Page 12 - AMANGO MODEL ANSWER 2

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We nonetheless summarise below, our objective assessment of each provision, in terms of what the
state is seeking to achieve for the country and the impact it may have on our business if we do
nothing about it - this is more important as the Minister has singled us out!

Mining Charter provision Why this provision Effect/impact on our business
Definitions:
1.2 This is in line with The underlined portion strangely allows black people
"Black person or people’’ is a generic term objective 1.2. who only became South Africans after 1994 and were
which means Black Africans, Coloureds and therefore not Historically Disadvantaged. This is the
Indians who were Historically Disadvantaged case with the Gupta family as implied in background.
and (a) are citizens of the Republic of South We depend on a fair and impartial state in the granting
Africa by birth or descent; or (b) became of mining rights and licenses. This provision may mean
citizens of the Republic of South Africa by corrupt interests may interfer with how government
naturalisation before 27 April 1994; or, on or awards these rights and that could affect our ability to
after 27 April 1994 and who would have been secure mining rights in the future!
entitled to acquire citizenship by naturalisation
prior to that date
Ownership: This is in line with We have a duty to protect our shareholders. Read with
3.1 objective 1.2 with provision 3.4, the percentage is now going up from 26%,
a Holder of a new mining right must have a underlined to show meaning our shareholders need to forego a further 4%
minimum of 30% Black Person shareholding for emphasis of desire to deal of their right. This may be expropriation or deprivation of
each mining right or in the company which with ’window-dressing’. the right to property, in violation of the constitution!
holds the mining right (which shareholding must
include economic interest plus a corresponding
percentage of voting rights).

3.2 This is in line with A mine takes more than 20 years from prospecting to
Any portion of the Minimum BEE Allocations objective 1.2 with production. This means, even whilst the mine has still
that have not yet vested must vest within 10 underlined to show not started generating positive returns, the black people
years. Such vesting to be paid from proceeds of emphasis of not having would be deemed to be fully paid up. This means white
dividends received by Black Person black people own equity shareholders have to take the long-term risk and pay for
shareholders and if such dividends are and perpetually indebted the black shareholders? This is deprivation from white
insufficient to discharge the amount required for such that they can never shareholders to black ones and conflicts with objective
full vesting, the Holder or vendor of the Black truly benefit from their 1.1
Person shares shall write-off the balance owing. shareholding.
3.3 The changes requires to top up constitute substantial
If a Holder claims recognition of a Historical This is in line with changes to shareholding and finance structures, which
BEE Transaction and/or if an existing Holder objective 1.2. Deadlines may involve not only existing black persons, but also
has maintained a minimum of 26% Black are there to show urgency persons (including corporate and state entities such as
Person shareholding after 15 June 2018, it is on the part of the state to PIC) whose shareholding rights would have to be
required to Top Up its Black Person transform or be seen to be diluted. In any event, the underlined is the ‘once
shareholding (at the Holder level) to a minimum transforming ahead of empowered, always empowered principle.’ If HDSA
of 30% Black Person shareholding by no later 2019 elections. shareholders or other economic participants in mining
than March 2019 which shall at all times be companies were to be subjected to ‘perpetual lock-in’’, it
maintained.. would materially impair the investment opportunities
available to non-HDSAs and discourage investment by
HDSAs. If we were required to continually replace
departing HDSA investors, the resultant cost,
uncertainty and administrative burden would provide a
material disincentive to investment in the mining industry
in general and mining companies in particular. This is

Developed by The CharterQuest Institute for 'The CFO Business Case Study Competition 2017'
www.charterquest.co.za | Email: thecfo@charterquest.co.za