Windhoek – Namibia’s age-old zinc mine Rosh Pinah has effectively been sold to a Canadian listed firm in a deal that saw two international companies swap shareholding and exchange cash this week to consolidate their mining portfolios in Africa and Latin America.
Once signed off by authorities the deal would essentially place the two mining groups among the top ten zinc producers in the world.
In a notice to the market yesterday Swiss-based Glencore announced it “has entered into a definitive agreement” with Canada’s Trevali Mining Corporation. The transaction is subject to customary regulatory approval and is expected to close by July 2017.
According to the agreement Trevali would purchase Glencore’s 80 percent shares in the Rosh Pinah mine and its 90 percent shareholding in a zinc mine in Burkina Faso. In exchange Glencore would obtain significant shareholding in Trevali’s mines in Peru and Canada. Glencore will also market the zinc produced at Trevali’s mines including the zinc produced at Rosh Pinah and from Burkina Faso.
The entire transaction is valued at some N$5.3 billion at current exchange rate (US$400 million). It is structured in such a way that Glencore would receive more than N$3.2 billion in cash from Trevali, and the rest of the money would be used to purchase shares in Trevali. Trevali would also pay Glencore about N$396 million (US$30 million) for Glencore to repay an existing debt facility.
Glencore is already a minority shareholder in Trevali, and the new transaction would increase its shareholding from 4 percent to 25 percent, effectively giving Glencore two seats on the board and a much louder voice at the shareholders’ table.
After the completion of the transaction Trevali would have an annual production of 230 000 tonnes of contained zinc, making it one of the top ten zinc producers in the world, the statement on the deal said.
“The acquisition of Rosh Pinah and Perkoa is a historic event and unique opportunity for Trevali shareholders, and sets the stage for a multi-asset, low-cost global zinc producer,” said Mark Cruise, president and CEO of Trevali.
It is not known what plans are in place for the Namibian black economic empowerment shareholders who own the 19.92 percent shares in Rosh Pinah mine, along with Rosh Pinah employees through an empowerment participation scheme trust.
It could also not be established at the time of going to print whether recent retrenchments at the mine had anything to do with the new purchase deal, amidst speculation that getting rid of workers was part of efforts to make Rosh Pinah an attractive package for the Canadians.
“We are excited to form part of this unique global zinc vehicle, providing pure zinc exposure across a wide geographic footprint,” said Daniel Maté, Glencore’s head of zinc marketing.
Maté, a Swiss-based Spanish citizen who according to Forbes broke into the ranks of the world’s billionaires when global commodities trading outfit Glencore went public in 2011, owns a three percent stake in London-listed Glencore.
Forbes estimates his wealth to be at $2.1 billion (nearly N$28 billion).
Maté said Glencore and Trevali have been working together as partners since Trevali’s first mine was built and “we share the same vision for the future growth of the business through value-creating organic and inorganic growth opportunities.”
Trevali would gain by adding the two African zinc assets to its portfolio, creating the only global mining company focused on zinc.
“The transaction will materially increase Trevali’s geographic footprint and access to global capital markets. This will enable the company to take advantage of the significant opportunities to grow across the zinc market,” the statement said.