GEORGE van der Merwe is CEO of Oakbay.

BUSINESS DAY TV: Oakbay Resources and Energy, majority owned by SA’s politically connected Gupta family, began trading on the JSE last week and while this was a listing by way of introduction, the company does plan to raise at least R800m over the next year to further invest in uranium assets in SA’s North West Province. CEO George van der Merwe joins us now on News Leader.

George, let’s start off with why you’re listing and why at this stage of the game you’re not looking to raise any capital, even though you’re looking to need about R800m down the line.

GEORGE VAN DER MERWE: SA is very au fait with gold, platinum and coal, but being a uranium product, this is the only uranium energy company that’s on the market today, so one of the reasons why we wanted to list was that we wanted people to get to know the commodity as such.

It’s an unknown commodity and in Canada it’s a well-known commodity as well as in Australia. So in SA we’re doing a little bit of education on it … that’s one of the reasons. Furthermore to that we are just starting the development of the company and we would like the people to see our progress for when we go for the future capital raising that already we’re well-known in the market.

BDTV: Okay, so to get to know the commodity, but to get to know the company as well and as I said previously this is a business that’s largely run by the Gupta family. It’s a politically connected family where businesses run by the Guptas have attracted their fair share of cynicism, criticism in the past. How has that come to bear on investor perceptions of the company as it stands right now?

GVDM: I cannot speak for the family itself or their perceptions of it, but as CEO of the company, what I can say is that we should remember now that this is a public company, it has public shareholders, it has independent directors, it is governed by the corporate governances of the JSE, so all of these things are in place and I believe this is a great opportunity to see what is happening inside the business, and for other people to see what happens inside the business and maybe a lot of these allegations that you’re alluding to are merely that … just allegations. And today the opportunity is there for people to see how the business is run.

BDTV: And have you had to do a lot of public relations marketing around this listing to engage with investors, and win them over?

GVDM: We’ve not really engaged with many investors. Our strategy was very clear from day one … we would go in and do listing through introduction, do a lot more development. We are busy doing a bankable feasible study (BFS) and once that BFS is complete we would have a signed document and with this document we would go to market to raise money, and then of course lure in investors.

BDTV: Okay, so let’s focus on the business at this point…we’re looking at a market cap of R8bn roughly speaking so that’s sizeable and your primary asset is Shiva Uranium. Talk us through the investment that has seen over the past four years and where operations stand at the moment, because right now you’re mining gold more than anything else.

GVDM: Yes, we are mining gold. This asset was previously listed on the JSE and it was listed for around R27bn, so there is a lot of upscale still to be done on it and one of the reasons why it was not successful previously is that there was a lot of development not done which needed to be done and we have engaged this year to start with that development.

We have the benefit of hindsight. We don’t want to make the same mistakes as our predecessors and while doing this we have found an opportunity in the gold market. The gold price was very good. It’s not that it’s very bad now, in SA it is R420 per gram so it’s still quite profitable for us. It’s an open-cast mine that we have and we are using this money to fund our operations and our development.

So within in a year or two we will be ready for the uranium product. Uranium is now really in its infancy stage and busy climbing up…one of the only products to reach…in the last week or so it reached $ 44 up from $ 28, so it is really climbing. It is one of the only commodities that is climbing. The time is right now for uranium. You see the world demand is sitting at £190m, current supply in the market is at 140 million points and in 2020 its estimated at £265m, so there is a lot of scope to grow and there is going to be a need quite soon, for companies to start delivering on uranium.

BDTV: Talk us through the exposure you’re likely to have and whether you’ll be catering to that export market or to the South African and domestic market primarily.

GVDM: The South African market is really small compared to the rest of the world. We have two nuclear reactors that are running and of course in any nuclear deal…and that’s the important reasons to know why listing. Uranium is not traded on the spot…maybe 5% is traded on the spot with the rest being traded on a long-term price…so to try and get into the South African market now, it’s not something that we want to do.

BDTV: Having said that, we’ve got the country planning to produce as much as 9,600MW from nuclear power by 2030…that’s about a quarter of the current installed capacity and that’s where the company has a foot in the door already, one assumes?

GVDM: We should then complement the shareholders for their vision for buying the mine four years ago … what a great anticipation thereof, but in reality how it works is we’re still 10 years away … SA is still 10 years away from ever getting to a time where we would get to talk to anybody about such contracts, and it’s not that we need to … as I said the demand today far outstrips the current supply and the previous secondary supply system that was in place, that has fallen away, so there is a real genuine demand and that’s why you can see the prices starting to skyrocket and keeping in mind that the spot price is $ 20 or so below the long-term pricing.

So in fact we are now sitting on a price for long-term of almost $ 50-$ 57 which is quite profitable.

BDTV: Best of luck moving forward…