Scope of work
One of South Africa's largest gold producers was in process of positioning itself for growth. Their strategy was to obtain safe, profitable ounces while increasing margins and portfolio returns.
This strategy was based on three pillars: operational excellence, cash certainty and effective capital allocation to achieve growth through acquisitions.
The company identified various target assets that could meet their criteria and unlock synergies in their portfolio.
We believe that the value a mining asset can generate is different in different hands. The purchaser needs to create more value than the current owner and be able to apply an alternative operating philosophy. Value generation is also more likely if the purchaser has a better understanding of the asset to and a plan to integrate it into the purchaser's company.
Successful acquisitions and integration requires extensive industry experience, an understanding of how synergies could be created and an understanding of the “levers” that generate value. When conducting the due diligence, the purchaser must also have a well-defined strategy and a plan for creating value.
Most consultants follow a tick-box approach to assess various areas of due diligence. In our experience, boards and financiers require assurance regarding the following key questions:
Our approach is comprehensive and risk focused, and is built on our extensive industry experience.
The Client and Fraser McGill’s collaborative effort translated into:
The study and negotiations successfully concluded and resulted in a favourable outcome for both the purchaser and seller. The target assets were successfully integrated into the purchaser’s portfolio and has been value accretive for the company.
The client relied on Fraser McGill's support for a similar subsequent transaction, which was successfully closed.