JOHANNESBURG (miningweekly.com) – The arbitration to resolve the long-standing contractual dispute between JSE-listed Mvelaphanda Resources and its former shareholder Khumama Platinum is expected to delay the Mvela unbundling process, the company said on Tuesday.

Mvela said that unbundling was not allowed to proceed until a ruling had been given in the arbitration, which had been set down for the first two weeks of May.

The company added that the unbundling was likely to be delayed until the first half of its 2011 financial year, from July to December.

Mvela said that it had obtained dispensation from the JSE to delay the dismantling of its pyramid structure until the end of June.

Mvela did its deal with the black economically empowered Khumama in 2004, paying for shares, R80-million cash and also a possible "upside" payment, to be determined in accordance with a contractual formula.

Determination of the upside requires that the Booysendal platinum project be valued and Mvela said that, should one half of the real net present value exceed R600-million, then the former Khumama shareholders would be entitled to one half of the excess, paid for in Mvela shares

Mvela acquired Anglo Platinum's interest in Booysendal from Anglo Platinum to gain 100% of Booysendal.

Mvela then sold Booysendal to Northam in a share deal and currently owns 63% of the JSE-listed Northam, which is in the process of building a mine at Booysendal.

Anglo Platinum and Khumama in 2003 agreed in principle to establish a 50:50 joint venture to develop the Booysendal platinum project on the eastern limb of the Bushveld Complex.

Khumama was chaired at the time by Ms Nomazizi Mtshotshisa and consisted of three broad-based empowerment consortiums led by Mtshotshisa, Dr Paseka Ncholo and Robinson Ramaite.

The shareholder dispute around the value of the upside emerged in after Khumama sold its stake in Booysendal to Mvela, itself a black economically empowered company.

Mvela is selling off its shares in Gold Fields in anticipation of its unbundling.

In the six months to December 31, it sold 6,2-million Gold Fields shares and applied the proceeds towards reducing the bridging finance raised in March 2009.

The remaining 33,7-million Gold Fields shares were fair valued at R3,3-billion.

Mvela said that it remained committed to its stated unbundling strategy and to removing the pyramid holding company structure, as required by the JSE.

The unbundling involves realising the value in the Gold Fields investment and applying the proceeds to redeem the debt on the balance sheet before potentially applying any excess to part capitalise the Booysendal project, as well as unbundling the Northam shares to shareholders, in order to give them direct exposure to Booysendal.

Financially, Mvela remains robust, exceeding its liabilities by some R1-billion and having R1,1 billion cash on hand.