Zimplats stake not for free

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JOHANNESBURG — South Africa’s Impala Platinum (Implats) says the Zimbabwean government would have to find money to buy the 31% stake it wanted in its local unit Zimplats or the stake would not be transferred.

Zimbabwe is demanding that foreign-owned companies transfer a 51% stake in their local operations to local investors and the government has pressurised miners to set an example.

After months of wrangling and threats the government would ensure its law would be enforced, Implats said it would sell a 31% stake to the Zimbabwe government and another 20% to local communities and Zimplats’ employees.
The solution had in principle been accepted by Harare.

“If they don’t come up with the cash the stake will not be transferred,” Implats chief executive David Brown said during a conference call aimed at providing more clarity on the in-principle deal it had reached with the government on Tuesday.

The stake, whose value must still be decided, will only become available for sale once the government has compensated Implats for land it had released to the State as part of a separate agreement almost six years ago, the miner said.

Brown said the company believed the $158 million value it pegged on the land it released to Zimbabwe was still appropriate.

That would have to be paid before a value could found for the 31% stake in Zimplats, which would be worth $372 million based on the company’s market capitalisation.

“Although one may question Zimbabwe’s ability to fund this stake and the ability of the joint technical team to determine an ‘appropriate value’, we consider this a net-positive,” SBG Securities platinum analyst Justin Froneman said in a note.

Implats said it would provide loans to help fund the 10% stakes each to be sold to community and employees. These loans will be paid through dividends, the company said.

Brown said with no deadline or valuation decided there was “still a lot of water to flow under the bridge” before the deal would be finalised.

He said finalisation of the agreement would provide the clarity it needs to further invest in Zimbabwe, adding the miner may consider spending at least
$1 billion in expansion projects and a possible metals refinery there.

Implats shares closed 1,37% higher at R162,20, compared with a 0,72 % rise in the Johannesburg Stock Exchange Top-40 blue-chip index. —Reuters