Avmin signs Memorandum of Understanding to sell Chambishi Metals

8 April 2003

Anglovaal Mining (Avmin) last week signed a Memorandum of Understanding (MoU) with J&W Holding AG (J&W), regarding the sale of Avmin’s 90 per cent stake in Chambishi Metals Plc (Chambishi).

According to the MoU, J&W will have exclusivity for a period of two months, during which a due diligence study will be conducted. Based on the outcome of this due diligence study, detailed terms will be finalised and a sales and purchase agreement concluded. The transaction is subject to approval from lending institutions and authorities in Zambia and South Africa, as well as final approval from both the Avmin and J&W boards.

“After much deliberation we have decided to sign a MoU with J&W as we believe that they will add value to Chambishi. J&W has successfully bid for the assets of the former Ramcoz mines, which will feed concentrates to Chambishi, making it a natural purchaser of our shares in Chambishi,” said Avmin chairman Rick Menell.

Chambishi is a cobalt and copper refining and tolling company, with substantial cobalt reserves. The government of the Republic of Zambia, through ZCCM Investments Holdings Limited, formerly Zambia Consolidated Copper Mines Limited (ZCCM), has a 10 per cent stake in Chambishi.

Avmin announced at the release of its interim results to 31 December 2002 that Chambishi had reached a level where it could sustain its operations without financial assistance from Avmin, and was running at planned production levels following the commissioning of the redesigned furnace. During the period, Chambishi’s contribution to Avmin’s headline earnings was a negative R61 million. Avmin has guaranteed Chambishi’s debt facilities, which amount to approximately US$62 million.

“Chambishi requires additional capital expenditure to achieve optimal performance. Since it is already overcapitalised due to delays in reaching full production and a decline in the cobalt price, Avmin does not wish to invest further funds, and has decided that the sale of Chambishi is in the company’s best interests as it will allow Avmin to focus on new growth opportunities in South Africa,” concluded Rick Menell.

Should the due diligence be concluded successfully, shareholders will be informed of the transaction details.

For further details contact:
Ebrahim Takolia
General Manager, Investor Relations
+ 27 (0) 83 291 3384