Capital Equipment News November 2016

BUSINESS

QUICK TAKE

• enX to purchase Eqstra’s Industrial Equipment and Fleet Management and Logistics divisions for R7,8 billion • Under the deal, the MCC Contract Mining division will be recapitalised with a cash injection of R1,4 billion • MCC Contract Mining division the only entity left in the Eqstra stable • Eqstra to change its name to eXtract Group following conclusion of deal • Deal comes into effect on 1 November 2016

Eqstra’s MCC Contract Mining division will now focus on improving the efficiencies of the mines on which it operates, as well as seeking new projects to diversify the geographic and commodity exposures.

Declining contract mining performance and idle assets

LTM Dec 2015

-1 100 -900 -700 -500 -300 -100 100 R' Million

168

114

34

8

-55

-572

Impairment Loss on Dis. Ops. Net Pro t

-530

Benga contract in Mozambique in Decem- ber 2015, Serfontein says the company will be selling off most of the equipment, ahead of its plan to standardise its equipment moving forward. The excess assets will be sold through an auction process. Reputa- ble auction houses have been approached and a list of units with each item’s floor price have been provided. The auction houses will sell the assets at best, but not below the floor price. As of June 30, 2016, the floor prices in aggregate equated to a minimum price of R511 million. In addition, about 18 months ago the MCC Contract Mining division also reported

local excess assets, as a portion had then been earmarked for future opportunities. An additional impairment of R536 million was raised for the local contract mining excess assets this year. Looking ahead Under the new eXtract banner, the MCC Contract Mining division will now focus on improving the efficiencies of the mines on which it operates, as well as seeking new projects to diversify the geographic and commodity exposures. Serfontein says the company’s imme- diate success will hinge on a number of

the termination of two major contract mining projects in South Africa, on the back of challenging operating conditions in the sector. The company says the mining environment has been in a decline in South Africa and opportunities for contract mining have become less frequent. Pricing has also become more competitive. The combination of these factors resulted in equipment to the value of approximately R700 million being in excess of the then current operational requirements. This resulted in an impairment of R97 million being recorded in the South African operations in June 2015 for some of these

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