PETMIN LIMITED - Press Release - Petmin announces R350 million Broad-Based Black Economic Empowerment (BBBEE) deal.10 Jun 2015
PET 201506100005A
Press Release - Petmin announces R350 million Broad-Based Black Economic Empowerment (BBBEE) deal.

Incorporated in the Republic of South Africa
Registration Number 1972/001062/06 
Share Code JSE: PET
ISIN: ZAE000076014
 ("Petmin" or the "Company")  
10 June 2015 

Petmin announces R350 million Broad-Based Black Economic Empowerment (BBBEE) deal with 
community and employees for 20% stake in Somkhele anthracite mine 

JSE-listed mining company Petmin today announced a R350 million Broad-Based Black Economic 
Empowerment (BBBEE) deal, subject to shareholder approval, which sees a 20% stake in its 
Somkhele anthracite mine being acquired by its employees and the local community. 

South Africa's Mining Charter and the Mineral and Petroleum Resources Development Act (MPRDA) 
aim to empower historically-disadvantaged South Africans and expand their opportunities to benefit 
from exploitation of SA's mineral resources. An important component of this empowerment is in 
expanded ownership of mining assets.

"From inception it has been Petmin's strategic intention to embrace the spirit of BBBEE for the 
mining industry, as determined in the MPRDA," said Petmin chief executive Jan du Preez. "Petmin 
believes that to ensure long-term sustainable empowerment it is imperative that local communities 
and employees become owners so they can participate and share in the economic benefit of our 
operations, and beyond the life of our operations." 

Tendele Coal Mining Proprietary Limited (Tendele) is the owner of the Somkhele anthracite mine in 
KwaZulu-Natal, with annual production of approximately 1,2 million tonnes of anthracite and 350 
000 tonnes of energy coal from rewashed discard. Tendele is currently 100% owned by Petmin.

Petmin will help the local community and Tendele employees to become shareholders in Tendele. 
Community and employee trusts will be formed, and they will own 20% of Tendele, initially through 
a Special Purpose Vehicle (SPV) and subsequently through direct share ownership in Tendele. 
Petmin's shareholding in Tendele will be reduced to 80%. 

The BBBEE deal was negotiated with the Traditional Council (established in terms of traditional law), 
representing the 175,000 strong Mpukunyoni Community and with trade unions representing 
Tendele employees. 

"We believe that the Somkhele mine will make a difference in the lives of the community and that 
the BBBEE transaction will have a positive and lasting impact on the community," said Qhina 
Mkhwanazi, mining portfolio head and member of the Mpukunyoni Traditional Council.

Preference shares in the SPV will be issued in exchange for R270 million from a Nedbank subsidiary, 
and R80 million from Petmin, totalling R350 million. The funds will be used to subscribe for the 20% 
shareholding in Tendele. The SPV shares will be allocated 80% to the Community Trust and 20% to 
the Tendele Economic Benefits Sharing (EBS) Scheme for employees. 

Dividends from Tendele will be used to repay the R350m preference shares plus interest. Petmin 
effectively guarantees the redemption of the Nedbank funding as it will subscribe for additional 
preference shares in the SPV in the event of a potential default in payments to Nedbank.

In order to ensure the transaction was fairly priced for all stakeholders, an independent Competent 
Persons Report (CPR) for the Somkhele Mine was completed by SRK. This updated CPR will be 
published as part of the JSE-approved Category 1 Circular that will be mailed to shareholders to 
obtain shareholder approval for the transaction. Petmin previously published a CPR on SENS on 3 
March 2014 that indicated a value of ZAR1.6 billion for Somkhele. 

"Tendele Coal Mining's BBBEE deal is a significant transaction for the sustainability of the Somkhele 
anthracite mine, its employees and surrounding communities," said Greg Webber, Head of Mining 
Finance - South Africa, at Nedbank's corporate and investment bank. "We are proud to have 
financed the transaction and hope that it marks the beginning of a long and successful relationship 
with the Petmin group."

Community Trust
Tendele's Somkhele mine operates in the Mpukunyoni community of approximately 175,000 people. 
The mine employs approximately 800 workers from the local community, of a total workforce of 
1,000. The beneficiaries of the Community Trust will be the children and youth of the Mpukunyoni 
community, and all proceeds will be used for their development. 

A member of the Traditional Council of the Mpukunyoni community will be a permanent trustee 
and at least 50% of the trustees will be independent. The trustees will be required to spend the 
money received by the trust on programmes that support and facilitate education and training, and 
that will make a lasting difference to the community's children and youth.

Tendele will donate a founder's contribution of R2, 4 million to the Community Trust, and this will be 
used to construct a training/lecture Hall at the Mpukunyoni Community Hub. "This will be available 
for community youth development activities funded by the trust," said Joyce Makhema, Tendele 
general manager for community relations. 

The Mpukunyoni Community will also receive an annual guaranteed payment of R1 million to 
support development projects in the area. There is provision for supplementary payments up to 
another R1 million per year, depending on production at the mine. 

Employee share scheme
The EBS employee share scheme includes as beneficiaries not only Tendele's own full-time 
workforce, as is usual in such schemes, but also employees of companies in which Tendele holds a 
substantial shareholding, and employees of any company with a long-term mining-related service 

The majority of trustees of the employee share scheme will be appointed by unions that have a 
recognition agreement with Tendele.

The EBS will receive from Tendele R1000 per employee per year. This will increase to R2000 if annual 
production exceeds 900 000 tonnes of saleable anthracite. The EBS will distribute these amounts to 
employees. In the financial year ended 30 June 2014, Tendele's production exceeded 1.1 million 
saleable tonnes. 

Unions welcomed the Petmin BBBEE transaction. 

"The EBS is an innovative Broad-Based Empowerment approach that will effect real economic 
benefits sharing to bridge the gap between social and mining economics," said Jimmy Gama, AMCU 
National Treasurer.

The National Union of Mineworkers said: "The NUM welcomes the compromise transaction of 
Tendele and Petmin. We say 'compromise transaction' deliberately. We are proud that we have won 
material benefits for our members. We will continue to fight in all future schemes for those benefits 
to be fairly divided between workers and community, and for them to come in the form of direct 
shareholdings, free of debt."

Solidarity said: "Solidarity welcomes the fact that the company invited participation of a wide 
spectrum of stakeholders' inputs in the scheme, as well as all the labour unions that have members 
at the company. It is expected that employees and members of the trade unions and the community 
shall reap the fruits of the investment that the company made into their financial wellbeing."

Petmin chief executive Jan du Preez said: "This is long-term sustainable empowerment which is 
broad-based, enabling the Mpukunyoni community and Tendele employees to own part of the mine, 
to participate at board level, and to share in financial rewards from the mining operation in their 
own community and we thank our future shareholders for working together to close this milestone 

Once all the preference shares have been redeemed, the 20% equity in Tendele will be distributed as 
a dividend in specie to the Community Trust and the EBS, which will thereafter own shares direct in 
Tendele. At that time, the EBS will also have an option to acquire an additional 4% of Tendele at fair 
value in cash.

The Community Trust and the EBS will be entitled to appoint one director each to the Board of 
Tendele. In this way both the community and the employees will have an opportunity to contribute 
to the strategic direction of the company. 

The transaction is subject to the approval of Petmin shareholders and approvals required in terms of 
the Companies Act and the Listings Requirements of the JSE, and it is anticipated that the 
transaction will be implemented within the next three months.

Live call and Q&A with Petmin management 
Analysts, investors and media are invited to join a live call and Q&A with Petmin management at 
10h00 SA Standard Time on Wednesday 10 June 2015. Dial in details below. 

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10 June 2015

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