[miningmx.com] – NORTHAM Platinum today unveiled a R6.6bn empowerment deal in which it will issue about 22% of its share capital raising R4.6bn in the process – funds it will use for its growth plans.
“The transaction effectively catapults Northam into the “1st division’,” said Paul Dunne, CEO of Northam Platinum who on August 14 set down plans to double the firm’s platinum output to one million ounces a year in six years.
The structure of the deal sees Northam issue 22% in new shares to a special purpose vehicle (SPV) for black economic empowerment (BEE) to which the Public Investment Corporation (PIC) will also sell shares equal to 9% of Northam.
The SPV, which consists of an employee share option programme, a community trust, and other consortiums, one consisting of a womens’ group, will own 31.4% of Northam.
Including Northam’s previously executive Toro Trust, total BEE will be 35.4% which is roughly 10% more than required by South Africa’s mining charter.
Payment for the shares issued to the BEE entities will be financed by the SPV which will issue 159.9 million in listed preference shares which will be underwritten by prominent shareholders, PIC and Coronation Asset Managers.
Another aspect of the deal is that in order to make sure the BEE funds don’t sell their shares in Northam, the company has made sure there’s an immediate R400m benefit to them in return for a 10-year lock-in agreement.
One of the BEE consortiums is Atisa Consortium which is led by Lazarus Zim, Northam’s chairman, a position granted to him by dint of Northam’s previous, and failed, empowerment deal which the current transaction effectively replaces.
Zim led Afripalm Resources which, along with Mvelaphanda Resources, had bought 26% of Northam Platinum. However, the BEE partners in 2012 fell foul of bank covenants and had to sell their shares to Nedbank.
The South African government, in what would appear to be a landmark decision, insisted Northam re-empower itself, hence the current transaction. It leaves Zim’s consortium with 4% of Northam, equal to R560m at Northam’s current share price.
The preference shares open to eligible shareholders are being offered at R41/share. This represents a 9.3% to the 30-day volume weighted average price of Northam’s share price as at October 20 and was the basis for all share transactions in the deal.
One of the major upsides of the BEE transaction for Northam is that it also provides a pretext for raising more capital even though the firm refinanced itself just over a year ago to the tune of R1bn (of which R600m was a rights offer).
Following completion of the BEE deal, Northam Platinum will be left with R4bn for its growth plans net of costs.
Dunne said in August that Northam would base its growth plans on possible expansion opportunities in close contiguity to the Zondereinde and Booysendal, its recently commissioned R4.3bn, 160,000 ounce a year project due to reach nameplate capacity in October 2015.
A second option for Northam would be for it to weigh “… other non-contiguous and global expansion opportunities within the PGM [platinum group metal] sector”.
“Northam is strategically well-positioned in a changing industry. It is not a small opportunity; we have the intent, ambition and aspiration,” said Dunne in August.
