21 August 2009

Publication: Moneyweb

How the company evolved and came to the market.

Alec Hogg: Sephaku Holdings hit the market today. It’s a new listing on the Johannesburg Stock Exchange, and chief executive Neil Crafford-Lazarus is with us in the studio. No relation to Neil Lazarus of Corpcapital fame?

Neil Crafford-Lazarus: Not at all.

Alec Hogg: I can see you do look somewhat different, Neil. Your background is in the accounting world, but you’ve been in mining for quite some long time, having worked at Xstrata. Interesting, there’s a perception in the market place that yourself and two of the co-founders of Sephaku Holdings were involved in Platmin – in fact, they were the co-founders of Platmin as well. Platmin hasn’t been a rip-roaring success. It looked good, then it started tailing off badly. Brian Gilbertson has gone in to rescue the company – that’s what we believe anyway. What was your relationship with Brian Gilbertson?

Neil Crafford-Lazarus: Alec, no relationship at all. Rudolph and David, the two founder members of Platmin that you referred to and also were involved and are currently still a director and alternate director of Sephaku, started Platmin or even Boynton Platinum, which was a South African operating subsidiary. And David and Rudolph actually left the company prior to the listing on the TSX and AIM, which was in August of 2006. I was approached by them in 2005 to assist with the listing of the company. They at that stage already were targeting a dual listing. I left Xstrata at that point, as you’ve mentioned, and joined Platmin as the CFO to assist in that process. But prior to the listing Rudolph and David … going into a production operation and still having a lot of appetite for exploration specifically in gold and nickel formed two companies with an African view on exploring for gold and nickel – and also assisted Lelau Mohuba, who was the other partner and the founder member of Sephaku, to look at the exploration of South African assets.

Alec Hogg: So their passion, then, is exploration – find the stuff, bring it to a particular point, and then move on to another project?

Neil Crafford-Lazarus: Absolutely. That’s why I say they actually left prior to the listing. I undertook to really stay until we published the first set of financials post listing. I left a year later than that and joined again the Sephaku team, where I’ve now been for two years.

Alec Hogg: You are exploring for just about anything that doesn’t move – limestone, gold, nickel, tin, fluorspar, coal, diamonds. Is there anything you are not looking for?

Neil Crafford-Lazarus: Yes, I think that is really the exhaustive list at the moment. And maybe just something about the process. Sephaku originally at that time that you referred to in the … was also a BEE partner to Boynton Platinum. Some of the PGM applications were for prospecting rights; Sephaku was the BEE partner in those applications. When Rudolph and David left there was a severance agreement that Sephaku wouldn’t touch for two years…

Alec Hogg: What happened there? Was there an acrimonious fallout?

Neil Crafford-Lazarus: I don’t really think so. It’s really a matter of these two guys, having been interested in doing exploration and not really getting involved in the mine, the construction of the mine…

Alec Hogg: But they took their toys and left and took their BEE partner with them as well.

Neil Crafford-Lazarus: The BEE partner stayed – that is probably where the timing with Brian … came in. While Sephaku undertook not to get involved in PGMs for that period, Lelau and Shibe, who are currently two of our directors, were still directors of Boynton for a period after that. Yes, Mineral Securities came in…

Alec Hogg: Now we are getting terribly complicated. The fact of the matter is that these two guys are explorers, and they are exploring some more. High-risk operations, though, being an exploration company – what gives you the edge?

Neil Crafford-Lazarus: I think purely the process that we’ve followed when the MPRDA was published and you were looking at the use-it-or-lose-it scenario. Lelau Mohuba, the chairman and founder of Sephaku – during his time at Platmin we were looking for critical mass, and Lelau had relationships with all the majors who also had platinum assets surrounding us, maybe not core to their existing operations, but rights that they had. So in the process of obtaining those rights and consolidating the Platmin assets, Lelau had these relationships. And during this period of the MPRDA, we went back to the majors and said: “Let’s have a scratch in your orphan baskets – things that are not core to you, that you are going to lose on the use-it-or-lose-it principle.” We obtained those and work was done on them by the majors some time ago. So that’s why we have a high hit rate and we also have the spread of geologists that were available to look at it before we really picked it. And we didn’t take the whole orphan basket. We identified specific assets, those that are currently on the list.

Alec Hogg: An interesting story and an interesting company – Sephaku Holdings. Go and do your homework on that one, Mr McCurrie. They’ve got a few platinum orphan assets, as he says.

Wayne McCurrie: Alec, exploration is a vital part of the index, but generally speaking the big asset managers like ourselves – there is risk involved here. We’d rather they did some projects and then look at them after they’ve been established.

Alec Hogg: Rather hit a strike first, and then you’ll go along and maybe take the last 10% rather than the first 90%.