Lonmin, the world’s third largest platinum producer, has entered into binding black economic empowerment (BEE) agreement with the community of Bapo ba Mogale.
In order to meet its BEE targets, Lonmin has granted the Bapo ba Mogale community in Rustenburg a R546 million share transaction, as well as a R100 million cash payment.
The share placing will be subject to a lock-in period of 10 years to preserve BEE credentials.
The R564m payable will include a premium of R149 million in recognition of the benefit to Lonmin of the 10-year lock-in period.
“It is Lonmin’s first priority to work in the interests of all our stakeholders. We are pleased to have reached an agreement as this is testimony to developing a constructive relationship with the Bapo ba Mogale,” said Lonmin CEO, Ben Magara.
Lonmin stated that the transaction with the Bapo involved the community swapping a royalty scheme for 13.13-million shares in Lonmin and a R20 million a year payment over five years.
There is also an employee share ownership scheme and community share ownership trust that the miner is putting in place.
Lonmin said that the deal would secure it the 26% BEE target by the end of this year.
Lonmin will provide the Bapo preferential status when tendering for the supply of goods and services to Lonplats.
“Lonmin will provide an opportunity for the Bapo ba Mogale community to participate in the procurement and business value chain activities of Lonplats to a minimum revenue value of R200 million within eighteen months from completion,” Lonmin said in a statement.
Pandora joint venture
As part of the transaction, Eastern Platinum will acquire 100% ownership of Bapo ba Mogale Mining Company, which owns a 7.5% stake in the Pandora joint venture that Lonmin shares with Anglo American Platinum (Amplats).
Amplats said last week it wanted to sell its 42.5% stake in Pandora and it was likely Lonmin would be the buyer.
The transaction would boost empowerment levels in Lonmin by 2.4% and a further 0.9% through the creation of a developmental trust for the Bapo community, giving a total 3.3%.