Kumba Empowerment Transaction
13 October, 2005
Anglo American welcomes Kumba empowerment transaction
Following the announcement earlier today by Anglo American plc (”Anglo American”), Kumba Resources Limited (“Kumba”) and Eyesizwe Mining Limited relating to the proposed empowerment transaction in respect of Kumba, Anglo American wishes to draw shareholders' attention to the following key aspects of the transaction.
Following the announcement earlier today by Anglo American plc (”Anglo American”), Kumba Resources Limited (“Kumba”) and Eyesizwe Mining Limited relating to the proposed empowerment transaction in respect of Kumba, Anglo American wishes to draw shareholders' attention to the following key aspects of the transaction.
As part of the transaction, Kumba's iron ore assets, held through Sishen Iron Ore Company (Pty) Ltd (“SIOC”), will be transferred to a new company, Kumba Iron Ore, and unbundled to all existing Kumba shareholders. Following the completion of the transaction, there will be two separate listed entities, namely:
- Kumba Iron Ore: which will own 74% of SIOC
- Newco: which will have significant coal, heavy minerals and zinc assets, together with a 20% holding in SIOC
As a result of this transaction, Anglo American will:
- own 66.2% of Kumba Iron Ore (the balance will be 20% freefloat and 14% held by the IDC) which will give Anglo American an effective direct economic interest of 49% in SIOC, in addition to a further indirect interest of 3% through Anglo American's 17% stake in Newco
- retain 17% of Newco as a demonstration of its long-term commitment to Newco of which 10% will be locked in for 10 years
- on the proviso that Newco becomes fully empowered and, subject to certain conditions, grant options to Newco to acquire 100% of Namakwa Sands and 26% of the Black Mountain zinc mine and the Gamsberg zinc project at a total fixed price of R2.3 billion ($350 million)
- receive an aggregate cash consideration of R7.2 billion ($1.1 billion), including the sale of Namakwa Sands and the stakes in Black Mountain and Gamsberg
This transaction secures Anglo American its long term investment in iron ore, a core part of the Group's portfolio. Kumba Iron Ore has significant growth opportunities with production targeted to increase from 31 to 44 million tonnes per annum by 2008. Kumba Iron Ore also has other projects under consideration including the 12 million tonnes per annum Faleme project in Senegal.
The transaction represents a significant step forward for Anglo American in terms of satisfying the requirements of Black Economic Empowerment (“BEE”) and through Newco, creates South Africa's premier empowerment diversified mining company.
Tony Trahar, Chief Executive of Anglo American said: “We are very pleased to have created Kumba Iron Ore, a pure play iron ore company and the world's fifth largest iron ore producer. Kumba Iron Ore has a world-class portfolio of iron ore assets together with significant growth opportunities, both in South Africa and other parts of the world.
As a result of today's transaction, Anglo American has helped to create Newco as South Africa's flagship empowerment diversified mining company, with a strong investment case and capable of sustainable growth. Anglo American is fully supportive of the letter and spirit of the Mineral and Petroleum Resources Development Act and the Mining Charter. We believe that the scale and structure of this transaction demonstrates Anglo American's strong commitment to transformation.”