Difficult to apportion blame
MVELAPHANDA RESOURCES agreed to transfer its 50% stake in the Booysendal joint venture with Anglo Platinum to Northam in exchange for R460m, to be paid by the issue of shares in Northam. That agreement is between three separate and distinct parties.
The transaction has not yet been finalised. Mvelaphanda Resources has placed blame on Angloplat, alleging, inter alia, bureaucracy. Angloplat has complained that Mvelaphanda’s black empowerment credentials were at one stage in doubt. It’s difficult to exactly apportion the blame for the delay in finalising the agreement. Certainly, both parties are to some extent responsible.
The agreed consideration was to approximate to US$1/oz of metal in the ground. From the outset Northam, one of the three parties, has always wanted the agreement to be finalised on those terms and as soon as possible. As late as February 2006, Northam’s CEO confirmed that the consideration remained the same.
Northam has excellent mine management. We have more than R1bn cash on the balance sheet. We have the necessary refining capacity. We aren’t responsible for the delay in finalising the agreement. Northam has at all times been willing, able and, indeed, eager to finalise the agreement and to proceed with Booysendal.
Mvelaphanda Resources recently contended that given the average price paid for deals in the platinum sector was more than US$13/oz it implies there’s some scope for renegotiation of the consideration.
As it is, Northam has been subjected to potential prejudice by the delay in the Booysendal project. We’re looking at large capital outlays and it will evidently take four to five years to bring the mine to production, whereas far less feasible projects are being brought to production far earlier in the current cycle of high platinum group metal prices.
Certainly fairness would dictate that, if any changes, they should impact on Mvelaphanda Resources and/or Anglo Platinum and should not prejudice Northam. There are negotiations between Mvelaphanda Resources and Angloplat on other issues and properties.
Hopefully, they’ll have the good grace to reflect the above in such negotiations and to finalise the Booysendal transaction on the previously agreed terms with haste.