Amplats sheds two more mining assets
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.
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.