Pamodzi commits to set aside 10% of the $1.3-billion Pamodzi Resources Fund ('PRF' or 'the Fund') over the next 5-10 years to achieve the following: create new formal jobs, sustain current jobs, extend the life of mine operations, stimulate enterprise development, source products from black-owned, indigenous-owned and women-owned businesses. The commitment objective will be achieved by directing PRF's investments to greenfield and brownfield projects, which require substantial recapitalization, in economically-depressed communities that border mining operations across sub-Saharan Africa.
1. Pamodzi Investment Holdings (PIH), which is majority black South African-owned and controlled, is the fund adviser to PRF. PIH's shareholders include more than 100 black South African entrepreneurs and professionals, employees and a social development trust. The fund adviser also exercises control in decision-making in relation to the Fund's underlying investments. More than 50% of the benefits from the Fund go to black South Africans. More than 50% of the Fund's investment portfolio will be 25% or more black-owned.
2. PRF, which launched on October 1, 2007, is implementing an aggressive investment program targeting resources and resources-enabling infrastructure projects across sub-Saharan Africa. The injection of offshore funds will stimulate local economies. It is anticipated that the downstream impact will be significant and measurable.
3. A substantial portion of the funds have been earmarked to recapitalize portfolio companies. For example, in December 2007, PRF, in partnership with First Reserve Corporation and AMCI Capital, acquired $252 million, 60% in a $400-million uranium company in Gauteng, South Africa. An additional $350 million will be invested to recapitalize the new business over the next five years. The recapitalization will extend the life of the company's mine operations in the economically-depressed West Rand by 12-15 years as well as sustain 3,000 current jobs half of which would have been lost in the next 2-3 years. In South Africa, for every direct, formal job in the mining business, 10 indirect jobs are created upstream and downstream. The recapitalization will create an additional c. 2,000 new jobs in the next five years.
4. Part of their investment model includes ensuring new transaction agreements specifying that the portfolio company will source a minimum 20% of its products and services from black and/or indigenous African-owned and women-owned enterprises.
5. When exiting a portfolio company after 5-10 years, these strategies encourage selling to a consortium that includes junior miners.
6. Post-acquisition: PRF management will work seamlessly with the management team of each portfolio company to establish management routines to review and track performances, including quarterly management reports to the PF Board.