NORTHAM Platinum would close the proposed transaction to restore its empowerment ownership to 26 percent shortly, it reported yesterday. But the market reacted negatively with the stock losing 4 percent on the JSE, compared with a 1.1 percent fall for the platinum index.
“The terms of the proposed HDSA (historically disadvantaged South African) transaction are being finalised and a detailed announcement will be released in the near future,” it said in a Stock Exchange News Service statement.
Northam was forced to revise its black economic empowerment (BEE) deal when Mvela Holdings and Afripalm Resources were forced to sell down about 10 percent of stock in August 2012 after breaching bank covenants.
The world’s fifth-largest platinum producer was the first established mining company in South Africa to become fully empowered. However, Mvelaphanda founder Tokyo Sexwale and Lazarus Zim of Afripalm sold the majority of their shares in 2012.
The deal brought into question the concept of “once empowered, always empowered”, and whether Zim and Sexwale had been the best candidates for the partnership. Zim shut down Afripalm following the Northam failure and the company’s stake was purchased by state fund manager the Public Investment Corporation.
Northam stock fell as low as R38.08 before closing at R38.40.
In the statement, the company said it had made “significant progress in structuring a proposed transaction”.
It warned that the terms of the proposed transaction might have a material effect on the share price and advised shareholders to exercise caution when dealing in its securities until further notice.
Northam’s former chief executive, Glyn Lewis, said last month that the firm was in talks with the Department of Mineral Resources regarding the deal and that an agreement had been reached, in principle.
Former Impala Platinum executive Paul Dunne took over as chief executive at the start of this month. Lewis is assisting with the transition and will retire from Northam when his contract ends on June 30.
Northam posted a R91 million loss for the six months to December last year following an 11-week wage strike led by the National Union of Mineworker (NUM) at its Zondereinde Mine in Limpopo. The loss was the first recorded by the company since 1998.
The strike cost it R750m in revenue and ended when the company reached an agreement with the NUM for wage increases ranging between 7.5 percent and 9.5 percent and a R3 000 once-off bonus for employees to return to work.
Platinum sales at Zondereinde declined by 16 percent in the interim period. The strike took place at a time when the mining industry was facing increasing input costs, softening prices and lower demand.