Gold and crocs: Padenga buys into gold mines to diversify business

Zimbabwe mining investment
Pickstone Mine: Padenga looks beyond croc skins

Zimbabwe’s crocodile skin producer Padenga will diversify from the luxury goods market with the acquisition of gold assets through a 50.1% shareholding in Dallaglio Investments.

Dallaglio’s assets include Pickstone Peerless in Chegutu, whose current output is around 27,000 ounces per year, and Guruve’s Eureka, where an open pit mine is scheduled to be commissioned in the second half of 2020. 

In 2018, Pickstone reported US$26.7 million turnover and US$2.7 million net profit.

The transaction’s consideration is US$19,099m, to be paid through the delivery of mining equipment to Dallaglio, as well as Z$90.36 for each of the 9,036 shares Padenga will acquire.

With 79% of Padenga’s 2018 sales being accounted for by one European luxury goods brand, the company has been looking to scale down its exposure to the crocodile skin market.

Padenga seeks to reduce this concentration risk through diversification into alternative, export oriented businesses, and has identified  the gold mining sector as attractive from a long-term perspective, particularly in respect of the historic world-wide demand for gold and the capacity for gold mining to produce hard currency which is not readily available in the local Zimbabwe market,” Padenga says in a circular to shareholders published on Monday.

The company’s shareholders are due to vote on the transaction at an EGM slated for August 28, 2019.

Padenga was born out of the Kariba Crocodile Farm, the first such operation to be established in the country in 1965. After being sold to Astra Corporation, the business was taken over by a company which later became part of the Innscor Group, forming, along with the Ume Crocodile Farm, the conglomerate’s Niloticus Division.

The division was spun off  and listed separately in 2010.

Padenga sold 44,253 crocodile skins in 2018, 2% up on the previous year’s volumes, on its way to US$13 million after-tax profit.

In April, the UK-listed mining firm Vast Resources also sold its interests in Pickstone and Eureka, by disposing of its 50.1% holding in Ronquil Enterprise, which housed the stakes in the two mines. Vast let go of gold to focus on developing its diamond claims in Marange.

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