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Strategic clarity is the key to unlocking the treasures of South Africa’s shallow gold resources for the country’s most dynamic recent market entrant. Neal Froneman, CEO of Gold One International (Africa), talks to Jayne Flannery

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old One International is an Australian and African gold resource company listed on both the Australian Securities Exchange and the Johannesburg Stock Exchange. The company, which came into existence in 2002, is a junior entrant to South

Africa’s goldfields; and as CEO Neal Froneman points out, the niche positioning required to create an advantage in this mature and highly competitive marketplace demands a unique and innovative approach.

Strategic clarity is the key to unlocking the treasures of South Africa’s shallow gold resources for the country’s most dynamic recent market entrant. Neal Froneman, CEO of Gold One International (Africa), talks to Jayne Flannery

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and far between. But when they do occur, there is a significant competitive advantage because of the lower costs and environmental conditions conducive to higher productivity.

Strategic direction and strategic clarity are critical concepts. “We have a very highly structured process that we repeat on an annual basis, starting with a strategic break away at the beginning of the year. Each year we revisit and refine our corporate strategy and it is always good news when there are no dramatic changes because this shows we got it right in the first place.”

Once the company has decided exactly where it intends to go, the message is then rolled out systematically through the organisation to every level. “Everyone must understand our strategy in order to be able to align their own input and sub-strategies accordingly,” Froneman says. “We must have both ownership and very good strategic alignment, which is then converted into our underlying budgets to support the next business cycle. The final aspect of implementation is the attention we pay to team effectiveness and the role and contribution of each team and the individuals within that team. At the end of the process we are left with very clear owners and a very sharp focus.”

A key short term goal is to ensure that production at the Modder East mine remains on track and in line with projections. The first new mine to be built on the historic gold mining belt of East Rand for 28 years, the site has a shallow underground mine, approximately 500 metres below the surface at its deepest point, with an integrated gold treatment facility and a production capacity of 100,000 tonnes per month. The first symbolic pour took place on 21 July 2009 and five months later the mine moved into continuous commercial production. Delivery has consistently been in line with expectations; but Froneman and his team are well aware that investors will be unforgiving if production should falter.

“A second important short term issue is to restructure our balance sheet by putting a debt facility in place,” Froneman continues. “It is not easy in the current environment but it has a number of commercial benefits as opposed to relying on our equity to fund the development of the company.”

Lastly, Froneman is keen that Gold One takes more steps to highlight its visibility to stakeholders. “We have had an inevitable focus on operational delivery over the last few years and we have not always been good at bringing our successes to

To date, Gold One is the first junior gold mining company to bring greenfield resources to account; and Froneman explains that the company has had to negotiate formidable barriers to entry. “Firstly, there is the amount of capital required and then the inevitable risk associated with the investment. Moreover, there is no historical legacy of support in South Africa for junior companies who more typically list on the Toronto and Australian stock exchanges,” he says.

Most market players are multinationals driven by their size and the need to demonstrate a big impact on their market capitalisation. The reserves they want offer the higher rewards that stakeholders demand, but at a higher cost and a higher risk. “Our strategy is very different,” Froneman asserts. “We are a company that is not driven by size and so we are happy to bring projects to account that the major mining houses would walk away from.”

Despite its market capitalisation of $250 million, Gold One is considered a relatively small player—but this means it can be quick off the mark when opportunities arise. The company can also display a strong balance sheet and stellar production history, so Froneman is not perturbed by unpredictable world markets or the vagaries of commodity cycles. “Marginal companies would struggle in this sort of environment, but we have significant margins and a solid asset base that can withstand volatile trading conditions,” he explains. “It would take a very large swing indeed for any of our projects to be affected, or for us to consider a major shift in strategic direction.”

The company has a clear and highly focused strategy to seek out shallow, low risk and technically accessible resources, whereas most of South Africa’s gold reserves are typically deep and technically challenging. Opportunities that fit with Gold One’s strategic approach are thus few

Gold One International Limited is one of the leading mining houses that is creating relationships with small and medium businesses, and maintaining them. KWV Mining is one of those success stories that has grown into a professional supplier of goods and services. Our vision is simple: “The right goods at the right time at the right price”. Gold One’s commitment has allowed our vision to be perfected. KWV Mining is a professional supplier of goods and services to the mining industry.

“Commitment is vision”

KWV Mining

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after a promising scoping study.The Ventersburg project has a resource of

3.28 million ounces and is predicted to produce its first gold in 2015. The potential of another site, Bothaville, which is also in the Free State Goldfields, is also being explored; and the company also has the Tulo concession in Mozambique and the Etendeka greenfield project in Namibia. Taken together, there is an indicated and inferred resource base of around 13 million ounces of gold.

Gold One already has 100,000 ounces of annualised production, but in five years’ time, Froneman envisages that production will have comfortably grown fivefold. “We believe our strategy can realistically support this kind of growth. Most of it will come internally from organic growth within our existing resources, but we are also excited by the possibility of other acquisitions,” he concludes. www.gold1.co.za

the world’s attention. We want to change that by adopting a far more proactive stance in marketing and communication,” he says.

In the medium term, there is already a highly promising second project in the pipeline. The 9,760 hectare Ventersburg Project is situated in the Witwatersrand Basin in Free State Province to the east of the main Free State Goldfields. Gold One was awarded prospecting rights in November 2006 and is currently in the pre-feasibility phase

The Sage ERP Accpac financial software solution upon which Gold One International depends is supported and maintained by Lorge, the preferred supplier and implementer of Sage business software and technology solutions in Africa since 1986.The solution provides special functionality essential to the gold mining industry, including financial report writing, purchasing/workflow procedures, production reporting and asset maintenance.

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