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Acquisition Of Select Manganese Assets.
EXXARO RESOURCES LIMITED
Incorporated in the Republic of South Africa
(Registration number: 2000/011076/06)
JSE share code: EXX
ISIN: ZAE000084992
ADR code: EXXAY
Bond issuer code: EXXI
ISIN: ZAG000160334
("Exxaro" or the "Company")
ACQUISITION OF SELECT MANGANESE ASSETS FROM NTSIMBINTLE
HOLDINGS PROPRIETARY LIMITED AND OMH (MAURITIUS) CORP
1. INTRODUCTION
1.1. Shareholders are advised that on 13 May 2025 Exxaro, through its newly incorporated
wholly-owned subsidiary (the "Purchaser"), has entered into two separate
agreements ("Agreements") with Ntsimbintle Holdings Proprietary Limited
("Ntsimbintle Holdings") and OMH (Mauritius) Corp ("OMH Mauritius") (collectively
the "Sellers"), respectively, to acquire the shares and certain corresponding claims
held by the Sellers in and against various investee companies (the "Target Assets")
(the "Transaction(s)"). The Target Assets include South Africa's largest single mine
manganese exporter, the Tshipi Borwa Mine, as well as the Mokala Mine, in the world-
class Kalahari Manganese Field ("KMF").
The Target Assets to be acquired from Ntsimbintle Holdings are:
- 74% of Ntsimbintle Mining Proprietary Limited ("Ntsimbintle Mining");
- 19.99% of Jupiter Mines Limited ("Jupiter");
- 100% of Ntsimbintle Marketing and Trading Private Limited ("Ntsimbintle
Marketing");
- 51% of Mokala Manganese Proprietary Limited ("Mokala"); and
- 9% of Hotazel Manganese Mines Proprietary Limited ("Hotazel").
The Target Assets to be acquired from OMH Mauritius comprise 26% of Ntsimbintle
Mining, resulting in the Purchaser acquiring 100% of Ntsimbintle Mining through the
Transactions.
The Purchaser will acquire the equity stakes in the Target Assets as indicated above,
together with certain corresponding shareholder claims on loan account related to
those stakes (collectively referred to as the "Sale Equity"). Additionally, as part of the
Transaction, the Purchaser will take on various agreements related to the Target
Assets to which Ntsimbintle Holdings and/or Safika Resources Proprietary Limited
("Safika") (which holds a 39.7% interest in Ntsimbintle Holdings) are a party (the "Sale
Contracts").
The cash consideration payable for the Sale Equity and the Sale Contracts is R11.67
billion ("Unadjusted Price"). As a result of pre-emptive rights, tag-along rights and
purchase price escalation considerations, the Unadjusted Price could be subject to
adjustments as further outlined in section 4 below.
1.2. Ntsimbintle Holdings is a Broad-Based Black Economic Empowerment ("B-BBEE")
mining investment company beneficially held as follows:
- Safika, which holds 39.7%, is a South African-based company focused on mineral
exploration and mining;
- John Taolo Gaetsewe ("JTG") Development Trust, which holds 14.5%, is a public
benefit organisation managing social impact and investment programmes within
the JTG district municipality located in Northern Cape, in partnership with
communities and stakeholders;
- Friedshelf 1239, which holds 10%, is a company primarily engaged in holding the
investment in Ntsimbintle Holdings;
- Women Investment Portfolio Holdings, which holds 5.8%, is an investment holding
company with investments in various sectors including infrastructure, food &
agriculture, financial services, mining & energy and education; and
- The shareholding of 30% is held by B-BBEE shareholders.
1.3. OMH Mauritius is a wholly-owned subsidiary of OM Holdings Limited ("OMH"), which
is a publicly listed entity, with a primary listing on the Australian Securities Exchange
("ASX") and a secondary listing on the Bursa Malaysia exchange. OMH's beneficial
shareholding, as a listed company, is widely held. None of the shareholders of OMH
are "related parties" in relation to Exxaro, as defined in section 10 of the Listings
Requirements of the JSE Limited ("Listings Requirements").
2. DESCRIPTION OF THE TARGET ASSETS
2.1. Ntsimbintle Mining, which is 74% held by Ntsimbintle Holdings and 26% held by OMH
Mauritius, holds 50.1% in Tshipi é Ntle Manganese Mining Proprietary Limited
("Tshipi"). Tshipi owns the Tshipi Borwa Mine, an open pit manganese mine in the
KMF in the Northern Cape;
2.2. Jupiter is an Australian registered public company listed on the ASX, with a 49.9%
beneficial interest in Tshipi;
2.3. Ntsimbintle Marketing conducts manganese marketing and sales and will, following
the Transaction, have the right to market 50.1% of Tshipi's finished manganese ore
products;
2.4. Mokala owns the Mokala Manganese Mine and is operated by Blue Falcon 222
Trading Proprietary Limited ("Blue Falcon") which directly owns 49% of Mokala. Blue
Falcon, which is a Glencore Plc entity, has pre-emptive and tag along rights in respect
of Mokala;
2.5. Hotazel owns the Hotazel Manganese Mines, which is operated by Samancor
Manganese Proprietary Limited ("Samancor Manganese"). Samancor Manganese
owns 74% of Hotazel and is 60% owned by South 32 Limited and 40% by Anglo
American Plc. Samancor Manganese and the other existing shareholders of Hotazel
("Hotazel Shareholders") have pre-emptive rights in respect of Hotazel.
2.6. The pre-emptive rights waiver processes for Blue Falcon and the Hotazel
shareholders are included as part of the suspensive conditions to the Transactions as
outlined in section 7 below.
3. RATIONALE FOR THE TRANSACTIONS
3.1 Exxaro's Sustainable Growth and Impact ("SG&I") strategy aims to transform Exxaro
into a diversified company, to include energy transitioning metals and renewable
energy. With the minerals business in focus, Exxaro is excited to have the opportunity
to utilise its strong coal resources as a base from which to prudently accelerate its
asset portfolio to include transition minerals and grow the energy solutions business.
3.2 This acquisition in manganese, a bulk commodity, aligns with Exxaro's capabilities.
Having built and operated open pit mines, including South Africa's largest coal mine,
and the world's largest coal beneficiation plant in the form of Grootegeluk mine,
Exxaro can leverage this knowledge and expertise to drive growth at the Target
Assets' operations.
3.3 Manganese will remain a key ingredient in steel making and is an emerging key
essential ingredient in the green economy. South Africa hosts more than 80% of
global manganese resources within the KMF in the Northern Cape, with the
Ntsimbintle Holdings portfolio representing best-in-class assets in a world class
deposit. Therefore, the country is an important region for global manganese supply.
Through this acquisition, Exxaro will have a stake in quality, long life mines located in
the KMF. This positions Exxaro well to become a globally significant and meaningful
player in manganese.
3.4 An added advantage of this opportunity is that these assets are located in South
Africa, a jurisdiction which Exxaro is well positioned to create value within. As a
proudly South African mining company with nearly two decades of experience in the
country, Exxaro possesses deep knowledge of the landscape and is poised to
continue thriving in South Africa.
4. PURCHASE CONSIDERATION
4.1 The Unadjusted Price payable by the Purchaser to the Sellers in respect of the Sale
Equity is R11.67 billion.
4.2 The Unadjusted Price may be subject to adjustments for certain reasons ("Closing
Price"). As a result of pre-emptive rights being exercised, the Closing Price could
decrease to R9.00 billion. As a result of tag-along rights and purchase price
escalation considerations, the maximum Closing Price payable could be R14.64
billion (assuming the pre-emptive rights are not exercised). This maximum Closing
Price is calculated as follows:
4.2.1 the R11.67 billion Unadjusted Price; plus
4.2.2 the escalation of the Unadjusted Price based on a locked box mechanism at
31 December 2024 ("Locked Box Date") which will be a maximum of R1.48
billion; plus
4.2.3 a maximum of R1.68 billion assuming all tag-along rights are exercised; less
4.2.4 leakage amounts that are already known (due to dividends having already
been declared post the Locked Box Date) in an aggregate amount of R0.19
billion (leakage adjustments are standard for a transaction of this nature and
can encompass various financial transactions, such as distributions and
transfer of assets (if any), that benefit the Sellers and their affiliates, that
decrease the value of the Targets Assets).
4.3 The purchase consideration will be discharged in cash and Exxaro will fund the
Transaction through its existing cash resources and undrawn bank facilities.
5. CLOSING DATE OF THE TRANSACTION
5.1 The closing date of the Transaction will be the date of transfer of the ownership of the
Sale Equity to the Purchaser, which is expected to occur in early 2026 (subject to the
requisite regulatory approvals) ("Closing Date").
5.2 On the Closing Date, the Purchaser will make the payment of the purchase
consideration set out in section 4 above as follows:
5.2.1 95% into the Sellers' bank accounts in cash; and
5.2.2 5% to an escrow agent to be held in escrow in line with agreed escrow
agreements.
6. WARRANTIES AND OTHER SIGNIFICANT TERMS OF THE AGREEMENT
6.1 The Agreements contain warranties and indemnities by Ntsimbintle Holdings, OMH
Mauritius and Safika in favour of the Purchaser, which are standard for a transaction
of this nature.
6.2 The warranties and indemnities will be insured through warranty and indemnity
insurance policies in the name of the Purchaser ("W&I policies").
6.3 There is a Material Adverse Change ("MAC") clause in favour of the Purchaser. The
Purchaser can terminate the Agreements if a MAC event occurs prior to the Closing
Date.
7. SUSPENSIVE CONDITIONS
7.1 The implementation of the Transactions remain subject to the fulfilment or waiver (to
the extent that they are capable of being waived) of various suspensive conditions on
or before 15 months post signature date of the Agreements ("Long Stop Date"),
including inter alia,:
7.1.1 section 112 approval pursuant to the Companies Act, 2008 by Ntsimbintle
Holdings' shareholders as it relates to the Agreement with Ntsimbintle
Holdings. Irrevocable undertakings have been provided by 87% of Ntsimbintle
Holdings' shareholders to vote in favour of the Transaction with Ntsimbintle
Holdings;
7.1.2 the waiver or exercise of the respective pre-emptive rights, outlined in
paragraphs 2.4 and 2.5 above, by Blue Falcon in respect of Mokala and the
Hotazel shareholders in respect of Hotazel;
7.1.3 the Agreement with OMH Mauritius is subject to the execution of offtake
agreements between the Purchaser and a wholly-owned subsidiary of OMH
in relation to the Tshipi manganese ore;
7.1.4 the escrow agreements referred to in paragraph 5.2.2 being entered into, and
the W&I policies being issued;
7.1.5 counterparty consents in relation to various Sale Contracts and other
contracts;
7.1.6 approval by the relevant Competition Authorities;
7.1.7 Ministerial approval under section 11 of the Mineral and Petroleum Resources
Development Act, 2002, in respect of Tshipi and Mokala; and
7.1.8 exchange control approval by the South African Reserve Bank.
7.2 The Long Stop Date can be extended by the Purchaser and the Sellers in
accordance with the terms of the Agreements.
7.3 If the suspensive conditions pertaining to the Mokala portion of the Transaction
with Ntsimbintle Holdings, have not been fulfilled by the Long Stop Date, then the
Agreement with Ntsimbintle Holdings permits such Transaction to be
implemented without the Mokala portion, on the basis that the Mokala portion of
the Transaction will be implemented thereafter once the relevant suspensive
conditions have been fulfilled (for which purpose the Long Stop Date will be
extended by a further 365 days).
7.4 Any extension of the Long Stop Date will be announced on SENS.
8. FINANCIAL INFORMATION
8.1 The net asset value of each Target Asset for the audited full year ended 30 June 2024
and unreviewed interim (six months) period ended 31 December 2024 is as follows
(on a 100% basis):
For the full year ended 30 For the interim period
Target Asset
June 2024 ended 31 December 2024
Ntsimbintle Mining R1.36 billion R1.48 billion
Jupiter R6.63 billion R6.46 billion
Ntsimbintle Marketing R282 million R323 million
Hotazel R1.22 billion R1.45 billion
Mokala R821 million R832 million
8.2 The profit after tax of each Target Asset for the audited full year ended 30 June 2024
and unreviewed interim (six months) period ended 31 December 2024 is as follows
(on a 100% basis):
For the full year ended 30 For the interim period
Target Asset
June 2024 ended 31 December 2024
Ntsimbintle Mining R321 million R122 million
Jupiter R478 million R166 million
Ntsimbintle Marketing R49 million R25 million
Hotazel R848 million R273 million
Mokala R306 million R9 million
9. CLASSIFICATION OF THE TRANSACTION
The Transaction constitutes a Category 2 transaction in terms of the Listings Requirements
and does not require shareholder approval.
10. OTHER
Post the Transaction, certain companies will be classified as subsidiaries of Exxaro, held
through the Purchaser. Exxaro confirms, for the purposes of paragraph 9.16 of the Listings
Requirements, that nothing in the memorandum of incorporation of the subsidiary companies,
will, in any way, frustrate or relieve Exxaro from compliance with the Listings Requirements.
11. INVESTOR CALL AND PRESENTATION
Exxaro will host a conference call for investors at 11:00 (South African time) on Tuesday, 13
May 2025. For dial-in details please refer to the Exxaro's website at
https://www.exxaro.com/investor-centre/. Playback details will be made available after the call.
The investor presentation will also be made available on Exxaro's website at
https://www.exxaro.com/investor-centre/presentations-and-speeches/.
M Nana
GROUP COMPANY SECRETARY
Johannesburg
13 May 2025
Financial Advisors to Exxaro:
Investec Bank Limited (acting through its Itai Capital (Proprietary) Limited
Investment Banking Division: Corporate
Finance)
Legal advisor to Exxaro:
ENS
Sole Transaction Sponsor to Exxaro:
Investec Bank Limited (acting through its Investment Banking Division: Corporate Finance)
Lead equity sponsor and debt sponsor to Exxaro: Joint equity sponsor to Exxaro:
Absa Bank Limited (acting through its Corporate Tamela Holdings (Proprietary Limited)
and Investment Banking division)
Financial and Tax Due Diligence Advisor to Exxaro:
Deloitte
Financial Advisor to Ntsimbintle Holdings:
Barclays Bank PLC, acting through its investment bank
Legal Advisor to Ntsimbintle Holdings:
Webber Wentzel
Tax Advisor to Ntsimbintle Holdings:
Werkmans
Date: 13-05-2025 07:05:00
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