Padenga to acquire controlling stake in gold mining firm

BY MISHMA CHAKANYUKA

PADENGA Holdings Limited (PHL) will acquire a 50,1% equity shareholding in local mining company, Dallaglio Investment Limited as it seeks to diversify its business.

Describing Dallaglio in a circular of its intended acquisition yesterday, Padenga said the company develops and operates large-scale commercial gold mines in Zimbabwe. This is in sharp contrast to what Padenga currently does, the production of crocodilian skins and meat for different markets.

“In the interests of Padenga stakeholders, the Padenga board would like to diversify the company’s exposure away from a reliance solely on the production of crocodilian skins. Padenga seeks to reduce this concentration risk through diversification into alternative, export-orientated businesses, and has identified the gold mining sector as attractive from a long-term perspective, particularly in respect of the historic world-wide demand for gold and the capacity for gold mining to produce hard currency which is not readily available in the local Zimbabwean market,” Padenga, in the circular, said.

“Padenga will acquire 9 036 shares, representing 50,1% equity shareholding in Dallaglio, to be settled by way of a cash injection in Zimbabwe dollars of 90 dollars and 30 cents ($90,36) and the equivalent US$19 999 990 to be paid in kind by the delivery of mining equipment to Dallaglio. The purchase consideration will be invested entirely in expanding the current operations of Dalllaglio, and all existing Dallaglio shareholders will remain invested in the company.”

Padenga said the decision to diversify into the gold mining sector was arrived at after applying appropriate valuation methods to determine a valuation range for the Dallaglio operation.

“Based on the valuation work performed, the appropriate equity valuation range for Dallaglio, the entire issued share capital of Dallaglio was deemed to be between US$50 million and US$55 million,” Padenga said.

Dallaglio was incorporated in Zimbabwe in 2005 in terms of the Companies Act and is in the business of developing and operating large-scale commercial gold mines in Zimbabwe. The mining company owns Pickstone Peerless Mine near Chegutu and Eureka Mine near Guruve which is currently under development with commissioning targeted for 2020.

In Dallaglio’s 2018 financial year, Pickstone Peerless Mine recorded an after tax profit of US$2,7 million, a turnover of US$26,7 million and contributed approximately 7% of total gold production by primary producers in Zimbabwe.

Dallaglio mining assets have a total resource of 1,6 million ounces. The interest into mining by Padenga comes at a time when mining remains Zimbabwe’s major source for export earnings.

During the first half of the year, the sector contributed US$1,3 billion, which is 68% of the total exports of US$1,9 billion.

Padenga, formerly a division of Innscor Africa Limited, owns Kariba, Nyanyana, and Ume crocodile farms in Zimbabwe and the Lone Star alligator farm in the United States.

Padenga recorded an increase in the number of skins sold to 44 253 in the year ended December 31, 2018 from 43 313 sold in 2017.

From its operations, Padenga generated revenue for the period of US$42,48 million, up from US$30,28 million in the comparative year, with net assets worth US$67,93 million.

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