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The All Points West podcast meets leaders from some of the most innovative and influential small and mid-cap UK-listed companies to learn more about them and their businesses. Hosted by former Sunday Times business journalist, Karl West.
Want to get in touch? Send an email to apw@stbridespartners.co.uk
Nothing in this podcast is intended as investment advice and the people in this podcast may hold positions in the stocks they talk about. Do not buy anything based solely on a tip or recommendation. Please do your own research.
Nothing in this podcast is intended as investment advice, and the people in this podcast may have a position in the stocks they talk about. Do not buy anything based solely on a tip of recommendation or the content of this podcast.
Speaker 2:Be your own research. Welcome to the All Points West podcast. I'm joined today by Dennis Edmonds, chief executive of AIM listed Kasera Global, an investment company that is focused on developing early stage mining assets. Kasera's current assets include a diamond production mine and a heavy mineral sands project in South Africa. The heavy mineral sands project is focused on resources like garnet and ilmenite.
Speaker 2:Garnet is one of the nature's hardest minerals with high performance qualities, used in used as an industrial abrasive in sand blasting, environmentally friendly water jet cutting manufacturing, and water filtration. Ilmenite is listed on Australia's critical minerals list and is used in the pigments industry from paints to sunscreen. It is also the main ore to produce titanium metal, which is used in high-tech applications from aircraft to military equipment. For his part, Dennis began his career initially as a lawyer in South Africa, where he established his own law firm before moving to the UK where he requalified as a solicitor and worked for a number of years as an equity partner in a UK law firm. Since ceasing to practice law in 2000, he's had a successful career in private equity and at board level as both an executive and non executive director in a number of public and private companies.
Speaker 2:Dennis' expertise lies in negotiating and structuring corporate transactions. Dennis, thank you for joining me.
Speaker 3:Thank you, Carl.
Speaker 2:I I've mentioned there that Kazaire's Diamond and Mineral Sands divisions, but the company also has a third arm, African Tantalum, which you agreed to sell in December 2022 to, Hebe Xinjiang Construction for $13,000,000 in cash, as well as a debenture payment of 2.5% of the gross sales of produced lithium and tantalum for the life of the mine. However, you've recently, threatened to take legal action to enforce the terms of the sale agreement after the Chinese business failed to pay the remaining $9,500,000 owed for the purchase. And you've given, Xinjiang, a final deadline of September 23rd, which is today, to settle a debt, and you've outlined plans to pursue arbitration if necessary. Now, given that it's pretty topical, what's the latest on this situation?
Speaker 3:We haven't yet heard from them. We're still waiting to see if they will respond. Our hope is that they will come back with, some sort of a sensible and acceptable offer for us. If they don't, we will proceed to institute action formally under the provisions of the contract, which is to take them to arbitration. The nice thing about the arbitration provision is that the contract provides it has to be resolved within 2 months.
Speaker 3:So before the end of the year, we would hope to have a very favorable judgment, in the event of them not coming back to us for something sensible today.
Speaker 2:Yeah. What's your assessment of of how this situation has has come about? Why is Xinjiang not, why are they kind of dragging their heels, if you like, on the on the payment?
Speaker 3:I think they struggle for a couple of reasons. Firstly, when they entered into the contract with us, they were very aware of the fact that we didn't have a lithium license. Our license was to mine tantalum. We had applied for an extension to mine lithium, and that deal was granted about 2 weeks ago, coincidentally. So that would have obviously affected what they were able to do because the Department of Mines that they were exporting lithium in bulk as samples, apparently, and the Department of Mines in Namibia said that they couldn't do that anymore because they didn't have a right to mine lithium.
Speaker 3:The other problem I think that they had was that they were exporting in bulk, and the Namibian government had a legislation in place to say that any bulk any exporter of of products had to be, beneficiated in other words to add value for jobs, etcetera. So they had 2 problems. The third problem they had was that the price of lithium has gone down since they did the deal. And that doesn't really affect us any more than if I sold my house and the price goes down. But, nonetheless, it became more difficult for them to operate.
Speaker 3:So I think they had a number of things to to overcome, but the fact is that they've now got a lithium license. That is the biggest of all of the problems they had, and that has now been overcome.
Speaker 2:Yeah. And from your point of view, you know, your legal advice is pretty clear. I imagine that, you know, that the sales agreement is is there in black and white, and it's, you know, it's it's pretty clear from your from Cazero's point of view.
Speaker 3:Yeah. The the sales agreement is black and white. I think the the one thing that that is worth mentioning is that not only does do we retain 100% ownership of the shares in the company until we've been paid in full, but in terms of the agreement, we also have the right in the event of us canceling the agreement to retain any money which has been paid to us to date, which is, at the moment, just shy of $5,000,000.
Speaker 2:Yeah. So as you say, the arbitration process is pretty straightforward, and and that should give you some resolution on this by, did you say, within 2 months?
Speaker 3:Yeah. I would certainly say by the end of the year, we should be we should have, that bit out of the way and no longer issue.
Speaker 2:Yeah. Okay. Kazzera's diamond mining business is, Deep Blue Minerals, which you own 74% of. And the main asset, is the Alexander Bay diamond project, which is located within the 80 kilometer long Alexcor diamond fields between 2 historic De Beers operations. What's the latest update from that project?
Speaker 2:What can you tell us about that?
Speaker 3:Right. It's been a a long process, to actually get into production. The contract the contract with Alexcor, which is a government owned entity, it's half owned by the government and it's half owned by the Richtersveld community Yeah. Has been a difficult one. Alexcorp are supposed to be processing all the gravel.
Speaker 3:So what what should be happening is diamond contractors ought to be mining gravel. They then take that, gravel to the plant, which is at a place called Mace Flock. The Mace Flock plant then does an initial separation. They then do a final sorting of it. It then goes through for hand sorting where the diamonds are extracted.
Speaker 3:Right. The plant, for a number of reasons, has not worked either at all or when it was working, not very efficiently. There have been a number of issues around it. And the consequence of that has been that we've had to go forward and to establish our own completely independent method of sorting out the diamonds from the grubble, which we have spent a considerable amount of money and time doing. Obviously, it's still going to be approved by Alexcorp because they still own the diamonds and are operating on their territory and operating under their license, and that there is just about finalized now.
Speaker 3:We've started mining with gravels, specifically, with a view to putting them through the NoniJig flow sort, and then ultimately, they will go to be hand sorted by Alexcorp together in our presence.
Speaker 2:Yeah. What was the what was the issue then with Alexcorp? What, why was it that you felt that you needed to kinda step in and and take kind of greater ownership of of that, bit of it, if you like?
Speaker 3:We tried a number of different things. We even we even agreed to take over the running of the plant. Unfortunately, when we agreed to do that, the management of Alaskol at the time decided that it would only be right to impose a group of 5 people who would share in the profits with us and help to do it. Unfortunately, they turned out to to be as we'd expected, to be of no value at all. And the payment that we put a few we got the sorry.
Speaker 3:We got Manesfol up and running. We put through a relatively small number of gravels, but then Alex called since the payment was made to this group, which is called MV5, and MV5 kept the money. Right. We then ended up suing them. They put the company into liquidation.
Speaker 3:It it it just it was just everything was completely unsatisfactory. So it's been a combination of theft. It's been a combination of of inefficiency. It's just it's it's been a very, very difficult journey. Mhmm.
Speaker 2:Okay. Are you happy that with the way things are running there now?
Speaker 3:I'm happy with the way that we're we're running. Firstly, Alex call has changed dramatically. They've got a new acting CEO who we have every reason to believe will be absolute new new breath of air and life into Alexcor. Yeah. The the management team, the senior departmental heads in Alexcor have always been very good, always been very supportive of us.
Speaker 3:Their heads have obviously been tied. So we think Alexcor is going into a new and much more positive phase. But perhaps more importantly from the perspective of our shareholders, we are now pretty much independent of Alex Call in terms of processing. And the only time we will be processing in conjunction with Alex Call will be at actual the final sorting. And that sorting is done almost in a in a baby, incubator type scenario.
Speaker 3:So you've got a sealed perspex box, with with gloves that go into it. You insert your hand into the gloves and they actually pick out the diamonds by hand.
Speaker 2:Right.
Speaker 3:And you do that in the presence of Alex Gore Alex Gore doing it in our presence. So it's it's it's a situation where it's almost impossible to envisage any way that a a theft could happen.
Speaker 2:Okay.
Speaker 3:Or any way that it could be less efficient.
Speaker 2:Yeah. Okay. And, what's the ultimate goal there, with that project? Are you looking to kind of develop it and then eventually sell it onto a bigger, bigger producer, bigger diamond producer?
Speaker 3:Carl, yeah. The the diamonds are very much integrated with the heavy mineral sands. So we would we we would see keeping the 2 projects strongly linked forever. They the diamonds themselves will produce a good revenue and ought to largely cover all the costs of our South African operations. So, yeah, they they they're relatively small but very important part of of what what the long term future holds for us.
Speaker 2:Yeah. I only ask because, as I said in the introduction to it there, it's situated between 2 historic De Beers operations. And clearly, you know, the geology would seem to suggest if De Beers are involved in neighboring operations that there's, you know, there's scope for a lot, for something perhaps much bigger there.
Speaker 3:Yeah. No. Absolutely. You know, it's been mined for almost a 100 years now, and there's still quite a lot of diamonds left. Where they are tends to be a bit more focused.
Speaker 3:The diamonds the diamonds have been washed there by river action, by sea action, over 1000000 of years, and they lie in thin strips, as as you'll see shoals on a beach. So that's effectively where the diamonds have been deposited, and that builds up over over a period of time. Yeah. Our manager in in South Africa is a guy called Johan Trutte, and he has been a diamond miner all his life. His father was a diamond miner in the same area before him, and and it's a a a peculiar combination, really, of of of of knowledge and skill and and intuition.
Speaker 3:And, Johan, probably there's probably nobody better qualified than Johan in terms of of locating diamonds in that area.
Speaker 2:Yeah. If I can move on, to your, heavy mineral sands, business. Kasera had some good news recently, about the Whalehead Minerals business, which is part of that heavy mineral sands, bit of the company, after receiving certification from the National Nuclear Regulator in South Africa. And this enables Whalehead to commence the mining and production of heavy mineral sands. Could you explain, for the benefit of listeners, why this certification was so key for Kazaera, and what's what comes next then for Whalehead?
Speaker 3:Bluntly, I think, it's it's so important because without it, we weren't allowed to touch the heavy mineral sands. They have a level of of radioactivity naturally, which is which requires us to have a certificate from the nuclear regulator. That's a good thing, and that indicates the process of the more valuable, heavy mineral sands. But at the same time, it obviously meant that that we had to go through a process which we were anticipating going through. Yeah.
Speaker 3:But the long term future for it is is absolutely fantastic. Our deposit is incredibly rich compared to to other deposits, comparable deposits sort of 450 kilometers down the road, probably 10 times higher richness, of of heavy mineral sands Right. Which has an enormous implication in terms of of the amount of sand one needs to process to make it profitable, and the cost of of of putting sand through. So it's it's a very attractive project from our perspective, quite small. It's only a 5 hectare site, but the big up side there is that we have also applied for a mining right to the adjacent beach, where the quality of the sand appears to be pretty much the same or higher and which is approximately 30, 34 times bigger than our current area of operation.
Speaker 3:So the scalability is there, and the richness of the sand is there. So it's very attractive.
Speaker 2:Thanks for that, Dennis. Now if I can take you back to where it all started for you, where did you grow up, and, and what was that like?
Speaker 3:I grew up in Johannesburg, which was surround in a in a city which was surrounded by by sand from from the historical gold dumps, but mining was never part of my my future. I became a lawyer doing, large litigation and some corporate law. And, yeah, certainly, mining wasn't part of part of what I saw my future as being.
Speaker 2:What did you if I could just keep you there, you know, in childhood for a minute, what did what did mom and dad do when you were when you were growing up?
Speaker 3:My mom was a housewife, and my dad was a a computer I guess, probably a computer technician. He had left the army at the end of the 2nd World War, having worked in signals. He went from there into the post office where he continued to sort of work in signals, I suppose, essentially, in the communications industry. Yeah. And from there, it was at the very forefront of of computers, so it was, you know, in the days of punch cards and, very, very early computers.
Speaker 3:I remember going to go and see computer rooms with him when I was a kid. These enormous rooms which were air conditioned and sterile and had all these wheels spinning around, which now, you know, have the computing less computing capacity than our mobile phones. It's just incredible.
Speaker 2:Yeah. Absolutely. And, do you have siblings?
Speaker 3:I have a brother who's an accountant, who, has moved from South Africa to Dubai and into England. He's now back in South Africa. Yeah. So he's he's, happily living living a a retired life in South Africa.
Speaker 2:Was there never a chance that you would follow your dad's lead and, you know, get into computing? Was that ever a a a subject of interest for you?
Speaker 3:Well, the one the one bit of advice I got from my father was was absolutely don't. I think computing computing in the days when he was doing it was much more mechanics than it is computing nowadays.
Speaker 2:Sure.
Speaker 3:Yeah. It was going in and and and fixing these great big machines, and they were servicing, obviously, banks and things. And when they stopped working, he would get a call in the middle of the night and have to get a team together and sometimes have to go out and support them. Pressure from the bank, obviously, who wanted their systems working, and they'd have to go in and and something would have broken. It wasn't it wasn't like the good days now where it's a software issue or there's a bit of backup or something.
Speaker 3:It was
Speaker 2:Yeah.
Speaker 3:Something that physically broken.
Speaker 2:Yeah. Yeah. Yeah. Yeah.
Speaker 3:He absolutely hated it. It was once my brother and I were strongly discouraged from getting pissed.
Speaker 2:Right. Yeah. But it can either go one way or the other, can't it? You either follow in the footsteps or it it's enough to put you off for life. Yeah.
Speaker 2:Where did you go to school, Dennis?
Speaker 3:I went to school in Johannesburg, school called High. It was a very young school at the time. We were under a certain amount of pressure when we matriculated on the basis that up until, I think, our year, it was only 21 years old, up until our year, nobody had ever failed matric at Roosevelt.
Speaker 2:Right.
Speaker 3:Sadly sadly, that record didn't last the year I was there, and and a couple of guys didn't make it. But yeah.
Speaker 2:Right. Were you were you a good pupil? I'm I'm assuming that you went on to do law so that you were probably quite academic.
Speaker 3:Yeah. Yeah. I I was fairly academic. I think I think, you know, it's it was certainly a great place to grow up, South Africa, in terms of of a a balance between academia and sport, and it was, yeah, it was it was a fantastic opportunity to grow up in a in a in a country, luckily.
Speaker 2:Yeah. Did you play much sport while you were at school?
Speaker 3:I played all sort of usual things. I played, the rugby. I played quite a lot of roller polo. I swam. But people were, yeah, outdoors the whole time.
Speaker 3:Played a lot of table tennis. Yeah. People were outdoors. It is a it is a country. Johannesburg, in particular, is very conducive to an outdoor lifestyle.
Speaker 3:Yeah. So it was it was a a great time. I do quite a lot of canoeing as well.
Speaker 2:Okay. Did, to any kind of level or just just for enjoyment?
Speaker 3:No. Not really. I you know, it'd be by virtue of of what I wanted to do at university and things that became difficult. Difficult. My parents didn't have an enormous amount of money, so when I was at university, I tended to work over weekends and holidays and stuff.
Speaker 2:Right.
Speaker 3:So, it limited what time I could focus on on any particular sport, but having said that, I managed to enjoy a number.
Speaker 2:Yeah. Great. Whereabouts did you go to university?
Speaker 3:I went to Rand African University for the 1st year. I felt it would be good to improve my Afrikaans. I also because I wanted to be a lawyer, and I think like a lot of aspirant lawyers, my my my vision of what being a lawyer was was was going to court. South Africa had 2 official languages at the time, English and Afrikaans. And, you were entitled as a witness to choose which language you would be cross examined in.
Speaker 2:And
Speaker 3:so I thought it was very important to learn, Afrikaans, better. So I went to Rand African University for a year. I then realized that I also had to learn Latin, which I hadn't done at school. Learning Latin in Afrikaans, which I didn't speak very well, was incredibly challenging. And there was no way else ever going to pass that side to side that off the end of the 1st year, that I would go to an English university, and I would do my board degree there.
Speaker 3:So I got credit for the 1st year at Accorale and then moved across to the university that follows Schrock, which was probably, and I know this is gonna be controversial, but which was probably the, leading law university in South Africa at the time.
Speaker 2:Okay. What was your university what were those university days like?
Speaker 3:Fantastic. Absolutely fantastic. For a period of time, I was a full time student for about 2 years, and then I was working, as I say, part time. At the same time, I worked in a state car, so I worked at the race course. I was playing a lot of squash.
Speaker 3:I was playing quite a lot of rugby, and then went on to studying part time while I did my articles. And, yeah, it was it was a really busy time, but a really, really, rewarding time. So I enjoyed it.
Speaker 2:How long did it take you to qualify as a as a lawyer in South Africa?
Speaker 3:Well, I cheated slightly because I was studying, in theory, full time, but at the same time, doing articles. So I managed to, despite having gone to I ran off of accounting university for a year, to finish both my law degree and my articles within, well, section 2 degrees because that'll be in South Africa as a postgraduate degree. So
Speaker 2:Yeah. It would
Speaker 3:only be 5 years of full time study followed by 2 years of articles.
Speaker 2:Right.
Speaker 3:I managed to do it in 6 years, by doing registering for full time studying but actually doing articles at the same time.
Speaker 2:Okay. So you kind of studied both sort of side by side for a bit?
Speaker 3:Yeah. I enjoy I enjoy being busy, and I enjoy the challenge. And, actually, I found that that while I was working in a in a law firm, it made studying a lot easier because what I was learning about had a practical implication which I didn't have otherwise.
Speaker 2:Yeah. And then, as I said in, my introduction, you decided that you wanted to move from South Africa to the UK. When when did you decide that, and what was the what was the driver behind that decision? Why the UK?
Speaker 3:I'll answer the second part first. The driver was my wife. She'd been to university in England. She is South African. She'd been to university in England.
Speaker 3:She was back in South Africa on a holiday. We'd we'd bumped into each other a long time previously. If she was still at school, I knew her father. So we sort of met, very briefly previously. But when she was back in South Africa, we actually started going out together, and we got married.
Speaker 3:But she felt very, exposed in South Africa. She felt that the way that that we lived in South Africa behind gates and with weapons and all the rest of it was a was a unnatural way of living.
Speaker 2:Yeah. So this was still during apartheid?
Speaker 3:This was still during apartheid. Yeah. So this was in 1990.
Speaker 2:Okay.
Speaker 3:And, it was yeah. She was right, obviously. And I had sold my law firm. I'd I'd set up a law firm, and sold that. Yeah.
Speaker 3:I was running another law firm, and sold that, and I was sort of in a position where I could I could make some choices. And and I thought that the idea of moving to England was a would be a new adventure, a new excitement. And the one thing I would not do when I came to England, obviously, would be to practice law, which didn't work out very well.
Speaker 2:Well, I was gonna ask you that. What, so when was that? When did you make that move? And, you know, I mean, you've you've kind of part answered it there. You you seem reticent then to requalify in the UK, but, but then decided that you would do it.
Speaker 2:So just talk me through that part of your life and how that all unfolded.
Speaker 3:Yeah. So, Carl, as as you correctly say, we're still doing the days of apartheid. South Africa was very much, the pariah state. Yeah. So degrees from South Africa weren't recognized in the UK.
Speaker 3:Okay. Australians, New Zealanders, even Americans, who have a completely different legal system to ours, could do something called the qualified lawyer transfer test and become qualified lawyers very quickly. South Africans had to largely requalify. There were a number of degree courses I had to do.
Speaker 2:Okay.
Speaker 3:And then you had to do the qualified lawyers not the corporate law transfer, sorry, the legal practice exam, which was, I think, a 1 year course full time or something, 2 years part time course, which, you know, taught you to write letters and how to interview clients and how to appear in court, all of which I'd been doing for a long time and had more experience of than some of the lecturers. So that was a bit of a frustrating time. Yeah. And I had to do articles again, and I really didn't wanna do any of that. But but the reason was was that the only box that I fitted into was as a lawyer.
Speaker 3:I was made an offer by a very good law firm in London, and I ended up spending my 2 years doing articles there. In theory, despite being article, Clark was the head of the South African department.
Speaker 2:Right.
Speaker 3:But at the same time, I was also working in various departments and, you know, sort of at 3 o'clock in the morning, my job would be to I would be the most junior person, and I was sent out to get pizzas. So it was a, yeah, slightly slightly slightly humbling experience as well. Slightly frustrating as well.
Speaker 2:So then why did you then decide to quit the law and pursue a career change with a move sort of into the boardroom, really? How did that come about? What influenced that decision?
Speaker 3:I love large aspects of law. What I don't and didn't like was was the politics involved. And I got in after leaving the city, I ended up working for a big firm, in the southeast. And it was just the politics of of law, and managing departments and managing partners and, lawyers are a little bit like herding cats. It's it's it's hard work, and it took away from the the joy of of law that that, you know, was was actually putting a contract together and negotiating a deal Yeah.
Speaker 3:Coming up with a solution which which which worked. I mean, I always love corporate law because corporate law, unlike litigation, is is really a win win situation. You know, your client and the other client are both trying to get to the same place.
Speaker 2:Yeah.
Speaker 3:And it's a it's a it's a really rewarding place to be. If you if you can you can get it right, you can focus on doing that. So I enjoyed that part of it, but there were so many other things. And then when you start hitting up a department and hitting up a branch of the firm, your time is largely spent on doing things unrelated to the parts you like.
Speaker 2:And I guess you've probably already got lots of transferable skills, you know, managing teams of people, you know, etcetera, as you as you've just alluded to there. And so I guess a move into kind of corporate management rather than being on the other side of the table and putting deals together. I would imagine that you probably saw that and thought, yeah. I quite fancy a bit of that.
Speaker 3:Yeah. To to to a large extent, you you see people, making good money out of out of putting a business together and selling it, and you sort of think, well, it would be very nice to to have a to be doing something like that there rather than simply advising people, on how to do it. Yeah. So, yeah, definitely the opportunity to sort of get get involved appealed.
Speaker 2:Yeah. And then, when did you join Kisera, and how did that come about?
Speaker 3:I stopped practicing law, got involved in a in a private equity business, which worked out quite well, and then was in the office of a friend who was looking for somebody to get involved in a mining project, gold mining project. And we were just sort of chatting, and he suddenly said, you know, you should do this because you're South African. You must know about gold mining. And, that was kind of my beginning of of of of of involvement in in mining and listed companies. Right.
Speaker 3:Because you're a I was I was the chairman or CEO, I did both at different times, I'm not too sure which I was at that time, of a company called Pathfinder Minerals. The diamond and heavy mineral sands project was introduced to me for Pathfinder, and I had a look at it. We couldn't do it in Pathfinder because of the structure of Pathfinder, and it was then shown to Kizira, who were an investment are an investment company. Mhmm. And the the package really was along the lines of, look, you know, we've we've got this fantastic project.
Speaker 3:We think you guys might be interested in it and you should do it. And if you do, we've also got somebody who can run for you. So kind of that was that was the, the way I got into it. I ended up I ended up joining Kazeer as a director, while at the same time being a Pathfinder, and being responsible for initially just these two projects. And then when Larry Johnson left, Kizira, took over the whole running of the whole operation, including the operation in Namibia.
Speaker 2:Yeah. And when when was that?
Speaker 3:About 2020. June 2,020, I think. It might have been 2019. About four and a half years ago.
Speaker 2:Yeah. Okay. Great Great stuff. Just one final question, if I may, Dennis. What do you like to do to relax?
Speaker 2:Do you have any hobbies?
Speaker 3:I enjoy reading. I enjoy walking. We've got 3 dogs. So that's a big part of it. I enjoy sailing.
Speaker 3:Yeah. So it's a combination of all of those.
Speaker 2:Dennis Edmonds of Kizira Global, thank you for joining me on the All Points West podcast.
Speaker 3:Thank you very much, Carl.