Johannesburg - The directors of fraud-damaged Randgold & Exploration (R&E) and JCI proposed yesterday that the companies merge to form a R2.9 billion mining company that would have Gold Fields shares worth R1.8 billion as its key asset.
Since late 2005, all the directors of R&E and JCI have been the same.
The new company would have interests in Matodzi Resources, the Boschendal wine estate, mining prospecting rights near the South Deep gold mine and empowerment group Jaganda.
However, the group could be hit by a R388 million charge from a controversial profit share on a R460 million Investec loan agreement with JCI.
The Investec loan is the subject of court challenges by Letseng Diamonds and Trinity Asset Management.
R&E is claiming R5.8 billion from JCI for the misappropriation of assets while the late Brett Kebble was the chief executive of both companies.
Earlier this month three mediators suggested the starting point for the settlement between R&E and JCI should be between R1.2 billion and R1.5 billion.
On the basis of a R1.2 billion settlement, R&E shareholders would hold 71 percent of the new company and JCI shareholders would own the remainder.
A R1.5 billion settlement would result in R&E shareholders having an 81 percent stake, while JCI shareholders would own 19 percent.
Depending on the final settlement, each R&E share would be equivalent to between 65 and 112 JCI shares.
Trinity Asset Management's chief executive, Quinton George, said a share ratio of one R&E share for every 100 JCI shares was "fair", while a ratio of one R&E share for every 65 JCI shares was "unacceptable".
Should an agreement be reached between the companies, a merger would be proposed in the form of a scheme of arrangement under section 311 of the Companies Act.
Such a scheme would require 75 percent shareholder approval and high court sanction.
Fund manager Allan Gray holds 25 percent of JCI and R&E.
Allan Gray's portfolio manager, Ian Liddle, declined to comment on yesterday's announcement.
The other major JCI shareholders are Letseng Diamonds of Guernsey and Hawkhurst Investments, which are represented by a lawyer called Montague Koppel. Together, these companies hold 17.6 percent of JCI.
Aflease Gold is a major R&E shareholder.
Aflease has a 12 percent stake in R&E and has an arrangement with Trinity to swap the fund manager's 15 percent stake in R&E for Aflease shares.
The chief executive of Aflease Gold, Neal Froneman, was not available to comment yesterday. Trinity's Quinton George said the company would be happy to convert its R&E shares into Aflease shares.