[miningmx.com] – LONMIN is to provide interest-free loans totalling R484m by 2015 to the members of Incwala Resources, of which Sanduka Resources is one of the most recognisable with a 52% stake, to help the BEE firm pay banks with redeemable preference shares.
In a statement to the Johannesburg Stock Exchange today, Lonmin added that the loans to Incwala Resources would be repaid by withholding sums that would have been used in dividends to the BEE firm.
This means that Lonmin will have allocated just over R1bn worth of funds to either increase or maintain its empowerment credentials in the last three months.
On July 30, the platinum firm said it would provide the Bapo ba Mogale Traditional Community with a R564m lump sum in return for annual royalty payments as part of its drive to get BEE to the 26% regulated by South Africa’s mining law.
Lonmin’s balance sheet is equipped to take the outlay, however. Goldman Sachs said in a report on August 21 that Lonmin would have a $150m cash balance by the end of the 2014 financial year.
Northam Platinum and Aquarius Platinum have both spent funds reviving the finances of their BEE partners after banks either called in debts or threatened to do so.
According to mining law, mining firms must be compliant with 26% BEE ownership by December.
Lonmin said it would provide the loans through its operating subsidiary Western Platinum Ltd which would advance R242m to Incwala on or before September 30, and had committed a furtherh R242m on or before March 31, 2015.
Both loans were on an interest-free basis, Lonmin said.
“The loans will enable Incwala to meet the covenants and other obligations in relation to existing preference share funding it has raised from local banks,” Lonmin said in its statement.