Northam Platinum Boosts Black Stakes in $600 Million Deal

Northam Platinum Ltd. will sell shares under a 6.6 billion-rand ($600 million) plan to raise black South Africans’ stake in the company, owner of the world’s deepest mine producing the metal, to more than a third.

Northam will sell more than 112 million new shares at 41 rand each to black shareholders for 4.6 billion rand, the Johannesburg-based company said today in a statement. Those shareholders will also buy 47.7 million shares from Public Investment Corp., South Africa’s largest fund manager, for 2 billion rand. That will bring the holdings to 35.4 percent.

The company will use “the injection of 4 billion rand free cash to fund Northam’s growth,” it said. “The transaction effectively catapults Northam into the ‘1st division,’” Northam said, referring to the largest producers including Anglo American Platinum Ltd. and Impala Platinum Holdings Ltd.

South African mining companies face a December deadline to raise black South Africans’ holdings to at least 26 percent, a policy aimed at redressing economic disparities created during apartheid. The stake of Northam’s previous main black owners, Afripalm Resources and Mvelaphanda Holdings Ltd., was eroded as the companies had to sell part of their stakes to repay loans.

Northam fell 2.8 percent to 34.80 rand by the close in Johannesburg, bringing losses this year to 17 percent.

The company targets output of more than 1 million ounces of platinum-group metals by 2020 via acquisitions and expansion, more than double the approximate 400,000 ounces it sold in the 2014 fiscal year, Chief Executive Officer Paul Dunne said in August.

The new group includes trusts for employees and communities near Northam’s mines. It won’t be allowed to sell its stake in Northam for 10 years in return for an immediate payment of 400 million rand, the company said in the statement.

Current shareholders will be allowed to take part in the deal, underwritten by Coronation Asset Management Pty. Ltd. and the Pretoria-based PIC, according to the statement.

Before it's here, it's on the Bloomberg Terminal.