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Anglo Platinum, Anooraq Resources Corporation and Mvelaphanda Resources Ltd Black Economic Empowerment Transaction

Category: Agreement
Date: September 2007
Sub Category:Black Economic Empowerment Transaction (South Africa) | Joint Venture Agreement (South Africa)
Location:Bushveld, Limpopo and Northwest Provinces, Republic of South Africa
The Bushveld Complex is located in the Limpopo and Northwest Provinces of the Republic of South Africa.
Subject Matter:Collaboration / Partnership | Employment and Training | Management / Administration | Mining and Minerals
Summary Information:
The Anglo Platinum, Anooraq Resources Corporation and Mvelaphanda Resources Black Economic Empowerment Transaction ('AP Transaction') was agreed to in September 2007, and relates to the transfer of the interests held by Anglo Platinum (AP) in Lebowa Platinum and the Ga-Phasha Project to Anooraq Resources Corporation (ARC). It also includes AP's transfer of interests in the Booysendal Project and Northam to Mvelaphanda Holding Resources (MHR).

It is estimated that these transactions will place assets of approximately R35 billion under the control of Historically Disadvantaged South African (HSDA) managed and controlled platinum group metal producers.

This group of transactions is guided by the South African Government's policy of Black Economic Empowerment (BEE), one of a range of measures being used to counteract the economic effects of apartheid in South Africa. According to the joint announcement produced by the parties, the transfer of ownership achieved by these transactions also addresses the ownership requirements of the Broad-Based Socio-Economic Empowerment Charter for the South African Mining Industry (Mvelaphanda Resources, 2007).

See 'Black Economic Empowerment' and 'Historically Disadvantaged South Africans' below for further information.
Detailed Information:
The AP Transaction comprises several transactions which will result in the creation of two substantial HDSA managed and controlled South African platinum group metal (PGM) producers, and an employee share ownership plan (ESOP) which, according to the Mining Africa Yearbook and the Anglo American Website, will benefit more than 43,000 employees of AP. According to the CEO of Anglo American, these 'truly historic BEE' transactions will result in ARQ and MHR controlling the third and fifth largest platinum group metals resource bases in South Africa (Anglo American, 2007).

The Anglo American website goes on to note that the transaction parties 'believe that the meaningful participation by beneficiaries in the transactions recognises the importance of local communitites and employeems and promotes gender equality and broad-based ownership.'

Booyensdal Project and Northam Transaction

The Booyensdal Project and Northam Transaction involves the construction of a platinum mine at Booysendal, a well-explored area on the eastern limb of the Bushveld Complex, and the area is estimated to be worth R4.8 billion (Mining Weekly Online). It is anticipated that development and construction operations will begin in 2009, with the mine production beginning in 2010.

As a result of these transactions, MHR will acquire 50% of AP shares in the Booysendal Project, or 22.4% of shares in Northam, for the consideration of R4 billion. Northam will then acquire 100% of the shares in the mine for the consideration of R6.25 billion, which will result in MHR owning a controlling 63.4% of Northam. The Transaction also includes shareholding provisions for HDSA women (Mvelaphanda Resources Ltd, 2007).

Lebowa Ga-Phasha Transaction

The Lebowa Ga-Phasha Transaction refers to the transfer of shares in the Lebowa platinum refinery and Ga-Phasha platinum resources located in the north eastern limb of the Bushveld Complex. For consideration of R3.6 billion to AP, ARC will acquire 51% of the shares in the newly-created HSDA, Lebowa Holdco, or 51% of the total value of Lebowa and 1% of the total value of Ga-Phasha (Mvelaphanda Resources Ltd, 2007).

The implementation of these transactions are subject to conditions such as the completion of due diligence, raising of finances, regulatory approval and approval of third party shareholders (South Africa Info, 2007).
Outcomes:
According to the Mining Weekly Online on 7 December 2007, MHR's acquistion of interest in Northam and the Booysendal Project will be delayed until January 2008. It also noted that the ARC transaction is expected to be completed by mid-2008.

Related Entries

Organisation
  • Anglo American PLC
  • Mvelaphanda Resources Ltd
  • Northam Platinum Limited
  • Anglo Platinum
  • Anooraq Resources Corporation
  • Policy/Strategy
  • Apartheid
  • Black Economic Empowerment
  • Broad-Based Socio-Economic Empowerment Charter for the South African Mining Industry

  • References

    Resource
    Anglo American PLC Black Economic Empowerment
    Mvelaphanda Resources Ltd (4 September 2007) Announcement relating to the proposed empowerment transactions between Anglo Platinum, Anooraq and Mvela Resources
    Mining Weekly Online (7 December 2008) Acquisition delayed until January
    Resource Section
    South Africa Info - The all-in-one official guide and web portal to South Africa. (4 September 2007) Anglo Platinum in R35bn BEE deal
    Mining Africa Yearbook (October 2007) Anglo Platinum Empowerment Deal Places R35-Bill Under HDSA Control
    Anglo American (September 2007) Anglo Platinum, Anooraq Resources and Mvela Resources BEE Transactions

    Glossary

    Black Economic Empowerment Transaction (South Africa)

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