Eskom yet to sign loan agreements

Eskom is yet to sign loan agreements with the New Development Bank and the African Development Bank secured in 2016, both of which are contingent on a commitment to the expansion of renewable energy.

Siyanda is the operating partner.

There will be further annual payments of 35% of cumulative free cash flows over 10 years, with a R6bn cap on the price, which means the potential value of the sale to Amplats is R6.4bn if platinum prices strengthen.

There was no minimum price in the sale of Masa and Union, which produced 151,000oz of platinum and free cash flow of R224m last year.

In the Rustenburg deal, the minimum and maximum values arising from an annual 35% share of cumulative free cash flows is pegged at R3bn and R20bn, respectively. For the Rustenburg mines (sold in 2016), Amplats reported negative cash flow of R352m in 2016.

“This deal gives Siyanda a low upfront capital entry and it gives protection to a small mining company with a small balance sheet, so its risk is much lower. It has positive participation in future upside in metal prices, but if there is very little cash flow, you won’t see Siyanda getting into a huge amount of debt because of the need to pay out a whole lot of money when they aren’t making any,” said Amplats CEO Chris Griffith.

Union comes with a R1bn pipeline of metal going through various processes in four months. “They get about a billion rand of working capital.”

Siyanda’s business development executive Imraan Osman said the company was talking to various parties to raise the R400m. He gave no details.

Siyanda did not have “aggressive” ambitions to expand into platinum, but it knew Union well from its role as the operator of Masa Chrome attached to the mine, he said.

“One of the opportunities we saw is buying the rest of Masa we don’t have and it’s a massively value-accretive business,” Osman said. “The work Amplats has done to restore Union to profitability can be taken further to extract additional value. A number of our executives are ex-Anglo American people and come from the mining industry.”

Siyanda, a black-owned company, had to conclude an empowerment transaction to secure the transfer of mining rights to the company.