EASTERN Platinum (Eastplats), the platinum group metals firm that mothballed its operations in 2012, said it would mine and treat chrome-bearing tailings from its Crocodile River mine following a finance and equipment supply agreement totalling $14m (R164m).
Eastplats said in an announcement to the Johannesburg Stock Exchange today it had signed an agreement with Union Goal Offshore Solution, a chrome trading company, which would finance and supply to Eastplats subsidiary, Barplats, a processing circuit and technological know-how. Barplats would supply into the unit chrome-bearing tailings from its Zandfontein UG2 tailings facility.
Production is expected to begin this year as the partners had pre-sourced the equipment, the company said. A construction phase of some seven months had been pencilled in. “Eastplats is very pleased to come to an agreement with Union Goal and begin construction immediately on the chrome recovery project which will again establish Barplats as an operator,” said Diana Hu, CEO of Eastplats.
In terms of the financing package, Union Goal will make an upfront payment of R42.2m to Barplats. It will then recover the full cost of the project in chrome produced at the joint venture whilst also paying Barplats fees of R31.22 per run of mine tonne treated, equal to $2.66/t. The parties have a put and call agreement on the chrome circuit if either wants to exit the arrangement.
Barplats expects to recover the tailings at a run-of-mine cost of R25/t or some $2.14/t.
The agreement opens a new chapter for Eastplats which has had a chaotic six years since shuttering operations culminating in a takeover battle. During this event, questions were raised about the validity of a black economic empowerment agreement whilst an attempt to sell Barplats for $50m was also voted down.
Some of these issues continue to rattle on.
In November, its BEE partners relinquished shares in the company which reverted back to the company. This has raised the question as to whether Eastplats will continue to keep its mining licence in terms of South Africa’s mining regulations.