SENS ANNOUNCEMENT
(the “Notice” or “Announcement”)
ISSUER
ZCCM INVESTMENTS HOLDINGS PLC (“ZCCM-IH”)
[Incorporated in the Republic of Zambia]
Company registration number: 771
Share Code: ZCCM-IH
ISIN: ZM0000000037
Authorised by: Charles Mjumphi – Company Secretary
SPONSOR
Stockbrokers Zambia Limited
[Founder Member of the Lusaka Securities Exchange]
[Regulated and licensed by the Securities and Exchange Commission of Zambia]
Contact Number: +260-211-232456
Website: www.sbz.com.zm
APPROVAL
The captioned Notice or Announcement has been approved by:
RISK WARNING
The Notice or Announcement contained herein contains information that may be of a price-sensitive nature.
Investors are advised to seek the advice of their investment advisor, stockbroker, or any professional duly licensed by the Securities and Exchange Commission of Zambia to provide securities advice.
ISSUED: 02 February 2024
ZCCM INVESTMENTS HOLDINGS PLC
[Incorporated in the Republic of Zambia]
Company registration number: 771
Share Code: ZCCM-IH
ISIN: ZM0000000037
[“ZCCM-IH” or “the Company”]
TRANSACTION ANNOUNCEMENT UPDATE
Regarding
Mopani Copper Mines Plc
The shareholders of ZCCM Investments Holdings Plc (“ZCCM-IH” or “the Company”), and other market participants, are referred to the cautionary announcements issued on 10 November 2023 and 30 November 2023 in relation to the board of directors of ZCCM-IH (“the Board”) selecting International Resources Holding RSC Limited (“IRH”), as the preferred Strategic Equity Partner (“SEP”) for Mopani Copper Mines Plc (“MCM” or “Mopani”). The market is also referred to the transaction announcement dated 22 December 2023.
The Board is pleased to announce that on 22 December 2023, ZCCM-IH entered into an agreement with IRH pursuant to which IRH, through its wholly owned subsidiary Delta Mining Limited ("Delta"), has committed up to US$1.1 billion for a 51% interest in MCM and the formation of a strategic partnership with ZCCM-IH. This investment comprises of US$620 million in new equity capital, up to US$100 million in settlement of existing third-party letters of credit and up to US$380 million of shareholder loans into MCM as a SEP (the “Transaction”), subject to the fulfilment of Conditions Precedent defined herein. Consequently, upon the satisfaction of those Conditions Precedent, the relationship between Glencore International AG (“Glencore”) and MCM will be restructured.
ZCCM-IH, in consultation with its transaction advisors, is preparing a Transaction circular providing all the relevant information in respect of the Transaction, including financial and technical information. Shareholders will be able to vote on the Transaction at an extraordinary general meeting (“EGM”) due to take place in the first quarter of 2024.
In compliance with the requirements of Section 9 of the Listings Requirements of the Lusaka Securities Exchange (“LuSE ”), the key features of the Transaction are set out below.
The total consideration to be paid by Delta is up to US$1.1 billion which will be split between equity and debt in the following proportions:
MCM is one of the most important copper mining operations in Zambia, with a long history that is synonymous with the growth and development of the Copperbelt. ZCCM-IH took full control of MCM from Glencore in 2021, with a plan to find a suitable SEP to contribute to the expansion of the business and provide the necessary capital for growth.
IRH's strategy aims to invest in critical minerals in the region, across the entire mining value chain. The selection of IRH as the preferred SEP was carefully considered against the key criteria outlined above. The Board of ZCCM-IH believes that IRH's partnership with ZCCM-IH and MCM represents an important strategic step towards the revitalisation of the Zambian economy, the Zambian mining industry, and the continued development of the Copperbelt by enabling the long-term sustainability of MCM.
IRH's investment into MCM will recapitalise its balance sheet, secure direct and indirect jobs, and provide both funding and technical experience to complete MCM's PDP, all of which underpin MCM's strategy to achieve its target of becoming a 200,000 tonnes per annum producer of copper cathodes in the next 3 years. Beyond this, ZCCM-IH and IRH will work with MCM and the Government of the Republic of Zambia (“GRZ”) to pursue other opportunities in the Zambian mining industry that will attract further investment into the region.
Financial strength of IHC
IRH's parent organisation IHC is the largest company listed in Abu Dhabi, and as at 22 January 2024, IHC had a market capitalisation of US$240 billion with sufficient cash reserves and access to credit facilities to fund the Transaction. Securing this finance at closing of the Transaction is critical to the development of Mopani and also enables a restructuring of the debt owed to Glencore which further improves the economic viability of Mopani.
Strong track record across the mining value chain
IRH has a technical team of over 120 professionals working with major global mining companies and possessing a variety of experience, including in geology, engineering, metallurgy, and project management. The IRH team will provide support and expertise to the existing MCM management team to ensure a successful turnaround of the mine's operations. IRH will also leverage the expertise of its various subsidiaries and joint venture companies as required, to support the development of ancillary opportunities across the entire mining value chain.
Environmental, social and governance (ESG)
IRH's investment into MCM embraces a strict focus on multiple ESG principles. In collaboration with GRZ, IRH will not undertake staff redundancies at MCM as part of the Transaction. Any staff separations to occur will be strictly performance-related and carried out purely in the ordinary course of business. IRH has also committed to working with ZCCM-IH and MCM to optimise the local supply chains to benefit the Zambian economy and will ensure that, inter alia, MCM continues to be managed by the existing local management team. MCM's existing corporate social responsibility programs, including its investments in schools, hospitals and sports clubs will continue to receive funding and other support.
US$620 million Equity Investment into MCM
IRH, through its wholly owned subsidiary, Delta, will, subject to certain conditions precedent, provide an equity investment of US$620 million through the subscription of new shares in MCM. Delta will thus subscribe for 7,181,633 shares (“Investor Shares”), issued at $86.33 a share of which $85.33 per share is share premium (the “Subscription Price”).
The Investor Shares, when issued, shall constitute 51% of the entire issued share capital of MCM, with the balance of 49% being held by ZCCM-IH. The equity investment will be used to undertake MCM's PDP and stabilise the working capital position of the business as well as repayment of US$19 million of the ZCCM Shareholder Loan.
US$400 million of loans to MCM
In addition to the equity investment, IRH will provide up to US$400 million in loans by way of novation of the existing debt owed to Glencore as outlined above. IRH will also, subject to certain conditions, make available up to US$80 million of capital to MCM as shareholder loans, if required, to support future working capital requirements of the business.
Glencore and MCM Capital Restructuring
As detailed above and as part of the overall restructuring of MCM's balance sheet, agreement has been reached to restructure US$1.5 billion of Glencore Transaction Debt that resulted when ZCCM-IH acquired 100% of MCM in 2021, and to settle up to US$100 million of the third party letters of credit that have been procured by Glencore and made available to MCM since ZCCM-IH's acquisition. The effect of this is that the gross debt owed by Mopani to Glencore consisting of US$1,500 million plus accrued interest that was put in place when ZCCM-IH took control of Mopani, and a further US$100 million of third-party letters of credit underwritten by Glencore, will be replaced by the above shareholder loan owed to Delta of up to US$400 million, resulting in an overall net reduction in Mopani debt of over US$1,200 million.
Closing of the Transaction is subject to the fulfilment or waiver of, inter alia, the following conditions precedent:
(the "Conditions Precedent").
The Transaction shall not require prior approval of the Competition and Consumer Protection Commission pursuant to the Competition and Consumer Protection Act, No. 24 of 2010 and therefore this is not a condition precedent of Closing. The Transaction will be authorised by the Common Market for Eastern and Southern Africa (COMESA) Competition Commission based on the jurisdictional and financial thresholds and the parties are taking steps to obtain these approvals.
The Transaction will close and become effective once all of the Conditions Precedent listed have been completed. It is estimated that closing will occur during the first quarter of 2024.
Before | Pro Forma Adjustments | After | Percentage change (%) | |
EPS (ZMW) | (23.54) | 92.37 | 68.83 | 392.38% |
HEPS (ZMW) | (23.54) | 55.27 | 31.72 | 234.76% |
NAV per share (ZMW) | 49.18 | 94.23 | 143.42 | 191.59% |
Ordinary Shares in issue | 160,800 | 160,800 | 160,800 | 0.00% |
Shares in issue | 160,800 | 160,800 | 160,800 | 0.00% |
Weighted average number of Ordinary Shares in issue | 160,800 | 160,800 | 160,800 | 0.00% |
The circular will also be available in electronic form on the LuSE website (www.luse.co.zm) and Stockbrokers Zambia Limited's website (www.sbz.com.zm) and ZCCM-IH website (https://zccm-ih.financifi.com). Alternatively, shareholders may collect the circular from the Company's Transfer Secretaries and/or Transaction Sponsoring Broker whose details are below:
Sponsoring Broker | Transfer Secretary |
Stockbrokers Zambia Limited | Corpserve Transfer Agents Limited |
32 Lubu Road | 6 Mwaleshi Road |
Longacres | Olympia Park |
P.O. Box 38956 | Lusaka |
Lusaka | Zambia |
Shareholders are advised to continue to exercise caution when dealing in the Company's securities until the closing of the Transaction.
By Order of the Board
Charles Mjumphi
Company Secretary
Issued in Lusaka, Zambia on 02 February 2024
Lusaka Securities Exchange Sponsoring Broker | |
T | +260-211-232456 E | advisory@sbz.com.zm W | www.sbz.com.zm Stockbrokers Zambia Limited (SBZ) is a member of the Lusaka Securities Exchange and is regulated by the Securities and Exchange Commission of Zambia. |
First Issued on 02 February 2024
Regulated information:
Inside Information:
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Full and original press release in PDF: https://www.actusnews.com/news/84021-zccm-ih-mopani-transaction-announcement-update-sens-01.02.2024.pdf