‘Deal of a life­time’

Some­times it’s more sus­tain­able to be a small fish in a larger empowerment pond

Finweek English Edition - - Companies & Markets - SIKONATHI MANTSHANTSHA sikonathim@fin­week.co.za

THE PRO­POSED TAKEOVER of black empowerment min­ers Northam Platinum and Mve­laphanda Re­sources by Im­pala Platinum would en­hance trans­for­ma­tion while build­ing a “na­tional platinum empowerment cham­pion” and one of South Africa’s big­gest empowerment com­pa­nies. So says Mve­laphanda Hold­ings, found­ing and ma­jor share­holder in Mvela Re­sources, which de­nies un­eth­i­cal busi­ness prac­tice in rev­ers­ing into Im­plats as­sets it re­cently bought from Im­plats’ largest com­peti­tor.

In Au­gust Mvela Re­sources bought An­glo Platinum’s 50% in­ter­est in the Booy­sendal platinum ex­plo­ration project and the com­pany’s 22% stake in Northam for R4bn in cash. Af­ter ex­chang­ing the whole of Booy­sendal for new Northam shares, Mvela Re­sources ended up with a 63% in­ter­est in Northam.

But the ques­tion on some in­vestors’ minds is the palata­bil­ity of Mvela Re­sources’ lat­est trans­ac­tion with Im­plats – which di­rectly trans­fers to a com­peti­tor an as­set bought at a dis­count in or­der to ad­vance empowerment and trans­for­ma­tion. The pro­posed sale to Im­plats also flies in the face of Mvela Re­sources’ claim in Septem­ber 2007 that the deal with An­gloplat would help it “achieve a mile­stone in its longer-term strate­gic ob­jec­tives by gain­ing con­trol of an op­er­at­ing com­pany”. No sooner had it gained con­trol of Northam than it en­tered into ne­go­ti­a­tions for its sale and al­lowed it­self to be swal­lowed up by Im­plats in the process.

How­ever, Mvela Hold­ings CE Mark Will­cox doesn’t see the deal in that light. “Mvela Re­sources paid top value at the time for the Booy­sendal as­set, and the trans­ac­tion with Im­plats en­hances trans­for­ma­tion and empowerment.” Will­cox com­pares the deal with African Rain­bow Min­er­als’ Pa­trice Mot­sepe and Exxaro’s Sipho Nkosi, who also bought as­sets cheaply and in­jected them into their re­spec­tive com­pa­nies. “Those turned out to be very value-adding empowerment deals and very sus­tain­able,” says Will­cox. He says An­gloplat is “sup­port­ive” of Mvela Re­sources’ trans­ac­tion with Im­plats – “sub­ject to their rights” be­ing pro­tected.

“An­gloplat did a very fair deal with us. There isn’t much black cap­i­tal go­ing around but they got R4bn cash from us,” says Will­cox. The trans­ac­tion “will cre­ate a na­tional platinum empowerment cham­pion” where the Royal Bafo­keng Na­tion (RBN) joins hands with Mvela as the largest share­hold­ers in the com­pany.

The empowerment part­ners will own a joint ini­tial 17% in the ex­panded Im­plats; but Im­plats also stated it will do a fol­lowup deal to take black share­hold­ing north of 20%. “It’s a coup for empowerment to cre­ate a na­tional platinum as­set in the form of Im­plats,” says Will­cox. He adds Mvela Re­sources has a right to make money, as it took a ma­jor risk when it bought Booy­sendal as the platinum price could have gone against it. Platinum sprang from around US$1 200/ oz in Septem­ber 2007 to more than $2 000/ oz and stayed above $1 700/oz un­til two months ago. At the time of writ­ing it was around $1 000/oz.

More im­por­tantly, the Im­plats trans­ac­tion will re­sult in a “sus­tain­able trans­fer of value and trans­for­ma­tion from board level right through­out the as­set,” says Will­cox. He be­lieves the Im­plats deal is a cul­mi­na­tion of Mvela’s en­deav­ours with empowerment.

Mvela Re­sources deputy chair­man Bernard van Rooyen says An­gloplat did a “deal of a life­time with us and earned their empowerment cred­its for it”. An­gloplat will still re­tain those cred­its. Says Van Rooyen: “We be­lieve it’s Im­plats’s vi­sion to be a com­pany that over­reaches empowerment in the leg­isla­tive sense. We also want to do the max­i­mum we can do for empowerment.”

Al­ready in re­tire­ment ter­ri­tory, Van Rooyen is happy to have been able to “try to trans­fer” his skills and in­tel­lec­tual knowl­edge to the main play­ers in the Mvela em­pire.

Will­cox says one ma­jor as­pect of the deal is its sus­tain­abil­ity and en­hance­ment it of­fers to trans­for­ma­tion. “On our own we couldn’t de­velop Booy­sendal as quickly, but Im­plats has the re­sources to help us do that,” says Will­cox. He isn’t wor­ried about the loss of con­trol over the as­sets. “In min­ing it’s some­times more sus­tain­able to be a small fish in a big pond than be­ing a big fish in a small (empowerment) pond.” (See story on page 46.)

Cul­mi­na­tion of en­deav­ours. Mark Will­cox


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