Egyptian ‘Goldfinger’ targets African expansion

Egyptian billionaire Naguib Sawiris is bullish on gold mine investments. (Reuters)
Updated 07 October 2018
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Egyptian ‘Goldfinger’ targets African expansion

  • Sawiris is estimated to be worth $4 billion by Forbes
  • Sees attractive valuations in African gold mining assets

LONDON: La Mancha Holding, the mining investment vehicle headed by Naguib Sawiris, is looking at more gold acquisitions in Africa, Arab News can reveal.
In June, the private, Luxembourg-headquartered company headed by the billionaire Egyptian businessman shelled out $126 million for a 30 percent stake in Toronto-listed Golden Star, owner of two gold mines in Ghana. La Mancha already owns 30 percent of another gold company, Endeavour Mining with gold assets in West Africa. It also has significant stake in Australian gold miner Evolution.
But Africa appears to be the main target, for now. La Mancha’s new chief financial officer, Beirut-born Karim-Michel Nasr said: “We are interested in M&A, although we are not empire builders — our aim is to build shareholder value, any acquisition has to be value accretive.”
The company would look at potential mining targets in west and central Africa but “not southern Africa,” said Nasr.
Andrew Breichmanas, mining analyst at BMO Capital Markets, said that, given Sawiris’ track record in bolstering the value of Endeavour and Evolution, “there is every reason to be bullish about [his] strategy going forward. Sawiris is viewed as a successful operator,” he said.
The market worth of Endeavour and Evolution since he bought into them in 2015 had rocketed by 290 percent and 267 percent respectively, according to a La Mancha presentation on its website.
Sawiris, reckoned to be worth almost $4 billion by Forbes, has the financial firepower to allow Golden Star or La Mancha itself to go out and do other deals,” said Breichmanas.
La Mancha’s approach to date has been to inject both cash and assets into new investments, “improving the scale of those assets, and trading off [selling] those at the bottom of the quality curve,” Jonathan Guy, an analyst at Numis Securities, said in an interview with Mining Journal this week.
Half of Sawiris’s personal net worth is today locked into gold company investments, the Egyptian recently told Fox News. Gold mining companies had underperformed the gold price by a significant margin this year, down 27 percent according to the New York Arca Gold Bugs index, against the metal’s 9 percent slide. And that meant Sawiris could see the opportunity to pick up undervalued mining assets.
Breichmanas backed that general drift, saying: “If you look at valuations for gold companies they are relatively attractive as they trade at a discount to the prevailing gold price. So, you could certainly make the case that there is value within the sector.”
Gold M&A is being propelled during a period when there is relatively little new supply coming on stream, and companies view mergers as the easiest and quickest way to expand their asset portfolios. Executives see tie-ups as less risky and less costly than developing new mines, sometimes in challenging geographies. Last week, one of the biggest gold mergers of recent years was cemented when Barrick Gold of Canada unveiled an agreed takeover of Randgold, which runs gold mines in Africa, sometimes in tricky jurisdictions such as Mali and Cote D’Ivoire.
Sawiris told Fox: “I invest in gold mining companies because the cost per ounce has a 30 to 40 percent discount when you mine it yourself versus the international (gold) price, so there is a cushion there.”
He added: “In the last few years, there haven’t been any big findings in gold or copper anywhere in the world … I mean significant ones. That means down the road, there will be higher prices.”
He likes gold (and also copper) for other reasons — as a hedge against inflation and as a buffer in the face of current geopolitical uncertainty.
By underwriting expansion, as well as bringing in accomplished mine managers to acquired investments, such as Sebastien de Montessus, CEO and president of Endeavour, Sawiris had shown himself to be “a shrewd and accomplished operator,” said Guy at Numis.
La Mancha has beefed up its profile this year. In January Sawiris brought in Andrew Wray, the former finance director of London-listed Acacia Mining (which owns gold mines in Tanzania) to be his CEO. Sawiris has also put Wray on the board of Golden Star. And he recruited Nasr, who worked with him in the Middle East for 20 years as he built up his North Africa-Asia telecoms empire (Orascom), which was eventually sold to the Russians.


Saudi energy minister recommends driving down oil inventories, says supply plentiful

Updated 19 May 2019
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Saudi energy minister recommends driving down oil inventories, says supply plentiful

  • Oil supplies were sufficient and stockpiles were still rising despite massive output drops from Iran and Venezuela
  • Producer nations discussed how to stabilise a volatile oil market amid rising US-Iran tensions in the Gulf, which threaten to disrupt global supply

JEDDAH: Saudi Arabia’s Energy Minister Khalid Al-Falih said on Sunday he recommended “gently” driving oil inventories down at a time of plentiful global supplies and that OPEC would not make hasty decisions about output ahead of a June meeting.
“Overall, the market is in a delicate situation,” Falih told reporters before a ministerial panel meeting of top OPEC and non-OPEC oil producers, including Saudi Arabia and Russia.
While there is concern about supply disruptions, inventories are rising and the market should see a “comfortable supply situation in the weeks and months to come,” he said.
The Organization of the Petroleum Exporting Countries, of which Saudi Arabia is de facto leader, would have more data at its next meeting in late June to help it reach the best decision on output, Falih said.
“It is critical that we don’t make hasty decisions – given the conflicting data, the complexity involved, and the evolving situation,” he said, describing the outlook as “quite foggy” due in part to a trade dispute between the United States and China.
“But I want to assure you that our group has always done the right thing in the interests of both consumers and producers; and we will continue to do so,” he added.
OPEC, Russia and other non-OPEC producers, an alliance known as OPEC+, agreed to reduce output by 1.2 million barrels per day (bpd) from Jan. 1 for six months, a deal designed to stop inventories building up and weakening prices.
Russian Energy Minister Alexander Novak told reporters that different options were available for the output deal, including a rise in production in the second half of the year.
The energy minister of the United Arab Emirates, Suhail Al-Mazrouei, said oil producers were capable of filling any gap in the oil market and that relaxing supply cuts was not “the right decision.”
Mazrouei said the UAE did not want to see a rise in inventories that could lead to a price collapse and that OPEC would act wisely to maintain sustainable market balance.
“As UAE we see that the job is not done yet, there is still a period of time to look at the supply and demand and we don’t see any need to alter the agreement in the meantime,” he said.
US crude inventories rose unexpectedly last week to their highest since September 2017, while gasoline stockpiles decreased more than forecast, data from the government’s Energy Information Administration showed on Wednesday.
DELICATE BALANCE
Saudi Arabia sees no need to boost production quickly now, with oil at around $70 a barrel, as it fears a price crash and a build-up in inventories, OPEC sources said, adding that Russia wants to increase supply after June.
The United States, not a member of OPEC+ but a close ally of Riyadh, wants the group to boost output to bring oil prices down.
Falih has to find a delicate balance between keeping the oil market well supplied and prices high enough for Riyadh’s budget needs, while pleasing Moscow to ensure Russia remains in the OPEC+ pact, and being responsive to the concerns of the United States and the rest of OPEC+, the sources said earlier.
Sunday’s meeting of the ministerial panel, known as the JMMC, comes amid concerns of a tight market. Iran’s oil exports are likely to drop further in May and shipments from Venezuela could fall again in coming weeks due to US sanctions.
Oil contamination also forced Russia to halt flows along the Druzhba pipeline — a key conduit for crude into Eastern Europe and Germany — in April. The suspension, as yet of unclear duration, left refiners scrambling to find supplies.
Russia’s Novak told reporters that oil supplies to Poland via the pipeline would start on Monday.
OPEC’s agreed share of the cuts is 800,000 bpd, but its actual reduction is far larger due to the production losses in Iran and Venezuela. Both are under US sanctions and exempt from the voluntary reductions under the OPEC-led deal.
REGIONAL TENSIONS
Oil prices edged lower on Friday due to demand fears amid a standoff in Sino-US trade talks, but both benchmarks ended the week higher on rising concerns over disruptions in Middle East shipments due to US-Iran political tensions.
Tensions between Saudi Arabia and Iran are running high after last week’s attacks on two Saudi oil tankers off the UAE coast and another on Saudi oil facilities inside the Kingdom.
Riyadh accused Tehran of ordering the drone strikes on oil pumping stations, for which Yemen’s Iran-aligned Houthi militia claimed responsibility. 
Saudi Arabia’s minister of state for foreign affairs said on Sunday that the Kingdom wants to avert war in the region but stands ready to respond with “all strength” following the attacks.
“Although it has not affected our supplies, such acts of terrorism are deplorable,” Falih said. “They threaten uninterrupted supplies of energy to the world and put a global economy that is already facing headwinds at further risk.”
The attacks come as the United States and Iran spar over Washington’s tightening of sanctions aimed at cutting Iranian oil exports to zero, and an increased US military presence in the Gulf over perceived Iranian threats to US interests.