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Presentation to the
Select Committee on
Labour and Public
Enterprise
August 2011
Progress on the Implementation of Alexkor’s
Corporate Plan
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Introduction
Overall Strategy/Key Elements
Progress on Key Elements
Corporate Plan Targets
Results
Commencement of Alexkor RMC JV
Commence large scale exploration
Alexkor Corporate
Introduction
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Implement the Deed of Settlement
Secure and expand the Alexkor Operations
Maintain sustainability of Alexkor
Enlarge the production base
Increase the number of contractors
Secure new sources of production
Investigate the beneificiation of the product
Implement the Alexkor RMC JV
Commence large scale exploration
Overall Strategy/Key Elements of the Corporate
Plan
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To give effect to the Deed of Settlement
(DoS)agreement between Alexkor, the government of
South Africa and the Community of the Rictersveld.
Inter alia this will include:
- The formation of the PSJV
Operating the current activities on a profitable
basis
- Reducing costs while exploring strategies that will
ensure long term viability
Commence with exploration in the onshore and offshore
mining and prospecting areas (the intention of the
exploration is to provide a sound footing and basis to
increase mining from the land operations and to
stabilize mining from the marine areas for the
foreseeable future
Progress on Key Elements
Overall Strategy/Key Elements of the Corporate
Plan (cont.)
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Commence with exploration in the onshore and offshore
mining and prospecting areas (the intention of the
exploration is to provide a sound footing and basis to
increase mining from the land operations and to
stabilize mining from the marine areas for the
foreseeable future);
To secure and expand the Alexkor operations into new
diamond mining opportunities in and outside the borders
of South Africa to ensure Alexkor becomes profitable
and sustainable. Inter alia this will include:
- Improving performance and achieving real cost
savings whilst seeking an optimal business model
- The objectives are to build a sustainable diamon
mining company with a diversified portfolio of
diamond mining ventures
Overall Strategy/Key Elements of the Corporate
Plan (cont.)
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Alexkor must comply with all applicable legislation
(especially in terms of the Mining Charter and PMFA)
Progress on Richtersveld Deed of Settlement
The Settlement reached entails the following:
Restoration of the land claimed. Portions of land to be transferred to
the RVC by Alexkor & the State [Alexkor, the State & Northern Cape
Government ordered to give effect to];
Transfer of Alexkor’s land mining rights to the RVC [Alexkor ordered to
give effect to]. In the interim, a Pooling & Sharing Joint Venture (PSJV)
to be formed between Alexkor & the RVC. The State to capitalise Alexkor
for it to contribute R200 m to this PSJV in order to constitute a viable
mining venture;
Transfer of Alexkor’s agricultural & mariculture assets to the RVC in
order to empower the RVC & to create a basis for future development &
wealth creation [Alexkor ordered to give effect to];
R190 m as extraordinary reparation to be paid to the RVC’s Investment
Holding Company in 3 equal instalments over 3 years [The State (DLA)
ordered to give effect to];
Progress on the Dos
R50 m lump sum development grant to the RVC’s Investment Holding
Company to be used for the recapitalisation of the agricultural & maricultural
enterprises [State (DLA) ordered to give effect to];
R45 m to the RVC’s Property Holding Company as compensation to secure
Alexkor’s right of occupation of the transferred residential properties for a
period of ten years [Alexkor ordered to give effect to on transfer of erven to
RVC];
Establishment of a formal township in terms of the Northern Cape Planning &
Development Act, 1998 at Alexander Bay [The State & Alexkor ordered to give
effect to];
Environmental rehabilitation & revision of the mine’s Environmental
Management Programme [Alexkor ordered to give effect to financial obligation
for all outstanding environmental rehabilitation, with the State providing a
guarantee for the financial obligation]; and
Costs in connection with the implementation of the Settlement.
Court Order
The Deed of Settlement & the Unanimous Resolution
declared to be binding between the Richtersveld
Community, Alexkor, the Government of the Republic of
South Africa & the Government of the Northern Cape
Province
The Order of Court states in clause 6: “By consent the
State shall procure that Alexkor shall perform its
obligations in terms of the Deed of Settlement & the
Unanimous Resolution & that Alexkor shall be in a
financial position to do so.”
Status of Richtersveld Land Claim Settlement 1/1
Obligations
Status
Restoration of the land claimed. Portions of land will be
transferred to the RVC by Alexkor and the State [Alexkor, the
State & Northern Cape Government ordered to give effect to]
All land has been transferred, except for the
township erven
Transfer of Alexkor’s land mining rights to the RVC [Alexkor
ordered to give effect to]. In the interim, a Pooling & Sharing
Joint Venture (PSJV) will be formed between Alexkor and the
RVC. The State will capitalise Alexkor for it to contribute R200
million to this PSJV in order to constitute a viable mining
venture
The Notarial Deed of Cession of the Alexkor land
mining right (from Alexkor to RMC) was
registered by the Mineral & Petroleum Titles
Registration Office on 6 April 2011
Transfer of Alexkor’s agricultural and mariculture assets to the
RVC in order to empower the RVC and to create a basis for
future development and wealth creation [Alexkor ordered to
give effect to]
Alexkor’s agricultural and maricultural assets
were transferred to the Richtersveld Community’s
agricultural holding company in January 2008.
R190 million as extraordinary reparation to be paid to the
RVC’s Investment Holding Company in three equal
instalments over three years [The State (DLA) ordered to give
effect to]
Paid
Status of Richtersveld Land Claim Settlement 2/2
Obligations
Status
R50 million lump sum development grant to the
RVC’s Investment Holding Company to be used for
the recapitalisation of the agricultural and
maricultural enterprises [State (DLA) ordered to give
effect to]
Paid in 2007
R45 million to the RVC’s Property Holding Company
as compensation to secure Alexkor’s right of
occupation of the transferred residential properties
for a period of ten years [Alexkor ordered to give
effect to on transfer of erven to RVC]
Alexkor to give effect on transfer of erven.
Establishment of a formal township in terms of the
Northern Cape Planning and Development Act, 1998
at Alexander Bay [The State & Alexkor ordered to
give effect to]
Township upgrade commenced. Upgrade expected
to be completed in July 2011.
Environmental rehabilitation and revision of the
mine’s Environmental Management Programme
[Alexkor ordered to give effect to financial obligation
with the State providing a guarantee for the financial
obligation]
Revised EMP submitted to DME in November 2008.
Rehabilitation commenced
Outstanding Richtersveld Land Claim Committments
 Establishment of a formal township in terms of the Northern Cape
Planning and Development Act, 1998 at Alexander Bay [The State &
Alexkor ordered to give effect to];
 Environmental rehabilitation and revision of the mine’s Environmental
Management Programme [Alexkor ordered to give effect to financial
obligation with the State providing a guarantee for the financial
obligation];
 R45 million to the RVC’s Property Holding Company as compensation to
secure Alexkor’s right of occupation of the transferred residential
properties for a period of ten years [Alexkor ordered to give effect to on
transfer of erven to RVC];
 Transfer of Alexkor’s land mining rights to the RVC and forming the
Pooling & Sharing Joint Venture[Alexkor ordered to give effect to].
Pooling & Sharing Joint Venture
Clause 8.3 of the Deed of Settlement (DoS) provides for formation of a Pooling & Sharing
Joint Venture (PSJV) between Alexkor & Richtersveld Mining Company (RMC) as
follows:
– Alexkor & RMC to remain holders of their respective marine & land mining rights;
– Alexkor & RMC to put their respective mining rights under the full control of a
Joint Board of the PSJV for purposes of mining both marine & land diamond
resources;
– Alexkor to further put its land & marine mining assets under the control of the
Joint Board & certain of its personnel under the control of the Executive
Committee which shall be appointed by the Joint Board;
– Alexkor to initially hold a 51% stake & RMC a 49% interest in the PSJV; and
– Alexkor shall make an initial finance & capital contribution of R200 m to the PSJV
which will be expended on both the land & sea operations according to a mining
development programme approved by the Joint Board.
Pooling & Sharing Joint Venture
ALEXKOR
(land & sea mining rights)
Land mining rights
transferred to RMC
Alexkor retains sea
mining rights, mining
assets
PSJV
Alexkor 51%
RMC 49%
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Conditions Precedent for the Formation of the PSJV
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In terms of clause 3.1 of the Unanimous Resolution, the commencement of the PSJV was subject
to the fulfilment of a number of suspensive conditions namely:
i. that RMC & Alexkor must obtain the required approvals to implement the pooling transaction
from the Competition Authorities under Competition Act, 1998, all on an unconditional basis
or under circumstances where any conditions attached to any of such approvals, that such
conditions are reasonably accepted to Alexkor & the RMC [The Competition Commission
subsequently advised that the transaction was not notifiable];
ii. that the Land Claims Court grants an order confirming or noting the Deed of Settlement &, to
the extent necessary, the terms, provisions & conditions of the PSJV [The Land Claims Court
made the DoS an order of court on 9 October 2007];
iii. that the existing Environmental Management Plan of Alexkor be amended as contemplated in
clause 9 of the Deed of Settlement [Alexkor’s revised EMP was submitted to the Department
of Mineral Resources (DMR) in November 2008]; and
iv. that the land mining rights are transferred to RMC with the permission of the Minister of
Minerals & Energy, as contemplated in clause 8.2 of the Deed of Settlement [the Notarial
Deed of Cession of the Alexkor land mining right (from Alexkor to RMC) was registered by the
Mineral & Petroleum Titles Registration Office on 6 April 2011].
Pooling & Sharing Joint Venture
 ALL THE SUSPENSIVE CONDITIONS FOR POOLING & SHARING JOINT
VENTURE TO COME INTO EFFECT HAVE BEEN FULFILLED
 ALEXKOR HAS SUBMITTED APPLICATION FOR THE APPROVAL OF
THE POOLING & SHARING JOINT VENTURE IN TERMS OF SECTION
54(2) OF THE PFMA
 GIVEN THAT THE PSJV HAS NOW COME INTO EFFECT, ALEXKOR’S
OPERATIONS IN ALEXANDER BAY WILL FALL UNDER THE CONTROL
OF THE JOINT BOARD OF THE PSJV
JV Operations
DoS Requirements
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All houses and buildings to be transferred to CPA
Town should be upgraded to municipal standard and to
be transferred to the Richtersveld Municipality
administration
The JV should be governed by a Board consisting of 3
members appointed by Alexkor and 3 members
appointed by RMC
Management appointed by the Board consisting of a
General Manager and Executive Committee
DoS Requirements
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Submission of a Environmental Management Plan to
DMR
Conversion of Mining/ Prospecting Rights to New Order
Ceding of Land Mining Rights to RMC
Surface Rights to be transferred to CPA
DoS Requirements
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Government to provide funding towards further
exploration by the JV = R200m
Town Establishment = R120m
Commencement of JV
• 7 April 2011
Progress of JV
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Town Establishment is in progress, anticipated to be
completed by May 2012, within budget
- Phase 1 of the project (Civil Engineering Services) is
93% complete versus the target of 100%. This project
phase was supposed to be completed by 1st July 2011
but due to hard rock intersected, subcontractor
withdrawal from the project and declining road
conditions, the deadline was not met. The revised
completed time for this phase is the end of September
2011 (due to more road damages encountered since
the finalization of the tender)
Phase 2 of the project (The Electrical Engineering Services)
is 27.6% completed versus 40% due to delayed delivery
of equipment. The consultants are working on this.
Phase 3(treatment works) is estimated to be completed on
31 March 2012.
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Conversion of Mining Rights granted by DMR June
2011
Ceding of Land Mining Rights happed on 6 April 2011
Progress of JV
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Conversion of Mining Rights granted by DMR June
2011
Ceding of Land Mining Rights happed on 6 April 2011
Commencement of JV 7 April 2011
JV Board
• R Muzariri (Acting Chairperson) (Alexkor)
• Dr. R Paul (Alexkor)
• S Ngoma (Alexkor)
• W Diergaardt (RMC)
• M Solomon (RMC)
• C Matthews (RMC)
Progress of JV
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In terms of DoS the Board needs to appoint an Exco
PSJV Board
of Directors
JV
General
Manager
Production
Manager
Engineering
Manager
Finance
Manager
Administration
Manager
MIneral
Resource
Management
Manager
Security
Manager
Progress of JV
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Continue with production from contractor operations
• 50 Shallow water contractors
• 3 Beach mining contractors
• 3 Land mining contractors
• 1 Deep Sea contractor
Continue to establish and maintain solid production
Utilize all of concessions
Keep cost under control
Alexkor employees to be seconded to JV
Employee good local skills
Investigate the beneficiation of product
Progress of JV
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Commence exploration on Land concessions
Exploration conducted in phased manner
R200m allocated towards exploration
Spending in prudent and cautious manner
Target areas that has got a known resource
Goal is to establish land mine operations for at least 10
years
Targets
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Implement DoS
Commence Alexkor RMC JV
Expand the production to 36 225 (31 000 – 2011)
Expand operations
• 50 Shallow water contractors
• 3 Beach mining contractors
• 3 Land mining contractors
• 1 Deep Sea contractor
Separate Alexkor Corporate and JV
Targets
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Conversion of rights and ceding of rights
Formation of Board and appointment of Exco
Commence large scale exploration on Land
Upgrade of town
Government to provide funding towards further exploration by
the JV = R200m
• Town Establishment = R120m
Results
• 7 April 2011
• Ceding of rights 6 April 2011
• First Joint Board meeting 28 April 2011
Production Results
Production Results
Production Results
Production Results
Summary
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JV has commenced on 7 April 2011
Board has been established
Exco position to be filled
Production is maintained and improved
Exploration to be commenced
Town Establishment completed by 2012
Alexkor Corporate (background)
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Alexkor to be separated into JV and Alexkor Corporate
Alexkor Corporate office in Johannesburg
Opportunity to look for new business ventures
Find and secure diamond mining opportunities in
Southern Africa
Continue with rehabilitation of historical affected areas
Is responsible for the Post-retirement medical aid
liability
Generate cash flow from new ventures asap
New Business
• Since the establishment on the JV on 7th April 2011 the
Johannesburg office has begun to look for new diamond ventures
• A number of 24 opportunities have been considered thus far
• 4 have been short-listed
• MTEF applications have been submitted
• Other funding methods are being looked at, which include the IDC
and DBSA
In Future…
Success of the new business is key for the future
sustainability of Alexkor, which will enable it to service its
liabilities, produce diamonds and jobs
Thank You