AngloPlat digs deep for Anooraq

Brendan Ryan | Thu, 14 May 2009 17:40

[miningmx.com] -- ANGLO Platinum (AngloPlat) will provide a net R1.2bn in vendor finance to ensure the success of its black economic empowerment (BEE) transaction with Anooraq Resources, according to Anooraq CEO Philip Kotze.

In addition to this money, AngloPlat will also stand behind Anooraq through two further financing facilities that Anooraq will be able to call upon if necessary.

These are an operating cash flow shortfall facility of up to a maximum of R750m over a nine-year term, and a standby loan facility which is also for nine years.

The standby loan facility will be up to a maximum of 59% of AngloPlat’s attributable share of the free cash flow from Lebowa Holdco. This is the owner of the group’s Lebowa Platinum mine, a key asset being injected into the Anooraq BEE transaction.

Kotze said: “We needed that safety net under the transaction to make sure it was sustainable.”

These financial terms - as well as a R1bn reduction to R2.6bn in the total price paid by Anooraq for the assets it is acquiring - have been negotiated against the background of grim times in the platinum industry, which have hammered AngloPlat’s own finances.

That’s probably the main reason it has taken so long to finalise this deal, which was first announced in September 2007.

At the end of December AngloPlat had net debt of R13bn, and that number has probably grown since then.

AngloPlat will also provide a further R150m to facilitate the participation of communities and Lebowa employees in the transaction.

Kotze said: “It was a huge task to conclude a deal of this nature under current market conditions. AngloPlat has done its best to make it possible.”

He said Anooraq was now fully funded to deliver the revised Lebowa growth plan. This aims to increase annual production by about 60% to 150,000 ounces of platinum over the next three years.

The target has been reduced from the originally estimated 200,000oz of platinum because of “current constrained market conditions”.

Kotze said management’s focus over the next 24 months would be to turn the Lebowa Platinum mine around by lowering its present high-cost structure and delivering the planned expansion.

As with many other platinum juniors, there has been considerable speculation over how Anooraq might get involved in future consolidation of the industry.

Mvelaphanda Resources CEO Pine Pienaar commented at a 2008 platinum conference in London that one possibility was a link-up with Northam Platinum and its Booysendal project, which sits south of Anooraq.

Kotze said: “We need to become a real player in the platinum industry as a profitable producing company. Until that happens, I don’t believe our assets will be valued properly.”