Atlatsa talks to Amplats about status of Bokoni joint venture

ATLATSA Resources is holding talks with Anglo American Platinum (Amplats) and the Department of Mineral Resources, about the continued participation of the world’s largest platinum producer in the Bokoni project.

Amplats CEO Chris Griffith said last month that as part of a restructuring of its business, which includes disposing of its Rustenburg and Union mines, as well as its stake in the Pandora joint venture with Lonmin, it could exit its Bokoni joint venture with Atlatsa.

“We are not the best partners in Bokoni as we think about our spend across our portfolio. It’s not where we would seek to spend capital,” Mr Griffith said, adding that Amplats would talk to the department about the empowerment issue.

He said Amplats had received unsolicited offers to buy its stake in the project, but did not identify the parties.

The Bokoni mine counts towards Amplats’s empowerment credits, an important point at this juncture where mining companies are being audited for their compliance against targets set out in the Mining Charter to transform the industry. The 10-year targets set out in the charter fall due at the end of this year.

“The position is that Amplats and (Atlatsa) remain joint venture partners in Bokoni,” chief commercial officer Joel Kesler said yesterday.

“Both parties remain committed to funding the build-up to 160,000 tonnes a month underground steady-state production, and that remains in place.”

“The sustainability of Bokoni mines remains of paramount importance to Atlatsa and Amplats,” Mr Kesler said, describing the Bokoni transaction as a “cornerstone” for Amplats’s empowerment credits.

Atlatsa has invested $200m in the Bokoni operation in the four years up to 2013. It needs to spend a further $100m in the next five years to reach 240,000oz of platinum group metal output by 2019.

Asked what would happen to the $100m spend if Amplats did sell its stake, Mr Kessler said that would form the basis of a conversation with Amplats, given that funding facilities for Bokoni were all linked to the larger company.

The $100m, which is mostly funded from internal cash flows and existing facilities, was being spent at about R30m a month.

“What we’d look at in any discussions are all the funding arrangements, but you can safely assume the key feature for Bokoni from Atlatsa and Amplats’s perspective is one of sustainability,” Mr Kesler said. The next big investment decision is in 2020 to ramp production up to 400,000oz, but no capital figures were given for that project.

Bokoni is one of the joint venture projects in the Amplats stable that has come in for intensive intervention to help turn it back to profit, after years of losses and underperformance.

Atlatsa’s share’s ended nearly 11% higher yesterday after it narrowed its interim headline loss per share to C$0.02 from C$0.04 for the interim period to end June.