Pallinghurst’s Platinum Plans ‘Mega Platinum Mine’ Valued At ($US3Billion)
Brian Gilbertson’s Pallinghurst has joined forces with the Industrial Development Corporation (IDC) and the Bakgatla community to create a platinum “mega-mine” with a net asset value of R23bn ($US3bn).
The deal sees the formation of a “Newco” in which the IDC has taken a 16% stake for R3.24bn (US$418mn). The Bakgatla Ba Kgafela Community has taken a 27% stake and the Pallinghurst Investor Consortium a 42% stake with the balance of 15% held by other shareholders. The Pallinghurst Investor Consortium includes amongst others, Pallinghurst Resources, Temasek (Singapore) and APG (Netherlands).
In terms of the deal the IDC will also be issued warrants that will entitle the IDC to acquire an additional 4% shareholding for R800m if exercised before the 31 December 2013 expiration date.
The uniqueness of the deal is that it has been achieved without any hedging or debt and the Newco balance sheet is purported to have a cash balance of US$500m.
Kgosi Pilane, leader of the 350 000 strong Bakgatla Ba Kgafela tribe, said that it had generated cash from land sales in order to participate in the venture.
Pallinghurst CEO, Arne Frandsen, followed up to explain that it was an amalgamation of R1bn (US$129mn) in cash from the Bakgatla tribe along with assets contributed to the venture by Pallinghurst, the Bakgatla and third party investors.The parties have also committed to forming a joint venture to investigate energy efficient downstream beneficiation opportunities.
Gilbertson emphasised the fact that the resources in Newco are shallower than 600m thereby reducing risk and costs involved in extracting the ore. Platinum mines in South Africa can be up to 2000m deep.
The consolidated mine is expected to create 9000 jobs with a life of mine in excess of 30 years and a resource base of approximately 70m platinum group metal (PGM) ounces. With targeted production of 1.1moz of PGMs per annum by 2016/17 the size of the operations would be similar to that of Lonmin.
The properties to be vended into the deal are adjacent to one another (contiguous) and are situated north of the Pilanesberg on the western limb of the Bushveld Complex.
They are the Pilanesberg Platinum Mine (the current operations of recently delisted Platmin), the Sedibelo Platinum Project and the Magazynskraal Platinum Project. Pallinghurst Resources owns stakes in both Platmin and Magazynskraal. Sedibelo is owned by Itereleng Bakgatla Minerals Resources.
The Pilanesberg Platinum Mine consists of an open-cast operation which is currently in ramp up to reach an annualised production rate of 250 000oz of PGMs in 2012 and a concentrator processing plant comprising UG2, Merensky and DMS circuits.
The mine’s ramp up has been beset with problems, most notably an illegal strike in June 2011 where employees of a mining contractor illegally disrupted operations. The disruptions caused serious damage to property and mining equipment belonging to the mining contractor.
Assets on the eastern limb are also to be included in the deal. Platmin refers to these as the Mphahlele, Grootboom and Loskop projects.
The transaction is expected to be completed during the June quarter of this year the sens announcement said and that further details would be included in an information memorandum to be sent to Platmin shareholders.
Frandsen, confirmed plans to list Newco on the Johannesburg Stock Exchange as well as either on the London or Hong Kong exchanges.
Pallinghurst’s share price had retreated slightly by 16h42 but was still up by 9.03% on the day at R3.38. Its annual results are due for release tomorrow.
iPad Version: Picture – At the Polokwane smelter wet concentrate made up of UG2 and Merensky Reef is smelted to produce a PGM-rich nickel-copper furnance matte which is then sent to Rustenburg’s ACP converter for refining: VisMedia
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