Shanduka agrees Incwala deal

Published: May 11, 2010

Lonmin offers US$309mn loan to save black empowerment partner.

Investment group Shanduka has forged a partnership with Lonmin, one of the world’s leading platinum group metals (PGM) companies, after agreeing to buy a controlling stake in troubled South African black empowerment miner Incwala Resources.

The group, through its Shanduka Resources subsidiary, is to spend US$373.8mn on a 50.03% stake in the company, subject to regulatory approval.

Incwala was established in 2004 and holds an 18% interest in Lonmin’s subsidiaries Western Platinum and Eastern Platinum. The deal also gives Shanduka a 26% ownership of the Akanani platinum project.

The target company has had problems repaying debts following a drop in platinum prices. Under South African law mining companies must sell 26% of its assets to black investors by 2014. The deal was part-financed by Lonmin itself, which approved a US$309mn loan to complete the sale.

Shanduka’s managing director, Rowan Smith, says the deal provides the company with the opportunity to invest in one of the world’s leading platinum producers. 

“We are also excited that the project pipeline with Lonmin will foster a long-term partnership which will enable Shanduka to become a significant player in the South African PGM market, and we look forward to working closely with Lonmin’s team in this regard.”