Date: 16 November 2018 By: Andries van Zyl
MC Mining on Thursday announced that its subsidiary, Baobab Mining & Exploration, has reached an agreement under which it will acquire the two key properties required for its Makhado hard coking and thermal coal project north of the Soutpansberg.
“The purchase agreement will result in Baobab owning the Lukin and Salaita properties and is subject to a suspensive condition, which the parties have every expectation will be met in early January 2019,” said MC Mining. The company has been pursuing various avenues, including legal and negotiations on commercial terms with the owner, the privately owned Akkerland Boerdery, who utilises the farms for commercial hunting purposes.
If the names Lukin and Salaita sound familiar they should. The two farms made international news headlines earlier this year as they were first on a list of properties to be expropriated without compensation by the South-African government. Civil rights organisation AfriForum waded in on the ensuing legal battle, arguing that government’s attempt to expropriate the two farms at 10% of the market value seeks to employ land reform as the pretext to hide the real motive behind the expropriation: That the government wants to lay its hands on the rich coal reserves below the surface of these farms to facilitate expansion of the Chinese government’s economic interests in South Africa, namely the Musina-Makhado SEZ.
It would, however, now seem that any future issues regarding ownership will be MC Mining’s headache with the parties agreeing on a selling price of R70 million for the two farms. The purchase price will be settled in two equal tranches of R35 million each.
The first tranche is payable on transfer of the properties while Baobab will have access to the properties upon payment of this amount to the conveyancing attorneys. The second tranche will accrue interest at the South African prime interest rate (currently 10%) less 3% (from date of transfer) and is payable on the earliest occurring of the following: the third anniversary of the transfer of the properties; or the first anniversary of production of coal underlying the properties; or completion of a potential land claims and expropriation process that would, in all likelihood result in Baobab receiving market related compensation under present legislation. Should the properties be expropriated in favour of the land claimants, MC Mining will negotiate access terms with the Minister of Land Affairs and the successful claimants who are expected to be communities who have a shareholding in Baobab.
“The agreement to acquire Lukin and Salaita is a significant step for MC Mining and completes the suite of surface rights required for our permitted flagship Makhado Project. With the acquisition of the properties, the company can proceed with the geotechnical and related studies for the mine’s infrastructure. The initial tranche of the purchase price will be funded from internal cash flow,” said Brown.
Andries joined the Zoutpansberger and Limpopo Mirror in April 1993 as a darkroom assistant. Within a couple of months he moved over to the production side of the newspaper and eventually doubled as a reporter. In 1995 he left the newspaper group and travelled overseas for a couple of months. In 1996, Andries rejoined the Zoutpansberger as a reporter. In August 2002, he was appointed as News Editor of the Zoutpansberger, a position he holds until today.