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Cape Town - Sephaku Holdings, the empowerment company with major cement production ambitions, appears to have taken a step closer to securing funding of about R900m for developing its manufacturing capabilities.
In an announcement on Monday confirming the sale of its gold and nickel assets, Sephaku said negotiations were advanced with a major global financial institution around a $40m (R300m) equity investment into 80%-owned Sephaku Cement.
A recent breakdown of Sephaku's portfolio of exploration and development assets accorded the cement projects a value of R3.5bn.
These comprise a limestone mine and cement plant (the Itsoseng Project), a cement grinding and milling plant (the Delmas Milling Project) and a waste ash processing plant (the Fly Ash Classification Project at Eskom's Kendal power station).
Sephaku is aiming for full cement production by mid-2012 and has already placed a $273m (R2bn) order for setting up the cement plant with China's Sinoma Industries.
The firm paid R420m in September 2008 to acquire shares in Sephaku Cement company from various minority shareholders.
The transaction was settled by issuing 37.8 million shares at 1 111 cents per share - a sizeable premium of Sephaku's current share price of 390c on the JSE.
Sephaku said the global financial institution had already received preliminary investment committee approval to proceed with the deal.
Further good news is that the Wu Group, which bought the company's nickel and gold deposit, also agreed to subscribe for shares in Sephaku Holdings for between R70m and R170m.
The proposed Wu share subscription, however, hinges on the Sephaku Cement project being fully funded.
Sephaku advised that it was in discussions with a number of other parties in a bid to secure the balance of equity and debt funding.
The sale proceeds from the deal with the Wu Group brought R80m to the table.
Sephaku already kicked off capital-raising for the cement project in 2008, when R350m of about R900m needed to start up production was raised from Dangote Industries.
Dangote holds a 20% stake in the cement project.
- Fin24.com