17th May 2021 09:17
(Alliance News) - South32 Ltd on Monday said it has fulfilled all conditions for the sale of its 92% holding in subsidiary South32 SA Energy Coal Holdings Pty Ltd to coal miner Seriti Resources Holdings Pty Ltd.
The Perth, Australia based metals and mining company said it expects the deal to be completed on June 1.
Earlier Monday, South African utility Eskom Holdings SOC Ltd had given its final consent to South32 for the sale. The coal supply agreement between both parties required that Eskom gives its consent for any change in the ownership of South32 SA Energy Coal, which supplies most of the coal requirements for the Duvha power station in Mpumalanga, South Africa.
As part of the transaction, both parties have agreed on a modification of the supply agreement until the end of 2024, which secures the continued use of South32's infrastructure at the mine so that alternative coal supplies can be delivered over conveyor into the power station.
In November, diversified metals and mining firm South32 had agreed to sell its 92% holding in coal subsidiary for an upfront payment of ZAR100 million. The consideration also included a deferred payment which will see South32 receive a portion of the cash flow generated by the unit, capped at ZAR1.5 billion.
However, in April, South32 amended the original agreement by adjusting the up-front cash payment to a nominal consideration and removing the deferred consideration. The terms related to the 49% of earnings from operations were not changed.
"For South32, completion of the divestment is an important milestone that will see us significantly simplify our business, reduce our capital intensity and improve our underlying operating margins. Looking forward, we remain focussed on reshaping our portfolio with a bias to the base metals important for a low carbon future by advancing our development options in North America and continuing to invest in greenfield exploration," said Chief Executive Officer Graham Kerr.
Shares in South32 were down 0.6% at 161.60 pence on Monday in London, while its Johannesburg shares were 0.9% higher at ZAR32.31.
By Dayo Laniyan; [email protected]
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