GLENCORE said on Wednesday it had exercised its tag along rights in respect of an offer for the Mokala manganese mine in South Africa’s Northern Cape province.
It’s understood the miner is also negotiating a potential offtake agreement for Mokala’s manganese production as part of its transfer to its new owner, Exxaro Resources.
In May, Exxaro announced it had bid about R11.67bn for the manganese assets held by Ntsimbintle Holdings and OM Holdings. The offer included a 60% stake in Tshipi Borwa as well as 9% in Hotazel Manganese Mines and 51% of Mokala.
Ben Magara, CEO of Exxaro said last week the majority shareholders in Hotazel Manganese, the Samancor JV controlled by South32 and Anglo American, had opted not to exercise a pre-emptive right on Ntsimbintle’s holding.
Glencore said however it would exercise its tag-along rights in Mokala, a 1.5 million ton a year capacity mine, which means Exxaro is required to buy out Glencore’s 49% stake.
Magara said his company remained confident the entire transaction would be concluded by the first quarter of 2026 which also includes regulatory approvals from Government and the Competition Commission.
In announcing its agreement with Ntsimbintle and OM Holdings, Exxaro said the deal could be as low as R9bn or increase to R14.64bn depending on how other shareholders voted.
Concluding the acquisition is an important precursor to setting out a new dividend policy for Exxaro. Currently, the company pays dividends based on having enough cash for a dividend cover of 2.5x earnings. Magara raised the prospect the dividend cover would be improved likely for more cash in investors. The group’s valuation may receive another boost once its capital return plans were announced.
Cash as of June 30 rose to just over R18bn, a cash build that worked against the company’s valuation as analysts were concerned at potential deal-risk, especially as Exxaro first announced its diversification strategy about three years ago.
“I think you’ve seen that at our interim results our shares improved 20%, as the group performed better than expectations” said Magara.
