Highlights
- Mineral Commodities has executed formal agreements to restructure its holding in Mineral Sands Resources.
- The restructuring will be done as per the recommendations of the Broad-Based Socio-Economic Empowerment Charter for the Mining and Minerals Industry, 2018.
- Upon completion of the restructuring, MRC will hold 69% interest via its subsidiary MRCR.
Global mining and development company, Mineral Commodities Limited (ASX:MRC) has signed restructure agreements for its holding in Mineral Sands Resources (Pty) Ltd (MSR) following the regulations of the Broad-Based Socio-Economic Empowerment Charter for the Mining and Minerals Industry, 2018.
As of now, MSR holds 100% ownership of the Tormin Mineral Sands Operation in the Western Cape, South Africa. MRC has been developing and operating the project through its 50% shareholding in MSR, while the other 50% ownership of MSR lies with the MRC’s empowerment partner, Blue Bantry Investments 255 (Pty) Ltd.
The development is aimed at increasing the company’s ownership from 50% to 69%.
Details of the 2018 Mining Charter
A minimum of 30% Broad-Based Black Economic Empowerment (B-BBEE) shareholding or equity equivalent benefit is recommended, wherein a minimum of 20% effective ownership is included in the form of shares to B-BBEE entrepreneurs, being HDPs or enterprises that are at least 51% owned by HDPs, a minimum 5% interest to qualifying employees who are HDPs; and a minimum of 5% interest or a minimum of 5% equity equivalent benefit to the host community.
MRC states that, it needs to focus on scaling up distributions as well as the flow of regular dividends, or equity equivalent benefits, to the respective B-BBEE participants in line with the 2018 Mining Charter.
Considering this, a Recoverable Interest methodology will be adopted by MSR to measure amounts owing, given MRCR has been and is expected to be the only external funding source for MSR. Through this, MRCR will be able to recover its contributed capital on behalf of other beneficiaries by withholding 80% of available dividends payable to these participants until this relevant capital contribution is repaid in full.
There is also a minimum annual dividend set at US$10,000 per 1% interest in MSR to ensure the flow of regular dividends, or equity equivalent benefits, to the respective B-BBEE participants.
MRCR will waive off long-term loans and other amounts owed to it by Blue Bantry in return for decreasing Blue Bantry’s interests in MSR to 21% from 50%.
As per the agreed terms, Blue Bantry will be entitled to receive 11.3M fully paid ordinary shares in the capital of MRC, together being in consideration for amounts that would have been payable to Blue Bantry if the Recoverable Interest methodology had been applied since inception of the Tormin operation. Blue Bantry will have a carried interest of R33M still payable to MRCR as at 1 July 2022, being the effective date of the proposed transition.
Completion of the restructure of MSR by the transactions as mentioned, along with the issue of the Consideration Shares, is subject to the satisfaction of a number of conditions precedent including the receipt of all required regulatory approvals, and the receipt by MRC of shareholder approval for the issue of the Consideration Shares for the purposes of ASX Listing Rule 10.11 given Company director Mr Madiba Qunya is a 50% owner of Blue Bantry. Shareholder approval for the issue of the Consideration Shares will be sought at the Company’s Annual General Meeting, to be held in late May 2023.
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