Motjoli Resources aims for big iron ore league

Motjoli Resources has shaped up into medium sized mining investment company and now the group aims to explode into the big league through a multi-billion rands iron ore project.

If the iron ore project which is said to require about R11bn investment comes through, Motjoli will come to rival Anglo American’s subsidiary Kumba Iron Ore. Motjoli founding director Nonkqubela Mazwai has been quoted recently saying the project has advanced satisfactorily. In a statement issued earlier this year Motjoli said it was looking for funding of about R11bn for the project.

Located outside Piet Rietief, in Mpumalanga, Motjoli’s iron ore project is described as South Africa’s biggest iron ore discovery in 90 years. Named Cascade Iron Ore, the project is said to have defined resource base of 1 billion tonnes with a potential to touch 2 billion tonnes through further exploration. With an estimated production life of about 60 years, the project was expected to churn out 20 million tonnes per year within three years of starting production. This compares to Kumba’s annual production of about 40 million tonnes.

Motjoli found life about eight years ago when two professionals, Nchakha Moloi and Nonkqubela Mazwai, set out to take advantage of opportunities opening up through the black economic empowerment (BEE) movement. They secured mining prospecting rights in Limpopo and Mpumalanga provinces which proved to be a big score.

These rights cover a significant portion of the mining rights which are now positioned inside ASE and JSE listed coal mining group Coal of Africa. For lack of financial resources, Moloi and Mazwai, injected their rights into Coal of Africa and took a stake in the company. In 2007 they sold their interest in Coal of Africa for hundreds of millions of rands in what Mazwai has described as a well thought out strategy to leverage from the coal assets in order to fund other projects.

Motjoli is a group worth watching given the foundation established in the following track record as defined by the group.

BBBEE Participation

 

  • In 2004, the two Motjoli entrepreneurs participated in the Eyabantu Consortium, which had a 9.7% shareholding in BEE Holdco, a Broad Based BEE company that bought 53% of Exxaro, the coal miner, for about R8.6bn.

 

  • In 2007 Motjoli participated in the R1.2bn Broad Based BEE transaction where Lafarge South Africa sold 26% of its mining business and 10% of its manufacturing business to employees, Sinako Pty Ltd., a community trust and an education trust. Motjoli owns 20% of Sinako.

 

  • In 2008 Motjoli invested in Hotazel Manganese mines as part of a Broad Based BEE transaction concluded under NCAB Resources of which Motjoli owns 30%.

Creating new businesses through exploration

 

  • In 2004, Motjoli acquired a number of prospecting rights in the Soutpansberg Coal field in Limpopo in a 50/50 joint venture with Afriore, then went on to acquire 51% in Holfontein coal deposit in partnership with GVM Metals. In 2006 Motjoli acquired prospecting rights to a further three farms in the Soutpansberg Coal field.

 

  • In 2007, Motjoli sold various coal assets – a 51% interest in the Holfontein Coal Project, a 50% interest in the Baobab coal project and 100% interests in three Limpopo prospecting licenses adjacent to Baobab – to Australian GVM Metals, now called Coal of Africa. The following year Motjoli sold the shares to Signet Mining Services following a significant increase in the value of the company.

 

  • In 2005, Motjoli subsidiary Seven Falls, acquired a 26% shareholding in four diamond exploration projects – Kareevlei, Tawana Alluvials, Daniel Kimberlite and Perdevlei. These interests were then reverse-listed into the holding company, Tawana Resources, giving Mtjoli 10% shareholding in that listed Australian exploration company. In this way, Motjoli was able to diversify its risk from the four projects to the global business of Tawana.

 

  • In 2008, Motjoili acquired 26% equity in the Australian Aquila Resources’ Avontuur manganese project located in the adjacent towns of Kathu and Hotazel. The two companies are also developing the Thabazimbi Iron Ore project.

 

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