JOHANNESBURG (miningweekly.com) – The mining division of the JSE-listed Basil Read construction group may be hived off into a separately listed entity, Basil Read CEO Marius Heyns said on Friday.

Heyns told Mining Weekly Online that the company was working on a strategy to extract optimum value for shareholders from its opencast contracting business. Basil Read's drilling and blasting company Blasting & Excavating also forms part of the division.

"Mining has been the star performer," Heyns said, in presenting a set of outstanding overall results for the year to December 31, which saw group operating profit increase 33% to $408-million.

He said that mining had produced some of the group's best margins in tough economic circumstances and off a lower revenue base.

"The good news is that mining's R1,4-billion order book could jump up to R2-billion or even higher. We're currently negotiating some seriously significant contracts with some of our existing clients and there are also new clients and I am very upbeat about the mining company," he added.

Heyns said that Basil Read had been advocating the hiving off the company company into a separately listed entity and would communicate more to the market about that in the future.

The mining business is capital intensive, with R300-million of Basil Read's 2008 capital expenditure of R388-million going to mining alone, but it has been "super conservative" in the writing down of its plant over four years, and paying a relatively high cash portion when purchasing plant.

Basil Read MD mining Antonie Fourie told Mining Weekly Online that, as a result of the entry of project company TWP into the group, the mining division was able to offer process planning and mining.

Fourie said that the mining business had performed well in the year to December 31, contributing R679-million to group revenue and operating profit of R113-million.

The company had met with Debswana about a large mining development and was also active for Areva at the Trekoppje uranium project in Namibia.

Fourie added that the company had been working for mining major Rio Tinto for five years at the Rössing uranium mine in Namibia.

It had also worked with Highveld Steel for several years, offering methodologies for optimum iron-ore extraction and greater energy efficiency in ore crushing and loading and was currently engaged with a new iron-ore prospect, which outcropped on to the surface some 7 km from Highveld's existing Mapochs iron-ore mine.

The division's R138-million percussion drilling project at De Beers Venetia diamond mine was expected to endure until September 2011, in joint venture with three other companies.

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