Highveld Enters into a Black Economic Empowerment Transaction
April 9, 2009 – Evraz Group (LSE: EVR) ("Evraz" or the "Company") announces that its South African subsidiary, Highveld Steel and Vanadium Corporation Ltd. (“Highveld”) concluded an agreement to transfer 26% of the ordinary equity interest in Mapochs Mine (Proprietary) Limited (“Mapochs Newco”) to local partners. This agreement is a part of the Black Economic Empowerment (BEE) government program and was signed in order to comply with South African legislation for the mining industry.
Mapochs Mine, presently an independently managed division of Highveld, will, after fulfilment of the conditions described below, be transferred into Mapochs Newco, a subsidiary of Highveld.
The transaction, which is valued at US$59.8 million, comprises of two parts:
- the sale of a 23% equity interest in Mapochs Newco to Umnotho Iron and Vanadium (Proprietary) Limited (“Umnotho SPV”), a subsidiary of Umnotho weSizwe Group (Proprietary) Limited; and
- the transfer of a 3% equity interest in Mapochs Newco to the Mapochs Mine Community Trust (“the Community Trust”).
The parties have agreed on share disposal restrictions and certain empowerment status undertakings to secure mutual interests in Mapochs Mine, the BEE transaction and the conversion of Highveld’s old order mining rights in respect of the Mapochs Mine.
The BEE transaction is subject to certain conditions, including the conversion of the old order mining rights and the consent of the Minister of Minerals and Energy for the transfer of the converted new order right to Mapochs Newco. The effective date of the BEE transaction will be the later of 1 July 2010 and the last business day of the calendar month in which the conditions above are fulfilled.
* * *
About Black Economic Empowerment
Black Economic Empowerment (BEE) is a program launched by the South African government to redress the inequalities of Apartheid by giving previously disadvantaged groups economic opportunities previously not available to them. It includes measures such as employment equity, skills development, ownership, management, socio-economic development and preferential procurement.
About Mapochs Mine
Mapochs Mine produces lumpy titaniferous magnetite ore, which is supplied exclusively to Highveld’s steelworks, and fines ore, which is supplied exclusively to Vanchem Vanadium Products (Proprietary) Limited for the production of a variety of vanadium products.
Highveld Steel and Vanadium Corporation Limited (Highveld) is an integrated mining, vanadium, and steel producer. It is South Africa's second-largest steel maker and a leading vanadium-slag supplier. Highveld is the primary producer of medium and heavy structural sections and thick plate in South Africa. Evraz holds an 85% equity stake in Highveld.
About Umnotho weSizwe
Umnotho weSizwe Group (Proprietary) Limited is a BEE investment holding company with interests in the mining and minerals sector, with strong, proven mining experience and expertise. The company has been active in the resource sector since its formation in 1997. Its investments span the platinum, diamond, coal, chrome and oil and gas sectors, amongst others. The group is a manger and developer of its own projects and holds a variety of mining and exploration rights in both base and precious metals, which it is in the process of exploiting.
About Mapochs Mine Community Trust
The Community Trust was established by Highveld in order to enable the communities surrounding the Mapochs Mine to benefit from the broad-based socio-economic empowerment ownership initiatives of Highveld. With a key focus on upliftment and contribution towards socio-economic development, the beneficiaries of the Community Trust will include people from the community surrounding the Mapochs Mine, Roossenekal and other major labour-sending areas to Mapochs Mine.