A fortnight can be a long time in business. Earlier this month, after chatting to then Village joint-CEO Marius Saaiman on.our CNBC Power Lunch programme, I like his enthusiasm for the business so much that I did some more homework. And ended up buying some shares. On Monday, the company announced that Saaiman was stepping down, his joint-CEO Bernard Swanepoel was moving upstairs to non executive chairman, and Swanepoel's long-time deputy from their Harmony days, Ferdi Dippenaar would be moving immediately into the hot seat. We asked Dippenaar to come and tell us what was going on. As soon as he found a break in his schedule, he came over to the studios. In the interview which follows, Dippenaar talks about the reasons for the upheavals at Village. We kick off with his insights into the financial results released earlier in the day by his old company..ALEC HOGG: Welcome back. Well, we stay with Gold Mining and in a way with Harmony Gold. Ferdi Dippenaar who was previously with Harmony Gold, now recently appointed Chief Executive of Village, is with us in the studio. Ferdi, good to have you here. Do you look at your old firm, Harmony? Do you look at their results?.FERDI DIPPENAAR: Ja, I do. I follow the results. I follow all the companies. We talk about the four large groups and the small juniors as well..ALEC HOGG: What did you think about what came out today with that big write-off in Hidden Valley in Papua New Guinea?.FERDI DIPPENAAR: We've seen that with all the companies. I think if you have a look at Village we've done the same with our assets. It's an international trend. I think as miners we've had to adjust to a low gold price – significantly low – 16/20% and we've had to look at the viability/profitability underlying assets and typically you'll find a write-off..ALEC HOGG: You mentioned Village. You're with your good pal, Bernard Swanepoel. You were together at Harmony. Big changes in the past few days..FERDI DIPPENAAR: Ja, absolutely. The process started probably in the second quarter of the year, Alec. We had a look at the asset base, the operations and the ability to perform under the current gold price cycle. We realised we had to take a few serious difficult decisions. We've seen what they have been. Buffels' care of maintenance has been around since 1954. We've had to deal with that. Tau's in good shape. It's making money. And then ConsMurch our gold and antimony operation and lastly Lesego, our option on the platinum price..ALEC HOGG: So of the three gold operations two are now pretty much out of the way and you're going to be focusing on Tau Lekoa. I know on Monday we were hoping to get you here, you were introducing a new mine manager. So it really has been big changes the management teams..FERDI DIPPENAAR: It has been. I think at a time when the gold price cycle is where it is you need to make these changes. We need to hunker down. We call it our 'hunker down' plan. Stop the cash leakage. Stop the unprofitable parts of the operation. Stabilise it. Start getting cash, storing up the balance sheet and getting ready for returning something back to the shareholders. Village has been through a bit of a bumpy time of late..ALEC HOGG: And the share price tells you that as well..FERDI DIPPENAAR: Oh, absolutely, but the Company's definitely going to be healthier, post all the changes that we made..ALEC HOGG: Ferdi, I spoke to Marius Saaiman who was the previous Chief Executive who was going to be acting CFO. Is he going to be staying with you after he's acted?.FERDI DIPPENAAR: Well, he's got his own personal plans. In the interim he's the MD of the platinum operations. He's agreed to stand in as the interim CFO. He's been part of the team. I joined the team as a non-executive director. I was asked to join as part of this restructuring. As a team we realised we had to get involved and do things. What we had to do, who had to do what….the outcome was my appointment as the CEO and him assisting as part of the team and then obviously Bernard stepping into the role as the Chairman of the Company..ALEC HOGG: What I'm getting at is; when he was in the studio he made such a good impression that I went and bought some shares myself which I haven't done for a long time, particularly not gold shares. So far so good. It's up 10% but was he perhaps misguided, given that he is no longer in that position and given that you had to make these changes?.FERDI DIPPENAAR: Well, I think the circumstances called for the changes. Everybody accepted them and agreed to hang in there and make it work..ALEC HOGG: So do you have good news for the retail investment base that's in Village? Lots of people have got shares in your company, hoping for the best..FERDI DIPPENAAR: Ja. It was always about taking the difficult decisions. We've taken them. We've started implementing them. We've made good progress with them, especially on the Buffels side. Maintenance is something completely unexpected and putting it in ultimate closure – Blyvoor. So we've dealt with the difficult stuff. So I think we can look forward to a much-improved performance in the next quarter and hopefully even better, subsequently..ALEC HOGG: I guess you hope you've dealt with the difficult stuff because all we hear now is 'labour'. Yesterday we had Neal Froneman, another ex-colleague of yours who's now running Sibanye Gold saying he's built up a R2bn war chest. That is going to ensure that he doesn't have to worry if labour goes on strike for three months within those three big gold mines. You're a much smaller business, or you're involved with a much smaller business. How do you deal with that?.FERDI DIPPENAAR: Well, we've basically got the one operation making good cash, and that's Tau, so that makes us pretty vulnerable. But then, if we have a look at the nature of our asset – we're in more of a harvest mode with Tau – 3 to 4 years, maybe 5. So if we had to lock in a percentage more in terms of the increase and are actually able to avert a strike, see that the operations go and we generate the cash-flow as we planned – that would be the best outcome for us. We don't have the assets that, if we lock in an abnormal increase at the moment you get a compounded impact over the next 20 years. Once you lock it in it's there and the next increase is on that so our outlook is a bit different. We wouldn't like to see a strike..ALEC HOGG: So you'd be more flexible in your discussions with Labour?.FERDI DIPPENAAR: Absolutely – because of the nature of our assets, and of course we want to normalise and stabilise things at our operations..ALEC HOGG: And the relationship with your workers at Tau – which is the important one?.FERDI DIPPENAAR: It's good..ALEC HOGG: What unions are you dealing with?.FERDI DIPPENAAR: It's mainly NUM so if you look at the West Wits Line; that's where you've got a combination of the unions a few more challenging issues to deal with. At our operations it's mainly the National Union of Mineworkers..ALEC HOGG: Are you feeling a little bit more comfortable now that you've got a smaller business to worry about given the issues that are being faced by the big corporates?.FERDI DIPPENAAR: It might sound smaller but believe me Buffels comes with issues, placing it on care and maintenance, retrenchments, costs of closure, trying to get the carrying costs of Buffels as low as possible so it doesn't leak further cash out of the Company. Blyvoor, at least we've dealt with in terms of the financial support that has been suspended. ConsMurch – we've just gone through a strike – personally busy settling down the operations as well and typically makes some money. So over time, slightly smaller, but I don't think you'll resolve these issues in the short term. It's going to take a few months to resolve.
