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Impala still discussing platinum takeover

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Johannesburg, South Africa — MININGREVIEW.COM — 09 January 2009 – Impala Platinum Holdings Limited (Implats) – second biggest platinum producer in the world –says it is still in takeover talks with two rivals in South Africa, allaying fears that the deal had stalled and signaling potential for similar moves elsewhere in the industry.

Bloomberg News quoted Impala group executive: commercial Brenda Berlin as saying in a telephone interview that due diligence of the acquisition of Mvelaphanda Resources Limited and Northam Platinum Limited is complete, and that Impala is looking at the “relative valuations.” Mvelaphanda gained as much as 11% and Northam rose 12% in Johannesburg trading.

Impala – seeking to build reserves as it bets platinum prices will improve – said in November it wouldn’t proceed on the terms it considered initially. While the 39% drop in the London platinum price last year made takeovers cheaper, tightening credit saw planned deals being abandoned, including Xstrata Plc’s bid for Lonmin Plc.

“We see this as further evidence of potential for consolidation in the South Africa platinum industry,” said Liberum Capital Limited. analysts Michael Rawlinson, Nicholas Pickens and Dominic O’Kane. Several smaller companies are “attractive to the majors seeking further resources and replenishment of older, higher cost operations.”

“There seems to be renewed interest in the possibility of something happening,” said Garth Mackenzie, head of derivatives trading at BoE Stockbrokers.

“We hope to have something to announce to market by February or so,” said Mvelaphanda spokesman James Wellsted from his mobile phone. “The desire to do the deal is still there from both sides, and the logic behind merging the companies is still compelling.”

Wellstead added that a likely reduction in Impala’s project expenditure was one of the issues being addressed. Mining companies – including Anglo American Plc, Rio Tinto Group and BHP Billiton Ltd. – have cut production and delayed expansion plans on falling demand for metals and minerals, from iron-ore to diamonds.