JOHANNESBURG (miningweekly.com) – Platinum group metals (PGMs) mining company Royal Bafokeng Platinum (RBPlat) CEO Steve Phiri on Tuesday criticised the sell-off of RBPlat shares by Royal Bafokeng Holdings (RBH) to Northam Platinum as an undermining of the direct significant influence of the 300 000-strong Bafokeng community on regional job sustainability – plus the giving up of a heritage that Bafokeng sweat and blood had helped to enable.

“You do not give up that kind of heritage, even for the most tempting price,” said Phiri after announcing RBPlat’s stunning set of record-breaking financial and production results for the 12 months to December 31, when the JSE-listed company increased its earnings before interest, taxes, depreciation and amortisation (Ebitda) by 28% to a best-ever R8.5-billion on 22%-higher revenue of R16.4-billion. The Ebitda margin rose 51.9% from 49.7% in the previous comparative period. (Also watch attached Creamer Media video.)

On the decision of RBH to sell to Northam Platinum while RBPlat was negotiating with suitor Impala Platinum, Phiri said: “This was in contrast to what we would have expected, which is for RBH to remain invested in its RBPlat creation, and convince all the parties to participate in a consolidated merger," he said during the presentation of 2021 results, covered by Mining Weekly.

“Sadly, RBH’s approach resulted in a messy contest between two strangers in the lounge area of the Royal Bafokeng Nation (RBN), leaving RBN spectators in their own house, which RBN can do nothing about, and which will take some time to resolve, if any,” said the RBPlat founding CEO, who has led South Africa’s only rural community mining company to its current peak together with RBH.

Phiri spoke of RBH having missed a golden opportunity to become a catalyst for job-sustaining and consolidation, a road which would have made an important contribution to the consolidation of the PGMs mining industry, while still ensuring that RBH and the RBN retained their role at the boardroom table.

RBPlat’s listing on 8 November 2010 was so successful that it was oversubscribed four times – “and RBH were there, they actually took RBPlat to market”, said Phiri, who recalled that shortly before year-end “something happened that I could never in my wildest dreams have imagined taking place”.

This, he said, involved RBH not only selling off its defensive role shareholding in the company that it had created, but the sale was to one of RBPlat’s competitors, which, he added, had abandoned shareholders who invested alongside RBH, and who had made “an enormous contribution to the formation, growth and maturity of RBPlat, which as the record shows, has started delivering strong dividends to patient shareholders".

The RBPlat board has declared a gross cash final dividend of 535c a share, equating to R1.5-billion. This is in addition to the interim dividend of R1.5-billion, declared in August 2021, bringing total capital returns for the year to R3.5-billion.

“One would have thought that by creating this company and growing it, they were creating a long-term sustainable cash flow platform from which they would not divest especially at harvest time,” he said.

Still South Africa’s only listed rural community-owned company, RBPlat is a top-100 JSE company by market capitalisation.

“This at least should have made anyone who was part of its formation, think deeply before divesting.

“The trust large institutional investors had in RBH meant that they were comfortable to invest in RBPlat because of RBH and with RBH. Their huge support alongside RBH made it possible for us to successfully construct Styldrift.

ANGLO AMERICAN PLATINUM FORESIGHT PRAISED

“We also acquired Maseve with the support of our institutional investors alongside RBH. Our institutional investors also made it possible for us to acquire 100% of the BRPM joint venture, when, with RBH, we were able to persuade Anglo American Platinum to divest from the remaining 83% shareholding in the joint venture.

“At this juncture, it is appropriate to wish Anglo a prosperous future for their foresight in creating this quality company, a company which is an epitome of unparalleled transformation in the mining industry, and the South African economy at large. As I've mentioned, we brought RBPlat to operational maturity, which lends itself to being part of a consolidation in the interest of economic sustainability in the region.

“[That is] as part of the job sustainability, particularly in the RBN region, and diversification from a single mine in one corner of one region, to a geographically diverse company, with diverse sources of cash flow, in which RBN or RBH had a direct significant influence. It doesn't happen in two ways.

“One, through a merger with Impala Platinum, which would increase the life-of-mine in their lease area and continue contributing to the sustainability of the economic activity in both the Bafokeng region and the wider Rustenburg region, which would increase the cash flow pool for all the shareholders including RBH, and sustain jobs and create more jobs in the region by consolidating a quality asset with a declining but strong asset. This road would have made an important contribution to the consolidation of the PGMs mining industry, and still ensure that RBH retains that important and critical role at the boardroom table.

“The second option was to consolidate two quality well-managed companies, Northam Platinum and RBPlat, consolidate their cash flows into a bigger cash flow pool and increase cash flows to shareholders, including RBH. This option would also achieve geographic diversity and diversification of the basket of metals being mined. In this one RBN and RBH would not divest, but establish a significant influence and be part of the strategic decision-making.

“It should be borne in mind though, that many years ago RBN acquired various pieces of land and mineral resources, including the land on which RBPlat’s businesses are situated, through sweat and blood.

“You do not give that kind of heritage up even for the most tempting price. That should not be forgotten when dealing with those assets in whatever form.

“Each one of these transactions had its pros and cons and therefore we prefer neither of the two over the other. To us dependent on who of the two came up with a more credible and executable offer. However, it is fair to acknowledge that Implats assess or would have more and better operational synergies without regrets us as than others, and in a in a consolidation transaction. Any contrarian argument to that would be disingenuous,” Phiri, who is retiring, said.

“We were therefore taken by surprise when in the evening of the eighth of November 2021, just a few hours before the announcement, when the markets opened on the ninth of November, we were told that our major shareholder had decided to go it alone and divest from the company that had given birth to the nation's name and buy shares, you know, competitor Northam, from whom it must be said they had received a strong financial offer. This was in contrast to what we would have expected, which is for RBH to remain invested in his creation, this RBPlat, and convince all the parties to participate in a consolidated merger," he added.

“In our view, a strong financial return should be fairly balanced with a concrete and conspicuous social return. The reality now is that they have done the deal and nothing can change that.

“Despite all the noises about a competitive bid of for our company, there's only one offer to the shareholders of RBPlat, and that offer is from Implats, which offer our independent bodies are recommending to the shareholders. Any other person who is contemplating some offer must put up or shut up. The shareholders of RBPlat deserve some respect and certainty,” Phiri added.