Am­plats sheds two more min­ing as­sets

The Star Late Edition - - BUSINESS REPORT - Siseko Njobeni

AN­GLO Amer­i­can Plat­inum (Am­plats) has sold its 85 per­cent in­ter­est in Union Mine and its ma­jor­ity stake in Masa Chrome to re­sources in­vest­ment com­pany Siyanda Re­sources for R6.4 bil­lion, Am­plats said yes­ter­day.

It said the trans­ac­tion con­sid­er­a­tion com­prised an ini­tial dis­posal con­sid­er­a­tion of R400 mil­lion, payable in cash and a so-called de­ferred con­sid­er­a­tion, which will see Siyanda pay Am­plats 35 per­cent of cu­mu­la­tive pos­i­tive dis­tributable free cash flow a year over a 10-year pe­riod. The de­ferred con­sid­er­a­tion has a max­i­mum cap of R6 bil­lion.

The com­pany, which is the world’s largest pri­mary pro­ducer of plat­inum, has pre­vi­ously said that, as part of its eye on value “and not vol­ume”, it was repo­si­tion­ing its port­fo­lio by ex­it­ing cer­tain as­sets.

Am­plats, a sub­sidiary of An­glo Amer­i­can, said it in­tended to use the trans­ac­tion con­sid­er­a­tion pro­ceeds to re­duce debt.

Siyanda Re­sources, which was es­tab­lished in 2004, de­scribes it­self as an in­vest­ment com­pany with a fo­cus on re­sources, es­pe­cially coal, pre­cious and base met­als, in­dus­trial min­er­als, plat­inum and chrome.

Union Mine and Masa Chrome are lo­cated in both the Lim­popo and North West prov­inces and Union Mine op­er­ates un­der a min­ing right cov­er­ing an area of 119km².

The Bak­gatla-Ba-Kgafela tra­di­tional com­mu­nity owns the re­main­ing 15 per­cent of Union Mine.

“We are pleased to de­liver another im­por­tant mile­stone in the strate­gic repo­si­tion­ing of An­glo Amer­i­can Plat­inum’s port­fo­lio. The Union Mine and Masa Chrome op­er­a­tions are qual­ity as­sets that I be­lieve have long-term and sus­tain­able po­ten­tial un­der Siyanda’s own­er­ship. This trans­ac­tion is ben­e­fi­cial for both par­ties,” said Am­plats chief ex­ec­u­tive Chris Grif­fith.

The deal, ex­pected to be fi­nalised in the sec­ond half of this year, is sub­ject to, among oth­ers, the grant­ing of a Sec­tion 11 con­sent from the Depart­ment of Min­eral Re­sources, ap­proval by South African com­pe­ti­tion au­thor­i­ties and the con­clu­sion of Siyanda’s black eco­nomic em­pow­er­ment struc­ture.

In Jan­uary 2013, Am­plats an­nounced its in­ten­tion to re­con­fig­ure and there­after exit Union Mine and Masa Chrome. Since then, sig­nif­i­cant re­struc­tur­ing has been de­liv­ered at Union. “The com­pany, how­ever, has more value ac­cre­tive cap­i­tal op­tions in its port­fo­lio and would not pri­ori­tise cap­i­tal in­vest­ment into (Union Mine and Masa Chrome), and is there­fore not the best owner of these as­sets,” said Am­plats.

Mean­while, in the year ended De­cem­ber 31, Am­plats re­ported net profit of R632m for the year, up from a loss of R12.36bn in 2015. Net sales rev­enue in­creased by 4 per­cent to R62bn due pri­mar­ily to the weakening of the rand/US dol­lar ex­change rate.

Am­plats re­duced its net debt by R5.5bn, from R12.8bn. As a re­sult, Am­plats has re­duced its gear­ing from 32 per­cent in De­cem­ber 2015 to 18 per­cent.

Cash from op­er­a­tions, work­ing cap­i­tal re­duc­tions and pro­ceeds from the sale of the Rusten­burg op­er­a­tions con­trib­uted to the re­duc­tion in the net debt. But the com­pany did not de­clare a div­i­dend, at­tribut­ing the move to its net debt po­si­tion and the “un­cer­tain macro-eco­nomic en­vi­ron­ment”.

The com­pany said all of its op­er­a­tions in­creased pro­duc­tion. It said its Mo­galak­wena mine near Mokopane in Lim­popo in­creased pro­duc­tion by 5 per­cent to a record 412 000 plat­inum ounces, while the Aman­del­bult mine, also in Lim­popo, de­liv­ered 467 000 plat­inum ounces, its best per­for­mance since 2008.

“The busi­ness has made sig­nif­i­cant strides in the last 12 months, de­spite the con­tin­ued weak price en­vi­ron­ment for plat­inum group met­als. The chal­leng­ing global macro-eco­nomic out­look is likely to pre­vail through at least 2017. We will con­tinue to man­age the busi­ness ac­cord­ingly, po­si­tion­ing our­selves for the fu­ture by com­bin­ing op­er­a­tional and cap­i­tal dis­ci­pline,” said Grif­fith.

Am­plats shares on the JSE were down 4.67 per­cent yes­ter­day to close at R323.50.

PHOTO: NI­CHOLAS RAMA

An­glo Amer­i­can Plat­inum chief ex­ec­u­tive Chris Grif­fith re­leases an­nual re­sults for the year ended De­cem­ber 31, 2016, in Sand­ton. “We will be po­si­tion­ing our­selves for the fu­ture by com­bin­ing op­er­a­tional and cap­i­tal dis­ci­pline,” he said yes­ter­day.

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