Brian, thanks and welcome to CEOwise Thanks man, thanks for having me.
So you started your business buying second hand mining equipment, reburbishing it to
OEM standards and then re-selling it, now how has your company evolved, because now
you're concentrating more on building mills for mines?
Yeah, we started back in 2005, obviously getting into the business we had some experience in
a previous business where both myself and my partner worked, where we were doing refurbished
mining equipment.
So getting into our new business we took that knowledge with us into our new business.
It started off like that and as we developed our skills we started focusing on mills, being
the biggest equipment in the plant, and the most capex intensive equipment in the plant,
and then actually from there it was a natural progression to start making new mills.
Did you get funding to start your business, because presumably as a start up buying mining
equipment can't be cheap.
The strategy wasn't to use our own capex to run the business, so what we actually requested
from the outset is that the clients actually financed their own project.
So all our projects were run on either a cash positive or a cash neutral basis, whereby
we requested an up front payment from the mine.
50% or 100% up front?
It depended hey Dan, obviously dependent on the value of the project.
If it's a ten million rand project and guys have to lay out 50% they're going to want
to know all your credentials plus your mother-in-law's home phone number.
Where, doing it in certain stages, like taking a 10% deposit, obviously working up to about
8% of the project, then requesting another 10% deposit, that you're always either cash
neutral or cash positive.
You can actually allow a client to finance your business.
Then as your business grows obviously once you get more money in your own bank account,
in your own business, you can take on some finance and responsibilities, but often then
you can actually charge the client those financing.
You also at a time, a few years ago you bought a dilapidated mine, now was that just for
the machinery or for the equipment that you would want to refurbish?
What was that for?
Yeah I mean it's taken advantage of opportunities, that's what's been quite unique about our
business, we haven't been one track mind.
We've been quite diversified that the guys are prepared to do certain things that other
companies aren't prepared to do in our line of business and it's given us a competitive edge
So, we found out about a mine in Tanzania that was closing down, we went up to have
a look at it and actually made the decision to buy the entire gold plant, which we in
fact did and we dismantled it and stored it to sell on the prospective buyers.
And did anyone take over the actual land itself?
Yeah, the mine actually had an agreement with the government where they had to create a
mining school, a university there.
Once the mine was closed down they actually developed the old mine into a university.
Ok, and now running your type of business I'm sure you're under a lot of time pressure,
because if a particular mine is waiting for a spare part, now without that product they're
not making any money, so how do you deal with time pressure?
As you say Dan, our business is about saving clients money, delivering a project on time
and delivering it to world class quality.
In terms of time management we take advantage and we utilise certain Microsoft office tools,
a program called MS Projects, where you can actually plan your whole project out on a
timeline, plan resources and then actually manage that on a day to day or an hourly or
a weekly or a monthly basis until the completion of the project.
For us as well it's important that we don't find out that we're going to be late on a
project at minute 99.
So using these tools and obviously tracking our sub-contractors we can actually manage
the project and can actually pick up any time deviations from the beginning and then we
can manage it until completion.
You operate worldwide, you operate from South Africa, to Peru and even Kazakstan, now how
do you find that business, because that's with my business, that might have been my
flaw, because I've never had a sales team to go out and find business.
Do you have a sales team that goes out and looks for this business worldwide or does
the business come to you?
In South Africa we run a sales force, which is the typical reps or sales administrators
that go out and see the clients on a one on one basis, but in countries like Russia, Kazakstan,
South America we've actually found that doing business in those countries is vastly different
to doing business in South Africa.
So the strategy there was to employ local agents that act on behalf of our company and
market the company and then once the project seems like it's going to go ahead then we
actually send our team out to meet the client and become more involved.
But, how to you find those people, if it's in Kazakstan, how do you find an agent in
Kazakstan?
With difficulty.
Yeah, Im sure.
A lot of these agents represent a number of companies.
The mining industry is quite a tight knit community, and we've got a couple of associations
with various companies that run similar agencies in similar countries so we've piggy-backed
off that in the past.
You're currently working in an industry which is struggling given the current finance climate,
now have you put procedures in place to overcome that?
Yeah, I think coming back to what makes us different, every year we plan some goals and
we plan a strategy on how we're going to achieve the goals and one of the important things
that is always raised is a bit of diversification.
So, as I say we started off our business as doing second hand equipment, we developed
into supplying new mills, but we've also got some other facets to our business where we
do a lot of the engineering around the mills, where we can design, steel work, plate work,
supply ancillary equipment and actually go a little bit out of our comfort zone in completing
a project where a normal supplier in our industry wouldn't be prepared to go, we're prepared
to take those projects on and just stretch ourselves and grow ourselves.
I've been taught to always keep a three month slush fund of your expenses which is not always
possible, but do you have any stuff like that in place when times are tough?
I think what we've done which has been pretty successful for our company is we kind of developed
the company and as it grew we actually retained a lot of the wealth in the business.
I mean we ran our business for six years before we drew a dividend in our personal capacity.
Not that we couldn't draw a dividend, we just took the view that having the money in the
business could actually generate more wealth for us than what it could in our personal
capability.
I mean what you would do personally is go and invest it or put it in the bank etc. where
in our business we could actually invest in our own business.
Like, for example, buying the complete gold plant in Tanzania and the returns on that
far out ways investments you could make through banks etc. and the thing about it is you actually
control your own destiny, so it's up to you whether you make money or not.
Oh Newman, what other questions do you got there?
Thanks so much, that's awesome!
Cool man That's all my questions.
Let's check the questions.
Can you just push stop here.