Johannesburg, South Africa — MININGREVIEW.COM — 03 October 2008 – Impala Platinum Holdings Limited (Implats) – the world’s second-biggest platinum producer – has proposed a cash and shares deal worth US$2.65 billion (R22 billion) to buy Mvelaphanda Resources (Mvela) and Mvela’s unit Northam Platinum in a bid to boost its output.
Implats said last month it wanted to “create a South African-controlled platinum champion”, and the proposed deal would give Implats access to Booysendal, Mvela’s prime platinum deposit. The asset has over 100 million shallow ounces of platinum group metals (PGMs).
“We have a very good asset in Booysendal,” Implats chief executive David Brown told Reuters in an interview. He said he expected the deal to be concluded by March.
“We feel confident we can raise the cash from the market,” Brown said of the 30% cash element of the deal, despite the ongoing global credit squeeze.
Seventy percent of the transaction amount will be in shares. Based on closing prices on Wednesday, the deal offers premiums of 28% and 26% for Mvela and Northam shares respectively.
“You take what you can while you can,” Brown added. “The medium- to long-term fundamentals for platinum remain sound… It was a good option in terms of our future expansion.”
Implats said Booysendal had the potential to produce 480 000 ounces of platinum group metals a year, and production would start by 2012 and reach full production by 2020.
Implats released news of the deal yesterday after markets closed.
A power crunch and spiralling costs has caused Implats to delay its increase in output to 2.5 million ounces to 2015 – three years later than originally planned.
Reuters reports that Booysendal gives Implats options to grow output away from neighbouring Zimbabwe, long regarded as Implats main growth area, but now mired in a political crisis and hyperinflation. The deal also gives Implats the profitable Northam mine, which produced 292 989 ounces in 2008, and Northam’s refinery.
“It is a decent deal for Impala with Booysendal’s low-cost shallow potential. This secures Impala’s long-term future in South Africa, regardless of what happens in Zimbabwe," said Royal Bank of Canada analyst Leon Esterhuizen Mvela Resources chairman Lazarus Zim commented: “The combination of Implats, Northam and Mvela Resources will create a leading South African-listed company with significant and sustainable empowerment credentials and an attractive and diverse asset portfolio that extends from early stage exploration to steady state cash generative operations.”
Mvela Resources chairman Lazarus Zim commented: “The combination of Implats, Northam and Mvela Resources will create a leading South African-listed company with significant and sustainable empowerment credentials and an attractive and diverse asset portfolio that extends from early stage exploration to steady state cash generative operations.”