Platinum Group Metals
The Maseve platinum mine site is located on the Western Limb of the Bushveld Complex approximately 35 km north west of the town of Rustenburg in South Africa.
Dual-listed Platinum Group Metals has entered into a term sheet to sell Maseve Investments 11 to Royal Bafokeng Platinum in a deal valued at US$74 million.

The deal between Platinum Group Metals and Royal Bafokeng Platinum (RBPlat) will see RBPlat pay US$62 million in cash and $12 million in RBPlat common shares.

Maseve is the operating and holding company for the Maseve mine, located on the Western Limb of the Bushveld Complex near Rustenburg, South Africa.

Platinum Group Metals owns an indirect 82.9% equity interest in Maseve.

The cash proceeds of the sale will be used to repay debt.

Looking forward Platinum Group Metals plans to focus on its large-scale Waterberg project, a palladium dominant development asset where the majority of Platinum Group Metals’ mineral reserves and resources are located.

The Maseve sale transaction is to occur in two stages:

  • RBPlat is to pay Maseve $58 million in cash to acquire the concentrator plant and certain surface assets of the Maseve mine, including an appropriate allocation for power and water. Maseve will retain ownership of the mining rights, power and water rights as well as certain surface rights and improvements. The payment to be received by Maseve will be remitted to Platinum Group Metals’ South African subsidiary, Platinum Group Metals, in partial settlement of loans due to PTM RSA. This first payment due from RBPlat is conditional upon the satisfaction or waiver of certain conditions precedent, including but not limited to the negotiation and execution of definitive agreements, the approval, or confirmed obligation, of the holder of the remaining 17.1% equity interest in Maseve, Africa Wide Mineral Prospecting and Exploration, the approval of PTM’s secured lenders, the approval of the South African Competition Commission and completion of due diligence which may result in additional conditions. Closing of the plant sale transaction is anticipated in two to three months.
  • RBPlat is to pay PTM RSA $7 million in common shares of RBPlat plus approximately $4 million in cash to acquire PTM RSA’s remaining loans due from Maseve, and is to pay PTM RSA and Africa Wide, in proportion to their respective equity interests in Maseve, a further $5 million by way of issuance of common shares of RBPlat to acquire 100% of the equity in Maseve. The second stage of the transaction is conditional upon implementation of the plant sale transaction and, among other conditions, obtaining all requisite regulatory approvals including but not limited to the Minister of Mineral Resources granting consent to the transfer of the Maseve mining right to RBPlat in terms of section 11 of the Mineral and Petroleum Resources Development Act. Platinum Group Metals estimates ministerial consent may be obtained during calendar 2018.

The RBPlat common shares to be issued pursuant to the share transaction will be priced at their 30-day volume weighted average price of the RBPlat common shares on the Johannesburg Stock Exchange calculated on market close on the day preceding this announcement.

RBPlat will be granted a management contract for the Maseve mine and for carrying out care and maintenance services during the period between the date of grant of the competition approval and the date of ministerial consent.

Platinum Group Metals will be responsible for 50% of care and maintenance costs after competition approval until the earlier of the date of ministerial consent and the date upon which RBPlat utilises the surface infrastructure of the Maseve mine for its own purposes.

It is estimated that Platinum Group Metals will require approximately $10 million in additional working capital to provide for its share of Maseve mine costs until the plant sale transaction is closed.

Platinum Group Metals is working with its strategic advisers and current secured lenders on debt, equity and other strategic transactions for this financing.

“The sale of Maseve will allow Platinum Group Metals to settle a substantial portion of its outstanding debt and focus on the advancement of its large-scale Waterberg Project,” explains president and CEO, Michael Jones.

“We believe we have settled upon terms which will benefit both companies and all stakeholders. RBPlat owns and operates the adjoining Bafokeng Rasimone platinum mine and is the logical buyer for the Maseve Mine.

“The future integration of the Maseve mine into RBPlat’s operations is expected to bring benefits to local communities, both directly in terms of job creation and corporate social investment, and indirectly through the associated benefits of economic activity in the region.”

PTM’s proceeds from the sale of Maseve and the Maseve mine are to be repaid to secured lenders who are collectively owed approximately $89 million in principal and accrued interest.

Negotiations to settle or restructure the balance of amounts due and a termination fee are ongoing. Platinum Group Metals’ secured lenders are working closely with the company.

In reaching its decision to sell the Maseve mine, Platinum Group Metals considered the capital required to implement a revised Maseve mine plan, the metal prices required to deliver an appropriate risk-adjusted return to investment of further capital and the alternative investment or use of capital propositions available to Platinum Group Metals.

Management’s view is that the sale of the Maseve mine delivers the most attractive realisation of value from the Maseve mine assets at this time.

As reported in July 2017 active mining had been suspended at Maseve.

Lender and investor support for further investment at Maseve in restructuring a more conventional mining format was subsequently not available.

Platinum Group Metals believes that its resources are better utilised advancing the bulk mineable, large-scale project at Waterberg, a project that represents a significant shift in South African platinum mining away from narrow reef underground mining.

The recent rising palladium price is also a significant factor as it is the dominant metal at Waterberg.

BMO Capital Markets and Macquarie Capital are acting as Platinum Group Metals’ financial advisers with regard to the Maseve sale transaction.

As previously disclosed, Platinum Group Metals and its advisers have been evaluating various strategic alternatives and the company continues in active discussions with various parties with regard to assets other than the Maseve mine.

Feature image credit: Platinum Group Metals