Electricity the major constraint on investment – Mantashe

South Africa’s Mineral Resources and Energy Minister, Gwede Mantashe, has urged continued foreign investment into the country’s resources sector, saying that the government is actively working to address electricity issues, which have constrained economic growth. Speaking on the sidelines of Paydirt’s African Downunder conference, in Perth, Mantashe told Mining Weekly Online that until the question of electricity pricing in South Africa was sorted, economic growth would not be sustainable.

Electricity issues a major constraint on investment – Mantashe

South Africa’s Mineral Resources and Energy Minister, Gwede Mantashe, has urged continued foreign investment into the country’s resources sector, saying that the government is actively working to address electricity issues, which have constrained economic growth. Speaking on the sidelines of Paydirt’s African Downunder conference, in Perth, Mantashe told Mining Weekly Online that until the question of electricity pricing in South Africa was sorted, economic growth would not be sustainable.

Bluerock Diamonds’ shares jump on record find

BlueRock Diamonds (LON: BRD) shares were up 15% on the London Stock Exchange Friday after the miner announced it had recovered its largest diamond to date, a 24.9 carat gem quality stone.  

BlueRock owns and operates the Kareevlei Diamond Mine in the Kimberley region of South Africa.  The miner’s largest diamond prior was 16.28 carats, which sold for $78,947.
 
“This record recovery of such a high-quality diamond is an exciting milestone and underpins why we are so confident about the potential of the Kareevlei mine. We have a comprehensive development plan to increase production and look forward to providing further updates as we progress,” executive chairman Mike Houston said in a media statement. 

The diamond will be put to tender, the results of which will be announced June 17, the company said.

BlueRock’s shares were priced at 11 pence on the LSE late Friday, on a day that saw trading volume at 61.9 million, mover six times the average daily trading volume is 9.5 million. The company has a £1.8 million market capitalization. 

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Sibanye, Lonmin create world’s No.2 platinum producer as merger OK’d

Shareholders of both precious metals miner Sibanye-Stillwater (JSE:SGL) (NYSE:SBGL) and struggling rival Lonmin (LON:LMI) approved Tuesday the planned merger of the companies, effectively creating the world’s second-largest platinum producer.

Sibanye-Stillwater said that 87% of its shareholders backed the all-share offer, which it revised down in April, valuing the smaller miner at 226 million pounds ($286 million), 60 million pounds less than initially offered.

Later in the day, the majority of Lonmin's shareholders rubber-stamped the deal.

South Africa's Competition Appeal Court had cleared the way for the business combination earlier this month, blocking Lonmin's main mining union’s attempt to block the takeover or have re-examined. The Association of Mineworkers and Construction Union’s (AMCU) move was an effort to avoid some of inevitable layoffs, originally estimated at 3,000, that will take place after the merger.

The takeover is seen as a rescue deal for Lonmin, severely hit by weak platinum prices during the 2016-2017 downturn, costs related to the strengthening rand, a large labour force and expensive deep-level mines.

For Sibanye, is just one more of many deals struck by chief executive officer, Neal Froneman, who has transformed the gold miner by expanding its operations into the platinum-group metals sector.

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Barrick’s bid for Acacia an “appropriate” and “elegant” solution to Tanzania’s woes — CEO

Barrick Gold’s (TSX:ABX)(NYSE:GOLD) chief executive, Mark Bristow, said the company’s bid for its 64%-owned Acacia Mining (LON:ACA) is an “appropriate” and “elegant” solution to the long-running row over outstanding tax claims that has hit the African miner’s bottom-line.

The $285-million offer, considered by some analysts and Acacia’s minority shareholders as a low, would see the world's second largest gold miner buying the remaining 35% of Acacia it does not already own, at a discount.

“We’re not trying to exploit any particular situation,” Bristow told Bloomberg. “At the end of the day we do believe it’s a well-considered, fair and proper proposal that should be taken seriously.”

“We’re not trying to exploit any particular situation,” CEO Mark Bristow said referring to Barrick’s $285-million offer for Acacia Mining.

The proposed takeover, said Barrick last week, was made after realizing that the government of Tanzania was not prepared to deal directly with Acacia to settle their differences.

Acacia, the African country's No.1 gold producer, has been embroiled in a battle with Tanzania since 2017, when the  government banned exports of unprocessed metal and slapped it with a $190 billion tax bill— equal to almost two centuries worth of revenue.

The company was also forced to cut output by a third from two of its three mines in the country — Bulyanhulu and Buzwag.

A "tragedy"

Since then, the relationship between Barrick and Acacia has been strained and progress moving an agreement forward has been “almost impossible,” Bristow acknowledged earlier this month.

“It’s a tragedy," he said. "We’re dealing with a complete breakdown of relationships.”

For about two years, Barrick has been leading negotiations with President John Magufuli’s administration, first under executive chairman John Thornton and, more recently, under Bristow.

The South African geologist, who spent decades finding and building his own mines in Africa, has been considered by many analysts as the only one who could effectively end the never-ending row.

Acacia has sought to resolve some of its issues with Tanzania through international arbitration.

framework deal reached in February proposed that Acacia would pay $300 million to settle the tax claims and agree to split returns from operations with the country going forward. But Acacia has maintained its position that before approving any agreement its board should review it first.

“In our opinion, the bid value reflects the $300 million tax payment that has been negotiated between Barrick and the government of Tanzania, which becomes payable once a resolution is ratified,” Jefferies’ analysts wrote last week.

Acacia, which has said that much of the tax dispute stems from the period when the Canadian mining giant fully owned it, has sought to resolve some of its issues with Tanzania through international arbitration.

According to sources close to the matter, Barrick may choose to postpone any decisions on the proposed takeover until then.

With files from Bloomberg

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Acacia blames Barrick for barring it from Tanzania talks, mulls takeover bid

Barrick Gold’s subsidiary Acacia Mining (LON:ACA) condemned its parent company on Wednesday for keeping it out of the discussions with the government of Tanzania about a long-running row over outstanding tax claims.

The African miner’s comments come on the heels of the Canadian gold giant’s bid to take full control of the company, which is Tanzania’s No. 1 gold miner.

Toronto-based Barrick has proposed to buy the remaining 35% of Acacia it does not already own through an all-stock offer pitched at a discount, arguing that the plan offers a route to end Acacia’s crippling dispute with Tanzania’s government.

Barrick said it made the $285m-takeover bid because it was clear the government of Tanzania was not prepared to deal directly with Acacia and settle their long-running tax row.

The $285 million proposal made to Acacia’s board and management will offer 0.153 of Barrick shares for each of Acacia’s and implies a valuation of $787 million for the whole unit.

“Since the proposal is in Barrick shares, the Acacia minority shareholders will be able to benefit from any future potential upside in both the Acacia assets and Barrick's broader portfolio of assets,” Barrick said in the statement.

The offer, it noted, was made after realizing that the government of Tanzania was not prepared to deal directly with Acacia to settle their differences.

“As a consequence of the negotiations with the government of Tanzania, Barrick has had the opportunity to undertake detailed due diligence on the Acacia assets and on the basis of this work has concluded that the proposal on the terms set out above reflects the fair value of the company,” it said.

Faith in Bristow

For about two years, Barrick has been leading negotiations with President John Magufuli’s administration, first under executive chairman John Thornton and, more recently, under chief executive Mark Bristow.

The South African geologist, who spent decades finding and building his own mines in Africa, has been considered by many analysts as the only one who could effectively end the row over unpaid taxes claims.

Barrick has until June 18 to decide if it will follow through with a firm offer.

A framework deal reached in February proposed that Acacia would pay $300 million to settle the tax claims and agree to split returns from operations with the country going forward. But Acacia has maintained its position that before approving any agreement its board should review it first.

“In our opinion, the bid value reflects the $300m tax payment that has been negotiated between Barrick and the government of Tanzania, which becomes payable once a resolution is ratified,” Jefferies’ analysts wrote in a note on Wednesday.

“Acacia notes that it continues to be excluded from the discussions between Barrick and the government of Tanzania,” it said. “In the meantime, Acacia shareholders are strongly advised to take no further action.”

The company, which owns and operates Tanzania’s three major mines — Bulyanhulu, Buzwagi and North Mara, also said it would seek to clarify the position of Tanzania’s government.

Barrick has until June 18 to decide if it will follow through with a firm offer.

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South African court clears way for Sibanye’s acquisition of Lonmin

South Africa's Competition Appeal Court said Friday Sibanye-Stillwater's (JSE:SGL) (NYSE:SBGL) planned takeover of Lonmin (LON:LMI) could go ahead, clearing the way for shareholders to vote on the transaction that would create the world's second-largest platinum producer.

Transaction would create the world's second-largest platinum producer.

The country’s Competition Tribunal had approved the deal in November last year, but Lonmin's main mining union, the Association of Mineworkers and Construction Union (AMCU), filed an appeal to try to block it or have it re-examined. The move was an effort to avoid some of inevitable layoffs, originally estimated in 3,000, that will take place after the business combination.

“We welcome this decision as it clears the way towards the shareholder votes on 28 May,” Ben Magara, chief executive of Lonmin, said in the statement. “The combination creates a larger and more diversified company which we believe is in the best interest of Lonmin shareholders and other stakeholders.”

The all-share offer has been considered a rescue deal for Lonmin, severely hit by weak platinum prices during the 2016-2017 downturn, costs related to the strengthening rand, a large labour force and expensive deep-level mines.

For Sibanye, is just one more of many deals struck by chief executive officer, Neal Froneman, who has transformed the gold miner by expanding its operations into the platinum-group metals sector.

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Petra Diamonds fetches $15m for 425-carat legacy diamond

South Africa’s Petra Diamonds (LON:PDL) has sold its 425-carat “Legacy of the Cullinan Diamond Mine” diamond to Belgium-based Stargems Group for $15 million.

The exceptional D colour Type IIa gem was recovered in March from the company’s iconic Cullinan mine, the same that yielded the Cullinan diamond — at 3,106 carats the largest rough diamond ever found and which today is part of the  British Crown Jewels.

Petra, which recently appointed former gold miner Richard Duffy as chief executive, has been seeking to turn around its fortunes after piling up debt to expand Cullinan.

The mine, however, has been profitable every year since the company acquired it in 2008 and it's expected to generate free cash flow this year.

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Sibanye-Stillwater in good financial, political position to negotiate wages – Report

South Africa's largest gold producer Sibanye-Stillwater (JSE:SGL) (NYSE:SBGL), as the other top gold and platinum producers in the country, are preparing to hold wage negotiations in Q2-2019, and are bracing themselves to what is coming up, in particular with the belligerent Association of Mineworkers and Construction Union or AMCU.

AMCU was responsible leading 70,000 mineworkers in the longest, most costly wage negotiation in South Africa’s history – the 2014 platinum strike. Existing contracts were signed after this massive action.

First on the agenda will be Sibanye-Stillwater’s Rustenburg platinum mine, where an accident trapped 1,800 workers underground for a few hours this week and where the existing wage agreement expires in June.

Sibanye, Amplats and Impala Platinum intend to fix wage increases for the next three years.

According to risk and strategic consulting firm Verisk Maplecroft, Sibanye is the company with the second largest exposure to AMCU workers and following the completion of the proposed acquisition of British platinum producer Lonmin (JSE: LON)(LSE:LMI) and its Bushveld Complex, it will take the first spot in this regard.

“Luckily, for the company, its war chests are full. Sibanye-Stillwater has sold 5% of its share capital in preparation to stave off AMCU’s advancements, lowering debt and reducing its EDBITDA ratio from 2.3x to 2.5x,” Verisk Maplecroft experts said in a recently published report.

Despite the fact that at current prices and costs over 60% of South Africa’s platinum mining industry is loss-making or marginal, the consultancy believes that Sibanye-Stillwater’s preparation has put it in a position where it can afford above-inflation wage hikes, which would entail an opening offer of a 5.5% annual wage increase. “The question is whether it’s willing to pay out to avoid a scene. We expect so,” the document reads.

This forecast comes after the miner reached an agreement in mid-April with AMCU to put an end to a five-month long strike affecting its gold operations. The action caused $114 million in losses and about 110,000 ounces of missed gold output.

To be able to settle the dispute, the Johannesburg-based company agreed to sign the 2018 three-year wage agreement previously inked with National Union of Mineworkers or NUM, Solidarity and UASA on wages and conditions of service from July 2018 to June 2021; make a one-off payment of $285 to all gold employees in the form of cash or a voucher; make a cash advance to be repayable over 12 months; and transport AMCU members back to work.

AMCU, on the other hand, committed to concluding a peace pact within 30 days and to not pursue further appeals.

In the view of Verisk Maplecroft, these recent labour-related developments give Sibanye-Stillwater room to negotiate. “AMCU overplayed its hand. The union was forced to halt the industrial action at Sibanye- Stillwater’s gold mines after striking workers could no longer afford to forfeit their wages and defected to its rival, the National Union of Mineworkers,” the firm’s analysis states.

In addition to this, the British market analyst says that it is important to pay attention to the political context in which these negotiations are taking place. On May 8, 2019, general elections are to be held and AMCU’s gold strike is being seen as an attempt to hit President Cyril Ramaphosa, whose African National Congress is seeking to retain its majority status and secure him a full term in office as president.

But given that the strike ended up forcing workers towards the NUM, the political effects AMCU was looking for were diluted. As this happened, the NUM aligned with Ramaphosa’s party through its alliance with the Congress of South African Trade Unions.

At the same time, the labour ministry announced measures to de-register AMCU for breaking trade union rules as it has not held a national congress in more than five years, calling into question the mandate of senior officials.

“If de-registered, it would not be able to operate as a trade union. Workers would likely associate with other unions following a sharp loss in influence and funds,” Verisk Maplecroft’s report reads. “Yet the elimination of a negotiating partner would also drive the short-term unrest outlook in mining communities loyal to the AMCU message, including those working in the platinum industry in the Bushveld Complex. Wildcat strikes and operational disruption would be the order of the day.”

If this unlikely scenario plays off, the analyst says South Africa will require several years of regulatory stability and concerted action to tame the power of militant labour in order to repair its reputation among investors.

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