JOHANNESBURG - Merafe Resources has acquired a 20.5 percent stake in Glencore’s Unicorn Chrome for R32.2 million, the company said today.
Merafe told investors that it considered Unicorn to be a ‘valuable addition’ to its chrome interests.
The company said that it had sufficient cash reserves to complete the acquisition.
“Merafe considers this acquisition as a long-term strategic investment which will place the company in a better position and ahead of its peers from an operational perspective. Given the cyclical nature of the mining industry, prudent cash management is crucial, especially now during Covid-19 pandemic,” Merafe said, adding that it continued to closely monitor the costs and capital expenditure of the company.
Unicorn owns a UG2 chrome concentrate producer which extracts chrome concentrate from a tailings stream in the North West.
Merafe said that Unicorn’s net asset value at the year ended 28 February 2019 was R21.2 million and the profit attributable thereto was R28.6 million.
Merafe also said that the acquisition was not subject to shareholder approval, and it had appointed Tamela Holdings as the independent expert to provide an opinion on the fairness of the acquisition.
“Tamela has considered the terms and conditions of the acquisition and is of the opinion that the acquisition is fair to shareholders,” the company said. It invited shareholders to inspect the terms of the acquisition for a period of 28 days from the date of the announcement.
Merafe operates a chrome joint venture with Glencore The joint venture is owned 79.5 percent by Glencore and 20.5 percent by Merafe, has an annual capacity of 2.3 million tonnes of ferrochrome which is used in the production of steel.
In April the joint venture declared force majeure on qualifying contracts due to the nationwide 21-day lockdown imposed by the government due to the coronavirus outbreak.