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Implats under pressure on Mvelaphanda Posted: Wed, 01 Oct 2008 [miningmx.com] -- EXPECT swift action from Impala Platinum (Implats) to firm up its bid for Mvelaphanda Resources (Mvela) and Northam Platinum (Northam) now that Xstrata has shelved a bid for Lonmin. The reason is the competition for Mvela/Northam and the highly attractive Booysendal deposit they control is heating up fast. Both Lonmin and Xstrata are now potential bidders for Mvela/Northam while Gold Fields is being viewed as a “dark horse” in the race. Implats has to be the favourite if only because it was the first to openly declare its intentions with the announcement put out on September 12 that it was “in discussions” with Mvela and Northam. Now that Xstrata CEO Mick Davis has dramatically confirmed that he has major ambitions in the platinum sector the possibility must exist that he may turn his attention to Mvela/Northam. The attraction in Mvela/Northam lies in Booysendal which contains a resource of more than 100 million oz of platinum group metals on which a mining operation the size of the current Lonmin could be developed. One negative factor for Xstrata is that there will be no swift cash returns out of Mvela/Northam unlike Lonmin which is already generating good cash flow and profits from its existing operations. Xstrata would need that cash to meet interest payments on the debt it must raise to make the acquisition. By contrast, developing Booysendal will require billions of rands to be invested over and above the purchase price paid for Mvela/Northam. Davis would also have backed his team to improve Lonmin’s cash flow and profits once he had removed former CEO Brad Mills and radically changed the group’s mining strategy. The new management would have shifted back towards more extensive use of conventional mining methods than the mechanised approach that Mills was so keen on but which, so far, has wreaked havoc with Lonmin’s recovered grades and production targets. Mills got booted out - sorry, he “stepped down by mutual consent” – on September 29 and it’s worth highlighting the “about face” by Lonmin chairman John Craven which accompanied this development. Craven commented this week, ” I would like to take this opportunity to extend the Board’s sincere thanks to Brad for his significant contribution in developing the Company over the past four years.” Authoritative fingers have frequently been pointed at Mills during the past two years as being the major problem at Lonmin but this is what Craven had to say when Miningmx raised that issue with him on September 2. “I can assure you – and I speak on behalf of the entire Lonmin board – that we fully support Brad and his management team,” he commented. “Perfidious Albion” - is one phrase which springs into my mind. Click Here to subscribe to our daily newsletter
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