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Ghost Bites (Afrimat | Ellies | MC Mining | Tharisa)

Get the latest recap of JSE news in the Ghost Wrap podcast, brought to you by Mazars:



Afrimat goes large with Lafarge (JSE: AFT)

The Competition Tribunal has approved the deal

Afrimat has a strong track record of value creation, with acquisitions having significantly boosted shareholder returns over the years. The market always pays attention when Afrimat announces new deals.

The acquisition of 100% of Lafarge South Africa was first announced in mid-2023. These things take time, particularly due to the regulatory approvals required along the way. It’s very important news that the Competition Tribunal has now approved the transaction, which makes the deal unconditional with a closing date of 24 April.

This is a significant step in the construction materials strategy, expanding the quarry and ready-mix operations nationally. There are various other strategic opportunities available to Afrimat from this deal, including entry into new value chains. Most of all, Afrimat will look to drive efficiency in the business and achieve a positive operating profit contribution.

CFO Pieter de Wit has been appointed as full-time Integration Manager for this process.


Farewell, Ellies (JSE: ELI)

Bad strategy leads to even worse outcomes

Sadly, when a company allows technological progress to overtake it, things can go wrong. Ellies (JSE: ELI) has been going from bad to worse and the final attempt to save the company was a renewable energy acquisition that failed to be completed. In any event, it did look as though they were going to overpay for the asset, which is why the funding couldn’t be raised. Even if the deal had gone ahead, there’s no guarantee that shareholders would’ve done well from it.

With the group having entered business rescue in early 2024, there weren’t many options available to the company. All hope has now been lost, with the company confirming that it will be liquidated. This is because there is “no reasonable prospect” of the group being rescued.

It’s always a sad day when a company goes to zero, especially a listed company that has been a household name.


The independent board at MC Mining throws in the towel (JSE: MCZ)

Goldway has achieved quite the victory here

After many back-and-forth announcements, Goldway has won the battle against the MC Mining independent board. It’s been quite a thing to witness, with Goldway using provocative language and trying hard to create doubt in the minds of shareholders over what the MC Mining board has been saying.

It worked, with enough acceptances of the Goldway offer to be able to declare it unconditional. This has driven a complete turnaround in approach by the MC Mining independent board, with a recommendation to shareholders to accept the offer due to the limited liquidity in the stock (assuming it remains listed) and the practically zero likelihood of an alternative bid on more favourable terms. The board also notes that if the offer isn’t accepted, there’s a chance of shareholders being stuck in an unlisted entity.

Kudos to Goldway. It’s been quite the masterclass in M&A strategy.


Tharisa achieves consistent PGM output (JSE: THA)

Chrome output is down from the previous quarter’s record production

Tharisa has released its production update for the second quarter of FY24, which covers the three months to March 2024.

PGM output was pretty consistent at 35.3koz vs. 35.7koz in the first quarter. The PGM basket price was also remarkably flat for the quarter, coming in at $1,343/oz vs. $1,344/oz in the first quarter. For sure, up is better than sideways, but consistent execution is a big part of building a successful mining group.

Chrome output came in at 402.7kt, which is well down on 462.8koz in the first quarter – admittedly a record quarter. Chrome prices were fairly steady at $286/t vs. $291/t in the first quarter.

Across both commodities, production guidance has been maintained for the full year.

Although debt came down a bit in the past three months, the drop in cash was larger. This means that net cash reduced from $94.9 million at the end of December 2024 to $70.6 million at the end of March. The management team remains confident though, with a $5 million share repurchased announced in March.

The Karo Platinum Project development is focusing on smaller work packages to limit the amount of capital required, while the company works on putting together the necessary third-party financing to deliver the first phase into production. If PGM prices keep improving, then I think there’s a good chance that they will put the hammer down on the project and accelerate it.

Finally, the group officially launched Redox One at the Africa Energy Indaba. This is an initiative to develop long-term energy storage solutions utilising the commodities mined by Tharisa. They cleverly call this a “mine-to-megawatt” strategy.


Little Bites:

  • Director dealings:
    • A director of a major subsidiary of OUTsurance (JSE: OUT) has bought shares in the company worth R583k.
  • After 13 years on the board and 5 as Chairman, Abiel Mngomezulu will retire from the board of Merafe (JSE: MRF). Ditshebo Stephen Phiri will take the role of Chairman after the 2024 AGM.

Ghost Wrap #66 (MultiChoice | Grindrod Shipping | MC Mining | Sanlam)

Listen to the show here:

The Ghost Wrap podcast is proudly brought to you by Mazars, a leading international audit, tax and advisory firm with a national footprint within South Africa. Visit the Mazars website for more information.

In this episode of Ghost Wrap, I focused on recent M&A news across various sectors:

  • MultiChoice’s R125/share mandatory offer from Canal+ and the potential strategic direction going forward.
  • Grindrod Shipping’s selective capital reduction and intended delisting, leaving Taylor Maritime as the sole shareholder.
  • MC Mining’s battle with Goldway and the surprising number of offer acceptances.
  • Sanlam’s clever deal in India to gain a more strategic position in Shriram.

Ghost Bites (Alphamin | Coronation)

Get the latest recap of JSE news in the Ghost Wrap podcast, brought to you by Mazars:



Alphamin has caught up on delayed sales (JSE: APH)

EBITDA is vastly higher in this quarter than the immediately preceding quarter

In a mining group, there’s a big difference between commodities processed and commodities sold. Getting the stuff out of the ground is only the first part of the battle. For the three months ended March 2024, Alphamin’s production is only 1% higher than in the three months to December 2023. The difference is that sales more than doubled as the company dealt with a sales backlog caused by road conditions.

Needless to say, this means big things at EBITDA level. There’s a 156% quarter-on-quarter increase to $52 million. Of course, it helped a lot that the tin price was 7% higher at a time when the company could play catch-up on sales.

For reference, the tin price is up 12% year-on-year. The sales numbers aren’t a useful year-on-year comparison because of the sales backlog.

At Mpama South, tin production has been delayed by a few weeks. Underground development is on target though and ore stockpiles are being established ahead of the plant commissioning.

Thanks to a significant increase in the cash position, net debt has reduced from $73 million at the end of December 2023 to $28 million as at the end of March 2024.

The board will meet on 26 April to make a decision about the final FY23 dividend.


Coronation: be careful of the tax (JSE: CML)

No, not their tax fight – your own taxes in the odd-lot and specific offer

Coronation has finalised the offer price for the odd-lot offer (for those holding fewer than 100 shares) and specific offer (up to 500 shares). The price is R33.6191281, which is a 10% premium to the 30-day VWAP.

The very importance nuance here is the tax, as the offer is structured as a dividend. If you’re subject to dividends tax (e.g. an individual holder), this is almost certainly worse for you than selling shares in the market. If you hold through a company and hence don’t pay dividends tax, then this is likely to be a better outcome than selling in the market.

Please consider the tax carefully in making a decision here and speak to your tax advisor. This is more complicated than a normal offer structure.

The other very important nuance is that the odd-lot offer is something you have to opt out of i.e. the default is to accept it. The specific offer needs you to opt in i.e. the default is to have rejected the offer. Please read the circular for full details.


Little Bites:

  • Director dealings:
    • An associate of JD Wiese (son of Christo) bought shares in Shoprite (JSE: SHP) for just over R1 million.
  • NEPI Rockcastle (JSE: NRP) allowed shareholders to choose whether to receive a distribution as a cash dividend or a capital repayment. It mainly comes down to taxation consequences. In case this interests you, 37.1% of holders chose the cash dividend and 62.9% chose the capital repayment (the default).
  • Oando (JSE: OAO) has finalised its 2022 financial statements at long last. The company will now get the interims and final statements for 2023 done. The board has committed to publishing these financials by the end of July 2024.

Ghost Bites (MC Mining | MultiChoice | Sasol | Sirius)

Get the latest recap of JSE news in the Ghost Wrap podcast, brought to you by Mazars:



Goldway has declared its MC Mining offer unconditional (JSE: MCZ)

There is yet another twist in this tale

The MC Mining soap opera continues, with bidder Goldway announcing that it has in fact met the minimum acceptance condition. This means that holders of at least 50.1% of ordinary shares in MC Mining (other than those already held by Goldway) have accepted the offer.

This is going to come as a surprise to the MC Mining board based on their recent communication (and of course the recommendation they made to shareholders not to accept the offer). To further increase the acceptances , the offer has been extended by 10 business days for acceptance until 11am South African time on 22 April.

MC Mining was unhappy about the extension that they believe came as a surprise. As Goldway very smugly points out, the intention was always to extend the offer once the minimum acceptance condition was met. MC Mining just wasn’t expecting the condition to be met.


MultiChoice announces the terms of the Canal+ mandatory offer (JSE: MCG)

The offer price of R125 is well above the required mandatory offer price

The MultiChoice – Canal+ journey has been interesting. The firm intention announcement by the group includes the timeline of events, starting in February 2024 with Canal+ announcing that it wanted to make an offer of R105 per share. MultiChoice rejected that offer, as the board believed that the price undervalued the group.

It was a brave strategy, but it worked. After Canal+ acquired more shares in the market and triggered a mandatory offer at R105 per share, the parties negotiated further and decided to propose a price of R125 to shareholders. It’s still a mandatory offer, but at a price higher than the minimum regulatory requirement of R105 per share based on the trading history of Canal+ in MultiChoice shares.

This avoids a silly and expensive situation of a mandatory offer followed by an offer at a higher price. It seems like a win for all concerned.

Canal+ currently holds 36.6% of MultiChoice shares in issue and is allowed to buy more shares while the offer is live, provided they don’t pay more than R125 per share or the offer price will need to be increased to whatever the higher amount is.

The very important thing to note is that this is being structured as a mandatory offer rather than a scheme of arrangement. This isn’t an expropriation mechanism that binds all holders to the outcome of a vote that needs 75% approval. Instead, the squeeze-out provisions may apply, which allow Canal+ to force a 100% acceptance provided 90% of holders say yes to the offer.

It is therefore highly likely that MultiChoice will remain listed on the JSE, as achieving a 90% acceptance rate is no joke. There’s potentially a much more interesting outcome here, as the parent company of Canal+ (Vivendi) is considering a split into various entities. If this happens, it seems that Canal+ might be available for a separate spin-off and merger with MultiChoice, which would suddenly create a far more interesting media and entertainment group with a seriously impressive footprint.

The circular to shareholders is due by 7 May 2024 and should make for very interesting reading.

Personally, with no financial horse in this race, I would love to see a MultiChoice – Canal+ merger. It would give local investors the opportunity to hold shares in a proper media powerhouse. I bet there would also be further benefits for the local film industry.


Great for Sasol, perhaps not great for your lungs (JSE: SOL)

This is going to upset the environmental groups

Investors in Sasol have had to stomach a situation where the longevity of Secunda Operations has been in doubt because of environmental concerns. Naturally, environmental groups would love to see the back of this thing, although that would lead to far more boring Sasol AGMs with less disruption. Investors with a purely financial lens just want to see Sasol return to a financially appealing position, with the share price having lost more than a third of its value in the past year.

The right approach, as is so often the case, is probably somewhere in the middle. This is why regulators exist, as they need to balance the needs of all stakeholders. There is always an economic cost that has to be balanced against environmental costs. Sadly, the trade-off is air quality vs. loss of jobs. There are no easy decisions here.

The major recent scare for Sasol was the National Air Quality Officer (NAQO) refusing Sasol’s application to be regulated on an alternative emission load basis for the boilers at Secunda Operations. Sasol’s argument is that they are working hard to reduce the environmental footprint, but shouldn’t be measured against the concentration-based limits.

The Minister of Forestry, Fisheries and the Environment has upheld Sasol’s appeal after the NAQO said no. Load-based limits will be applied from 2025 until 2030.

You can read the full appeal decision here, with this as just one interesting extract dealing with Sasol’s grounds of appeal. It clearly shows how the trade-offs mentioned above come into play:


Sirius makes more progress on its portfolio (JSE: SRE)

This group isn’t shy to do deals

There are many property funds on the JSE that seem to do deals for the sake of it, paying market value for properties and selling at market value as well. That doesn’t really do much to create shareholder value, let’s be honest.

Sirius is more interesting than that. Although I’ve commented many times on how silly the valuation got during the pandemic, that wasn’t a negative reflection on the management team. If anything, the market simply got too carried away.

To help justify the valuation, Sirius tries hard to acquire properties at appealing prices and to dispose at strong prices as well. The group previously announced acquisitions in both Germany and the UK with a total value of over €100 million. These four deals have now been completed. They were paid for with the proceeds of the November €165 million capital raise.

Separately, Sirius has completed the sale of a light industrial asset in Stoke-on-Trent in the UK for £3 million. It’s a small transaction for a non-core asset, with the price set at a 1% premium to the last reported book value.

The share price is up 30% in the past year. Here’s the pandemic craziness I was talking about, clearly visible in this five-year chart:


Little Bites:

  • Powerfleet (JSE: PWR), the newly merged group with MiX Telematics, has gotten its locally listed life off to a complicated start thanks to accounting rules. The group needs to restate the accounting treatment of convertible preferred instruments. This will require restatement of financials for the 2021 and 2022 financial years as well. This has non-cash impacts on the financials. Still, it makes the group late in filing its annual report, which earned the company a warning letter from the Nasdaq giving it 60 calendar days to respond. They definitely need to get this sorted in the required time period, as a listing suspension is not the way to win the trust of investors.
  • To give you an idea of the cost of borrowing for sub-scale REITs in Europe, Deutsche Konsum (JSE: DKR) is issuing subordinated secured convertible bonds in euros. The repayment date is October 2025, so this is very short-term money where the convertibility into shares is important. They pay interest at 12% per annum and with an issue price of 98.5% of the nominal amount, the effective rate is actually slightly higher. Compare this to the yields on properties and you’ll see the problem.
  • Four non-executive directors have resigned from Ellies (JSE: ELI), so things are going from bad to worse there it seems.

Emus with Guerrilla Tactics

Is violence always the answer? If you consider the fact that the Australian military once went to war with the native emu population (and lost), then the answer to that question is no, probably not.

Disclaimer: gentle reader, most times when I sit down to write this column, I do so with the aim to inspire a fresh perspective on business or finance, or to draw your attention to an interesting story with a relevant lesson. This article, however, has been written purely for the purposes of unabashed glee. You will probably learn nothing useful from this article, but you will come away with one very entertaining dinner table story. 

Our story begins at the end of World War I

Australia’s involvement in the First World War had marked its most catastrophic conflict to date, with casualties exceeding those of the Second World War that would follow. 

Approximately 210,000 Australians were affected, with 61,519 fatalities or deaths resulting from injuries. Given the nation’s population of less than five million at the time, these losses were severe. Numerous veterans returned home with incapacitating injuries, hindering their ability to secure employment.

Under mounting public pressure to assist returning veterans, the Australian government devised a dual-purpose solution: they would offer employment to veterans and contribute to the nation’s food supply at the same time. The strategy involved dividing the countryside into small parcels of land, encouraging veterans to take up farming. 

Despite the enthusiasm of many thousands of veterans who accepted the challenge, the endeavour was fraught with difficulties from the start. The soil quality was generally poor, vermin posed a constant threat and most veterans lacked even basic farming experience. Furthermore, the allotted plots, which were typically around 10 acres each, proved inadequate for sustenance, let alone profitability. Nonetheless, numerous veterans were resettled across the country as part of this initiative.

Around 5,000 veterans were settled in Western Australia, where wheat was the crop most suitable to the conditions. 

From bad to worse

By the mid-1920s, it became obvious that the veteran farming initiative was a terrible idea. Tens of thousands of farmers were plunged into poverty while struggling to produce even a meagre amount of food.

Under such dire circumstances, alcoholism and suicide rates soared. Throughout the decade, wheat prices collapsed, exacerbated by the 1929 American stock market crash, which precipitated the Great Depression in Australia (and worldwide) with devastating effect. Suddenly, already diminished wheat prices halved, and Australia’s unemployment rate surged to 32%. As if that wasn’t enough, a drought compounded the hardships. 

A quarter of the resettled farmers in Western Australia abandoned their plots in frustration. Those who remained had no idea that their greatest hardship was still to come. 

Enter 20,000 emus

Imagine being a novice farmer, trying your best to grow wheat in the unforgiving landscape of Western Australia. You’ve persevered through a steep learning curve, bad soil, a freak drought and empty promises of subsidies that never came. And then one morning you wake up to find your wheat fields covered in emus. 

For those who are unfamiliar with emus, these are large flightless birds that are native to Australia. They have a similar look and build to the ostriches that we know so well, except that they are slightly smaller. Historically, Australia has had a bit of a love-hate relationship with the emu, alternating between classifying them as a protected species and vermin (probably depending on how much damage they were causing in a given period). 

Driven by the drought, increasingly large flocks of emus were migrating to Western Australia, where they found themselves in stiff competition for resources with struggling farmers. They caused so much damage to wheat crops that by 1922, their protected status was once again dropped, and the government classified them as vermin to be exterminated. Farmers took matters into their own hands but failed to make a dent in the emu numbers, as the birds were so hardy that they needed to be shot multiple times before they would die. 

Running low on ammunition and patience, the farmers turned to the government, who decided now was the time to involve the military. 

Bring in the big guns

A group of former soldiers was dispatched to meet with Sir George Pearce, the Minister of Defence. Drawing from their experiences in World War I, these veterans understood the efficacy of machine guns and requested their deployment. Pearce readily agreed, and military involvement was slated to commence in October 1932. The operation was overseen by Major Gwynydd Purves Wynne-Aubrey Meredith of the Royal Australian Artillery’s 7th Heavy Artillery, who commanded Sergeant S. McMurray and Gunner J. O’Halloran. Armed with two Lewis guns and 10,000 rounds of ammunition, they went off to war.

Assisted by local farmers, they endeavoured to corral the emus into an ambush. However, contrary to their expectations, the birds didn’t flock together but instead scattered, evading easy targeting. Later that day, when they encountered a small group of emus, the soldiers made another attempt, yet with no better outcome. Two days later, Meredith and his team meticulously laid an ambush near a dam. They lay in wait as approximately 1,000 emus approached the water. At close range, the soldiers opened fire, but the Lewis machine gun jammed after a few rounds, allowing the emus to flee with minimal casualties.

Getting an accurate assessment of the emu casualties was another challenge, as many would flee into the bush before succumbing to their injuries. By the third day, only about 30 emus had been killed, hardly making a dent in the estimated 20,000-strong population. Subsequent days saw limited success as the emus adapted their tactics, splitting into smaller groups with lookout individuals while others continued their ravaging. Meredith and his men attempted to mount the Lewis machine gun on a truck, but the rough terrain hampered their efforts, rendering that plan ineffective.

Amidst mounting negative publicity and lacklustre progress, Meredith and his team were withdrawn from the operation on November 8. The official report cited approximately 300 emus killed during the campaign.

Summarising the first offensive of the war, ornithologist Dominic Serventy commented: “The machine-gunners’ dreams of point blank fire into serried masses of emus were soon dissipated. The emu command had evidently ordered guerrilla tactics, and its unwieldy army soon split up into innumerable small units that made use of the military equipment uneconomic. A crestfallen field force therefore withdrew from the combat area after about a month.”

An astonished Major Meredith compared the emus to Zulu warriors, proclaiming “If we had a military division with the bullet-carrying capacity of these birds it would face any army in the world. They can face machine guns with the invulnerability of tanks”.

A victory of sorts

Following the military’s withdrawal, emu crop raids persisted. By November 12, the Minister of Defence authorised a renewed military effort, and Major Meredith was sent back into the field.

Initial progress was seen over the first two days, resulting in approximately 40 emus killed. However, the third day, November 15, saw a significant drop in success. Nonetheless, by December 2, soldiers were averaging around 100 emu kills per week. Meredith was recalled on December 10, and in his report, he documented 986 confirmed kills using 9,860 rounds, equating to precisely 10 rounds per confirmed kill. Additionally, Meredith reported that exactly 2,500 wounded emus had succumbed to their injuries. 

The exactness of his numbers hints at over exaggeration, but even so, using more than 10,000 rounds of ammunition to kill less than 3,500 (flightless) birds hardly feels like a sweeping victory. 

Despite the challenges faced during the culling operations, farmers in the region once again sought military aid in 1934, 1943 and 1948, only to have their requests denied by the government. Instead, the bounty system implemented in 1923 remained in place, and its effectiveness became evident: over a six-month period in 1934, 57,034 bounties were claimed. The larger issue was eventually resolved with the implementation of stronger barrier fencing, effectively preventing emus from entering farmers’ fields.

Although no emus were present to endorse the agreement, a truce was officially declared in 1999, when emus were once again designated as a protected species. Despite the eventual effect of their numbers, the emus are widely regarded as the victors of the Great Emu War of 1932.

And you thought that the spiders were the most frightening things in Australia, didn’t you?

About the author:

Dominique Olivier is a fine arts graduate who recently learnt what HEPS means. Although she’s really enjoying learning about the markets, she still doesn’t regret studying art instead.

She brings her love of storytelling and trivia to Ghost Mail, with The Finance Ghost adding a sprinkling of investment knowledge to her work.

Dominique is a freelance writer at Wordy Girl Writes and can be reached on LinkedIn here.

Ghost Bites (Grindrod Shipping | Sanlam)

Get the latest recap of JSE news in the Ghost Wrap podcast, brought to you by Mazars:



Grindrod Shipping shareholders are celebrating (JSE: GSH)

Their ship really has come in, with a potential delisting on the table

With Taylor Maritime Investments holding 83.23% of the shares of Grindrod Shipping in issue, the day was always going to come where Taylor looked to finish the job of delisting the company. In a clever proposed deal structure, this will effectively be achieved with the internal resources of Grindrod Shipping via what is known as a selective capital reduction.

Essentially, the company would buy back the shares not held by Taylor, leaving no other shareholders in place and therefore no reason for the company to remain listed on either the NASDAQ or the JSE.

The price on the table is $14.25 per share and the total deal value is just under $50 million. The price is a 54.8% premium to the 30-day volume-weighted average price (VWAP) on the JSE. As juicy as that sounds, shareholders will of course still need to approve the transaction and an independent financial expert has been appointed to issue a fairness opinion. This will be included in the circular to shareholders.

The share price closed 25% higher at R249.90. This is lower than the offer price because of the risk of deal failure and the time that will be required to implement the deal.


Sanlam invests further in India (JSE: SLM)

This is a lucrative opportunity for the group

At a time when the growth story around China has been under pressure, India has been getting increasing amounts of attention as an interesting emerging market. For a South African financial services group, India seems like a logical expansion opportunity.

Sanlam has already been in India for a while now, holding significant investments in Shriram as part of a partnership going back to 2005. The group has now decided to increase its stake in both Shriram General Insurance and Shriram Life Insurance. This is being partly funded (around 60%) by a disposal of a portion of the direct holding in Shriram Finance.

The effect of these transactions is that Sanlam will increase its stake in Shriram General Insurance from 40.25% to 50.99%, as well as the stake in Shriram Life Insurance from 42.38% to 54.40%. The shareholding in Shriram Finance will dip from 10.19% to 9.54%.

This is a clever approach that requires limited additional capital (only 40% of the purchase price is new capital flowing into India) to take the stakes in two business units to controlling stakes.

The near-term impact on the net result from financial services is expected to be marginally positive for earnings and marginally negative for dividends. This is a long-term play, with India seen as an attractive market that can achieve returns for Sanlam well in excess of the “internal hurdle rate” – the return they need when deploying capital.


Little Bites:

  • Director dealings:
    • A non-executive director of Remgro (JSE: REM) purchased shares worth R485k.
  • Also at Remgro (JSE: REM), It’s rather interesting to note that Carel Vosloo, who held a lot of senior positions at RMB including co-head of corporate finance and investing banking, has been appointed as an alternate director to Jannie Durand. Vosloo joined Remgro in March 2022. Recent performance at Remgro hasn’t been acceptable, so perhaps this is a step towards trying to address that.
  • DRA Global (JSE: DRA) announced that the group CFO has resigned. He has been with the company since December 2021 and in the role of CFO since May 2022, so that’s not a long stint. The company has promoted an internal resource to Acting CFO.

Ghost Bites (Aspen | Harmony | Kore Potash | Mantengu Mining | MC Mining)

Get the latest recap of JSE news in the Ghost Wrap podcast, brought to you by Mazars:



Aspen’s deals with Sandoz have achieved Chinese regulatory approval (JSE: APN)

The deals are on track to close in this financial year

Back in December last year, Aspen announced that it would acquire all the shares in Sandoz (China) Pharmaceutical Co, along with commercialisation rights and intellectual property for the established products of the company and the pipeline for the short to medium term.

As part of the same overall deal, Aspen would sell four anaesthetic products to Sandoz that are currently sold by Aspen in the European Economic Area.

As you can imagine, there are a number of regulatory approvals that need to be obtained along the way. One was for the Chinese State Administration for Market Regulation to approve the transactions. This approval has now been granted, which puts on the deals on track to be completed in this financial year.


Unions singing in Harmony (JSE: HAR)

For the first time, there’s a five-year wage agreement with all five labour unions

Harmony Gold announced a landmark five-year wage agreement that covers all five labour unions in the group. This is the first time in the company’s 73-year history that such a deal has been reached.

For planning purposes, having certainty around labour costs for five years is incredibly helpful for Harmony.

There are various elements to the deal, ranging from annual wage increases (for most workers, equal to 6.2% or CPI, whichever is greater) through to increased housing and living-out allowances.

The announcement unfortunately doesn’t indicate the overall effective percentage increase over five years.


Kore Potash appoints a CEO (JSE: KP2)

This is a big step, given the remaining uncertainty

If you’ve ever taken a risk with a business venture before, you’ll know that hiring ahead of the curve is only one of the many big decisions you need to make. Simply, you need the right bums in seats before there’s certainty over the way forward. It’s a proper chicken and egg problem.

Kore Potash has been putting tons of work into getting the Kola project to the point where there’s an agreed EPC contract and funding proposal. The slog continues, but there must be a general feeling of optimism around it as the company has appointed André Baya as CEO. He has loads of experience in Africa.

Oddly, the CEO role at Kora Potash is a non-board role.


Mantengu Mining is now breakeven (JSE: MTU)

Yet the share price has halved in the past year

Mantengu Mining is tiny. The market cap is less than R100 million, which puts it in a difficult space on the local market. Recent activity has seen the company putting together capital raises from GEM Yield funds, with a circular having been issued to shareholders in December 2023.

The major project in the group is Langpan, which has a chrome plant that was commissioned in May 2023.

The group has issued a trading statement for the year ended February 2024 that notes HEPS of between 0 and 1 cent – the tiniest of positive HEPS. That’s still a significant improvement from the headline loss per share of -12 cents in the comparable period though!

Detailed results are due for release on 29 May.


Goldway extends the time period for the MC Mining offer (JSE: MCZ)

At the 11th hour, there’s a two-week extension

The games continue around the offer by Goldway to shareholders in MC Mining, with Goldway dishing out the surprise move of extending the offer by two weeks. It was due to close at the end of this week (5 April) and previous communication was that it wouldn’t be extended.

Obviously, this is because the minimum required acceptances haven’t been achieved. The independent board notes that Goldway has notified acceptances from holders of 12.1% of shares, which equates to 34% of the shares to which the offer relates.

Of course, the real question now is whether the extension will potentially come with an increased offer that takes the price closer to the range suggested by the independent expert. The game of chess (mixed with poker) continues.


Little Bites:

  • Exxaro (JSE: EXX) announced that its special dividend of 572 cents has received SARB approval. The payment date is Monday, 13th May.
  • If you are a shareholder in AYO Technology (JSE: AYO), then be sure to refer to the latest financial statements which include a “change statement” – this means that adjustments have been made between the announcement of results and the release of the financial statements. In other AYO news, Sekunjalo Investment Holdings now has 42.8% in the company.
  • Eastern Platinum (JSE: EPS) is late in filing its audited financial statements for the year ended December 2023. Although the general public can continue trading in shares, the directors and prescribed officers of the company cannot. The company plans to file and get back on track as soon as possible, with no specific date given.
  • Conduit Capital (JSE: CND) announced that the hearing for the applications by the liquidators of Constantia Insurance Company to provisionally wind-up Conduit Capital and its subsidiary Conduit Ventures has been postponed to 2 August 2024 as the applications are opposed.
  • Tongaat Hulett (JSE: TON) has released its latest business rescue update. If you’ve been following that process, you can find it here.

Who’s doing what this week in the South African M&A space?

Exchange-Listed Companies

Old Mutual Africa (Old Mutual) is to sell Old Mutual Nigeria Life Assurance Company and Old Mutual General Insurance Company Nigeria to Emple Group, an investment company managed by Nigerian investors. Financial details were undisclosed. The decision follows a strategic review of the businesses with the key consideration to optimise capital management. The Group confirmed it would remain in Nigeria, maintaining a presence through its investment arm, Africa Infrastructure Investment Managers.

Invicta subsidiary, Invicta Global Holdings plc, has acquired a UK-based supplier of consumable parts to British and European earth moving and agricultural machinery aftermarkets. The purchase of Nationwide Bearing Company (NWB) for £12,3 million (R293,6 million) provides a platform for Invicta to grow its global Replacement Parts Earthmoving business. Aside from the synergies and cost-effective savings, NWB has product ranges which can be cross sold into Invicta’s existing operations.

Emira Property Fund, a 59.3%-owned subsidiary of Castleview Property Fund, is to dispose of a portfolio of 13 properties in Cape Town to Spear REIT. The portfolio comprises six office properties, five industrial facilities and two specialist/retail properties with the majority of the portfolio value being in office properties. The portfolio is to be acquired at no premium to its market value and is accretive to Spear shareholders from a distributable profit perspective. The R1,1 billion transaction forms part of Emira’s strategy to recycle capital. The net proceeds will be used to reduce debt and subsequently to fund new acquisitions.

In a separate announcement, Emira Property Fund disposed of Makro Crown Mines to New Order Investments 90 in a R334,5 million deal and Market Square, Beacon Way in Plettenberg Bay to Lynx Real Estate Developments for R354 million.

The saga of the off-market takeover offer by Goldway Capital Investment of MC Mining shares continues. Goldway has extended the close of its offer period from 5 April to 19 April 2024. Results of the offer will be announced on 29 April 2024. Goldway has a substantial shareholding of 76.4% but this is short of the minimum 82.19% level necessary to satisfy the ‘Minimum Acceptance’ condition for the Offer to proceed.

RMB Holdings has disposed of its 7.15% stake in Divercity Urban Property Group for R50 million. The shares, repurchased by Divercity, were at a consideration below its carrying value of R87,1 million (as per RMH’s interim results).

Unlisted Companies

Baobab Network, an early-stage investor in African startups, has acquired Reflector Marketing, a South African, strategy and branding agency. Reflector Marketing has a diverse clientele, across a diverse range of industries and spanning five continents. The agency has played a pivotal role in refining their positioning and scale by providing strategic marketing, branding and digital services tailored to individual needs.

RNR (Right Now Response), a local breakdown management startup, has raised R12 million in a follow-on investment round led by HAVAÍC. The venture capital firm contributed R10 million following an initial R9,2 million invested in February 2023. RNR provides truck fleet managers with on-demand breakdown support via its nationwide network of vetted mechanics, electricians and repair centres.

DealMakers is SA’s M&A publication.
www.dealmakerssouthafrica.com

Weekly corporate finance activity by SA exchange-listed companies

African Rainbow Minerals has, on a private placement basis, acquired a 15% stake in Surge Copper Corp. The 39,608,708 shares in the TSX Venture Exchange-listed company will be acquired at an 18% premium to the 20-day VWAP for a purchase consideration of C$3,76 million representing C$0.095 per share. Surge owns the Ootsa Property and Berg Project in British Columbia which have significant deposits of metals used as input in electrification and the low-carbon economy.

The required SARB approval has been granted for Exxaro Resources to pay shareholders a special dividend of R5.72 cents per share. The number of ordinary shares in issue as at the declaration date was 349,305,092. Payment date is scheduled for 13 May 2024.

A number of companies announced the repurchase of shares.

British American Tobacco has commenced its programme to buyback ordinary shares using the £1,57 billion net proceeds from its sale of ITC shares. The company will buy back £1,60 billion of its ordinary shares – £700 million in 2024 and the remaining £900 million in 2025. This week the company repurchased a further 880,000 shares at an average price of £24.02 per share for an aggregate £2,11 million.

In terms of its US$5 million general share repurchase programme announced in March 2024, Tharisa plc has repurchased 427 ordinary shares at an average price of R13.77 per share for an aggregate repurchase value of R5,881.00.

Prosus and Naspers continued with their open-ended share repurchase programmes. During the period 25 to 28 March 2024, a further 3,042,342 Prosus shares were repurchased for an aggregate €86,98 million and a further 235 734 Naspers shares for a total consideration of R763,6 million.

Telemasters issued a cautionary notice this week. The Company will be disposing of 30% of the shares of its major subsidiary, Catalytic Connections, to the Sebenza Education and Empowerment Trust.

DealMakers is SA’s M&A publication.
www.dealmakerssouthafrica.com

Who’s doing what in the African M&A space?

DealMakers AFRICA

Xtract Resources has entered into an option and joint venture agreement with Oval Mining, who are acting in cooperation with Cooperlemon Consultancy, to earn up to a 70% interest in the Silverking copper mine and accompanying exploration licence 26673-HQ-LEL in the Mumbwa District of the Central Province of Zambia.

Following a thorough strategic review, Old Mutual Nigeria has sold its life and general insurance businesses to the Emple Group. Financial terms were not disclosed. The group confirmed that it would still maintain a presence in the West Africa country through its investment arm, African Infrastructure Investment Managers.

Thor Exploration, the TSX-V and AIM listed exploration company currently advancing the Douta gold project in Senegal to a preliminary feasibility stage, has acquired majority stakes in two licences in southeast Senegal near to the Douta project. Thor has acquired up to an 85% interest in the Douta-West Licence which lies contiguous to the Douta project and an 80% interest in the Sofita Licence which lies approximately 20km south of the gold project.

Ghana’s Zeepay, a remittance and mobile money service company, has raised US$3 million in equity funding from Verdant Capital Hybrid Fund. The capital increase will be used to strengthen its financial position. The company, with licences in Ghana, Zambia, Ivory Coast, Sierra Leone, Gambia and Barbados, is already present in 23 countries.

OAR Resources has signed a binding agreement with Bullrun Capital Inc, Cityscape Asset and Impala Consulting to acquire 100% of Exclusive Prospecting Licences (EPL) 9652 and 9725. The EPLs are located close to Walvis Bay in the Erongo Region of Namibia and are considered highly prospective for in-demand and in-value uranium. In consideration for the EPLs, OAR will pay CAD$125,000 in cash plus four tranches of shares totalling 400,000 fully paid shares at various stages thereafter.

UAE-based Invictus Investment Company plc has completed the acquisition of a 60% stake in Graderco and its subsidiaries from Zalar Holding. No financial terms were disclosed. Graderco is a grain and cereal trading firm in Morocco which imports, stores and trades 2.5 – 3.0 million metric tonnes of grain and grain derivatives for both human and animal nutrition annually.

DealMakers AFRICA is the Continent’s M&A publication
www.dealmakersafrica.com

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