Mvelaphanda Resources, a leading black economic empowerment (BEE) mining name, on Monday announced the sale of 11m of 50m shares it holds in Gold Fields, a Tier I global gold miner. This follows the recent announcement by Mvela Resources of its conversion of a stake in Gold Fields South Africa, dating from 8 March 2004, into 50m shares in listed Gold Fields.On 16 March this year, Mvela Resources said it had refinanced some ZAR 2.1bn in mezzanine debt relating to the 2004 effective acquisition of the 50m Gold Fields shares, which it then received on 17 March 2009. At the start of the transaction in 2004, Mvela Resources loaned Gold Fields ZAR 4.1bn. The Mvela Resources loan itself was funded by way of commercial bank debt of roughly ZAR 1.3bn, start-out mezzanine finance of about ZAR 1.1bn, with the balance of some ZAR 1.7bn financed from cash raised by way of Mvela Resources's international private placement of shares.The timing of the deals and transactions has worked in Mvela's favour, given that the stake in Gold Fields is now worth ZAR 5.5bn (USD 567m) - including the 11m shares that have now been sold. Start-out equity of ZAR 1.7bn has delivered a further ZAR 3.8bn in equity, not least due to the continuing bull market in gold equities.Mvela Resources also holds 63% of Northam, a Tier II platinum miner. Beyond the debt associated with the Gold Fields transactions, Mvela Resources also holds a ZAR 2.4bn quasi debt item associated mainly with financing the acquisition of Booysendal (which sits in Northam) and allied items from Anglo Platinum in a BEE deal finalised during 2008.During recent presentations on 2008's results, Mvela Resources, led by CEO Pine Pienaar, made its clear that far-reaching plans are being put in place to unlock value for Mvela Resources shareholders. While there has been some bounce back of late, the collapse in platinum group metal (PGM) prices, and pretty dismal prospects for the meantime, has naturally proved to be one of the core drivers.Booysendal offers an outstanding opportunity to gain surface access to PGMs at low capital and low operating cost, and massive resources of PGM ounces, to boot. On 2 October 2008 Impala Platinum announced its intention to acquire Northam, but as PGM prices rapidly headed south Impala moved to a cold feet announcement of 17 October 2008, finally terminating in a full exit on 14 January 2009. While others have expressed an interest in Northam/Booysendal, such as Xstrata, Lonmin, Alisher Usmanov, and ENRC, the PGM sector is having a rough time of it.The strategic plans being hatched at Mvela Resources are keenly aimed at unlocking shareholder value, by attacking debt, collapsing the pyramid structure, and forging ahead with the development of Booysendal. Mvela Resources has long traded at a substantial discount to it underlying net asset value, probably penalized for its debt levels, and the perception of its heavy reliance on Northam dividends for cash flow. The discount has narrowed sharply since Mvela Resources made known its new plans to collapse the Mvela Resources structure.On Monday Pienaar said by way of statement that while Mvela Resources remains positive on the outlook for gold and Gold Fields, we deemed it prudent to at least de-risk part of the debt, by selling some of our Gold Fields shares in the market. Continued market volatility adds to trading risk and we are pleased that we have not only approximately halved our debt obligation, but received a price for our Gold Fields shares, which was higher than the market average over the period.Mvela Resources is significantly in advance of its repayment obligations under the facility and only intends to retire the balance of the debt, when further strength in Gold Fields' share price permits. We are confident that our investment in Gold Fields we allow us to redeem our debt.Mvelaphanda Resources

NET ASSET VALUE*

(Current)

ZAR bn

USD bn

Northam

5.863

0.602

Gold Fields

5.525

0.567

Trans Hex

0.027

0.003

Unlisted assets

0.200

0.021

Mezzanine debt

-2.100

-0.216

Northam pref

-2.347

-0.241

Cash

0.673

0.069

Total

7.841

0.805

ZAR/USD

Per share

36.62

Stock price

29.00

Discount

-20.8%

* Just prior to most recent transaction