Platinum shares war
BATTLE: IMPALA PLATINUM AND NORTHAM SQUARE UP TO EACH OTHER
No question that Implats needs deal more.
Northam Platinum and Impala Platinum (Implats) are locked in a battle for control of Royal Bafokeng Platinum (RBPlat), though Implats needs this deal more.
RBPlat mines platinum group metals (PGMs) is in the Merensky and UG2 reefs on the Boschkoppie, Styldrift and Frischgewaagd farms in the Rustenburg area. These sites account for the last undeveloped Merensky reef on the Western limb of the Bushveld complex.
RBPlat’s assets are the only known significant shallow high-grade Merensky resources and reserves still available for mining in SA, and this makes them some of the hottest real estate in the PGMs sector.
Implats kicked RBPlat into play in October when it made a cash and shares offer for 100% of RBPlat’s shares.
RBPlat’s major shareholder, Royal Bafokeng Holdings, seemed underwhelmed by this offer, and two weeks later announced it had agreed to sell 32.8% of its shareholding to Northam, with an option to extend this offer to 33.3%.
This prompted a counteroffer by Implats at R150 a share which, while lower than Northam’s R180 a share, did not account for Implats’s strong dividend flow which would reward shareholders over the longer term.
Implats secured agreements to acquire 24.52% from RBPlat institutional shareholders. The offer is made up of R90 a share cash and 0.3 ordinary shares in Implats per RBPlat share – representing a 22% premium to RBPlat’s closing price of R121.92 on 24 November.
RBPlat’s share price hit an all-time high this week of R140, fuelled by an auction for its prized platinum assets.
There’s no question that Implats needs the deal more. Crucially, RBPlat’s operations are contiguous with those of Implats.
Nico Muller, CEO of Implats, said this would create a range of operational synergies such as shaft expansions and higher metal off-take.
Implats expects a successful takeover to yield upwards of 600 000 ounces of 6E PGMs (platinum, palladium, rhodium, ruthenium, osmium and gold) a year and extend the life of its Rustenburg Mines.
With just 10 years of production left on the mines, this life extension is vital for Implats.
Battle justified
The fact that RBPlat runs a mechanised, Merensky-rich ore body feeding what is expected to be robust future demand for platinum, nickel, and copper, provides a compelling case for the takeover bid by both mining houses.
Implats explained the benefits of the deal to RBPlat shareholders.
Implats said it provides them with exposure to a global portfolio of PGM assets and a toll refining business designed to capture the full PGM value chain through integrated processing facilities, including smelters and base and precious metal refineries.
R140 an RBPlats share this week – an all-time high