Revelins from the board.
Frost also described as “rubbish” market speculation that Mintails did not have enough funds to meet the costs of bringing the Ergo joint venture on the East Rand with DRDGOLD into production.
Yet Mintails shares were suspended from mid-September to mid-December, as the company desperately searched for financing to complete the project. It finally received the money from DRDGOLD - but at the cost of agreeing to forego any earnings from Ergo for up to the first 12 years of operations.
Sources told Miningmx Smyth had been particularly active since January in rounding up enough proxy support from shareholders to call a special meeting at which Frost and Revelins would be removed from the board.
Smyth said on Tuesday: “I don’t want to dwell on the history. There was considerable shareholder dissatisfaction but, at the end of the day, this has been resolved amicably.”
Mintails on Tuesday announced completion of the sale of its remaining interest in the Elsburg joint venture to DRDGOLD. This brings in 16m Australian dollars, which increases Mintails’ cash balance to about A$21m.
According to the latest statement, the money puts Mintails “in a strong position to pursue its gold production and expansion plans on the West Rand”.
Mintails now plans to focus on gold production from its Mogale plant on the West Rand, while funding feasibility studies to pursue the secondary focus of developing potential uranium production on the West Rand.
Smyth pointed out that Mintails still owned 50% of the Ergo joint venture with DRDGOLD. This hosts about 1.7bn tonnes of slimes material on the East Rand containing gold, uranium and sulphur.
“A lot of people had the impression we sold out our entire 50% stake when the Elsburg deal was done. That is not the case; we only gave up the short-term income stream. We have kept our stake in the asset,” Smyth said.
The Mintails announcement said the Mogale plant had been returned to profitability and a new gold circuit should be completed by the third quarter of 2009.
This will double production capacity to 116kg of gold a month, and that level of production should produce operating profits of about A$1m a month. The estimate is based on a gold price of R265,000/kg or $868/oz at an exchange rate of R9,5 to $1.
*The writer owns shares in Mintails.
MLI Price at posting:
43.0¢ Sentiment: None Disclosure: Held
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