DJ Wesizwe: Deal With China Jinchuan Should Be Finalized Mid-July

The deal for a Chinese consortium that includes metals producer Jinchuan Group Ltd. to acquire a controlling stake in Wesizwe Platinum Ltd. (WEZ.JO) should be finalized by mid-July, Michael Solomon, chief executive of the South African company, said Thursday.

Solomon said that once the details are finalized the plan will go through the approval process.

Last month, Wesizwe announced a nearly $878 million deal that would be China's largest investment to date in Africa's platinum industry. The planned deal includes project financing provided by the Chinese and an off-take agreement for Jinchuan in a South African mining project.

It could take around three to four months for the deal to be concluded--in other words to get the "money in the bank," said Martyn Davies, chief executive of Frontier Advisory, a Johannesburg-based research and strategy company that advised Wesizwe on the deal.

Davies said some of the final details being ironed out include board representation for the Chinese investors. He said no discussions were taking place involving a future increase in the Chinese stakeholding in Wesizwe.

Davies said he didn't think the deal would be "held hostage" to any government approval process. After the deal is finalized, it will go through board, shareholder and government approvals on both sides, he said.

According to the term sheet for the planned deal, Jinchuan and China-Africa Development Fund, known as CADFund, will pay $227.5 million for a controlling 51% stake in Wesizwe.

The deal also provides $650 million in project financing through state-controlled China Development Bank Corp. for the development of Frischgewaagd-Ledig near Rustenburg, west of Pretoria.

CADFund is expected to take the smaller proportion of the 51% stake with Jinchuan because that is what the investment fund tends to do in deals like this, said Li Dongya, spokesman for CADFund, which is backed by China Development Bank and looks for opportunities as an equity investor in Africa.

"If we (the Chinese side) are going to be the controlling shareholder, then we would also want to have a controlling presence on the board," said Li, but he added the board make-up will depend on the final shareholding breakdown.

Li couldn't say if the deal would be concluded in the next few months, but said he didn't think the deal would encounter obstacles in getting Chinese government approval.

Officials at Jinchuan weren't immediately available to comment Thursday.

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