Lonmin has agreed to make the acquisition for a deferred cash payment of 20% of the distributable free cash flows generated by the Pandora E3 operations on an annual basis for six years. The agreed payment is subject to a minimum deferred consideration of R400 million and a maximum total consideration of R1 billion.
Amplats will also receive 20% of any proceeds of any Pandora JV resources that are disposed of within the six year period.
Currently, 50% of the Pandora JV is held by Lonmin’s subsidiary, Eastern Platinum (EPL), 42.5% is owned by Amplats through Rustenburg Platinum and 7.5% is held by Northam through Mvelaphanda Resources.
Lonmin’s acquisition of Amplats’ 42.5% stake in the Pandora JV allows Lonmin to consolidate its position in this relatively shallow and high-grade mineral resource. It further provides an attractive option for development by EPL in both the short and longer term.
Lonmin said the Pandora JV area, which is contiguous with its existing EPL operations, relies on Lonmin’s mining and processing infrastructure and is already operated by EPL. The Pandora JV contributed 37 553 platinum ounces (74 019 platinum group metals ounces) to Lonmin’s production in the 2015 financial year.
Lonmin has also entered into a 36 months’ rental agreement with Amplats for the Baobab concentrator in Limpopo, whereby Amplats will pay Lonmin a rental fee of at least R46 million per year. The rental agreement is conditional on the completion of the transaction.
The Pandora JV mines platinum group metals from the UG2 and Merensky reefs underlying the JV mining area. 100% of the ore produced by the Pandora JV is sold to Lonmin for processing and refining.
Ben Magara, Lonmin’s CEO said: “We are pleased to announce the acquisition of Anglo American Platinum’s stake in the Pandora JV. This is an excellent strategic fit for Lonmin, which increases our exposure to a valuable asset with long-term development potential.”