Navachab's new ownership official

The acquisition by United Kingdom-based QKR Corporation of the Navachab gold mine is complete, the private mining company confirmed yesterday. QKR president Lloyd Pengilly, a former Johannesburg gold analyst who left JP Morgan in August last year to set up QKR, announced the deal in February as the company’s maiden transaction. AngloGold has disposed of Navachab, which last year produced below 2% of its total production, to allow it to concentrate on operations larger than the local mine, situated near Karibib, six km south of the road between Okahandja and Swakopmund. QKR, whose the major shareholders are Qatar Holdings and Kulczyk Investment, wants to acquire and build a diversified portfolio of development and growth assets in the Europe, Middle East and Africa region and the Americas. Epangelo’s share secure State-owned mining company Epangelo has partnered QKR in the US$110 million (N$1.2 billion) deal for Navachab, which has 3.9 million resource ounces and 1.92 million reserve ounces. Last year the opencast mine produced 63 000 ounces of gold at a cash cost of US$691 (N$7 324.60)/oz and an all-in sustaining cash cost of US$781 (N$8 278.60)/oz. AngloGold Ashanti executive VP strategy and business development Charles Carter said the transaction had been concluded at the end of June after all conditions precedent had been met and monies paid. Pengilly commented that the focus would be on maximising Navachab’s inherent value and realising the full potential of the asset. Epangelo Mining MD Eliphas Hawala said the transaction had brought Epangelo closer to fulfilling its objective of ensuring State participation in mining, beneficiation and creation of mineral-related employment opportunities for the people of Namibia. “We thus look forward to making our contributions in order to ensure maximum value is derived for our shareholders and stakeholders,” added Hawala, a Cameroonian. Epangelo, with the government of Namibia as its sole shareholder, is intent on realising higher economic benefits for Namibia, particularly in the realm of foreign export earnings. Fair value for the times AngloGold said when the deal was announced in February that the partly cash payment for the asset would be adjusted to take in net debt and the working capital position on the transaction’s closing date. In addition, AngloGold said it would receive deferred consideration in the form of a net smelter return, which would be paid quarterly for seven years following the second anniversary of the closing date. The net smelter return, described as a form of royalty payment, would be determined at 2% of ounces sold by Navachab during a relevant quarter, subject to an average gold price of US$1 350 (N$14 310)/oz being achieved, and capped at 18 750 oz sold a quarter. At the time, Carter described QKR as “the right group to take Navachab forward”, and explained the sale as being “for fair value in the midst of a difficult market”. QKR said in February that it would be working closely with Navachab management, the Namibian government and Epangelo to steer the mine through what it described as "its next phase of growth". The sale of Navachab, which has been owned and operated by AngloGold since its formation in 1998, stems from a strategy launched last year in which AngloGold said it would strip out corporate, capital, exploration and operational costs totalling US$482 million (N$5.1 billion) and equal to US$100 (N$1 060)/oz. As part of the cost-saving drive, AngloGold Ashanti CEO Srinivasan Venkatakrishnan said the JSE and NYSE listed company would dispense with non-core operations, provided good value was received. JOHANNESBURG MININGWEEKLY