GRD Macraes refloat gives investors a chance to go for gold

By CHRIS DANIELS

A new opportunity for New Zealand investors to put money into local goldmining is closer to fruition, with plans to refloat GRD Macraes going to a vote next month.

This "recapitalisation" of its gold business involves a complex combination of an initial public offering (IPO) of new shares, along with a sell down of GRD's own investment and a capital return to its existing shareholders.

Macraes Mining changed its primary stock exchange listing from New Zealand to Australia in 1997, but remained a New Zealand-registered company.

The A$100 million IPO will be offered on both sides of the Tasman and the new entity, Oceana Gold, will be listed on both the New Zealand and Australian stock exchanges.

The company is holding a general meeting in Perth on February 9 where shareholders will be asked to approve the scheme, which it calls an "important and valuable development for GRD and for GRD Macraes' New Zealand gold assets, creating a leading producer in the Australasian gold sector".

A notice of meeting, containing the resolutions that will be put to shareholders, has just been published, saying that money raised will be used to develop a goldmine in Reefton and at Macraes in Otago.

GRD also plans to distribute A$60 million of the new Oceana shares to existing GRD shareholders, either through a capital return or a buy-back of GRD shares, which would then be swapped for new Oceana shares.

At the end of this process, GRD expects to own 60 per cent of Oceana. The public and cornerstone investors will own 12.5 per cent each. Existing GRD shareholders will own the remaining 15 per cent (by way of the buy-back or capital return).

GRD says it is New Zealand's largest gold producer and will soon be the biggest gold miner listed on the NZSX.

Heritage Gold, which mines in the Waihi area, is listed on the NZSX.

Summit Resources is another locally listed mining company, but drills for gold and other precious metals in Australia.

Quininup Holdings, the family company of GRD executive chairman Brettney Fogarty, owns a little over 25 per cent of the company. The top 20 shareholders own just over 78 per cent of all GRD shares.

The birth of GRD Macraes in 1999 was an acrimonious one, with Macraes' New Zealand shareholders fighting a losing battle against Perth-based GRD for control of the company.

In 1999, Business Herald commentator Brian Gaynor described the merger between GRD and Macraes as "one of the worst cases of company looting since the 1980s".

GRD was under financial pressure in 1998, and was able to merge with the more substantive New Zealand Macraes, gaining access to the cashflow from its Otago mining operations.

TIME SCALE

Schedule for Oceana Gold IPO and buyback

Early February:

Offer and buyback details confirmed

Prospectus lodged in Australia and NZ

Mid-February:

Public offer and buyback opens

Early March:

Close of public offer and buyback

Mid March:

Oceana Gold lists on NZX and ASX