JSE-listed Mantengu has concluded negotiations with Afresources Mining regarding the disposal of Mantengu’s entire shareholding and claims in its 70%-owned subsidiary Blue Ridge Platinum.

Mantengu explains that, subject to the fulfilment of various conditions precedent and implementation of the transaction, it will dispose of its 70% shareholding and shareholder claims in Blue Ridge to Afresources for R35-million in cash.

In addition to the purchase agreement, Mantengu says it has simultaneously entered into a loan agreement and a cession and pledge agreement.

In terms of the loan agreement, on the signature date Afresources lends and advances to Mantengu an amount of R35-million at an interest rate of prime plus 1% repayable on the longstop date.

Mantengu explains that it is envisaged that the loan amount will be settled by means of a set-off between Mantengu and Afresources of the obligations owed between them under the purchase agreement and the loan agreement, respectively.

In terms of the cession and pledge agreement, Mantengu says it grants a cession and pledge over its shares and claims in Blue Ridge to Afresources as security for its obligations under the loan agreement.

It is a further feature of the transaction that Blue Ridge has entered into a sale and contractorship agreement with Afresources as "contractor" thereunder.

This agreement entitles Afresources to site establish and operate on the Blue Ridge mine, pending the Section 11 Approval.

The agreement is a ten-year agreement and will benefit Mantengu in that, from occupation date, all costs and expenses associated with Blue Ridge will be assumed by Afresources.

Mantengu explains that, post year-end, the board undertook a comprehensive review of the group's investment portfolio, noting that the company has been funding the monthly expenditure at Blue Ridge since August 2025 without any income.

The company says the situation was no longer tenable to the board.

Mantengu notes that the group's liabilities will decrease by R185-million once the transaction becomes unconditional and that the group's monthly operating expenditure will decrease by about R2-million from August onwards.

As reported in the audited results for the year ended February 28, Mantengu says Blue Ridge's contribution to the group's loss was R26-million.

Blue Ridge as a standalone entity incurred a loss of R15.6-million for the seven months ended February 28. The R26-million above was inclusive of consolidation adjustments at a group level.

Mantengu says that, had the group disposed of its 70% shareholding in Blue Ridge at February 28 for the consideration of R35-million, it would have realised profit of about R14-million.

The final accounting profit will be calculated after taking into account the operational losses from March 1 up to and including July.

Mantengu says the sale of Blue Ridge and the financial effects thereof vindicate the board's decision not to raise a R570-million liability in respect of the audited results for the year ended February 28.

“The board's view was that it had fully complied with International Financial Reporting Standards (IFRS) 9 which requires the recognition of the financial liability at fair value, which in the board's view was Rnil because there was no probability whatsoever of Mantengu being liable to the minorities for any amount in respect of the historical debt claims of Blue Ridge,” the company says.

“In fact, as stated above, the group's liabilities will decrease by R185-million, let alone not paying out a fictitious R570-million liability,” it adds.

The proceeds from the disposal will be applied to settle the loan amount. The loan amount will be used for expansionary and working capital.