Aflease Gold and Uranium Resources has announced it has signed a milestone black economic empowerment (BEE) deal with a broad-based consortium, with major benefits going to both workers and communities.
Under the accord, which will be effective from 30th September this year, the empowerment partners will acquire 26% of Aflease’s current exploration and mining activities and prospecting areas in the Klerksdorp region.
The deal is being financed by Aflease, and the purchase will take place in stages, with the empowerment consortium paying market-related prices.
“I am delighted that we have come so far so fast,” says Aflease CE Neal Froneman.
“Once this deal comes into effect, we will be compliant on our largest assets with the equity provisions of the Mining Charter, and we have done this in just over a year from the [Mining] Charter’s implementation.
“However, this is not the end of our commitment to making Aflease an empowerment player in the full sense.
“We are the only listed South African mining company to have a black chairwoman, in Thuthukile Skweyiya, and we are well ahead of target in recruiting able and talented black South Africans to our board and our management team.”
The company housing the BEE consortium has been provisionally named Micawber 397, but is due to change its name once it is up and running.
It will be 30% owned by black Aflease workers, and 30% by a community trust.
Sandile Zungu”s Africa Vanguard Resources will hold 20%, with five percent stakes each going to Indalo Investment Holdings, Emseni Investments, Umlilo Mining and Finance and Magumo Investments.
“The exact proportions have changed slightly since we first announced our BEE deal in February, but all of us are still committed to this deal, and I am delighted with the structure of the empowerment grouping,” says Froneman.
Froneman continued: “It meets our requirements for genuine empowerment, and not mere enrichment, and has also won government approval. With this powerful and proud partnership in place, I am confident that we will be well placed to secure not only the conversion of our existing mineral rights, but also to secure compliance for any new assets which we may acquire in the future, as we continue to grow our company and return to do what we do best — mining!”
Aflease is about to resume active mining at our Bonanza gold mine near Klerksdorp, and is also fast-tracking plans to start a uranium mine right next door, early in 2007.
“We will be ensuring that our new empowerment partners are with us as we selectively grow Micawber 397, and we and they start to reap the rewards from the turnaround strategy which we have in place for Aflease.”
Aflease finance director Jean Nortier says that a “very imaginative financing structure” was needed to underpin the BEE deal, with Aflease itself funding the empowerment holding. This loan is to be repaid from the future profits which accrue to the empowerment partners.
“We are still returning to active mining, so don’t have revenue streams to fund the transaction at this stage,” explains Nortier.
“Our BEE partners will pay for their stake in the company in stages, with the first payment of at least 20% of the total being due within three years of receipt of the first dividend distribution, and subsequent payments of at least 20% in each following three-year period.
“The empowerment partners are excited to be involved in this transaction, which is good for empowerment in general and definitely good for Aflease and for South Africa,” said Zungu.
“It shows that this company is ahead of the pack in embracing the need to uplift ordinary South Africans. Aflease is going to go places.”
Aflease has both gold and uranium resources in SA, and is planning an international capital raising later this year. The company is then expected to be divided into a focused gold vehicle and a separately-listed uranium-driven resources entity.
“We intend to grow Aflease both organically and by acquisition, and will be now able to do so as a mining company which is meeting the requirements of the Mining Charter, for the benefit of both our existing shareholders and our new empowerment partners,” says Froneman.
“Aflease is actively working to ensure it meets every aspect of the Charter, and not just the 26% equity requirement. From procurement to skills development, we are working hard to ensure that Aflease plays its part in the economic success and the transformation of South Africa. We have already very successfully employed one of the members of Magumo as part of our empowerment drive.” ‒ I-Net Bridge