Johannesburg — WESIZWE Platinum CEO Mike Solomon will step down as the company negotiates with a Chinese consortium on a R6,6bn deal that may be delayed because of its empowerment stake.
Wesizwe has to address its empowerment level to win government approval for the transaction, which will give the Chinese consortium a 51% stake in Wesizwe, dilute existing shareholdings and provide full funding for development of a R6bn platinum mine.
Wesizwe's empowerment holding is 33%, which will be halved once the consortium, which includes China's largest nickel and platinum producer, Jinchuan, buys 51% of it for R2,07 a share in a $227m deal.
The consortium, which also includes financier China Africa Development Fund, will invest a further 650m in project finance towards building the 350000oz- a-year platinum group metals mine.
Mineral Resources Minister Susan Shabangu has warned of a tougher stance on ensuring that mining companies reach the target of 26% black ownership by 2014 after the sector missed the interim 15% target last year , when it reached just 9%.
There are questions over the whereabouts of 43,85-million shares transferred out of the Bakubung-ba-Ratheo community holding into a shelf company called Newshelf 925.
Newshelf's 8,7% stake in Wesizwe is the subject of a court hearing brought by the Bakubung royal family and concerned community members to find out where the shares are.
Mr Solomon and his replacement, finance director Arthur Mashiatshidi, both acknowledged yesterday the board was aware there could be a problem in securing government approval of the Chinese deal.
"We are acutely aware of it. We have to convince not only our strategic partner but also government that we have the matter in hand and we have a contingency plan in place in case there is a problem with the status of those (Newshelf) shares," Mr Solomon said.
From Wesizwe's shareholder register, it appears there is a potential candidate that may be prepared to sell its shares. Anglo Platinum has a 26,5% stake in Wesizwe and is unlikely to deem this holding as core.
Even with Angloplat 's stake halved after the deal, it would, added to the diluted 16,5% empowerment level, give Wesizwe about 29% empowerment, satisfying the government's ownership requirements.
Members of Wesizwe's board will fly to China for talks with the consortium next week. Sticking points include securing an off-take agreement for the mine's concentrate, and the composition of the board.
Jinchuan has platinum experience and is likely to demand strong representation to manage the project. This has to be balanced against SA's corporate governance and ownership rules.
The board hoped talks would be completed before the end of this year so work could start on the mine early next year.
Mr Solomon was cleared of financial impropriety after a forensic audit by Deloitte & Touche and he will remain as an adviser for six months after he steps down at the end of next month.
The final results of the forensic audit, released yesterday, closed an unsavoury chapter in Wesizwe when a battle for the board raged and the R6bn Frischgewaagd-Ledig project was suspended because of difficulties in raising finance during the global financial crisis.
Wesizwe shares closed 1c down at 176c yesterday, off a session high of 182c.
Mr Solomon had indicated for some months that he would not renew his contract as CEO.
Wesizwe chairwoman Dawn Mokhobo made it clear that his departure was not linked to allegations levelled against him during the boardroom battle, which were investigated in the forensic audit.
