JOHANNESBURG (miningweekly.com) – The shareholders of JSE-listed gold company Aflease on Wednesday approved the company’s proposed merger with Australia-based BMA Gold, to form Gold One.

Aflease would now have to discuss the merger with its bondholders, as well as get final approval from South African competition authorities.

The merger would be completely finalised by the end of next month, and would see the formation of a dual-listed midtier gold-miner.

The portfolio of Gold One will include operations from a near-production gold mine in South Africa, to gold exploration activities in Australia.

Aflease CEO Neal Froneman told Mining Weekly Online that the merger would be a very significant change for the company. “We will end up with two primary listings, and we should be rated very differently. More importantly, it will give us better access, and we believe lower-cost access to capital that we need to raise to fund the Modder East project.”

Aflease was planning to raise R120-million for the development of its Modder East project, on South Africa’s East Rand. The capital would be raised through a share-swap agreement with minerals holding company Trinity Asset Management.

To date, the company had raised an estimated R40-million.

“We need R120-million, but we only need that by August or September, so we are under no pressure. We are watching the market carefully, and there are a number of opportunities that we are looking at. We will be opportunistic in the way we raise capital,” Froneman said in an interview after the shareholders meeting.

He added that the company would also investigate using the ASX listing as a possible avenue to raise funds. “We would like to increase our Australian shareholder base, but we do not want to look past our South African investors, so it is a balancing act. But we really have to look after both the jurisdictions.”

Froneman said that the current economic climate had made it more difficult to raise funds. “Investors are a lot more selective in where they want to invest their cash. There is an intense focus on cash. Unless you can demonstrate near-term positive cash flow, it is just about impossible to raise money at any decent level.”

However, he added that Aflease had been very fortunate, as the company had a near-term cash flow, and the outstanding R80-million needed for the Modder East project was only about 10% of the capital cost for the entire project.

“We have a large resource base, our risk profile is a lot better than most other companies, we have put together a shallow profile, our project is simple and not technically complex. So, we are probably in a better position than most.”

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