Six-and-a-half years later and R55-million richer, one diamond player has made its fortune, reports Bronwen Jones
Foreign investors have given another much needed capital injection into the economy with the purchase of one of South Africa’s
2 500 diamond mining concerns. The Canadian-based, but Bahamas-registered, Becksham Coporation recently acquired Messina Investments for R68,52-million.
Becksham has, however, just been reversed into dormant company Whispering Lake, that then changed its name to Messina Diamond Corporation … which is now quoted on that haven of exploration capital, the Toronto Stock Exchange.
Convoluted? Danie Kirsten, who was managing director of Messina Investments, doesn’t even know what his job title is at the moment. But with his share of the profit of the previous management teams’ 57% shareholding in the company, he just beams and says: “It’s a success.” The difference between the original purchase price some six-and-a-half years ago, adding in a rights issue along the way, and the sale figure of Messina, is around R55-million.
Messina has charted a chequered path since the main company was founded in 1904 and a major chunk was sold off to Impala Platinum in 1989. A management buy-out secured the copper, diamond and coal interests in 1990 for R12,5-million, and it is this that became Messina Investments, also known as Minvest.
The large copper mine that was Messina’s original raison d’etre closed in 1993 and rehabilitation will be complete by the middle of this year. Messina Investments mainly focused its attention on diamonds, and steadily sold off the coal properties including N’Komati and Anthra Colliery. One remaining site, Van Oudshoornstroom Coal, east of Ermelo in Mpumalanga, was explored but not worked. It has recently been sold to Anker Kolen of the Netherlands, giving Messina a R3,18-million profit on the book value.
Andre Venter, Anker’s managing director in South Africa, said that with the increasing difficulty of getting coal from the big mining houses, the only logical move was for Anker to come into the country and buy its own mine. More purchases will follow.
Messina’s two operating diamond mines are at Bellsbank, north of Kimberley in the Northern Cape, bought in August 1991, and the other, Star Diamonds, south of Virginia in the Free State. Star was bought in July 1992 from Loucas Pouroulis’s Salene Mining for R8,3-million. The mine was previously unprofitable, coming with a R20,5-million tax loss.
Unlike normal kimberlite pipe deposits, the diamonds at Star and at Bellsbank are found in fissures. The company said at the time: “It will be about another five years before Star has to pay tax.”
Kirsten told Mining Journal: “We’re very much into finalising the exploration phase for another diamond mine in north-east Lesotho, known as Liqhobong.” Involved kimberlite diamond mining, the company has already spent $3-million of a $10-million exploration plan that will be complete by 1999.
And in Botswana, Messina secured some licences for a base metals project – predominantly copper – and has spent “a bit more than $1-million” on boreholes and other exploration.
It was this project that Messina claims led it to seek an overseas partner “because South African exchange controls became a problem for moving the money that would be entitled in development”.
Messina and Becksham “decided it would be a good thing if we put our resources together. We have shares in things that they are into and vice versa.” Becksham was the majority shareholder in Liqhobong in Lesotho, in which Messina was acquiring a 20% interest.
In 1996, a company called Mortbury Limited, essentially British and registered in the Channel Islands, bought Messina’s Bushman Copper mineral licences in Botswana, giving Messina in return a 21% equity stake and a preference dividend to 11,5% of the net profits of the Messina Copper (Botswana).
Kirsten says: “Mortbury introduced us to Becksham but they are not the same organisation.”
The Botswanan project, north-west of Francistown, has been extensively explored before by Canadian concern Falconbridge and other companies, who were put off by the lack of infrastructure in the area. This has been remedied and makes the project infinitely more viable.
While a lot of companies are considering new copper mines, Kirsten said: “One must not just look at what’s coming on stream, but also remember what falls offstream. Copper tubing is becoming very important again in building in Europe.” And he joked, “with all the cable theft in South Africa there’s an increasing secondary market in copper too”.
Messina held a two day meeting in South Africa this week with its new president Jeremy Clarke. The new chair, David Jones, and board members Clive Johnson, Normand Lamarche, Marvin Singer and Anthony Williams are expected here by February 10 when the takeover becomes final. There is no South African on the board.
And what will Kirsten, former chair Tony Buchan and former company secretary Peter Freeman do with their new-found wealth? “Invest it in mining, probably.” But they’re not saying where.
l Messina shares were suspended on the Johannesburg Stock Exchange in December. In September last year, it reported post-tax income of R5,6-million (R3,2-million in 1995). Earnings per share were 41c (21,6c) and a 10,25c (5c) dividend was declared.