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Lazarus Zim may take Mvela Res shares
David McKay
Posted: Tue, 17 Oct 2006
[miningmx.com] -- LAZARUS Zim, the former CEO of Anglo American SA, may buy shares in Mvelaphanda Resources (Mvela Resources) in the first of a series of transactions that could ultimately see the empowerment firm lift its stake in Northam Platinum.
Zim and Tokyo Sexwale, whose Mvelaphanda Holdings is the largest shareholder in Mvela Resources, have shared an investment on one previous occasion. On September 21, Indian computer multinational, Sahara Holdings, sold 27% of its equity in its South African business for R173m to an empowerment consortium comprising Sexwale’s Mvelaphanda Holdings and Zim’s Afripalm.
Mvela Resources issued a cautionary statement to shareholders on August 24, and another last month, that it was involved in talks that would affect its share price. It gave no further details. But the company’s CEO, Pine Pienaar, said at Mvela’s annual results presentation that
Mvela would see an increase in black shareholders to above 50%.
Currently, Sexwale’s Mvelaphanda Holdings has a 29% in Mvela Resources. Of this R1.3bn worth of shares – 23% of Mvela Resources – was bought from the separately listed industrial group, Mvelaphanda Group, earlier this year. Sexwale added to this stake by buying the Khumama consortium’s 6% stake in Mvela Resources.
In addition to Zim’s investment, a broad-based consortium of black interests, as well as a womens’ group, is also preparing to take shares in Mvela Resources. Wiphold had considered investing in Mvela Resources in the past but has stepped back from the proposal.
Using the investment from the consortium, and cash from Zim’s investment, which he is hoping to raise from the market, Mvela will then have the firepower to bid for Anglo Platinum’s 22.5% holding in Northam Platinum.
Mvela Resources spokesman, James Wellsted, said the company could not comment beyond its cautionary
announcement. He said, however, that Northam would only benefit from Mvela’s further investment.
Mvela Resources is also to finalise long-standing plans to swap its stake in the Booysendal platinum project for 11% in Northam Platinum. In total, therefore, Mvela Resources could hold as much as 55% of Northam. This would effectively see it claim operating control of asset for the first time and help remove a major barrier to investment. Mvela Resources trades at a discount to its net asset value because it is viewed as an investment house and not an operating company, analysts have said.
In taking more than 35% of Northam, Mvela Resources would also trigger an offer to minority shareholders in the platinum firm. However, it’s understood that Mvela would ask Northam shareholders to waive their rights to a higher offer.
Zim did not return telephone calls made by Miningmx. Mark Willcox, CEO of Mvela Holdings, says the company does not comment on market speculation.
“However, we hold Lazarus Zim in high regard,” he said.
In selling its 22.5% stake in Northam Platinum, Anglo Platinum would also help take the pressure off its empowerment strategy.
Anglo Platinum’s Amandelbult section contributed R2.3bn to operating profit in the 2005 financial year, according to Anglo Platinum’s annual report. The next largest profit driver was the Rustenburg section with a contribution of R2.1bn.
By comparison, two business units where Anglo Platinum has an empowerment partner, the 162,000 oz/year Modikwa joint venture, and the 485,000 oz/year (refined platinum) Bafokeng-Rasimone (BRPM) mine, contributed R129m and R224m in operating profit in 2005 respectively.
Sandile Nogxina, director-general of the minerals and energy department, told
Miningmx on August 10 that his department did not want to see empowerment at assets that were less profitable or had a short mine life.
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