LONMIN has swept aside market speculation that it's struggling to find enough viable candidates for its R3,5bn empowerment vehicle, the newly named Incawa Resources.

In terms of plans unveiled in September, Lonmin is vending 18% of its platinum subsidiary Lonmin Platinum (Lonplats) into Incawa Resources, which will then be listed. Lonmin hopes that Incawa will become a home for consolidating other empowerment transactions across a range of metals.

Lonmin CE Ed Haslam says that the final structure for Incawa will be delivered to the market in February, in parallel with the finalisation of the sale of Impala's 28% stake in Lonplats back to Lonmin.

As part of Incawa's financing, R3bn will be generated from loans and the all-important empowerment equity participation. Lonmin hopes this participation will comprise a broad base of interests collected into a single consortium. The market has been whispering for several weeks that this has proved troublesome, because many of the candidates lack a balance sheet.

Lonplats director Ian Farmer concedes that there are complexities in assembling what may become SA's most representative empowerment transaction to date. The partners are now picking through more than 40 potential candidates, which include entrepreneurs, women's groups and other groupings. The magnitude of the job, therefore, justifies a heavyweight board that Farmer will lead as CE.

Brian Gilbertson, who becomes the company's non-executive chairman, will join Farmer at Incawa. Lonmin chairman Sir John Craven, Peter Joubert and Impala CE Keith Rumble will also become non-executive directors of Incawa. Impala finance director David Brown offers his bean-counting acumen to the mix. 'We're serious about this empowerment, which is why the board looks as it does,' Farmer says.

However, while Incawa moves apace, reportedly problem-free, there are some complexities facing plans for Lonmin's earlier empowerment transaction - the Pandora project, a joint venture with Anglo Platinum.

Haslam says that this project has not yet commenced owing to a delay in the award of a mining licence. Only Government's Minerals & Energy Department can grant this licence, which, Haslam grumbles, is somewhat 'pedestrian' in execution. It's worth recalling that AngloPlat's expansion problems partly relate to the tardy award of mining licences.

The other problem facing Lonmin is that AngloPlat might include Pandora in its expansion cutback programme scheduled for announcement before the year-end.

However, Haslam observes that Pandora could not be postponed indefinitely because both the spirit and form of SA's empowerment legislation is to avoid the sterilisation of mineral rights by established mining firms.

In any event, progress in extending the reach of Lonplats's vertical shafts is extremely promising, so much so that its strategic goal of reaching 1m oz/year of production by 2008 will be reached regardless of the Pandora joint venture.

Not even the rand's strength can dislodge Lonplats that much. Haslam says that even at a current rand exchange rate of US$1/R6,5, Lonplats commands an operating margin of 20% to 30%. For the record, Lonmin forecasts the rand to average R8,41 against the US dollar for 2004. SA's exporters will hope that Lonmin's currency forecasting expertise is as good as its platinum mining abilities.