African Rainbow Minerals places Beeshoek Iron Ore Mine on care and maintenance (JSE: ARI)

The mine is a casualty of the mess that is ArcelorMittal (JSE: ACL)

Just this week, I noted that ArcelorMittal is fighting with the unions regarding the loss of jobs at the Longs business in Newcastle. The Labour Court ruled in favour of the unions, despite ArcelorMittal having carried this loss-making facility for the longest time.

When a business (or a major segment) fails, it takes others down with it. Sure enough, African Rainbow Minerals announced that the Beeshoek Iron Ore Mine has been placed on care and maintenance as this mine’s sole customer is ArcelorMittal. The infrastructure is old and the mine is only viable based on the offtake agreement with ArcelorMittal. Offtake has been reduced over the past five years and the supply agreement expired in June 2024, becoming a month-to-month deal. Deliveries ceased at the end of July and all efforts to find an alternative for the mine were unsuccessful.

This means that 622 workers will be retrenched with effect from 30 November 2025. African Rainbow Minerals has put various support programmes in place to try and mitigate the pain. It’s always very sad when this happens, but it does a lot of damage to the economy if unions step in at this point and make the losses even worse. All this does is make it harder for companies to justify the risk of expansion and job creation.

Cell C takes a big step closer to being separately listed on the JSE (JSE: CCD)

This is of course highly relevant to investors in Blu Label (JSE: BLU)

I really look forward to the day when we can read about Cell C’s results and strategy without having to wade through endless transaction steps and complexities. That day draws ever closer thankfully, with two very important announcements in the market on Wednesday.

I’ll start with the most interesting one: Cell C has announced its intention to list on the main board of the JSE. We knew that this day was coming of course, as Cell C has been on roadshows for a while and Blu Label has been putting tons of effort into getting it ready for listing. Still, seeing the official announcement is exciting. We might be losing listings at an alarming rate on the market, but at least some new ones are coming through as well.

Cell C in its current form is a profitable and interesting business. The capex-light strategy focuses on being the shovel in the gold rush when it comes to companies with strong distribution (banks, retailers etc.) wanting to sell telecoms-related services and earn a margin-enhancing fee in the process. Capitec Connect is a perfect example of this, operating as a mobile virtual network operator (MVNO) using Cell C’s infrastructure.

Cell C has 13 of the 23 MVNOs in South Africa on its platform, so they have a majority market share. Although this segment gets all the attention, there’s still the consumer-focused segment that has 7.8 million mobile subscribers. My understanding of the numbers is that Cell C makes 42.1% of revenue from prepaid and 15.3% from postpaid. This means that more than half the revenue is sourced from the traditional offering, while the rest comes from wholesale and B2B, enterprise, fibre to the home, roaming and equipment. The group is much more diversified than the PR efforts around the MVNO business would otherwise suggest.

For the year ended May 2025, Cell C generated revenue of R13.7 billion and EBITDA of R3.7 billion. Given the financial complexities of how the group has been structured, those are pro forma numbers with footnotes (i.e. net of many adjustments). Still, it’s the best view they can provide of the current economics once all the restructuring steps are completed. Importantly, capex intensity (the percentage of revenue invested in capex) on a pro forma basis was 5.7% for that period, a number far below what would be required for Cell C to try and build out a competing network vs. buying excess network capacity from the leaders in the telecoms market. This speaks to their capex-light model of being the switch rather than the tower.

One of the strategic pillars that they put forward at Cell C has the bold aim of “driving an infectious brand connection” – a creative PR person came up with that! The brand may be infectious, but the web of restructuring transactions will simply make you sick. Blu Label has had some of the most complicated financial reporting I’ve ever seen. This will thankfully all be sorted out as part of the listing prep, which means that Cell C will be cut loose with a clean balance sheet.

The pre-listing steps will result in TPC (the Blu Label subsidiary) having a significant majority of shares in Cell C, while Cell C’s management will have 4.5%. The listing itself will see TPC sell up to R7.7 billion in shares in Cell C, with around R2.4 billion earmarked for an empowerment vehicle and the remaining R5.3 billion for the broader market. Blu Label will use the proceeds to settle debt and improve its balance sheet, with a portion of the proceeds potentially being paid as a dividend to shareholders.

It’s important to understand that Cell C will not be receiving any of those listing proceeds. Given the capex-light nature of the model, that makes sense.

For all the excitement, I must note that Cell C is only expecting single-digit revenue growth in years to come. They operate at decent margins and they expect to pay 30% to 50% of free cash flow as a dividend, so this is more of a dependable story than a high-risk growth story. If you’re looking for a position further along the risk/reward curve in this sector, then MTN (JSE: MTN) and Vodacom (JSE: VOD) with their forays into Africa would probably be more interesting. This isn’t to say that Cell C isn’t without risk of course!

In a separate announcement, Blu Label announced a few other pre-listing transactions. For example, TPC will acquire a loan claim that Nedbank (JSE: NED) has against Cell C for R447 million, with the plan being to convert it to equity. TPC has also agreed to acquire Nedbank’s 7.53% stake in Cell C, as well as the stake that Lesaka Technologies (JSE: LSK) holds in Cell C (5.13%). There is also an agreement to settle lease claims worth R1.3 billion for R750 million. With all said and done, the pro forma gross debt in Cell C is R2.75 billion, a gross debt to EBITDA ratio of 0.8x.

I can’t find exact confirmation of the listing date in the announcement, but I suspect it will happen before the December break.

Gold Fields: production up, costs down and guidance affirmed (JSE: GFI)

This is what the people want to see

Gold Fields released an operational update for the quarter ended September. It’s filled with good news, like a 6% increase in production and a 10% drop in all-in sustaining costs (AISC) per ounce, both measured on a quarter-on-quarter basis. At a time when gold is doing so well, all that investors hope for is that the gold miners will respond with efficient production.

If we look at year-on-year numbers, production was up 22% and AISC per ounce declined by 8%. That’s excellent.

The group ended the quarter with an extremely healthy balance sheet, with net debt to EBITDA at 0.17x vs. 0.37x in Q2. During the quarter, net debt managed to almost halve from $1.49 billion to $791 million. This was necessary as the post-quarter activity saw the completion of the acquisition of Gold Road Resources for $1.45 billion net of cash received and other adjustments. With all said and done, net debt to EBITDA is currently at 1.0x.

Guidance for FY25 has been affirmed. The share price is up 168% this year, although it’s nearly 19% off the 52-week high based on the recent correction in the gold price.

Vodacom has settled the Please Call Me matter (JSE: VOD)

I’m glad this crazy situation has come to an end

Personally, I’m tired of reading about the Please Call Me claim that Kenneth Makate has been fighting to get from Vodacom. All sense of commerciality appears to fly out the window in the debates around this matter, with truly eyewatering numbers as the suggested settlement figure for the dispute. It’s very much become a David vs. Goliath thing in South Africa, without people thinking about the knock-on effects of a huge number changing hands.

We don’t know yet what the final number is, but we do know that Vodacom and Makate have finally settled out of court for an undisclosed sum. We should be able to see it when Vodacom releases their interim results for the six months to September 2025. Given the strong recent performance at Vodacom, they may have used the opportunity to get this out the way and take the financial knock in a period that can “afford” it.

This battle has been going on for 17 years. That’s only slightly less time than the iPhone has existed for!

Nibbles:

• Director dealings:
  • An associate of a director of Afrimat (JSE: AFT) sold shares worth just under R500k.
  • As we’ve seen many times, the CEO of Spear REIT (JSE: SEA) bought shares for his minor children and family investment vehicles. This time around, the purchases came to over R90k in aggregate.
  • The CEO of Vunani (JSE: VUN) bought shares worth R8k.

• UK subsidiary of ASP Isotopes (JSE: ASP), Quantum Leap Energy, is working towards producing High-Assay Low-Enriched Uranium (HALEU) in the UK. The update is that early engagement for “regulatory pathways” has been formally commenced. If this sounds like a regulatory minefield, you’re on the right track. This sector is obviously at the top of the list from a national security perspective, so a detailed due diligence is part of the process. The company also announced the appointment of highly experienced civil and defence sector executive Rich Deakin to the role of Managing Director, UK Strategic Projects. They seem to be making a lot of progress at ASP Isotopes on both sides of the Atlantic.

• I may not love the approach being taken at Africa Bitcoin Corporation (JSE: BAC), but that’s not what counts. Instead, what counts is that the company consistently sticks to the strategy that has been put forward, so that those who believe in it can feel confident about its execution. Having raised my concern about less than half of the recent capital raising proceeds being used to acquire bitcoin, I’m pleased to see that another R900k or so was used to acquire half a bitcoin. This takes their total holding to just over 2.5 bitcoin, with a total acquisition value of nearly R4.6 million. But what about the rest of the proceeds?

• Interestingly, Attacq (JSE: ATT) has withdrawn the AGM resolution related to the general authority to issue shares for cash. Companies tend to ask for this permission as a matter of course each year. A potential reason for it being withdrawn could be that major shareholders may have indicated to Attacq that they won’t vote in favour for the resolution while there is now uncertainty over who the next CFO will be. I’m genuinely just speculating though – there could be other reasons. It’s just unusual to see a withdrawn resolution.

• Datatec (JSE: DTC) has sent the circular to shareholders dealing with the scrip distribution alternative. The cash dividend is 175 cents per share. The scrip dividend will be calculated based on this price and the 30-day VWAP adjusted for the cash dividend, less 10%. The exact ratio will be announced on 24 November.

• Wesizwe Platinum (JSE: WEZ) remains suspended from trading, with the company hoping to release the interim results for the six months to June by the end of January 2026. The company is still dealing with the hangover of the cyber breach that feels like it happened ages ago.