Pan African CEO Cobus Loots
Photo by: Duane Daws
JOHANNESBURG (miningweekly.com) – Gold-, platinum- and coal-mining company Pan African Resources told shareholders on Thursday that it would be raising equity capital to cement its black economic-empowerment (BEE) compliance and provide it with financial headroom for swift access to organic and acquisitive growth opportunities.
The London Aim-quoted and Johannesburg main-board-listed company said in a Stock Exchange News Service announcement that UK bookrunners would raise up to R363.1-million to fund the buyout of its BEE partner Shanduka Gold’s 23.8%, while it developed a more cohesive arrangement with the back-owned Mabindu Business Development Trust.
The equity capital raising would part fund the R545.6-million needed to buy 49.9% of Shanduka Gold.
Pan African CEO Cobus Loots is a former CFO within the Shanduka group. In April, Pan African bought the Uitkomst coal mine from Shanduka Resources and Oakleaf for R176-million.
The company and its subsidiaries are precious metals miners that produce more than 200 000 oz of gold a year at gold operations in Barberton and Evander and 8 000 oz of platinum-group metals (PGMs) a year at the Phoenix PGMs recovery operation in the North West province.
Loots recently told Proactive Investors that the company’s profits had been helped by the slide in the rand against the dollar and that it was producing gold at an all-in sustaining cost of $908/oz.
The latest deal joins the dots that Pan African put down in February when it announced that it was buying the 16.9% that Standard Bank of South Africa (SBSA) owns in Shanduka Gold.
The two transactions combine to give Pan African a 49.9% shareholding in Shanduka Gold, in which Mabindu owns 49.5%, Jadeite 33.6% and SBSA 16.9%. The sale of the 0.6% that Jadeite has retained in Shanduka Gold will take place later.
Both the SBSA and the Jadeite transactions are expected to be concluded simultaneously for R545.6-million, which will be paid for from finance on hand plus the raising of equity capital, by June 7.
UK bookrunners Numis and Peel Hunt will sell up to R363.1-million or £15.9-million worth of shares for R3.25 a share (14.25p a share), enlarging the share capital by 5.7%.
As Mabindu’s 49.5% of Shanduka Gold was acquired at a discounted value, a notional R536-million loan value has been created, which will be notionally settled at unchanged share prices on December 11, 2018.
This would also enable it to gain further flexibility and compliance with the prevailing BEE legislation, that it would navigate with Mabindu, a black-owned and black-controlled trust.
Mineral Resources Minister Mosebenzi Zwane threw the cat among the pigeons last month in a surprise gazetting of a new draft Mining Charter, for which comments close on May 31.
The two transactions would provide necessary flexibility ahead of the final charter version and leave scope for company investment.