Mining company Magni Investment Holdings has announced its intention to acquire a majority stake in JSE-listed Sable Exploration and Mining – formerly Middle East Diamond Resources – and its subsidiaries.

Magni has a diversified commodity portfolio and, through this deal, aims to enlist some of this portfolio into Sable to enable growth, sustainable value and better returns for investors.

To undertake this reverse listing, Sable will undertake, in the first stage of the transaction, a rights issue of 50-million shares at R1 each, of which about R20-million worth of shares will be underwritten by various shareholders of Sable.

Magni will underwrite a further ten-million shares at R1 apiece for R10-million. Sable will issue up to 240-million shares at R5 each to acquire assets from Magni, which include:

• the acquisition and treatment of coal from Seriti's Van Dyk's Drift discard dump to toll-wash for Seriti, to supply Eskom and for export;
• the Vlakpoort chrome mine in the North West with in-situ resources in excess of three-million tons; and
• a chrome beneficiation project in the North West that procures chrome ore from the community-owned dumps and toll treats this feed at a 50t/h plant to produce chrome concentrate.

Magni announced that it secured an investment commitment from private investment group GEM Global Yield to provide Magni with a share subscription facility of up to R4.4-billion for a 36-month period, following a public listing of Magni’s common stock.

Magni will control the timing and maximum number of drawdowns under this facility and has no minimum drawdown obligation.

In connection with the share subscription facility, on public listing, Magni/Sable will issue warrants to GEM to buy up to 8.3% of the total equity interests of Magni/Sable as of such public listing or reverse merger date at an exercise price equal to the public offering price at the time of listing or merger.

“While the world has been in a state of flux since March 2020, what has remained a constant is the good returns informed investors are still making from the diverse resource opportunities in Southern Africa. For Magni, this deal unlocks value and accelerates growth for us – a medium-sized commodity player in South Africa,” says Magni co-founder Ellington Nxumalo.

Magni co-founder Aubrey Chauke adds that the company’s mandate is to invest in broadly inclusive and commercially sound businesses that drive sustainable growth and social transformation, while delivering shareholder returns.

“We believe that our ambitious new structure, the access to capital GEM provides, our record of making our investments work for all stakeholders and our subsequent acquisition of Sable, is a clear signal to the market of the high-performance resources business we have become.”