Photo by: Rockwell Diamonds
TORONTO (miningweekly.com) – South Africa-focused diamond miner Rockwell Diamonds on Monday said it had reached an agreement with a new black institutional investor that would acquire a 30% equity stake in Rockwell’s Middle Orange River (MOR) operations as its black economic-empowerment (BEE) partner, as required by South African law.
The Vancouver-based miner said that African Renaissance Holdings (ARH) had fulfilled most of the conditions precedent and had already supported the company in relevant matters.
ARH was established early in 1994 to champion active participation and ownership by black South Africans in strategic economic sectors. Following a shareholder restructuring, ARH, under the leadership of chairperson Bobby Makwetla, would aim to continue with its successful investment track record in both listed and unlisted entities in the telecommunications, mining, diamonds and related services sectors.
TSX- and JSE-listed Rockwell in December announced that it had concluded an agreement with an unnamed “well-established” black investment company to acquire a 30% equity stake in the company's MOR operations, replacing Africa Vanguard Resources (AVR) as its BEE partner in the region.
As announced in March 2012, Rockwell agreed to unwind its agreement with AVR and subsequently entered into discussions with other groups that had indicated their interest to partner with Rockwell.
These discussions culminated in the agreement with its new BEE partner, which was established in the early 1990s and, which Rockwell asserted, had a successful investment record.
Under the terms of the agreements, and subject to the fulfilment of the suspensive conditions, Rockwell's new BEE partner would acquire 30% of its MOR operations for R72.6-million. This would be paid in two tranches, with an initial payment of R17.3-million to be settled once the various regulatory approvals had been achieved.
A vendor loan had been raised for the balance of the purchase price, to be settled on or before February 28, 2018, at a fixed interest rate of 9% a year.
CEO James Campbell at the time said the key criteria in the hunt for a BEE cohort was to find a partner with experience in the South African mining sector and which could also fund their share of future developments in the MOR region, which was Rockwell’s current organic growth focus.
"Following an exhaustive process to identify a new partner who shared our approach and vision and wanted to work with us to deliver on our objectives, we identified ARH who has an established track record in value-creating BEE transactions,” Campbell said on Monday.
He added that Rockwell had always been committed to participating in the economic transformation in South Africa.
“We consider the finalisation of this strategic partnership as an important milestone in our voyage towards building a leading value-focused African diamond business with a strong social licence to operate in partnership with all our stakeholders.
“Further contributing to this was our recent achievement of one-million hours of lost-time injury-free operations across the whole group in mid-January. This is the first time that we have achieved this landmark at a company-wide level since mid-2012, demonstrating the strength of our safety practices,” he said.