bbbee sishen iron ore

3 August 2011
The Manager
Company Announcements
Australian Securities Exchange Limited
Level 6, 20 Bridge Street
SYDNEY NSW2000
By e-lodgement
SISHEN IRON ORE COMPANY COMMUNITY DEVELOPMENT TRUST
CONTINENTAL??S NEW BROAD BASED BLACK ECONOMIC EMPOWERMENT PARTNER
Key Points:
?h Sishen Iron Ore Company Community Development Trust (??SIOC-cdt??) confirmed as Continental??s new Broad Based Back Economic Empowerment partner in South Africa
?h SIOC-cdt is a highly respected and well established Broad Based Black Economic Empowerment Company whose principal investment is a shareholding in the Sishen Iron Ore Company (Pty) Ltd (??SIOC??), which is one of the largest iron ore operations in the world owned 74% by Kumba Iron Ore Limited (??Kumba??)
?h SIOC-cdt to acquire the 26% interest in Continental??s South African subsidiary held by the Company??s current BEE partner Masawu Investments (Pty) Limited
?h SIOC-cdt initial investment of ZAR140 million (approx. US$20m) upon completion of the transaction to be invested by the Company into its South African coal business
South African focused coal mining company Continental Coal Limited (ASX: CCC) (??Continental?? or ??the Company??) is pleased to confirm that established Broad Based Black Economic Empowerment Company, the Sishen Iron Ore Company Community Development Trust (??SIOC-cdt??) is set to become the Company??s new Broad Based Black Economic Empowerment partner in South Africa.
Further to the Company??s announcement of 29 June 2011, Continental is pleased to advise that documentation of the binding agreement with SIOC-cdt is well advanced with execution of subscription and shareholder agreements scheduled to be completed in August 2011. Financial settlement of the transaction will be completed shortly thereafter, although will be dependent on the receipt of any applicable government approvals.
SIOC-cdt was established in 2006 as a broad based socio-economic empowerment ownership initiative. SIOC-cdt holds a 3% shareholding in the Sishen Iron Ore Company (Pty) Ltd (??SIOC??), the operator of the Sishen. The Sishen mine is one of the largest single open-pit mines in the world.
The value of SIOC-cdt??s shareholding in SIOC is valued at approxiamtely ZAR6.5 billion based on the market capitalisation of Kumba Iron Ore Limited. For the financial year 2011, SIOC-cdt has an interim dividend for the 6 months to 30 June 2011 of ZAR284 million declared by Kumba .
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SIOC
SIOC was established during the unbundling of South African-based mining group Kumba Resources into two companies: Exxaro Resources and Kumba Iron Ore. Kumba Iron Ore is a 74% shareholder and the manager of SIOC. The 26% BEE partners in SIOC are made up of Exxaro (20%), SIOC-cdt (3%) and an employee trust (3%).
SIOC operates the Sishen, Sishen South and Thabazimbi mines in the Northern Cape and Limpopo provinces, with total mineral resources in excess of 2 billion tonnes and at least 30 years life on mine remaining.
Since 2006, a total of ZAR11billion has been returned to SIOC??s BEE partners as dividend cash flows.
SIOC Community Development Trust (SIOC-cdt)
SIOC-cdt, also known as the ??Super Trust?? is the sole beneficiary of 3% of the ordinary shares of SIOC through a Special Purpose Vehicle established to hold the shares on its behalf. Historically Disadvantaged South African communities around the Sishen, Sishen South and Thabazimbi mines in the Northern Cape and Limpopo Provinces, through their nominated Beneficiary Trust??s, are the eligible beneficiaries for support from the Super Trust with emphasis on welfare and humanitarian, healthcare, land and housing, education and development, conservation and enterprise development.
Explaining the transaction, Mr Connie Molusi, Chairperson of the SIOC-cdt Board said: ??As a broad based socio-economic empowerment ownership initiative the Sishen Iron Ore Company Community Development Trust strives to fund education, skills development, infrastructure projects and other initiatives that benefit its community members. In addition to public benefit type investments, in and around the beneficiary communities, this investment signals SIOC-cdt??s intention of growing the trust??s balance sheet within the next 7 to 10 years??.
??We see this investment in Continental Coal as broadening our exposure to and investment in key South African resources, and look forward to playing an active role in advancing Continental??s growth and its project pipeline in South Africa which in turn will generate significant additional returns for our community members,?? Mr. Molusi added.
Commenting on the agreement, Continental Coal??s Chief Executive Officer, Don Turvey, said: ??This agreement has been the culmination of a great deal of time, effort and consultation with one of South Africa??s most established and successful broad based empowerment groups, to ensure broader based community participation in Continental??s future growth in South Africa.??
??It is particularly significant for the Company??s shareholders, and I believe paves the way for Continental??s long term future and success in South Africa.?? Mr Turvey added.
Following completion of the transaction, SIOC-cdt will have the right to appoint one director to the Company??s board and two directors to the board of the Company??s South African subsidiary.
Ends