Chatting to Village’s Marius Saaiman today made me pleased about my investment in the company at 33c back in early August. The shares have improved to 44c and even there is appealing. Its current market cap of R457m is covered by the Lesego Platinum project alone, which may well be on-sold to one of the majors in due course. Chairman Bernard Swanepoel is one of the country’s top mining entrepreneurs and given the way the business is now refocusing into an investment operation, his skills are sure to be seen to best effect. Today’s interview clarified a lot about Village’s strategic direction. Confirming the move away from gold into the less volatile commodities like coal. Â – AHÂ
To watch the video of my CNBC Africa interview with Marius Saaiman click here.Â
ALEC HOGG: Village Main Reef today released on the SENS, the Stock Exchange News Service, its abridged annual report. Now as Lindsay was telling you a little bit earlier; this is a stock that I thought offered a lot of value when it was 33 cents, said so, said I was going to buy the shares.Waited the weekend, bought them at 33 cents and I’m looking at my monitor and it says they’re now 44 cents. So thank you, Marius. I’m in the money. That’s an unusual circumstance to be in for a private investor.
MARIUS SAAIMAN: Ja, Alec. Certainly, I think it was a tough year for us and we said that on a number of occasions in this studio when we had our previous chats but we’ve made some tough decisions and I think we’ve set up the company very well to exploit our continued operations, which is really only our Tau Lekoa and our Cons Murch assets from an operational perspective. And then we’ve got the investment in Lesego Platinum and our investment in Continental Coal. So our loss-making operations in the form of Buffels and Blyvoor; I think we’ve dealt with that very decisively and certainly in terms of the numbers going forward – and I’m quite sure we’ll see that in the September quarter results as well – that the operations that we’ve currently got do generate very good cash at these gold price levels.
 ALEC HOGG: And you’ve also managed to sort out any potential labour issues?
 MARIUS SAAIMAN: Yes, I think we were very fortunate. We worked very closely with our labour organisations and we settled without having any strikes at any of our operations, which was quite impressive I think, for a small little outfit such as Village.
ALEC HOGG: This decision today though, to publish your abridged annual report – People seem to be using SENS better now for their communication. What motivated that?
 MARIUS SAAIMAN: Well Alec, in terms of costs; we’re very cognisant of what it costs to produce an integrated annual report. In terms of the JSE rules you do have the option to publish an abridged report, particularly if you are within the three months that they give you in terms of the rules. And therefore we opted to print the abridged report as our notice to Shell contains the notice to AGM and the abridged financials with certain notes that are compliant with the JSE rules and we also opted to put that on the JSE SENS service and publish the actual full integrated report in PDF format on our website, so that’s the option you’ve got.
ALEC HOGG: So you’re not killing the trees, which was always a process in the past.
 MARIUS SAAIMAN: No, no. Absolutely.
ALEC HOGG: Marius, in the meat of what you had to say today – one part that I picked up that was quite interesting – you’re not wedded to a single strategy. You’re looking at different things. Now the idea initially was to acquire mines, fix them up, and sell them. That didn’t actually work out for you.
MARIUS SAAIMAN: Alec, I think in the environment that we’re in, not just in South Africa; I think in terms of a macro environment it is extremely difficult. There are certain things within the South African environment that makes it even more difficult to follow that particular strategy in terms of deep level, low margin, high costs, inflexible labour environment, inflexible administrative burdens, and inflexible regulatory environments make it very difficult for a mine that is close to the end of its life.
ALEC HOGG: So you’re not going to punt on more Buffels or Blyvoor’s in the future.
MARIUS SAAIMAN: No, I certainly think that our intention is very clear. We’ve been saying this consistently for the last 24 months, that we are evolving into a resources investment company where we will use the cash that we generate from our operations to diversity our portfolio, to take strategic stakes in other commodities by mostly backing the management teams of those commodities that we really like and acting more as a fund manager than as an operator.
ALEC HOGG:Â And the first of these investments is Continental Coal.
MARIUS SAAIMAN:Â Correct.
ALEC HOGG:Â So are you looking specifically at coal?
MARIUS SAAIMAN: We like coal. We like the coal fundamentals. We like the Continental Coal team and we do believe that it offers real value in the longer term and is also extremely well-placed in terms of the fact that that particular management team has developed mines in the current environment. They’ve brought mines into production and they are in the process of doing more of that, and we back that management team and we would probably, in the longer term, look to increase our exposure to thermal coal. We like the thermal coal story.
ALEC HOGG:Â What about Lesego Platinum?
MARIUS SAAIMAN: Lesego remains an absolute company-builder. We’ve done all the right things. We’ve completed the bankable feasibility study and the bankable feasibility study just confirmed everything that we believed around the particular project, but it still remained a very deep level platinum operation potential on the eastern limb and a billion dollar price-tag to develop seven years from production. So most of our focus over the last couple of months has been: How do we exploit Lesego – bring it into production in a small mine format? So, a shallower operation and we do have the two ore bodies: The shallower ore body and the deeper ore body, and we’re looking in quite a lot of depth around; how do we exploit the shallower part of the ore body without the big capital?
ALEC HOGG: So it’s not the right time now to try and sell the Lesego project.
MARIUS SAAIMAN: I think if we get the right sort of cash offer, we are sellers but we also… In terms of what we initially paid for the asset it was in the $40m to $45m range – if you look at what we did the Lesego transaction at – but we would certainly be sellers if that means that the asset goes away into a house that will see it coming into production.
ALEC HOGG: So you’re not in the business of retaining mines?
MARIUS SAAIMAN:Â No.
ALEC HOGG:Â Interesting entrepreneurial play: that is Village Main Reef and that was Marius Saaiman, Chief Executive.
