Elgin, Jonpol JV partner sells interest to consortium
2005-03-07 12:15 ET - News Release
Also News Release (C-JON) Jonpol Explorations Ltd
Mr. Ian Rozier of Elgin reports
B.E.E. CONSORTIUM LED BY AFRIMINERALS HOLDINGS TO ACQUIRE 26% INTEREST IN SPITZKOP PLATINUM LTD.
Ian Rozier, president of Elgin Resources Inc., and Gordon Keep, president of Jonpol Explorations Ltd., have been informed that a black economic empowerment (BEE) consortium led by Zwelakhe Sisulu of Afriminerals Holdings Pty. Ltd. has entered into an agreement to acquire a 26-per-cent shareholding in Spitzkop Platinum Ltd., Elgin's joint venture partner in South Africa. The BEE consortium includes companies and organizations representing historically disadvantaged South Africans (HDSAs).
Under the terms of previously reported transactions, the company entered into a 50-50 joint venture with Spitzplats, whereby the company will finance further exploration and development of the Spitzkop platinum group metal project through to feasibility. In a related transaction, Jonpol Exploration entered into an agreement to purchase a 74-per-cent interest in Spitzplats from the Spitzkop syndicate, and the company and Jonpol have agreed to amalgamate (see news in Stockwatch on Nov. 1, 2004).
The South African Minerals and Petroleum Resources Development Act 28, of 2002, became effective on May 1, 2004. The act requires that companies holding existing, old-order mining rights apply for conversion to new-order mining rights within a period of five years. One of the most significant prerequisites for this conversion is the participation by HDSAs in the equity of the operating company. As part of the act and the broad-based socio-economic empowerment charter, it is a requirement that there be an equity participation by a BEE group in the South African entity that owns the mineral rights of at least 15 per cent within five years, and at least 26 per cent within 10 years. Current South African foreign policy exchange regulations do not permit the issue of shares in foreign corporations, such as Elgin, to South African residents for long-term investment, hence the BEE transaction must begin in South Africa.
As a result of the purchase of the 26-per-cent interest in Spitzplats by Afriminerals, Spitzplats will have achieved full equity compliance within the charter. On completion of all the transactions involving the company, Jonpol and Spitzplats, the amalgamated company, Eastern Platinum Ltd., will have a 50-50 joint venture interest in the project, as well as a 74-per-cent interest in Spitzplats. This will result in Eastplats having a direct and indirect interest in Spitzkop of 87 per cent. The full BEE equity compliance of Spitzplats at this early stage of corporate development places the company in good standing going forward with its plans to develop Spitzkop in a timely manner.
The chairman of Afriminerals, the lead partner in the BEE consortium, is Mr. Sisulu, a South African national educated in Swaziland and Soweto, and later at the INSEAD Institute in Paris, France, and as a Nieman fellow at Harvard University. Mr. Sisulu began his career as a journalist in South Africa in the 1970s. A notable political correspondent, his writings and political activities led him to be placed under house arrest during the apartheid era, later returning to work as the editor of the New Nation newspaper. In 1994, he joined South African Broadcasting Corp. as chief executive officer. Mr. Sisulu's current business interests include mining and energy, media, telecommunications and manufacturing. He is currently chairman of Savannah Resources Pty. Ltd. and Dirleton Minerals & Energy Pty. Ltd., as well as executive chairman of Afrimineral Holdings and Universal Media Pty. Ltd. As chairman of Savannah Resources, Mr. Sisulu was the lead partner in the Savannah consortium that recently completed the acquisition of a 29.5-per-cent interest in Aquarius Platinum (South Africa) involving an equity contribution of approximately $132-million (U.S.). Mr. Sisulu was recently appointed to the board of directors of Aquarius Platinum Ltd., an extremely successful South African PGM producer.
The BEE consortium led by Mr. Sisulu also includes the Dithamaga Trust, which represents the interests of the local community in the Steelport area of Mpumalanga province, where the Spitzkop PGM project is located. The company's BEE partners have the requisite corporate skills, political relationships and industry relationships, in addition to the local knowledge necessary to develop a successful company in the South African PGM sector. Spitzplats is now in a position to actively seek further growth opportunities in the PGM sector that will benefit all parties involved in the joint venture.
"We are extremely encouraged by the participation of Zwelakhe Sisulu leading the BEE consortium on Spitzkop. As a newly empowered company, Spitzplats is an excellent example to the international investment community of how a successful BEE/foreign partnership can be created in South Africa," commented Mr. Rozier. "Elgin looks forward to working with Afriminerals and the Dithamaga Trust on the rapid development of the high-grade Spitzkop PGM project."
