Mintails Is Now Only A Few Months Away From Becoming A Significant Gold Producer
By Charles Wyatt
It looks as if all is sweetness and light once again at ASX-listed Mintails, which is just as well in current market conditions. From a distance the kerfuffle looks a bit like the usual bit of niggle in a Wallabies/Springboks scrum as the directors who came under fire were both from Australia and the dissidents appeared to be South African. The essence of the argument appeared to be that a man called Pat Smyth, who claimed to have around 40 per cent of the Mintails votes behind him, wanted executive chairman Bryan Frost and non-executive director Richard Rivelins to step down from the board in favour of a couple of his appointees. But Bryan Frost found it difficult to confirm how this shareholding had been assembled as there was no evidence that South Africans held many shares. The only conclusion appeared to be that it might hinge on Peter Skeat of Skeat Gold Mining, which was acquired by Mintails some time ago. He was certainly known to be a critic of the leadership.
There was also the matter of board changes which seemed to be rather more frequent than is usual. In January Bernard Swanepoel became a director, which was a strong move in view of his amazing record as chief executive of Harmony Gold. He was followed in April by Basie Maree and it was a shrewd move to bring him on board as an executive too. Basie Marie was head of metallurgy for all AngloGold Ashanti’s operations in Africa. He also has a background as South Africa’s representative on the International Cyanide Steering Committee which goes to highlight the attention paid by Mintails to environmental issues. But following on from these appointments, in June Rob Croll, who only joined the board the previous August, and Jaco Schoeman, an expert on acid mine drainage who was involved in the early development of the Mogale gold operations, both quit. There doesn’t seem to be any acrimony, however, as both remain consultants.
Whether these changes unsettled the dissidents is not clear, but when the two sides met assurances were given that no further board changes were sought, and the South African-based investors offered in turn to find new shareholders to support Mintails. By this time, however, some damage had been done, as the share price dropped from A6 cents in April to the current A2 cents. A significant part of this fall must attach to current bear market conditions, but a fall of 66.6 per cent has to reflect other factors at work too. After all it takes a few months to assemble a dissident group speaking for such a large slice of the equity.
So what lies ahead? Mintails is about to start recovering gold, uranium and possibly sulphuric acid from tailings left by previous operations on its African properties. It has a large resource base and plenty of plant and equipment, thanks to the merger with Skeat Gold which meant it owns one of the largest fleets of trucks, cranes, bulldozers, construction and earthmoving equipment in Africa. The 100 per cent owned West Rand Gold and Uranium Operation (WERGO) is likely to commence production in January 2009, ahead of schedule, at an initial rate of 60,000 ounces of gold. Later on next year, production should increase to a rate of 150,000 ounces of gold with some uranium possibly thrown in too, although some complications that uranium production is likely to add to the circuit still have to be ironed out. A modest amount of gold is already being produced at Mogale, but the importance of this operation is simply that it provides useful proof of principle for the bigger project.
Mintails also has a 50 per cent interest in the ERGO project in the East Rand with DRD Gold holding the other half. The joint venture owns the entire ERGO plant, previously owned by AngloGold Ashanti and the first phase of project development involves the refurbishment of a carbon-in-leach circuit with the capacity to treat an estimated 15 million tonnes of tailings per annum, for the recovery of some 75,000 ounces of gold. The second phase, now under investigation, envisages the expansion of the gold plant by refurbishing a second carbon-in-leach circuit along with the development of uranium and acid plants which are envisaged to have a design capacity to produce an estimated 150,000 ounces of gold, 660,000 pounds of uranium and 855,000 tonnes of sulphuric acid per annum.This is on song to start production at a rate of 75,000 ounces of gold in October of this year.
Thus Mintails is on the verge of becoming a significant producer of gold over the next six months, and once investors pick up on this message the shares should show a bit of life. Charles Zorab, the London representative of the company, accepts that in these depressing times little may happen until production has actually started, but he also points out that the company will be updating its resource estimates at both projects in the meantime. Again, there is no doubt that Mintails has plenty to work on for the next few years, but confirmation of the updated resources should allay any initial doubts that are lingering about. In the meantime the full year results to end June can be expected in the next few weeks and they will confirm the imminent promotion to producer status.
