No stopping Afplats/Impala deal

Roy Pitchford, CEO of Central African Gold

» Lines drawn in Afplats battle
» US hedge fund to oppose Afplats
» Afplats' R1bn deal under attack
» Impala swoops on Afplats
» Afplats eyes LSE debut
» Size to dictate Afplats' smelter decision

> JSE:IMPALA PLATINUM HOLDINGS LIMITED:
16477c

Click here to find out more about how to use this button

No stopping Afplats/Impala deal
Allan Seccombe
Posted: Wed, 07 Feb 2007

[miningmx.com] -- AFRICAN PLATINUM’S R1.1bn transaction with Impala Platinum will not and cannot be derailed by objections from US-based hedge fund North Sound Capital, CEO Roy Pitchford said on Wednesday, defending the transaction as the best option for his company’s future.

Afplats has been told by the Department of Minerals and Energy that its year-old mining licence application should be granted before the end of this month. “But, I’m not holding the DME to anything,” Pitchford said.

The Impala deal is too far advanced for unhappy shareholders to halt it, but there could arguably be a repeat of last year’s ouster of chairman Charles Hansard after an extraordinary meeting called by North Sound.

Pitchford said if North Sound, a holder of 13% of Afplats, was unhappy enough with the transaction, and if it could convince other shareholders to follow it, his job and those of his board could be terminated.

they cannot stop this deal

“This transaction does not need shareholder approval,” Pitchford said on the sidelines of the Mining Indaba in Cape Town.

“The deal is done. It’s a signed agreement. The shareholders can fire me, the board and put a new board in, but they cannot stop this deal,” he said.

The rest of Aplats’ shareholders apart from North Sound had expressed satisfaction with the Impala transaction, he said.

It is thought that North Sound would have preferred Impala to buy into the AIM-traded parent company rather than acquiring 30% in the vehicle owning the Leeuwkop platinum deposit.

North Sound is said to also be unhappy with the 45 pence per Afplats share value of the transaction and would have preferred 70 pence.

Afplats has not lost ownership of the project and it will retain control and management, Pitchford said, countering speculation that this might be another source of unhappiness within North Sound.

Pitchford said he would not sell Impala any more of the project and if Impala really wanted it, it would have to buy it for the price of buying the parent company because Leeuwkop is the primary Afplats asset.

North Sound has to date declined to offer comment on the reasons for their objections to the transaction.

The only time Afplats shareholders would have to vote on a transaction with Impala would be if and when Impala decides to flip its ownership up into the AIM-traded parent company, something Impala has not said it intends doing.

Click Here to subscribe to our daily newsletter

If Impala did make a flip-up offer for Afplats it would have to buy the entire company as opposed to just a percentage under South African Reserve Bank regulations regarding interactions between local and foreign-listed companies.

Afplats management was satisfied with the deal because Impala cannot walk away and will contribute a billion rand towards developing the deep level mine and concentrator. Impala has the right to buy concentrate from Afplats for 10 years.

Estimates are that the first phase of Leeuwkop could produce 300,000 oz of pgm annually but this could subsequently be pushed as high as 1 million oz of pgm annually with the establishment of another two mines on the concession.

Having Impala in the parent company would be a poison pill in any takeover activity and the current set up allows Afplats to pursue other projects and activity without Impala’s involvement.

The overall perceived value of Afplats has risen with Impala’s involvement and major investment in the Leeuwkop project, which could lure other investors, which Impala would be in no position to block, he said.