Capital Equipment News November 2016

BUSINESS

Eqstra’s MCC Contract Mining division’s skills set stretches across hard rock and soft rock operations, and will look at spreading the risk between commodities rather than having too much exposure in a single commodity.

Net asset values for the Excess Assets that were identified as held for sale, as at 31 December 2015: Assets held for sale value

Disposal Consideration

Entity

Rm

Rm

MCC Plant Hire

84.0

58.8

MCC Contracts

281.0 782.0

196.7 547.4 802.9

EML

Total Excess Assets

1 147.0

factors, but it’s important to branch out into new geographic and commodity ex- posures. He tells Capital Equipment News that previously 90% of the Contract Mining division’s work was in the platinum sector and that exposed it to a lot of risk considering the historical pricing turmoil

in this particular mineral sector. As a re- sult, Serfontein says the company focused its efforts during the last couple of years on expanding into other soft rock mining sectors. “Our skills set stretches across hard rock and soft rock operations, and we are looking at spreading the risk between commodities rather than having too much exposure in a single commodity,” says Ser- fontein. He also believes future growth will be realised through expanding into other territories to increase hard currency earning potential. “We are diversifying into new territories, not only in Africa, but across the globe,” says Serfontein. “There are certain jurisdictions that are easier to enter and we will prioritise them first. These range from Indonesia to Guinea and everything in between. Of importance to us is where projects sit on the cost curve and how sustainable a project is.” Meanwhile, as part of the new strategy adopted in June 2015 to become a services-focussed group, the MCC Contract Mining division will increase its services offered to mines. “We currently offer a total suite of services, from pre- feasibility studies, through to mining execution and rehabilitation. Previously our offering included bringing a sizeable

portion of our balance sheet to projects,” says Serfontein, adding that in the future, the company’s offering will be much more service-oriented, with value creation the main focus, while using some of the company’s and others’ balance sheets. In the long term, Serfontein says the company will look to grow through stra- tegic acquisitions. “We will be looking at acquisitions in the mining services and supply space, that add value across and up/down the mining value chain,” he says. Speaking of turning around the fortunes of the company, Serfontein says, while there are factors which remain external, such as commodity pricing, he believes a large part of the future success of the eXtract Group lies with efficiencies which are within the company’s control. Some of the immediate plans following the recapitalisation of the Contract Mining division entail monetising standing equip- ment to pay down some of the company’s remaining debt. He believes that the cash from the disposal of excess assets would greatly alleviate the current constraints. All proceeds from the sales of local excess assets will be used to repay South African bank debt, while proceeds from the sales of Benga excess assets will go towards repaying rest of world funding. b

“We currently offer a total suite of services, from pre-feasibility studies, through to mining execution and rehabilitation. Previously our offering included bringing a sizeable portion of our balance sheet to projects.”

CAPITAL EQUIPMENT NEWS NOVEMBER 2016 30