Mvelaphanda Resources said on Monday it would sell 44-million shares in Northam to Kazakh group ENRC in a bid to simplify its corporate structure.
Mvela said it would sell the 12,2% stake to ENRC at a price of R50 per Northam share, amounting to a total consideration of R2,2-billion, which will be settled in cash.
After the completion of the deal, Mvela will own 50,5% in Northam.
“The unbundling strategy will, inter alia, resolve Mvela Resources’s pyramid holding company structure under the JSE listings requirements and realise value for shareholders by unlocking the discount to net asset value that Mvela Resources has historically traded at,” the company said in a statement.
Northam chief executive Glyn Lewis said the transaction reaffirmed the potential of the South African mining industry and the platinum group metals sector in particular.
“After Mvela Resources completes its proposed unbundling, Northam’s free float will increase significantly, improving the liquidity and ease of investing in Northam shares in the market,” he said in a separate statement.
Northam’s assets include the Zondereinde platinum mine, which produces about 300 000 ounces of PGMs per year, as well as the Booysendal project, whose first module is expected to be in full production by August 2014, with an annual output of 130 000 ounces per year.