South African fluorspar-miner Sallies has made good on its pledge
to conclude a charter- compliant empowerment transaction, by
concluding an agreement to sell 30% of itself, and its
subsidiaries, to black-owned African Renaissance Investments
(ARI).
CEO Izak Marais said last year that Sallies would address the issue
of its BEE status once it had returned to profitability.
The miner had, however, convinced the Department of Minerals and
Energy of its intentions and had been awarded new-order mineral
rights for its Witkop mine on that basis.
In terms of the agreement, which will become effective on the first
day of the next month after all the conditions are fulfilled,
Sallies has also encoal crushing plant and stockpiletered into an unincorporated joint-venture (JV)
agreement and a management and skills-transfer agreement, with
ARI.
Both Sallies and ARI will then contribute their shares (70% and 30%
respectively) to the JV.
The JV will also enter into a management and skills-transfer
agreement with Sallies, which will result in Sallies’ taking
responsibility for the management of the JV, as wellmobile cement dressing equipment price as the
marketing and distribution of its production.
Further, Sallies has also committed to a skills-transfer programme,
to benefit previously-disadvantaged South Africans. The JV will be
controlled by a management committee, comprising five
representatives from Sallies and two from ARI.
For the 30% in Sallies, ARI will pay a cash amount equal to 30% of
the Sallies market capitalisation, mining equipment for sale in azcalculated at a 60-day weighted
average traded price of the shares in Sallies at the time of
payment, multiplied by the number of Sallies shares outstanding at
the time.
ARI, which is wholly-owned by African Renaissance Holdings (ARH),
will have to complete its payments within three years of the first
dividend it received from the JV, which will be cofunded by the two
parties, in proportion to their respective interests.underground mining equipment manufacturing
However, until ARI has paid off the Sallies share purchase, Sallies
will finance its operational funding requirement of the JV, in the
form of a loan, to be repaid on the final payment day of the share
purchase.
ARH is black-owned and -managed and has interests in mining,
gaming, leisure and information and communications-technology
companies.
To protect Sallies’ empoused small scale gold mining equipmentwerment credentials, the agreement
also includes the condition that, should the ownership structure of
ARI change so that previously-disadvantaged South Africans are no
longer the beneficiaries, Sallies will be entitled to buy
ARI’s participation interests in the JV, at the value of the
outstanding loan.
The fluorspar-miner announced in January that it had managed to
cancel what it termed an ‘onerous’ supply contract with
US chemicals firm Honeywell, which had placed a price cap of $116/t
for fluorspar, while spot prices were at some $170/t.
Sallies blamed the contract, as well as the strong rand, for its
R31-million loss posted for the 2004/5 financial year, but said in
a statement last week that it expected to return to profitability
immediately.
The firm has stepped up its international marketing and is
confident that now that the Honeywell contract has been cancelled,
it would be able to replace the tonnage with several supply
options, it said. Sallies has also said that it is in talks to
acquire holding company Intercoal and its wholly-owned subsidiary,
which collectively trade under the name of Buffalo Fluorspar.
Last month, the company entered into an underwriting agreement,
with the intention to raise a mini-mum of R42,288-million in a
rights offer. The money will be used to partially finance the
proposed acqui- sition of Buffalo Fluorspar, reduce its
interest-bearing debt and finance the organic expansion of
Sallies’ exist- ing operations, the miner said.