JOHANNESBURG (miningweekly.com) – Diversified mining company Exxaro Resources has completed the sale of a portion of its shareholding in American mineral sands company Tronox for R6.5-billion.
Exxaro, headed by CEO Mxolisi Mgojo, said on Wednesday that it had raised $474-million from the sale of 22 425 000 class A ordinary shares in New York-listed Tronox, a company engaged in the mining, production and marketing of inorganic minerals and chemicals.
The sale was by way of an underwritten public offering in the US, with the number of shares sold including 2 925 000 class A ordinary shares bought through the exercise of an option to purchase additional shares at the public offering price by the underwriters.
The sale, which constitutes about 15% of Exxaro's market capitalisation, follows the company’s previous announcements of its intention to monetise its stake in Tronox in a staged process over time.
The disposal reduces Exxaro's ownership of Tronox's total outstanding voting shares from 51.2 million to 28.7 million, representing 24% of Tronox's total outstanding voting shares.
Exxaro said in a release to Creamer Media’s Mining Weekly Online that its management would continue to assess market conditions going forward for further possible sell downs in its remaining Tronox investment.
The net proceeds from the disposal will be used to provide funding for its future capital commitments, to repay debt and to return capital to its shareholders.
Exxaro plans to invest R20-billion in coal growth projects over the next five years, R10-billion of that investment earmarked for the Waterberg area, where it has signed a ten-year coal export transportation agreement with State-owned rail utility Transnet, allowing for the transportation of 7.8-million tons a year of export coal.
The contract signing, attended by Mining Weekly Online, follows the completion of the first phase of Exxaro’s Waterberg expansion programme in 2016, which included a 1.8-km passing loop, enabling 100-wagon trains to cross without disrupting other rail operations on the line.
Phase 2 of the programme will grow export rail capacity to six-million tons through incremental upgrades of the existing rail networks and yards using additional loops, while maintaining the existing axle load, electrical upgrades and improved train control systems.
“The agreement is a key contribution to the Waterberg expansion programme, earmarked in the National Development Plan as a strategic coal mining area and national asset to growing the South African economy,” Mgojo told Mining Weekly Online.
Exxaro's asset portfolio includes coal operations and investments in iron-ore and wind energy.
In March, the company announced its intention to begin exiting its stake in Tronox, a New York Stock Exchange-listed mining and inorganic minerals and chemicals production and marketing company, which last year opened the R3.3-billion Fairbreeze mineral sands mine, in KwaZulu-Natal.
As the US company’s 26% South African black economic empowerment partner, Exxaro at one stage held 45% of Tronox, which also operates South Africa’s Namakwa mineral sands mine and benefits from a vertically integrated suite of mines, smelters and pigment plants.
With the latest share sale completed, Exxaro's ownership in Tronox is down to 29.4%.