Afrimat spurred to acquire last Unicorn Capital shares

By Edward West Time of article published May 27, 2020

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CAPE TOWN - Afrimat, the industrial minerals, bulk commodity and construction materials mining company, said yesterday it had made an approach to acquire the remaining shares in Unicorn Capital Partners as it seeks to diversify its offerings.

Afrimat holds 27.27percent of the shares in Unicorn, and based on Unicorn’s market capitalisation yesterday, the remaining shares are worth some R93.4million. Unicorn’s share price increased 10percent to 11cents by mid-day yesterday.

The intention was that the remaining shareholding be acquired in exchange for new listed Afrimat ordinary shares at a ratio of 1 new Afrimat share for every 280 Unicorn shares held.

Afrimat had obtained undertakings from 57percent of Unicorn shareholders, who indicated that they would vote in favour of the scheme of arrangement.

Unicorn’s main asset, Nkomati Anthracite Proprietary, mines high-grade anthracite, which positions it as a key supplier to the local market, Afrimat said in its statement.

Nkomati’s operations were open-pit and underground, with the current life of mine LoM for the open-pit section estimated at nine years, while the underground LoM was in excess of 20 years.

There is a total managed coal resource of 41million tons and a total managed run of mine coal reserve of 5.9million tons.

Afrimat chief executive Andries van Heerden said the transaction accorded well with their diversification strategy and would open up an additional product line to its customers, as well as add to the composition of the bulk commodities segment in Afrimat.

“We are familiar with open-pit mining operations, and while we understand that underground mining of anthracite comes with its challenges, we have completed numerous assessments to ensure safe mining of the anthracite using precise, technical methods,” he said.

He said there was good demand for anthracite in South Africa. “Nkomati’s anthracite has the lowest sulphur impurities of all anthracite producers in South Africa, while its phosphorus levels are on par with the best-producing mines.”

Unicorn has been listed on the JSE since 1993. Unicorn said in a notice this week that Afrimat had indicated that, in order to enable it to submit a “firm intention offer letter”, it would be necessary for Afrimat to conduct a legal, financial, tax and commercial due diligence investigation into Unicorn and its business

In the six months to December 31, revenue from Unicorn’s continuing operations increased by R76.4m to R177.3m, its website showed, while the headline loss per share widened sharply by 4.64c to 6.14c per share.

According to the Modern Mining website, there has been rapid growth in the demand for anthracite coal from steel manufacturers, apart from demand from construction, infrastructure and the industrial sectors.

Van Heerden said last week at the announcement of the group’s annual results, that a healthy balance sheet after 11 years of earnings’ growth had enabled it to seek opportunities through the lockdown, such as participating in commodity projects or acquiring and turning around companies in distress.

Afrimat reported a 48.5percent rise in headline earnings to 347.7c per share for the year to February 29, maintaining a compound average growth in headline earnings per share of 21.6percent per annum for 11 years. Its share price increased 0.38 percent to R29.11 yesterday early afternoon, before closing at R30.

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