Exxaro’s sale of zinc stake to IDC collapses
JOHANNESBURG - THE SHARES in Exxaro Resources, the diversified South African-based resources group, leapt nearly 5 percent by midday trade yesterday despite it saying the sale of its 24.4 percent stake in Black Mountain Mining (BMM) to the Industrial Development Corporation (IDC) had fallen through.
By 3.48pm the share price was up 4.73 percent on the JSE at R145.25.
The miner said it had previously indicated that zinc was not strategically aligned to the group’s long-term objectives based on a review of its portfolio of assets.
“Exxaro, therefore, initiated a sales process for the disposal of its 24.4 percent interest in Black Mountain Mining Proprietary Limited to the Industrial Development Corporation IDC. Regretfully, the sale will no longer proceed as envisaged due to a change in the strategic priorities of the IDC, given the prevailing global and domestic economic conditions.”
Exxaro said the conditions within which the IDC originally considered the purchase of the shares hadchanged and informed a review of the transaction.
These included the immediate development impact of the proposed transaction and the fact that the IDC's funding proceeds would not be directly used to yield the developmental objectives in the target company.
“In addition, given the shifting dynamics in the local economic landscape, the IDC is reprioritising its capital allocation to ensure that it is geared to actively support downstream opportunities to maximise potential job creation and retention opportunities,” Exxaro said
Exxaro said it would continue to evaluate its options in relation to the BMM investment as part of its strategic review.
BUSINESS REPORT ONLINE