Diamond mine a good buy
A valuation carried out by an independent expert approved by the Johannesburg Stock Exchange puts the price of Trustco's new diamond mine at N$6.5 billion.
Trustco group CEO Quinton van Rooyen believes he has created great value for Trustco shareholders following the acquisition of a Northern Namibia Development Company-owned, yet-to-be-productive diamond mine from his family which saw upwards of N$3 billion change hands between the Van Rooyens and exiting Trustco shareholders.
Trustco company secretary Amanda Bruyns said that the process was compliant and fair with no interference from the family of majority shareholder, Quinton Van Rooyen.
“The first process was the initial transaction of the acquisition of the mine. It was a related party transaction therefore he could not vote. The shareholders approved the transactions then subsequently there was an amendment to the Huso transaction that did not change the price but because it was a related party it needed to go back to shareholders and through the entire process again,” Bruyn said in response to questions at a press conference.
“The JSE requires that an independent expert determine whether the transaction was fair. Again the independent party, which are the Van Rooyens, were excluded from voting in that transaction,” she added.
According to her, the valuation was extensive and in line with international best practices. “He had to use two valuation approaches and then he also had to do a fairness opinion on the transaction and for which he used the discounted cash-flow method and when he used the DCFM.
The tests were done independently, Bruyn's explained, doubling the value of the mine. “He determined that the value of the transaction in his opinion was N$6.5 billion and not the purchase price of N$3.6 billion that was done independently and he was not a related party and he is approved by the JSE,” said Bruyns.
The shareholders also voted on the Huso amendment and that was approved at the AGM on 13 June 2017, according to her.
The transaction according to Van Rooyen created significant value for Trustco shareholders and was a very good deal, in his opinion. “In a nutshell, from the family to a body of shareholders, N$3 billion went through or moved in additional value so it was sold for N$3.6 billion but an independent valuator said its actually worth N$6.5 billion which I think is a very good deal for the shareholders,” said Van Rooyen of the Huso transaction.
Trustco financial director Floors Abraham said that the resources department would contribute positively to Trustco's fortunes.
“We are still waiting for the issuance of the mining licence. Then there's the Meya project in Sierra Leone. We foresee that the resources division will contribute to revenue in 2017,” said Abrahams.
Trustco dramatically altered the terms of a controversial N$3.6 billion diamond mining deal, which is still awaiting approval from mining authorities, the Financial Mail wrote last year.
“It's a risky deal because the 'paper' value of the diamond assets, which have no meaningful profit history or solid tangible asset underpin, are worth more than Trustco's N$2.3 billion market capitalisation,” Financial Mail said in its November 2016 article.
“A fixed number of shares will be issued to Van Rooyen during the nine-year payment term. The profit projections of the combined diamond assets are N$250 million of earnings before interest, taxes, depreciation and amortisation in four unspecified trading periods in exchange for 120 million Trustco shares each time the profit target is reached,” said Financial Mail.
“The forecast earnings for the mining assets are nearly triple the market cap of JSE-listed diamond miner Trans Hex,” it said of the deal.
-additional reporting by Financial Mail
OGONE TLHAGE
Trustco company secretary Amanda Bruyns said that the process was compliant and fair with no interference from the family of majority shareholder, Quinton Van Rooyen.
“The first process was the initial transaction of the acquisition of the mine. It was a related party transaction therefore he could not vote. The shareholders approved the transactions then subsequently there was an amendment to the Huso transaction that did not change the price but because it was a related party it needed to go back to shareholders and through the entire process again,” Bruyn said in response to questions at a press conference.
“The JSE requires that an independent expert determine whether the transaction was fair. Again the independent party, which are the Van Rooyens, were excluded from voting in that transaction,” she added.
According to her, the valuation was extensive and in line with international best practices. “He had to use two valuation approaches and then he also had to do a fairness opinion on the transaction and for which he used the discounted cash-flow method and when he used the DCFM.
The tests were done independently, Bruyn's explained, doubling the value of the mine. “He determined that the value of the transaction in his opinion was N$6.5 billion and not the purchase price of N$3.6 billion that was done independently and he was not a related party and he is approved by the JSE,” said Bruyns.
The shareholders also voted on the Huso amendment and that was approved at the AGM on 13 June 2017, according to her.
The transaction according to Van Rooyen created significant value for Trustco shareholders and was a very good deal, in his opinion. “In a nutshell, from the family to a body of shareholders, N$3 billion went through or moved in additional value so it was sold for N$3.6 billion but an independent valuator said its actually worth N$6.5 billion which I think is a very good deal for the shareholders,” said Van Rooyen of the Huso transaction.
Trustco financial director Floors Abraham said that the resources department would contribute positively to Trustco's fortunes.
“We are still waiting for the issuance of the mining licence. Then there's the Meya project in Sierra Leone. We foresee that the resources division will contribute to revenue in 2017,” said Abrahams.
Trustco dramatically altered the terms of a controversial N$3.6 billion diamond mining deal, which is still awaiting approval from mining authorities, the Financial Mail wrote last year.
“It's a risky deal because the 'paper' value of the diamond assets, which have no meaningful profit history or solid tangible asset underpin, are worth more than Trustco's N$2.3 billion market capitalisation,” Financial Mail said in its November 2016 article.
“A fixed number of shares will be issued to Van Rooyen during the nine-year payment term. The profit projections of the combined diamond assets are N$250 million of earnings before interest, taxes, depreciation and amortisation in four unspecified trading periods in exchange for 120 million Trustco shares each time the profit target is reached,” said Financial Mail.
“The forecast earnings for the mining assets are nearly triple the market cap of JSE-listed diamond miner Trans Hex,” it said of the deal.
-additional reporting by Financial Mail
OGONE TLHAGE
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