Johannesburg - Zambezi Platinum plans to help Northam Platinum [JSE:NHM] make acquisitions and expand operations after paying R4.6bn as part of a transaction for a 31.4% stake in the South African mining company.
Zambezi, owned by black investors, listed preference shares on the Johannesburg Stock Exchange on Monday that it sold at R41 each. Legislation requires that non-white South Africans own at least 26% of mines in the country, a policy aimed at redressing economic disparities created during apartheid, which ended in 1994.
“We are not just passengers in the vehicle, we are very much active participants,” Lazarus Zim, chief executive officer of Zambezi and Northam’s chairperson, said by phone from Johannesburg on May 8. “We are in a position to hopefully grow the company significantly.”
Zim is the former CEO of London-based Anglo American's [JSE:AGL] local unit, ex-chairperson of Kumba Iron Ore [JSE:KIO] and Telkom South Africa [JSE:TKG], the continent’s largest fixed-line operator, and a past president of the nation’s Chamber of Mines.
His Afripalm Resources helped to facilitate Northam’s acquisition of the Booysendal property in 2007, where the company has since built a new mine, which is operational.
Preference-share investors will be paid an annual dividend at South Africa’s benchmark retail-lending rate, known as the prime rate, plus 3.5 percentage points, according to a notice on Northam’s website. Almost 160 million securities will be issued on May 18 following an offer to existing Northam investors, Zambezi said in a statement on Monday
‘Great believer in platinum’
Northam, which owns the world’s deepest platinum mine, will use the proceeds of the Zambezi deal to pursue deals and expand mines, it said in October. It announced a deal in February to buy the Everest mine, which is contiguous to Booysendal, for R450m from Aquarius Platinum [JSE:AQP]. The stock is this year’s best performer among six members of the FTSE/JSE Africa Platinum Mining Index, with gains of 31%.
Prices for platinum, used to clean vehicle emissions and for jewelry, have tumbled 36% since 2011 as excessive stockpiles compensated for production shortages.
“I’m a great believer in platinum, in spite of the current subdued sentiment,” Zim said. “I’m very bullish about the metal going forward because it is such an essential part of life.”
Northam announced the transaction with Zambezi in October after the stakes of its previous black owners, Afripalm and Mvelaphanda Holdings, got eroded as the investment companies had to sell part of their holdings to repay loans.
“Everyone party to this transaction is protected from the vicissitudes of the market through the ring-fencing of Zambezi,” Zim said in the Monday statement.