Empowerment through ownership

Context

The Mining Charter requires that we increase the level of HDSA ownership in our prospecting and mining ventures by 31 December 2014 to at least 26%.

By 30 September 2013, HDSA investors directly and indirectly owned 18% of the share capital of our subsidiaries that own and operate Marikana and Limpopo and that participate in the Pandora joint venture, as well as 26% of the share capital of our subsidiary that owns Akanani.

Shanduka owns 50.03% of the Company’s BEE partner, Incwala Resources (Pty) Limited (Incwala). Other equity investors in Incwala include a trust for the benefit of community members, the Industrial Development Corporation and Lonmin itself.

Lonmin Plc facilitated the purchase by Shanduka of the Incwala shares, inter alia, by means of loans amounting to R2.5 billion in total and guarantees.

Shanduka is represented on our Board of Directors by its CEO, Phuti Mahanyele, and on the Executive Committee by Thandeka Ncube, its Business Transformation Manager. The review of a feasibility study submitted by Shanduka, assessing the possibility of its taking majority ownership and control of our Limpopo operations, is still in progress.

We are now deeply engaged in examining ways in which the remaining 8% we need to achieve might be apportioned. In considering how best to meet our HDSA ownership requirements by 31 December 2014, the Board believes that it should strive to achieve further HDSA ownership through a broad based solution as this will ultimately be in the best interest of all of our stakeholders.

The various initiatives that are being considered have been set out in a concept paper that was submitted to the DMR in 2012.

They include:

  • Incorporating broad-based ownership for employees through an employee share ownership plan (ESOP).
  • Increasing community participation via community ownership schemes.
  • Issuing additional shares which could dilute the interests of shareholders.
  • Migrating HDSA equity and royalty holdings in the various Lonmin subsidiaries into Lonmin Plc as well as consolidating future HDSA ownership at this level.