African Empowerment Deal Creates Golden Ambience and Puts Gold Fields into Play

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Researched by Industrialinfo.com (Industrial Information Resources, Incorporated; Houston, Texas). With Tokyo Sexwale (pronounced 'Seckwarli') chairman of Mvelaphanda Resources (Mvela) (JSE:EDG) (Johannesburg, South Africa) and already a board member of Gold Fields Limited (JSE,NYSE:GFI) (Johannesburg, South Africa) it seemed likely that Gold Fields search for a black empowerment partner (see related article: Gold Fields Develops Ghanian Super Mine and Looks for Black Empowerment Partners in South Africa) would end up with Mvela, which has already built up significant holding in diamond and platinum mining and now has a point of entry into gold.

The deal, which has now been struck between the two companies, will see Mvela spending $512 million to buy into 15 percent of Gold Fields' South African assets. Those assets consist of the Kloof, Driefontein, and Beatrix mines and supporting services, which represent around 70 percent of Gold Fields operating assets. Non-South African assets include the Tarkwa Mine in Ghana and Australia's Agnew mine.

Mvela has an existing exploration agreement with Gold Fields and involvement between the two, beyond the current deal, can be expected. Sexwale has said that his company is investing in world-class assets and world-class management and sees a role for his company in the full international group as a desirable objective. Mvela has the option to transform its stake in the operating assets into an equity stake at corporate level and Golf Fields has the right to call on Mvela to roll up the shares. There is a compulsory lock up period which stipulates that Mvela won't sell its stake until Goldfields has converted mining rights to the new order, or until after the passage of five years.

Gold Fields chief executive, Ian Cockerill, said that with the Mvela deal, the group had the 26 percent empowerment involvement that the new South African mining charter requires 'well within its sights'. Under the charter South African companies are required to have 15 percent of their equity in empowerment hands in five years time and 26 percent within ten years. He also said that the deal had been structured with minimal leakage of value for Gold Fields shareholders. Mark Willcox, CEO of Mvela echoes the no sweetheart's style of the empowerment deal, saying that Mvela has never been given anything by anyone. The deal was done at around $11.40 a share that was close to the Gold Field's market share price of around $11.70.

Sandy Ngoxina, the director general of the South African department of minerals and energy was reported by Mineweb as saying that Cockerill had been instrumental in thrashing out the charter, and that now the process had come full circle.

"I am happy to see him walk the walk," said Sandy Ngoxina, adding that he was happy to see Mvela including minority partners in the deal.

There are community based trusts, broad based empowerment mining companies and womens and youth empowerment groups under the Mvela group umbrella, which is significant at a time when highly geared fatcat deals are being criticized from all sides in South Africa as denying the meaning of the intended perspectives of empowerment. Sexwale himself is a leader who brought his charisma to business from politics. An ex-Robben Island prisoner Sexwale, whose friend Chris Hani was assassinated by right wing fanatics prior to the 1994 elections, became premier of the powerhouse Gauteng province. He then stepped out of politics into business, with other high profile young Turks, perhaps to give Thabo Mbeki center stage as president. He therefore has the empowerment pedigree and personal motivation to succeed at the topmost level before he considering his next major career moves...maybe back into a milieu that he already knows well.

Willcox says that Mvela will be coming to the market within the month with funding details that will probably include an equity funding deal and Cockerill says that the income from the deal would be plowed back into the group's capital expenditure in South Africa and may also be used for growth opportunities.

Some analysts commented after the announcement of the Mvela-Gold Fields deal that maybe the latter company had been coy about the Ashanti Gold-Anglogold (LSE/JSE:ANG,NYSE:AU)(Johannesburg, South Africa) 'merger' (see related article: Billion Dollar Anglogold-Ashanti Merge Prospect to Attract Counter Bids for Gold League's Top Spot) in denying any interest as it was just waiting to have Mvela by its side to talk African empowerment to Ashanti (NYSE:ASF) (Accra, Ghana). Meanwhile Sam Jonah, Ashanti chief executive said that he had been notified of the Ghanaian government's intention to appoint an adviser on the deal, to protect their 17 percent interest and 'golden share'.

Following these moves Sam Jonah was a speaker at the World Economic Forum in Durban on the problems and visions of NEPAD and African empowerment and who was sitting at top table with Sam, Thabo and other presidents, but Patrice Motsepe whose African Rainbow Minerals (Johannesburg, South Africa) recently merged in an empowerment honeymoon with Harmony Gold (NYSE:HMY,JSE:HAR) (Johannesburg, South Africa).

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