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Send  Share  RSS  Twitter  06 Nov 2011

VENTURES: Brimstone Also Goes For Gold

 



Recent Western Cape Business News

IN late August Cape Town based empowerment icon Brimstone Industrial Corporation started showing signs (like so many other investors these days) that it had fallen for the lustre of the yellow metal.

At the release of its interim results to end June, Brimstone disclosed it had upped its stake in junior mining firm Galaxy Gold Mining to 10% at an undisclosed cost.

In March this year Brimstone surprised the market with an announcement that it had acquired an initial 6% in Galaxy, which is focused on exploiting the Barberton Greenstone Belt.

The deal was surprising in that Brimstone – since its inception – had not invested in any significant way in the mining sector. Cape-based empowerment companies have also largely steered clear of mining opportunities – the only deals to speak of being HCI holding a relatively small coal mining operation and Sekunjalo briefly flirting with the idea of buying into Pamodzi Gold.

But let’s keep things in perspective here. The value of the investment in Galaxy is relatively insignificant in the greater scheme of things – perhaps less than 5% of Brimstone’s portfolio.

Still, the value of Brimstone’s investment won’t be a secret too long. The value should become apparent fairly soon as Galaxy intends to list on the JSE in the last quarter of 2011.

In the meantime Brimstone will be hoping for the same sort of success as notched up by Cape retail tycoon Christo Wiese from his inspired investment in GoldOne International (which ironically was built on Sea Point headquartered gold miner, Sub Nigel).

Earlier this year CBN reported how Wiese had seemingly become enamoured with GoldOne – then a rather obscure gold mining junior that attracted little mainstream investor interest.

It’s difficult to ascertain exactly the size of Wiese’s stake (maybe 3%), or at what price the bulk of his shares were bought.

But since then a Chinese consortium have successfully pitched an offer for outright control of GoldOne, and the share price has run hard in line with a firm gold price and weaker rand/dollar exchange rate.

GoldOne was sitting at 420c at the time of going to press – well ahead of the 215c share price when CBN wrote its story in March.

CBN reckons Wiese may have quite easily doubled his money on GoldOne – presuming that he accumulated his stake in the gold miner between late 2010 and early 2011.

Let’s hope the hard working chaps at Brimstone have the same kind of luck in their first resources play…


 
 
 
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