Northham Holdings

NORTHAM ANNOUNCES –

• ACQUISITION OF A 32.8% INTEREST IN ROYAL BAFOKENG PLATINUM
• AGGREGATE PURCHASE CONSIDERATION OF R17.0 BILLION
• PURCHASE CONSIDERATION PARTIALLY SETTLED WITH 34 399 725 NORTHAM SHARES
  (8.7% SHAREHOLDING IN NORTHAM)
• OPTIONS TO INCREASE SHAREHOLDING TO 34.9%
• RIGHT OF FIRST REFUSAL OVER AN ADDITIONAL 1.2% SHAREHOLDING

Northam Platinum Holdings Limited (Northam or Northam Holdings) announced its acquisition of a 32.8% interest in Royal Bafokeng Platinum Limited (RBPlat) (excluding treasury shares) from a wholly owned subsidiary of Royal Bafokeng Holdings Proprietary Limited (Royal Bafokeng Holdings or RBH or RBH Group), for R17.0 billion, representing R180.50 per RBPlat share.

In addition, a call and put option arrangement has been entered into with the RBH Group whereby Northam may increase its interest in RBPlat to 33.3% in aggregate. The initial exercise price in respect of the put and call options is R135.00 per RBPlat share.

RBH will further endeavour to procure that one of its wholly owned subsidiaries enters into an agreement with Northam whereby Northam could increase its interest in RBPlat up to 34.9%, pursuant to an additional call and put option arrangement. Such agreement will also cater for a right of first refusal in favour of Northam in respect of all remaining RBPlat shares held by the RBH Group, representing a further 1.2% interest in RBPlat. The RBH Group’s total interest in RBPlat currently amounts to 36.1%, excluding treasury shares.

The R17.0 billion purchase consideration for the 32.8% interest in RBPlat will be settled by Northam issuing 34 399 725 Northam shares to the RBH Group, with the balance of R8.6 billion to be settled in cash. R3 billion will be paid upfront, R4 billion will be deferred to no later than 30 April 2022 and the remaining R1.6 billion will be deferred to no later than 30 September 2022.

As a result of the transaction, the RBH Group will obtain a strategic 8.7% shareholding in Northam.

The deferred portion of the cash consideration and the option consideration will escalate at a nominal annual rate of 12% compounded quarterly until the settlement thereof. Any distributions received in respect of the RBPlat shares which are subject to the options, will be deducted from the exercise price of the options.

The transaction is aligned with Northam’s operational diversification strategy and will result in Northam acquiring a significant and strategically beneficial interest in RBPlat, providing direct exposure to RBPlat’s proven mining operations and well-understood shallow ore bodies, of which a significant portion is mechanised. The transaction will also introduce further diversification to Northam’s metal mix interests, given RBPlat’s higher relative platinum contribution.

In addition, the transaction will provide a strategic platform for Northam to pursue a possible combination of Northam and RBPlat’s business operations in the medium-term, should Northam wish to pursue such opportunity. Northam is of the view that there is a compelling and complementary synergistic fit between the business operations of Northam and RBPlat and that a potential combination of the business operations will create and unlock significant value for shareholders of both companies.

Paul Dunne, Northam Holdings’ Chief Executive Officer, commented “The transaction concluded with Royal Bafokeng Holdings gives Northam a strategically important shareholding in RBPlat, creating significant long-term optionality for Northam. It aligns perfectly with our long-term growth, sustainability and diversification strategy and the introduction of Royal Bafokeng Holdings as a significant shareholder further strengthens our empowerment credentials. We are excited about the long-term value creation potential and the inherent optionality the transaction presents. In particular, we believe the complementary metals mix of RBPlat, with a higher relative platinum contribution, fits well within the broader Northam metals basket. The RBPlat assets are young, shallow and well capitalised and occupy a strategically important position in the Western Bushveld.  We recognise the Royal Bafokeng Nation’s important contribution and ongoing legacy in respect of RBPlat and are cognisant of our responsibility in respect of the long-term sustainability of RBPlat’s operations and its impact on the broader communities and the Royal Bafokeng Nation as a whole. Northam is committed to work closely with Royal Bafokeng Holdings and the Royal Bafokeng Nation in the areas of renewable energy, enterprise development and skills development through establishing a trade school. Northam is looking forward to supporting RBPlat, its board and management to create value for all stakeholders.”

Albertinah Kekana, Royal Bafokeng Holdings’ Chief Executive Officer, commented “We recognise Northam’s extraordinary success in implementing its long-term growth and diversification strategy and are pleased to become a significant strategic shareholder in Northam, whilst also realising a significant value unlock from our long-term investment in and commitment to RBPlat. Equally important with this transaction is that Northam will partner with RBH and the RBN to deliver a number of high-value and high impact community initiatives for the RBN and the region as a whole, which includes employees and communities associated with RBPlat. These initiatives are significant in that they will respond to the key needs and challenges being faced by the RBN to deliver secure and affordable energy supply; enterprise and supplier development, including procurement opportunities, for small and medium-sized enterprises (SMEs); and skills development to address youth unemployment through a Trade School. We look forward to supporting Northam’s board and management and to also work closely with Northam with regards to all matters affecting theRoyal Bafokeng Nation.”