Mining veterans bet $410M on Cape Town Formula One

A South African consortium led by former Sibanye Stillwater (JSE: SSW) (NYSE: SBSW) CEO Neal Froneman is working with advisory group Rothschild & Co. on a $410-million motorsport development near Cape Town aimed at bringing Formula One racing back to Africa.

Froneman, Endeavour Mining’s (TSX, LON: EDV) chairman Srinivasan Venkatakrishnan and Webber Wentzel lawyer Robert Appelbaum plan to develop the 6.7-billion-rand complex in the Swartland region north of Cape Town, consortium member Bob Hartslief told Bloomberg News.

The proposal includes a Formula One-compliant circuit costing about 2 billion rand, as well as conference, exhibition and hospitality facilities and residential property.

“Modern Formula 1 is no longer built around circuits alone,” Froneman told Bloomberg News Tuesday. “The sport has grown into a global entertainment property comprising 24 events a year, each anchored in a city the world already wants to visit.”

Blue Mountain Racing’s proposal is one of two efforts seeking to return Formula One to South Africa more than three decades after the country last hosted a race. Businessman Toby Venter, CEO of Porsche South Africa, is separately positioning his Kyalami raceway in Johannesburg for a successful bidder.

Funding model

Rothschild is advising Blue Mountain Racing as the consortium develops its financing structure, seeks Formula One approval and courts corporate partners, Hartslief said. The proposal must meet a government requirement that the event not rely on taxpayer funding.

The group is seeking support from some of Africa’s largest companies through a sponsorship model designed to underpin the race-licence fee. Blue Mountain Racing said the project has support from the provincial government and South Africa’s sports department.

The proposed venue would accommodate 125,000 spectators. The consortium has responded to Formula One’s initial technical and commercial requirements and faces an evaluation process that could take 12 to 15 months, Hartslief said.

Froneman said a purpose-built circuit would avoid the disruption and public costs associated with a Cape Town street race.

Kyalami hosted Formula One races intermittently between 1967 and 1993.

Formula One’s global audience has expanded in recent years, helped by Netflix’s documentary Formula 1: Drive to Survive. The business is now valued at more than $23 billion, compared with the $4.4 billion Liberty Media paid for it in 2017.