OM Holdings (OMH), a company listed on the Australia Stock Exchange, has announced it is to acquire a 20% interest in Ntsimbintle Mining, a company owned by broad-based BEE groups, for approximately R320-million.
Ntsimbintle is in partnership with the Pallinghurst Co-Investors (Pallinghurst) in Tshipi é Ntle, (Tshipi) a company about to become a new South African manganese miner. OMH has announced that it will also acquire the 49.9% that Pallinghurst holds in Tshipi in exchange for 139, 9 million OMH shares. Pallinghurst’s chief executive Brian Gilbertson will become non-executive deputy chairman of OMH.
The transaction represents a significant foreign investment in the South African mining sector and we particularly welcome it because we believe OMH is an ideal partner for Ntsimbintle in the Tshipi venture.
Of extreme importance is the fact that it introduces into the South African manganese mining industry an experienced new player with significant abilities in the total value chain from mine-to-market. I reiterate the chairman of Pallinghurst (Brian Gilbertson) comment that it, “establishes a robust supplier of manganese ores and alloys to the global steel industry that is able to source, blend and deliver internationally for optimum customer satisfaction”.
For Ntsimbintle the transaction provides us with an important progress in the development of the asset since we acquired the prospecting permit in 2004. The opportunity allows Ntsimbintle the opportunity of raising significant capital that can be utilised to develop the Tshipi manganese mine that is to be constructed near Hotazel in the Northern Cape. This will allow us to start construction on the mine sooner and that means creating jobs more quickly.
The biggest challenge for new entrants in the manganese business, especially for BEE Companies, is how to deliver ore to the steel producers at an optimum price. The tie-up with OMH means that we have an investor with a proven marketing capability into the most important manganese market in the world and this is transformational for the company establishing us as potentially a significant factor in the global market.
As a BEE company, Ntsimbintle is committed to the stated objectives of the Government and the Department of Mineral Resources to diversify the ownership, marketing and distribution of benefits in the manganese business. We believe that this transaction moves us forward towards the creation of a new black controlled, world-class manganese mining company.
In 2003 nine black groups formed Ntsimbintle Mining (PTY) Ltd., a BBBEE company created specifically to pursue manganese opportunities. Safika Holdings (Pty) Ltd. and Nkonjane Economic Prospecting and Investments (Pty) Ltd. jointly led and financed the process and worked to bring charitable and social responsibility groups into the company as shareholders. Ntsimbintle is proud that among its shareholders are those dedicated to social upliftment such as the Kgalagadi Rural Charitable Trust. This shareholder is already dispensing bursaries to the historically disadvantaged and will use Ntsimbintle’s future profits solely to help the people of the Northern Cape.
It is our intention to create a competitive company that can be in the lower quartile in the production cost curve. To pursue that objective we will continue to explore ways and methods of achieving operational efficiencies that will make us even more competitive.
Finally, we are committed to creating value for our shareholders.
It should be noted that Ntsimbintle’s 9% stake in Hotazel Manganese Mines remains unaffected by the transaction.