Zimplats Strikes $971 Million Deal as Zimbabwe Takes 51% of Company

---

Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Sugar Land, Texas)--Mining and resource-based companies worldwide will be studying the way Impala Platinum Holdings Limited (Implats) (PINK:IMPUY) (Johannesburg) has gone with the flow in resource nationalism and indigenization with Zimplats (Harare), the company's Zimbabwean subsidiary.

Zimplats have signed what is being called a 'landmark' indigenization deal with the Zimbabwean government. The state and other local interest will take a total of 51% of the company, and Zimplats will be granted some concessions, which include an undertaking by the state to cut land rents to pre-June 2012 levels and the repayment of $153 million for 51 million ounces of unmined platinum reserves, which the group returned to the state for empowerment credits in May 2006.

The biggest prize for Zimplats from the deal is that it can now plan the project expansion ahead. Zimplats has shed the uncertainty about the future under which it has been operating for some years.

Analysts, reported by Business Day, said that the 'favorable' arrangement ends two years of uncertainty, and finally puts the group on a growth trajectory. Zimplats is the first mining group to enter into an agreement with the Zimbabwe government, and the government can now use this as a template for deals with other mining companies.

The $971 million deal will give 10% of Zimplats to a community trust, 10% to a trust for 4,000 employees and 31% is going to the national indigenization and economic empowerment fund. Implats will provide vendor funding for the deal at 10% annual interest, which will be repaid from 85% of dividends declared by Zimplats over a decade.

Zimplats is currently undertaking an expansion program to increase production by 90,000 ounces (oz) of platinum to 270,000 oz in 2014. The current phase adds two million tons or processing capacity bringing the total to six million tons. The third phase could add another two million tons.

Implats CEO Terence Goodlace said that Zimplats would consider building a refinery in Zimbabwe once the total production of platinum in the country reached 500,000 oz annually. Currently, platinum group metals are refined in South Africa.

"It [the deal] has removed uncertainty. There is a vast potential there with fantastic geology and a great operating environment," said Goodlace.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.