JSE-listed chrome miner Chrometco has officially entered the PGM sector following the DMR’s approval to acquire from Nkwe Platinum and Realm Resources, in an all-share transaction, the rights to the Rooderand asset.
This acquisition includes all exploration data and guarantees Chrometco’s diversification into platinum.
Chrometco has received a letter from the Department of Mineral Resources granting consent in terms of section 102 of the MPRDA to include PGMs, base and other metals to the existing mining right for chrome over the remainder portion of Rooderand.
All other conditions precedent to the transaction have been fulfilled as well and the company has now applied to the JSE to issue the final tranche of shares, being a total of 70 million shares, being 35 million to each of NKWE and Realm.
Chrometco MD Petrus Cilliers describes Rooderand’s location – on the Western Limb of the Bushveld Igneous Complex, with the likes of Platmin and Platinum Australia as neighbours – as a “prime chrome/PGM neighbourhood”.
He points out that once Chrometco has access to additional chrome exploration data on Rooderand – a “happy consequence” of the failure of the planned disposal of Rooderand under previous management – it will be well placed to move 13 Mt of the property’s current chrome resource from the exploration target category into the inferred category.
This, with the addition of PGMs from the proposed Nkwe acquisition, has the potential to increase Rooderand’s current valuation of R186 million to R370 million. Chrometco envisages “limited exploration” being necessary to augment the chrome and PGMs exploration data.
Cilliers says Chrometco is not wedded solely to value-add through acquisition, mine development and operation although he hastens to point out that the company’s current “comfortable position” – cash in the bank, no debt and low costs.
This positions it well to avail itself of attractive, well-priced assets coming to the market in distressed state because of the global economic downturn.
“We would certainly not rule out mergers and joint ventures, or disposal for that matter; everything is for sale at the right price.”
While the company has taken a strategic decision to wind down chrome production at Rooderand until there is “an acceptable level of recovery” in the commodity’s price, Cilliers says it is currently looking at various cash-generating projects, with its 70 000t stockpile a prime – but not exclusive – consideration.
“In a South African exploration context, we believe we are uniquely and attractively well placed,” Cilliers says.
“We have some leeway to weather the current economic downturn – no heroics, no drama – all the while keeping our eye open for attractive opportunities and preparing ourselves for the upswing.”