Publications
Partners
Johannesburg - Shareholders in Rare Earth Extraction Company (Rareco), a junior mining company written off by the market after being suspended on the JSE in 2002, received an unexpected Christmas gift last week.
Canadian mining group Great Western Minerals Group (GWMG) offered to buy out all shareholders in Rareco for 300 cents per share. The deal values Rareco at almost R150m.
The GWMG offer values Rareco, which owns a rare earth mining deposit at Steenkampskraal near Vanrhynsdorp, far in excess of the market valuations accorded to the share in the five years leading up to the company's suspension on the JSE.
Not surprisingly, the Rareco board has urged shareholders to accept the GWMG offer.
Institutional memory of Rareco is scant, with most sources canvassed at the weekend only vaguely recalling the company. One noted: "From what I can remember, it was a typical Cape-based junior mining venture - big on promise, but very little in the way of delivery."
Between 1997 and 2001, Rareco traded as low as 5c and as high as 200c.
Rareco's "glory moment" came in the 1990s, when the company secured an agreement to supply feldspar to glass giant Consol. However, Consol quickly called off the arrangement, citing quality hitches. The decision, to all intents and purposes, sank Rareco.
'Rising from the dead'
There has been very little (if any) news on Rareco since its suspension and eventual termination of its listing on the JSE. Most junior mining observers were surprised by developments.
But Shareholders Association chairperson David Sylvester was pleasantly surprised at the offer. "It represents a fantastic rising from the dead for Rareco. Shareholders should verify their shareholdings as soon as possible in order to accept the offer."
It seems the offer to Rareco minorities is GWMG's second tilt at the company this year. GWMG's website shows that the Canadian company subscribed for 10 million Rareco shares in early September, garnering a 20.8% stake.
GWMG lists itself as an integrated rare earths processor, specialising in alloys used in the battery, magnet and aerospace industries.
The company's subsidiaries include Less Common Metals Limited in Birkenhead in the UK and Great Western Technologies Inc in Troy, Michigan. Activities span aluminium, nickel, cobalt and rare earth elements.
The Rareco purchase is seen as part GWMG's vertical integration strategy, which - according to president Jim Engdahl – is aimed at making the company the first fully integrated rare earths producer outside China.
GWMG seems optimistic about the Steenkampskraal rare earth operation.
The group's website reported: "Infrastructure is excellent, with access to the site by paved and gravel roads and close proximity to rail and sea port; the governments are pro-development, and there is technical expertise available as well as a trainable work force."
The website also details an earlier agreement between GWMG and Rareco to refurbish, recommission, and operate the currently abandoned Steenkampskraal mine. This agreement allows GWMG the right to acquire exclusive access to 100% of the rare earth elements mined at Steenkampskraal for a 10-year period.
- Fin24
