JSE-listed commodities trading company Metmar has completed an agreement to acquire a 40% stake in Zimbabwe Alloys and its subsidiary Chrome Corporation (Chromecorp), in consortium with several partners.
Metmar owns a 20% stake in the consortium, which it said would not only make capital contributions, but also had the required knowledge to restart the mining and alloy production.
The purchase consideration amounted to $56,25-million and $4,1-million for Zimbabwe Alloys and Chromecorp respectively, and was payable in several tranches.
Most of the proceeds would be applied to restore the operation’s mining, processing and production capacity. The Metmar consortium would also apply its significant intellectual capital to unlock the value of this investment.
Accordingly, it would invest towards the design, construction and commissioning of new furnaces, the training of staff as well as the transfer of knowledge and know how regarding the direct current technology and/or the refurbishment of existing furnaces and mining and processing activities.
The purchased assets included, among others, a furnace complex in Gweru, washing and metal recovery plants and the mineral claims to the extensive high quality chrome deposits. The refinery consists of a smelter, metal recovery plant and crushing, screening and loading facilities. Over the years, the refinery produced about three-million tons of ferroalloy products.
“The opportunity to invest in Zimbabwe Alloys and Chromecorp attracted significant interest from a number of commodity players, both in South Africa and further afield, based on its long-term potential,” said Metmar CEO David Ellwood.
The acquisition met Metmar’s strategy of concluding equity stakes in production and mining assets to secure marketing rights as well as the potential to unlock long-term value for stakeholders. It fitted the group’s policy to diversify into a broader range of commodity sources, although the acquisition is still subject to the conclusion of a technical due diligence.
“Metmar is already successfully exposed to the Zimbabwean environment through metallurgical coke screening activities. With mounting evidence of the potential for economic renewal in the region, we started evaluating opportunities to strengthen our strategic presence there more than six month ago, underpinned by our cautious and conservative investment approach,” commented Ellwood.
“We are confident that the acquisition presents Metmar with access to high quality chrome ore, high-carbon ferrochrome and plasma chrome and our new Zimbabwean partnership with Benscore Investments, which owns the remaining 60% in Zimbabwe Alloys, holds significant potential.”
Source: Mining Weekly
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