Lonmin unveils R646m deal with Bapo ba Mogale community

30-07-2014
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BusinessDay
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LONMIN, the world’s third-largest platinum producer, unveiled a R546m share transaction with the Bapo ba Mogale community as well as a R100m cash payment to the community as the company strives to meet its black economic empowerment (BEE) targets by the end of the year.

Lonmin said the transaction with the Bapo involved the community swapping a royalty scheme for 13.13-million shares in Lonmin, a R20m a year payment over five years, and an employee share ownership scheme and community share ownership trust it is putting in place. The deal would secure it the 26% BEE target by the end of this year.

The Bapo receive royalties from the Eastern Platinum and Western Platinum operating entities in Lonmin. The community voted on Tuesday night in a process overseen by the Electoral Commission of South Africa to swap these payments for shares in the company and the cash payment, which would be used towards funding the "administrative costs of running, controlling and directing the affairs of the Bapo".

As part of the transaction, Eastern Platinum will acquire 100% ownership of Bapo ba Mogale Mining Company, which owns a 7.5% stake in the Pandora joint venture that Lonmin shares with Anglo American Platinum (Amplats). Amplats said last week it wanted to sell its 42.5% stake in Pandora and it was likely Lonmin would be the buyer.

The transaction would boost empowerment levels in Lonmin by 2.4% and a further 0.9% through the creation of a developmental trust for the Bapo community, giving a total 3.3%.

Lonmin’s scheme for employees and the community trust would add a further 4.7% and should be completed by the end of the year.

These combined transactions would give Lonmin the outstanding 8% it needed to meet its 26% BEE ownership as stipulated in the mining charter, the company said.

The community also stood to benefit further from Lonmin’s decision to award the Bapo preferential status when it came to the supply of goods and services to the company, which had mines between Rustenburg and Brits in North West province.

"Lonmin will provide an opportunity for the Bapo ba Mogale community to participate in the procurement and business value chain activities of Lonplats to a minimum revenue value of R200m within 18 months from completion," Lonmin said.