On Monday South African diversified mining group Exxaro Resources said it had facilitated meaningful shareholding in Rosh Pinah as it has divested 43.8% of its stake in Rosh Pinah Zinc Corp to Namibian shareholder groups. No money exchanged hands in the ‘Namibianisation' transaction that reduced the black-miner's stake in the zinc producer to 50.04%.
The transaction followed an agreement facilitated by shareholder and mineral rights owner PE Minerals in which the parties that included Exxaro's predecessor, Iscor Ltd., Rosh Pinah and the south west African country's government agreed on a strategy to sell a 50% interest in the integrated zinc mining and refinery operation to Namibian citizens.
PE Minerals, a local Namibian entity, evaluated and considered appropriate beneficiaries for the transaction, obtained Namibian government approval for the transaction, and negotiated and structured the deal on behalf of Namibian shareholders. Exxaro will however continue to manage the mine.
Prior to Monday's transaction, Exxaro's stake in the mine, situated in the country's south west, stood at 93.9% while the rest was controlled by PE Minerals. The Namibianised stake is being held under the company Jaguar, which consists of a broad-based range of shareholders representing traditional authorities, communities, employees and individuals.
Jaguar will control a 38.99% shareholding of the Namibianised stake, with PE Minerals' stake increasing to 8% while the rest - 2.97% - would be taken over by an Employee Empowerment Participation Scheme which the shareholders have agreed to form.
Exxaro, PE Minerals and Jaguar will each donate a proportionate number of shares to form a trust through which the employee participation scheme will be administered. Under the scheme, qualifying employees at the mine would be entitled to 3% of the future dividends declared by Rosh Pinah.
This private sector initiative between Exxaro, PE Minerals and Rosh Pinah shows a unified commitment to social responsibility and empowerment of Namibians... The shareholder base has been widened significantly among Namibians, including the workforce at Rosh Pinah, chairman of PE Minerals Aaron Mushimba said in the capital, Windhoek.
To facilitate the transaction, Rosh Pinah will declare a dividend of R435-million (US$55.3-million) to Exxaro and PE Minerals from its cash resources. To accommodate the mine's new capital structure, 60% of Rosh Pinah's zinc and lead price exposure for the next 42 months will be hedged, an increase from the 47% hedged currently.
Rosh Pinah produced 94,000 tonnes of zinc concentrate in 2007. The mine supplies concentrates to Exxaro's Zincor refinery in Gauteng, South Africa, which produced 101,000 tonnes of zinc in 2007.
Since our listing in 2007, we have fully supported the obligations Exxaro assumed from its predecessors Iscor and, in turn, Kumba Resources. However, it was only when buoyant zinc commodity prices improved substantially from mid-2006 that the parties were able to develop a bankable financial structure to support the transaction, bringing us to today's reality, said Exxaro CEO Sipho Nkosi.