[miningmx.com] – LONMIN edged towards completion of its BEE obligations today announcing it had increased the equity status of its empowerment partners 3.3% following a transaction with a local community.
The principle elements of the transaction are that Lonmin through its local subsidiary, Lonplats (consisting of Eastern Platinum and Western Platinum) will provide the Bapo ba Mogale Traditional Community with a R564m lump sum.
This is in return for the community’s annual royalties in Lonplats and will be used by it to subscribe for 13.13 million shares in Lonmin equal to 2.25% of its share capital.
Of the lump sum, Lonmin has paid a R149m premium in return for which the Bapo will not encumber or sell its shares for 10 years.
Lonplats will also pump R100m a year into the Bapo community in terms of a “deferred
royalty payment” over a five-year period which is to be used “… to pay the administrative costs of running, controlling and directing the affairs of the Bapo”, Lonmin said in its announcement.
The community will also sell its 7.5% stake in the Pandora Joint Venture taking Lonmin’s stake in the mine to 50% ahead of plans by its joint venture partner, Anglo American Platinum (Amplats), to sell its stake in the enterprise. In any event, Lonmin has pre-emptive rights over Amplats’ stake.
Lonmin said in an announcement that it “believed” following discussions with the Department of Mineral Resources (DMR) that it had fulfilled 3.3% of the outstanding 8% of equity participation for previously disadvantaged South Africans.
A further 4.7% of empowerment is yet to be completed with Lonmin saying it hoped to achieve this by means of an Employee Share Ownership Plan or Esop, the details of which have yet to be announced.
“We are pleased to have reached an agreement as this is testimony to developing a constructive relationship with the Bapo ba Mogale,’ said Lonmin CEO, Ben Magara.
In terms of the mining charter, now enshrined in the Mineral & Petroleum Resources Development Act (MPRDA), mining companies in South Africa have until the end of 2014 to empower equity or units of production by 26%.
Lonmin’s other empowerment points are held in its much-maligned Incwala Resources in which Shanduka Resources is the principal. Shanduka was founded by South African deputy president Cyril Ramaphosa who has since set about establishing blind trusts severing direct knowledge of his company’s business dealings.
There are a number of other deliverables set down in the mining charter, such as employment equity, social and labour plans, and procurement.
Lonmin said it would provide R200m in preferential procurement to Eastern Platinum and Western Platinum to companies owned by members of the community for 18 months after the deal.
A further 0.9% each of Western Platinum and Eastern Platinum would be provided to the community in order to establish a development fund, the function of which would be to finance social upliftment projects, the company said.
“On behalf of the Board I would like to welcome the Bapo community as an important shareholder in our Company. We look forward to building a strong relationship with them over the years to come,’ said Brian Beamish, chairman of Lonmin.
Mines minister, Ngoako Ramatlhodi, welcomed the agreement as it “… further advances government’s programme of sustainable transformation by ensuring that communities also share in the wealth of the country’.
Lonmin said it expected to complete its BEE transactions in the final quarter of the 2014 financial year. Shares in the company, which have been soundly battered over the last two years, were marginally down on the Johannesburg Stock Exchange at R42.90/share against an issued share price to the Bapo of R42.97/share.
