Royal Bafokeng Platinum (RBPlat) and Impala Platinum have renegotiated terms and conditions of the 6 and 8 shafts royalty agreement originally concluded in 2010.

The original royalty agreement with Impala Platinum (Implats)  affords Implats the right to mine a demarcated southern portion of the Bafokeng Rasimone platinum mine joint venture’s (BRPM JV) Boschkoppie property from Impala’s 6 and 8 shafts in return for a royalty payment.

Implats determines the rate of mining and bears all the mining, safety, health and environmental risks associated with mining this area.

In terms of the royalty agreement Impala pays the BRPM JV a royalty that is based upon a factor that is linked to the Impala Rustenburg operations’ gross profit margin with a minimum royalty payment of 5% of revenue earned and a maximum royalty payment of 25% of revenue earned.

The ammended agreement

RBPlat and Implats have agreed to expand the mining area covered by the royalty arrangement and as a consequence revised the royalty agreement.

Effectively, RBPlat has granted, Implats an additional area to access and mine from Impala’s 6 shaft resulting in the original royalty agreement life potentially being extended up to 2026.

This amended royalty agreement will add approximately 360 000 oz (4E) resource, which represents an increase of approximately 58% to the original 620 000 oz (4E) attributable to 6 shaft in terms of the original royalty agreement.

The total resource included in the original royalty agreement was 780 000 oz (4E) of UG2 comprising 620 000 oz (4E) for 6 shaft and 160 000 oz (4E) for 8 shaft.

This amended royalty agreement will enhance RBPlat’s royalty income cash flow from 2017 and extend the duration of the royalty income stream by a further five years.

The board of directors of RBPlat believes that the terms of the amended royalty agreement are aligned to the company’s strategy and interests, and are therefore beneficial to shareholders.

The terms and conditions of the 20 shaft royalty agreement with Impala remain unchanged at 17.5% of revenue.