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Cape Town - The Cape-based empowerment company Sekunjalo Investments confirmed on Tuesday evening that it had arranged a well-heeled consortium to bid for the troubled Pamodzi Gold mining company.
Sekunjalo CEO Iqbal Surve told Fin24.com that the consortium comprised several well-known royal families from the Middle East.
"These are people we have a good relationship with... people that are very serious about investing in South Africa. They love South Africa, and have already committed $500m to set up a mining investment fund."
On Tuesday, Business Report speculated that the Sekunjalo consortium had made a conditional offer to acquire Pamodzi for $150m as part of a $500m package to recapitalise the company's mines.
The development is surprising, as Sekunjalo - largely viewed as an industrial holding company - has never shown an inclination towards mining investment.
Surve stressed that Sekunjalo - which currently holds fishing, health care, technology and financial services interests - would not be involved in the management of Pamodzi.
He said if the consortium's bid for Pamodzi was successful, Sekunjalo would receive 30% stake in the gold mining company at no cost.
"There will be no recourse to Sekunjalo's balance sheet... there is no capital demand on Sekunjalo. If we are successful then Sekunjalo will get a stake in Pamodzi for our efforts."
Surve stressed the Sekunjalo consortium's bid hinged heavily on exclusivity around the proposed transaction.
"We want to be able to undertake a thorough due diligence. We can't risk bringing in this investment to our partners only to find three months down the line that there are holes. That would damage Sekunjalo's reputation as well as the country's reputation."
Surve said one of the biggest concerns for the consortium was the Pamodzi hedge book.
"So far we have been unable to establish whether the hedge book applies to individual mines, or whether the hedge book is held at corporate level."
Reports suggest there are other bidders for Pamodzi (most notably Simmers), and that liquidators may not be keen to compromise the bidding process by guaranteeing exclusivity to one buyer.
An advantage for the Sekunjalo consortium, according to Surve, is that much needed funds could be made available quickly to the struggling Pamodzi.
- Fin24.com