AngloPlat finally converts its mining rights

Brendan Ryan | Mon, 26 Jul 2010 08:56

[miningmx.com] -- ANGLO Platinum (AngloPlat) has finally been granted conversion of its old order mining rights into new order mining rights which were approved on July 21.

The announcement was tucked away in a terse clause in AngloPlat’s interim results for the six months to end-June.

This stated, “Anglo Platinum received letters of conversion for its mining rights which were granted by the Department of Mineral Resources (DMR) on July 21, 2010. Execution of these rights has commenced with three executed to date.”

The group has downplayed the importance of this announcement. The extended delay in converting AngloPlat’s rights compared with its major platinum peers was causing rising anxiety in some investment circles.

Speculation in the market – denied by AngloPlat CEO Neville Nicolau - was the group had come under pressure from government to do further empowerment deals in addition to what it had already put in place.

Concerns were not eased by comments from Minister of Mineral Resources Susan Shabangu on June 30 in which she rejected the concept of “once empowered always empowered”.

Shabangu made it clear she would like mining companies to always have an empowerment partner on board.

AngloPlat does not have an empowerment partner because the group went the alternative route of empowerment provided for in the Minerals and Petroleum Resources Development Act which was through units of production.

AngloPlat placed a string of valuable platinum assets into black economic empowerment hands through deals with Northam Platnum, Anooraq Resources and Royal Bafokeng Platinum.

As of July 2 the situation was that AngloPlat had received “unconditional conversion letters” from the DMR for two mines and “conditional letters” for the rest .

The outstanding conditions involved resubmitting social and labour plans but this was two years after former deputy director-general Jacinto Rocha had stated there were only “technical issues” outstanding in the conversion of AngloPlat’s rights.

The conversions now granted are good news because they show the new legal mining dispensation is working. The granting of the conversions should also take pressure off controlling shareholder Anglo American.

Anglo is embroiled in two severe disputes with far reaching implications concerning Kumba Iron Ore and was perceived in some investment circles to be hampered by its exposure over AngloPlat.

AngloPlat has reported a 49% jump in profit before tax for the six months to R4.47bn (restated previous comparable six months – R3bn).

Headline earnings are up nearly sevenfold at 1,028c a share (164c) driven largely by a 67% increase in the US dollar price realised on the basket of platinum group metals (pgm) sold offset by a stronger average rand/dollar exchange rate and lower sales volumes.

Equivalent refined platinum production (mined ounces expressed as refined ounces) dropped 4% during the six months to 1.196m oz with the bulk of the drop consisting of 58,000 oz lost as a result of placing three shafts at Rustenburg on care and maintenance in 2009.

Management continued to deliver on improving productivity and holding down costs.

CEO Neville Nicolau commented, “the cash on-mine cost per tonne was R441, a decrease of 2.9% compared to the first half of 2009 and a 2.6% compared to the second half of 2009.

“We believe this steady reduction from a high of R475/t in 2008 reflects our successful cost management efforts across our mining operations.”

The dividend drought continued, however, with AngloPlat passing its interim. It stated that, “until a sustainable improvement is seen in cash flow, the board considers it prudent to continue to suspend dividend payments.”