Ghost Bites (Curro | Mantengu Mining)

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Curro has finally recovered to 2020 levels – but not 2019 levels (JSE: COH)

A trading statement for the six months to June has been released

Curro has guided the market on earnings for the six months to June. When it comes through as a trading statement, you know that the percentage difference is at least 20%.

In this case, the difference might be as high as that, but won’t quite reach that point based on the mid-point of guidance. For the six months to June, HEPS is expected to be between 10.9% and 21.3% higher.

Curro has been operating in tough conditions in the past couple of years. A recap of HEPS over the past few interim periods shows that they have finally recovered to 2020 levels. They are still a long way off 2019 levels, a time before Covid caused much pain:

• 30 June 2019: 50.0 cents
• 30 June 2020: 38.7 cents
• 30 June 2021: 19.4 cents
• 30 June 2022: 27.5 cents
• 30 June 2023: 34.6 cents
• 30 June 2024: 38.4 cents – 42.0 cents

It’s been a long slog for the company in the post-pandemic period, with equity capital raised along the way that has made it more difficult to recover earnings on a per-share basis. Here’s the share price over 5 years:

Mantengu Mining’s Birca Copper deal is in serious doubt (JSE: MTU)

At least lawyers will be making money here, even if nobody else will

In May 2024, Mantengu Mining announced the acquisition of Birca Copper and Metals for just under R30 million. This is a high grade chrome ore business in the North West Province. The mining area is the subject of a mining right granted to a company called New Venture Mining Investment Holdings, which is in force until 2045.

A prerequisite for the deal was for New Venture Mining to transfer the mining right to Birca Copper and Metals, otherwise Mantengu Mining would simply be walking into a potential disaster. There’s now high drama, with New Venture Mining claiming that Birca Copper and Metals has breached certain terms of their relationship and thus New Venture Mining is cancelling the mining right agreement with immediate effect.

Naturally, this means that the Mantengu acquisition of Birca is dead, which would be fine if it wasn’t for how much effort has already gone into the deal. Mantengu is going to engage with New Venture Mining to try and find a workable solution. If they can’t, then the lawyers will have to work to cancel the acquisition agreement and restore Mantengu as near as possible to the status quo ante.

In dealmaking, the golden rule is that no deal is ever complete until all conditions have been satisfied. The more complicated the deal, the higher the likelihood of disappointment.

Little Bites:

• Director dealings:
  • A non-executive director of Richemont (JSE: CFR) bought shares in the company worth R557k.
  • An associate of a director of Vukile Property Fund (JSE: VKE) bought shares in the company worth R247.5k.
  • A director of Visual International (JSE: VIS) has bought shares worth R33.4k.
  • A director of a major subsidiary of Stefanutti Stocks (JSE: SSK) bought shares worth R13k.

• Although not a director dealing in the traditional sense, Capitec (JSE: CPI) announced that Michiel Le Roux entered into another hedging transaction via Kalander Finco. This is basically a structure that uses the shareholding in Capitec as a way to raise financing, with a hedge over the shares to protect the lender. These structures are nothing new for Le Roux and wealthy listed company founders in general. The latest tranche is a European option transaction with expiry dates of 3.34 years on average, with a put strike price of R2,497.55 and a call strike price of R4,477.00. The current Capitec share price is R2,815.

• MC Mining (JSE: MCZ) announced what nobody ever wants to see: a loss-of-life incident at the Uitkomst Colliery. There was a fall of ground incident that is being investigated. The colliery has temporarily halted operations until further notice.

• For whatever reason, there was a small error in the Sebata Holdings (JSE: SEB) headline loss per share for the year ended March 2024. Instead of a loss of 101.62 cents as published, it should’ve been 102.2 cents.

• The applications filed by the liquidators of Constantia Insurance Company to provisionally wind-up Conduit Capital (JSE: CND) and wholly-owned subsidiary Conduit Ventures were dismissed by the Western Cape High Court with costs.

• If you’re keeping your fingers on the pulse of the business rescue process at Tongaat Hulett (JSE: TON), then be aware that the monthly status reports for the various entities have been published here.

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