[miningmx.com] – NKWE Platinum has agreed to sell at least 29% of the
company to China’s Zijn Mining Group in a proposed transaction which sees the
Australians issue convertible bonds worth A$20m (R187m).
Zijn Mining, which was the first Chinese company to invest in South Africa’s platinum
sector when it took a stake in Ridge Mining, also has the first right of refusal over
shares held by Nkwe Platinum’s empowerment partner, Genorah Resources.
Genorah held about 60% of Nkwe Platinum before its financiers started to sell down
shares in Nkwe Platinum it held in collateral last year.
Nkwe Platinum is hoping to develop the 10.8 million ounce Garatau project on the
Bushveld’s Eastern Limb. The project is estimated to cost R5.3bn to develop according
to a bankable feasibility study published in June last year.
Nkwe Platinum announced this morning that it had enlisted a convertible share
financing arrangement with Zijn Mining (represented by its subsidiary, Jin Jiang
Mining) for 200 million shares at an issue price of 10 Australian cents per share. Nkwe
Platinum was last trading at nine Australian cents after a one day 11.5% gain.
The convertible bonds have a three-year life, but they can be converted into Nkwe
Platinum shares after a year. Nkwe Platinum has 671 million shares outstanding.
As part of the arrangement, Zijn Mining has exclusive rights to participate in the
development of Nkwe’s South African mining projects including first right of refusal on
project financing and an offtake contract.
Jin Jiang will also be able to appoint an executive director to a five person board of
directors at Nkwe Platinum.
The transaction is effectively a change of control given the options over Nkwe
Platinum’s stock granted to Zijn Mining – a development that should be no surprise to
investors.
In September, Nkwe Platinum said it was heading for a change of control deal owing
to the parlous financing position of Genorah Resources. Then, the discussions centered
on a deal with “a major South African-based entity,” according to the company.
“Moving forward the company will . have new corporate and operational management
and seek to commence development of the Garatau PGM project,’ it said. By October,
however, Genorah’s investment was deemed safe.
Before that, Nkwe Platinum’s MD, Maredi Mphahlele, told Miningmx that the company
had the Industrial Development Corporation (IDC) “in our sights”, adding that the IDC
would be one of “several partners in the project owing the size of capital needed”.
Quite how the mineral resources department (DMR) will look upon the change of
control is another matter particularly if Genorah Resources is forced to sell down a
major portion of its shareholding. Mphahlele was unavailable for comment.
Questions related to the future financing of Nkwe Platinum is to say nothing of a legal
dispute with African Rainbow Minerals (ARM).
ARM and Nkwe Platinum are in dispute over the rights that were awarded to Genorah
over five farms down-dip from ARM’s Modikwa JV with Anglo American Platinum
(Amplats). The farms include the property related to the Garatau project.
Amplats held the old order rights over all the properties. However, these rights were
awarded to Genorah upon conversion. ARM previously indicated it has commenced
with legal proceedings against the DMR and Nkwe.
