Charlotte Mathews
18 September 2006
Johannesburg — THE sale of JCI's stake in the Letseng diamond mine in Lesotho will reduce JCI's net liabilities by about 21%, according to a circular sent out last week ahead of the shareholders' meeting to vote on the transaction.
It will also provide JCI's main financier, Investec, with a R38m share of the profits on the sale.
Shareholders will meet on September 29 to vote on the disposal of JCI's stake in the mine and approve the terms of Investec's financial assistance to JCI. Investec lent R460m to a special purpose vehicle last year to help JCI meet its commitments.
JCI was the main mining investment vehicle of the late Brett Kebble, who was assassinated in his car a year ago.
Since his death, new management has tried to unravel the complex deals involving JCI and Randgold & Exploration, both of which have been suspended from trade while the investigation continues.
In the circular, JCI said its current strategy was to dispose of some of its investments to repay its liabilities.
Apart from Letseng, JCI assets include 25% of the shares of Western Areas; a property portfolio including Boschendal; a 57,7% stake in Matodzi; preference shares in Jaganda, which is a shareholder in Simmer & Jack; minor industrial and technology interests; and various mineral rights. JCI said it was reviewing its strategic alternatives for these assets.
JCI's total liabilities amount to R397m in loan facilities from Investec, R1,1bn in claims from Randgold & Exploration, and R255m claimed by the South African Revenue Service.
It said it would use the proceeds of the Letseng sale to reduce interest-bearing liabilities.
Earlier this year, shareholders of Letseng Holdings, which owns 76% of the Letseng mine agreed to sell the company to Gem Diamond Mining for R879,5m.
The other 24% of the mine is owned by the Lesotho government, whose share will increase to 30% by agreement with Gem Diamonds.
Letseng Holdings is 50% owned by Matodzi, 40% by JCI and 10% by Letseng Guernsey. Because of JCI's stake in Matodzi, its effective share of Letseng is put at 52,7%.
Letseng has an estimated 120-million tons of kimberlite containing more than 2,4-million carats, giving a 19-year life.
It processes 200 000 tons of ore a month at present.
The mine has a history of producing high-quality diamonds, with 15% of its diamonds weighing more than 10 carats and 90% of its diamonds gem quality.
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