ASX and JSE-listed minerals explorer Orion Minerals has proven that South Africa’s Mining Charter 3 ownership objectives can be achieved, while also maintaining, and in this case, enhancing value for shareholders. CHANTELLE KOTZE writes.
Focused on creating meaningful empowerment structures, Orion signed a pivotal A$8 million capital raising in April, which was underpinned by a group of high-profile South African investors as part of a proposed restructure of the company’s black economic empowerment (BEE) equity participation at project level, achieving accelerated compliance with the ownership requirements of Mining Charter 3.
As a result of the restructuring, all Orion’s BEE partners will be aligned as shareholders at the ASX and JSE-listed level, sharing both the equity reward and risk on equal terms with all the company’s shareholders.
Orion Minerals CEO Errol Smart says that the company’s key shareholders have recognised the potential value uplift brought on by the new BEE partners and have participated in the placement at a significant premium to market, matching the terms on which the incoming BEE partners are investing.
The placing was undertaken at an issue price of $0.04 per fully paid ordinary share (a 29% premium to market), together with one free attaching option for every two shares issued.
It includes approximately $4 million placed to experienced South African BEE entrepreneurs, of which $2 million is being placed to the new BEE equity investors.
These include Black Star Minerals principle and Prieska-born Jowell Tobias, his wife Johanna Tobias, and business partner Sharon Matthews with 67% ownership; and Kolobe Nala Investment Company principle Billy Mawasha with 33% ownership.
These new BEE equity investors will also invest in Orion’s Prieska zinc-copper project in South Africa’s Northern Cape at project level, having entered into a memorandum of understanding with Orion Minerals to establish a BEE holding company (BEE HoldCo).
Meanwhile, the BEE restructuring transactions entailed the founding BEE shareholders in Orion’s subsidiary Repli Trading No 27, exchanging their 26.7% holding in Repli for JSE-listed Orion shares.
The new BEE shareholders, through BEE HoldCo, will then acquire a 20% shareholding in Repli, and will have the entitlement to provide their proportionate share of Prieska mine development costs on equal terms with the other shareholders of Repli.
As part of the placement, Orion's biggest shareholder, Tembo Capital Mining Fund II LP, and its affiliated entities, have subscribed for $2 million in the placement.
Meanwhile, Orion has strengthened its board by appointing two highly experienced South African mining executives Godfrey Gomwe, who is the former CEO of Anglo American’s Thermal Coal business, and former BHP Billiton executive, Tom Borman, who have specific knowledge and skill in the South African mining industry, as non-executive directors.
Smart believes that the inter-related transactions represent a “pivotal milestone” for the company, ahead of the imminent grant of the mining right for its flagship Prieska project and the delivery of the bankable feasibility study later this quarter.