Shanduka Group, a leading black-owned and controlled investment holding company is proud to announce a significant milestone in the building of its presence in the South African mineral resources sector.

 

Shanduka Resources (Pty) Limited (“Shanduka”), a 100% owned subsidiary ofShanduka (Pty) Limited, will, subject to several regulatory conditions precedent, be acquiring a 50.03% shareholding in Incwala Resources (Proprietary) Limited (“Incwala”) for a total consideration of R2.8 billion. Incwala was established in 2004 and holds an 18% interest in Lonmin plc’s (“Lonmin”) two principal operating subsidiaries, Western Platinum Limited and Eastern Platinum Limited and a 26% stake in the Akanani platinum project. London and Johannesburg listed Lonmin, is the third biggest producer of platinum in the world. In 2009, Lonmin produced 1.268 million ounces of Platinum Group Metals (“PGM”), including 682 000 ounces of platinum, for revenue of $1.1 billion.

 

This transaction provides the platform for a sustainable growth focused partnership between Shanduka and Lonmin, which will be further enhanced by: meaningful cooperation between Shanduka and Lonmin on existing and future PGM projects; Lonmin’s support of Shanduka’s operational involvement in these projects; Shanduka’s involvement in Lonmin’s executive and senior management structures (including Mr Cyril Ramaphosa’s election to the board of Lonmin as a non-executive director); and Shanduka providing leadership for Incwala and assisting with Lonmin’s various transformation initiatives.

 

Post completion of the transaction, Shanduka will, directly or indirectly, own 50.03% of Incwala, the Industrial Development Corporation of South Africa (“IDC”) and Lonmin will each continue to own 23.56%, with other Historically Disadvantaged South African (“HDSA”) shareholders continuing to own approximately 2.85%.

 

The transaction will be financed by an unencumbered equity contribution of R300 million from Shanduka and vendor loan funding from Lonmin to the extent of R2.5 billion. The terms and structure of the financing will provide for a sustainable framework to mitigate the effect of volatilities in the PGM market.

 

Shanduka will be acquiring shares from several of the original HDSA shareholder groups at fair value. This is particularly significant given that the majority of the HDSA shares have been financially distressed.

 

Mr Cyril Ramaphosa, Executive Chairman ofShanduka, said:
“The Board and Executive team of Shanduka have been monitoring Incwala and its investment in Lonmin’s operating subsidiaries for a number of years and we are delighted to be able to invest in the company through this transaction. We are very pleased that the transaction has been endorsed by the Minister of Mineral Resources / Department of Mineral Resources.

 

This transaction affords Shanduka a rare opportunity to invest in the world’s third largest primary producer of platinum and bolsters our existing PGM investments. Shanduka’s equity contribution represents a significant portion of the Group’s liquid capital and further exposes the Group’s balance sheet to the PGM market. We look forward to working with Lonmin and its management team in their efforts to progress a number of transformation and sustainability initiatives currently underway at Lonmin.”

 

Mr Rowan Smith, Managing Director of Shanduka said:
“The investment in Incwala provides Shanduka with the opportunity to invest in one of the world’s best PGM ore bodies. We are also excited that the project pipeline with Lonmin will foster a long term partnership which will enable Shanduka to become a significant player in the South African PGM market, and we look forward to working closely with Lonmin’s team in this regard. Shanduka is committed to broadbased black economic empowerment, which is demonstrated by the allocation of a 10% shareholding to a women’s group through a transaction vendor funded byShanduka. The company also benefits over 80 000 learners and previously disadvantaged communities through its social development initiatives.

 

Editor’s Notes

Shanduka Resources is a subsidiary of Shanduka, a black-owned and managed investment holding company founded by Mr Cyril Ramaphosa, Mr James Motlatsi and several other black professionals. Shanduka encompasses its own element of broad-based BEE through a 10% equity shareholding by a consortium of women, as well as a further 5% shareholding by community development trusts. These trusts are part of the Shanduka Foundation which was launched in 2004 as the vehicle through whichShanduka channels its social and community investment initiatives. Shanduka has committed to spend in excess of R100 million in upliftment programmes over ten years. The Shanduka Foundation is committed to supporting initiatives aimed at:

 

• providing scholarships for deserving, previously disadvantaged students at accredited tertiary institutions enabling them to continue their studies in business related courses;
• assisting underprivileged schools to acquire basic facilities through the Adopt-a-School programme;
• supporting small, medium and micro enterprises through initiatives aimed at developing business skills and ensuring sustainability through Shanduka Black Umbrellas;
• supporting targeted community-based initiatives; and
• drawing in other stakeholders to partner the Shanduka Foundation in its initiatives.

 

For more information please contact:
Maureen Mphatsoe
Tel: 2711 305 8912
Mobile: 27823 386 9693
E-mail: mmphatsoe@shanduka.co.za