[miningmx.com] – INVESTORS who helped put Optimum Coal Holdings
on the map have bid for a 25% stake of metals and minerals trader, Metmar, and a
further 25% stake in underlying vehicle Metmar Investments in a cash plus asset deal
worth R475m.
Shares in Metmar gained 2.1% on the JSE today to trade at R2,90/share, giving
Metmar a current market capitalisation of R674m.
Peter Gain and Tom Borman are key members of a consortium that has proposed
pumping R250m into Metmar Ltd in two tranches, the first of which has been
approved by current management. Both cash deals have been struck at premiums to
Metmar’s 30-day volume-weighted average share price, and will provide a 25% stake
in the company.
The consortium bidding for Metmar will also vend a 55% stake in a metallurgical
(anthracite) coal asset called Fuleni into Metmar Investments, a subsidiary of
Metmar Ltd. Fuleni is a KwaZulu-Natal asset which has an in-situ resource of 318.6
million tonnes (Mt). This will give it a 25% stake in Metmar Investments.
Miningmx readers may recall that Gain recently booked R91.2m in gross
profit after selling 2.4 million shares in Optimum Coal, a black empowerment firm in
which he had a hand in creating. The biggest beneficiary from the Optimum Coal
share sales, however, was Borman who sold 2.6 million shares for R98.8m. Both lots
of shares were sold to Glencore International, the Swiss trading group.
David Ellwood, CEO of Metmar, said his company had been seeking exposure to the
metallurgical coal market for some time, but couldn’t find the right value. From a
consortium perspective, it has access to a broad spectrum of minerals with the
emphasis falling on chrome and metallurgical coal production.
“The nice thing about this deal is that it also values our assets in Metmar
Investments which hadn’t been done before,’ said Ellwood.
In essence, the deal helps recapitalise Metmar as well as provide operational
experience through the Gain/Borman consortium. “It’s a perfect marriage,’ said
Ellwood, who added that existing Metmar management would bring marketing
experience. Decision-making would be carried out jointly, said Elwood.
One of the priorities for Metmar would be to bring two chrome assets to production:
a 40Mt open-castable and underground prospect on the eastern limb of the
Bushveld, near Steelpoort, and a similar-sized chrome mine in Zimbabwe’s Great
Dyke.
Said Ellwood: “Chrome is something that the Chinese don’t have,’ As for the output
from Fuleni, that would be sold into the domestic and export markets. Both
minerals, chrome and metallurgical coal, feed the steelmaking process.
Chrome exports from South Africa have become something of a hot potato, however,
with ferrochrome producer Merafe Resources lobbying the government for an export
levy. Merafe argues that cheap chrome exports are undermining the South African
ferrochrome industry which has lost market share dominance to China producers.
