JOHANNESBURG (miningweekly.com) – The black economically empowered Mvelaphanda Resources (Mvela) would sell its 39-million Gold Fields shares en bloc provided the price matched the value that the unbundling company envisaged realising from the stake, Mvela executive manager: commercial James Wellsted said on Thursday.

When Mvela sold 11-million Gold Fields' shares earlier this year, they went like hot cakes.

Since then, investor sentiment towards gold has improved still further, following the precious metal's advance through the $1 000/oz level.

"We think there's more upside in gold," Wellsted told Mining Weekly Online.

"To some extent, the strong rand's working against us, but the positive sentiment towards gold, and potentially to where the dollar is going, is still working in our favour, and we're quite comfortable right now.

"We don't see any issues with selling en bloc, and some institutions may be willing to do a transaction at prices that make sense to us," Wellsted added, following the company's announcement of its results for the year ended June 30.

He conceded that this year's Mvela results were complicated, and largely a nonevent, given the first-time consolidation of only ten months of Northam, owing to the Booysendal transaction taking till August to conclude.

"The unbundling's the story and not the earnings. It's now all about our potential use of any excess value from the sale of our Gold Fields' shares to recapitalise the Booysendal project, and then to unbundle the Northam shares to our shareholders.

"That unbundling should unlock the discount we're trading at, which is currently R1,5-billion," Wellsted said.

Mvela's shares have been trading at large discounts to their net asset value for some time, while its Gold Fields shares have been outperforming everything else on the market on a relative basis.

This presented an opportunity for Mvela to settle its debt, which it began doing in February, when it managed to refinance in order to give itself the time to sell the Gold Fields shares over a longer period, into a positive gold market.

Having bought the Gold Fields shares at R82,78 a share, Mvela managed to sell 11-million of them at R115,50 a share, ahead of traditional April-to-August gold-market slowdown.

"Now we're getting back into the gold price territory where selling more Gold Fields shares makes sense, in order to pay down the rest of our debt and reduce that risk on our balance sheet.

"We still have 39-million Gold Fields shares and have in mind the value that we would like realise, given our view that there's going to be more upside in the gold price," he added.

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