Crocodile farming company, Pedenga Holdings Limited has offered to acquire 50.1% equity shareholdings in Dallaglio Investments (Private) Limited, which majors in gold mining business.
Dallaglio owns Pickstone Peerless Mine near Chgutu, Eureka Mine near Guruve and The Giant gold mining claims in Chegutu.
The proposed transaction will be settled by way of cash injection in ZWL$90.36 and the equivalent of nearly $20 million to be paid in kind by the delivery of mining equipment to Dallaglio.
The Purchase Consideration will be invested in expanding the current operations of Dallaglio.
The Padenga Board says the crocodile farming company, by purchasing Dallaglio, would like to diversify the Padenga’s exposure away from reliance solely on the production of crocodilian skins.
“Padenga has significant client concentration risk, with 79% of sales in 2018 being ultimately to one luxury goods brands in Europe,” directors say.
“Product and customer concentration risk is exacerbated by the nature of Padenga’s core product.”
“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,” directors say.
Dallaglio’s assets have a total measured and indicated resource of 1.6 million ounces, and a total resource of 2.2 million ounces
The Pickstone mine recorded a profit after tax of US$2.7 million and in 2018 contributed approximately 7% of total gold production by primary producers in Zimbabwe.