Anglo American plc, a British multinational mining company based in Johannesburg, South Africa and London, United Kingdom, listed on Botswana Stock exchange (BSE), has this week announced its intentions to purchase the troubled Sirius Mineral plc which is faced with liquidation.
According to a communique issued this week, the world's largest producer of diamonds, platinum and copper (Anglo American plc) is said to have proposed taking over Sirius which is valued at £404.9 million. The multinational mining company is said to have proposed a share of 5.5 pence per share for each share to all the shareholdings. However tens of thousands of retail investors, who ploughed their life savings by buying Sirius Minerals shares would suffer huge loss if the 5.5 per share is approved by the board.
Sirius Minerals plc which is a fertilizer development company based in the United Kingdom and also listed on the London Stock Exchange announced in September 2019,that they were undertaking a strategic review in order to assess the development plan for its North Yorkshire polyhalite project (the “Project”) and an appropriate financing structure to provide relevant funding. This after the UK’s biggest mining company’s shares crushed by more than 80 percent last year after having traded as high as 43p in 2016.
Sirius employs 1,200 staff and its Project would create a further 2,500 high-earning jobs in the future. But the mine was plunged into doubt last year after Sirius shelved a $500m (£400m) bond issue, blaming factors such as a lack of government support and Brexit uncertainty. Mark Cutifani the Chief Executive Officer (CEO) of Anglo American said they intend to bring financial, technical and product marketing resources and capabilities to the development of the Project, which would be expected to unlock a significant and sustained associated employment and economic stimulus for the local area.
“The Project will support the ongoing transition towards supplying those essential metals and minerals that will meet the world’s evolving needs –in terms of the undoubted need for cleaner energy and transport, and providing infrastructure and food for the world’s fast-growing and urbanizing population,” he shared.
Russell Scrimshaw who is the Chairman of Sirius Minerals said following the setbacks in the bond market, they took the difficult decision to slow the pace of development of the Project and initiate a strategic review to reassess how best to unlock the long term value to the shareholders, UK, and customers all around the world. Scrimshaw further said in the communique that the scope of the strategic review was to consider and incorporate optimizations to the Project development plan and also to exploring alternative funding solutions.
“We were successful in reducing the initial funding needs of our Project to map out a way to develop the Project in a way that better aligned risk to capital providers but, despite an extensive global search for a strategic investor, we have to date not received a firm proposal for a partial Project stake. The only viable proposal was received from Anglo American in early January, who were only interested in pursuing a 100% control transaction,” he commented.
“Alternative financing solutions have also been pursued in parallel to the strategic partner process, which resulted initially in a non-binding proposal being received in December 2019 and subsequently a revised proposal being received on 9th January 2020.” If acquisition of Sirius Minerals by Anglo American is not approved by shareholders and does not complete, there is a high chance that the business could be placed under administration or liquidation within weeks thereafter and this outcome would most likely result in shareholders losing all of their investment, as well as put the future of the entire project in jeopardy.
This week Minister of Finance & Economic Development, Dr Thapelo Matsheka approached parliament seeking lawmakers approval of Government’s intention to increase bond program ceiling from the current P15 Billion to P30 billion.
“I stand to request this honorable house to authorize increase in bond issuance program from the current P15 billion to P30 billion,” Dr Matsheka said. He explained that due to the halt in economic growth occasioned by COVID-19 pandemic government had to revisit options for funding the national budget, particularly for the second half of the National Development Plan (NDP) 11.
Botswana Stock Exchange (BSE) has this week revealed a gloomy picture of diamond mining newcomer, Lucara, with its stock devaluated and its entire business affected by the COVID-19 pandemic.
A BSE survey for a period between 1st January to 31st August 2020 — recording the second half of the year, the third quarter of the year and five months of coronavirus in Botswana — shows that the Domestic Company Index (DCI) depreciated by 5.9 percent.
Botswana Diamond PLC, a diamond exploration company trading on both London Stock Exchange Alternative Investment Market (AIM) and Botswana Stock Exchange (BSE) on Monday unlocked value from its shares to raise capital for its ongoing exploration works in Botswana and South Africa.
A statement from the company this week reveals that the placing was with existing and new investors to raise £300,000 via the issue of 50,000,000 new ordinary shares at a placing price of 0.6p per Placing Share.
Each Placing Share, according to Botswana Diamond Executives has one warrant attached with the right to subscribe for one new ordinary share at 0.6p per new ordinary share for a period of two years from, 7th September 2020, being the date of the Placing Warrants issue.
In a statement Chairman of Botswana Diamonds, John Teeling explained that the funds raised will be used to fund ongoing exploration activities during the current year in Botswana and South Africa, and to provide additional working capital for the Company.
The company is currently drilling kimberlite M8 on the Marsfontein licence in South Africa and has generated further kimberlite targets which will be drilled on the adjacent Thorny River concession.
In Botswana, the funds will be focused on commercializing the KX36 project following the recent acquisition of Sekaka Diamonds from Petra Diamonds. This will include finalizing a work programme to upgrade the grades and diamond value of the kimberlite pipe as well as investigating innovative mining options.
Drilling is planned for the adjacent Sunland Minerals property and following further assessment of the comprehensive Sekaka database more drilling targets are likely. “This is a very active and exciting time for Botswana Diamonds. We are drilling the very promising M8 kimberlite at Marsfontein and further drilling is likely on targets identified on the adjacent Thorny River ground,” he said.
The company Board Chair further noted, “We have a number of active projects. The recently acquired KX36 diamond resource in the Kalahari offers great potential. While awaiting final approvals from the Botswana authorities some of the funds raised will be used to detail the works we will do to refine grade, size distribution and value per carat.”
In addition BOD said the Placing Shares will rank pari passu with the Company’s existing ordinary shares. Application will be made for the Placing Shares to be admitted to trading on AIM and it is expected that such admission will become effective on or around 23 September 2020.
Last month Botswana Diamond announced that it has entered into agreement with global miner Petra Diamonds to acquire the latter’s exploration assets in Botswana. Key to these assets, housed under Sekaka Diamonds, 100 % subsidiary of Petra is the KX36 Diamond discovery, a high grade ore Kimberlite pipe located in the CKGR, considered Botswana’s next diamond glory after the magnificent Orapa and prolific Jwaneng Mines.
The acquisition entailed two adjacent Prospecting Licences and a diamond processing plant. Sekaka has been Petra’s exploration vehicle in Botswana for year and holds three Prospecting Licenses in the Central Kalahari Game Reserve (Kalahari) PL169/2019, PL058/2007 and PL224/2007, which includes the high grade KX36 kimberlite pipe.