Aquarius, Implats agree $550m Mimosa sale

[] – AQUARIUS Platinum (Aquarius) has agreed to the sale of 51% of the 211,000 ounce-a-year Mimosa mine for $550m, a transaction that sees the JSE and UK-listed firm comply with Zimbabwe’s indigenisation laws.

The transaction structure allows for 51% in Mimosa Investment Holdings, a 50:50 joint venture with Impala Platinum (Implats), to sold to a combination of government, a local community, and mine employees.

Although not stated, it’s thought that the structure of the deal will provide a model for the completion of Implats’ indigenisation obligations. Implats was to have held meetings with the Zimbabwean government earlier this week.

Mimosa has been among the most profitable of contributors to Aquarius’ bottom line over the years. In the 2012 financial year (ended-June), it was the only profitable mine in the group with attributable gross profit of $52m. The mine has total attributable mineral reserves of 1.66 million oz.

In terms of the transaction, payment for the stake in Mimosa Investment Holdings will be vendor-financed in which the buyers would pay for the shares over 10-years by agreeing to waiver 90% of the company dividend flow. An interest rate of 9% would be applied.

Crucially, the Zimbabwe authorities, represented by the National Indigenisation & Economic Empowerment Fund (NIEEF), will be diluted if they fail to follow their rights in the event of capital expenditure at the mine.

“Although the negotiations have taken some time, the final plan represents a significant milestone for Aquarius and Mimosa as we work towards full compliance with the law and regulations in Zimbabwe,” said Jean Nel, CEO of Aquarius Platinum.

Given a total fair value of $1.09bn, Nel said the valuation was “a true reflection of the worth of our investment in Mimosa Investments which he billed “… a valuable asset and one of the lowest cost producers in the PGM sector globally”.

Some 30% of the shares in Mimosa Investment Holdings would be sold to the NIEFF, a further 10% would go to a trust owned by the Zvishavase community that lives near the mine, and the remaining 10% would be distributed through a share employee option plan or Esop.

Saviour Kasukuwere, the Zimbabwe minister of Youth Development, Indigenisation and Empowerment, and who steadfastly demanded control of the asset be yielded to his government, said negotiations had been “cordial and frank”.

“I am pleased to say that Mimosa Investment’s indigenisation plan reflects the spirit and letter of Zimbabwean law and signals that we welcome Aquarius as an investor to Zimbabwe,’ Kasukuwere said.

Said Implats CEO, Terence Goodlace, in his company’s announcement: “We are very glad to have reached agreement with the government of Zimbabwe to further realise our ambition to be a good corporate citizen and create a sustainable platinum mining company which can attract the kind of investment needed to deliver profits and
prosperity for the people of Zimbabwe, our employees, the local community and all other stakeholders”.