Northam may have Aquarius, Union in sights

[miningmx.com] – NORTHAM Platinum may be scoping the possibility of bidding for assets owned by Aquarius Platinum, or even the company itself, and may be a bidder for Anglo American Platinum’s (Amplats’) Union section, analysts said.

“I’d say both could be a possibility,” said an asset manager who wished to remain anonymous. “Aquarius’s market cap and the Union price are both close to the R4bn capital raised. And you have to wonder why they have ‘over-empowered’,” he said.

Northam Platinum announced a black economic empowerment (BEE) deal totalling R6.6bn on October 21 which also included a capital raising of some R4bn net of fees. It took the shares owned by BEE in the company to just over 35%.

“I’m not sure Northam is interested in Union although we think they should be,” said Michael Kavanagh, an analyst with Noah Capital. “There are obvious synergies at Everest so that one must be on the table,” he said.

Aquarius mothballed its Everest mine, which is contiguous with Northam Platinum’s Booysendal property, in 2012 amid the slide in the dollar price of platinum.

Aquarius’s CEO, Jean Nel, recently suggested the mine could be reopened, but that it needed a 10% to 15% improvement on the prevailing platinum price in early August which was $1,460/oz.

Aquarius may be persuaded to sell its Everest mine – despite some 460,000 oz in life of mine platinum group metals – after seeing the sale of its Blue Ridge and Sheba’s Ridge assets fall through. The two properties would have provided Aquarius Platinum with $37m – much needed funds which would have eased pressure on its balance sheet.

Standard Bank Group Securities analyst, Seten Naidoo, first suggested that Northam could play for Aquarius Platinum’s assets in a note this morning.

“We believe Aquarius offers Northam a quality asset base of operating assets thereby negating the lead times of projects to production, in addition to a significant current production base,” said Naidoo in his note.

“A second option would be the purchase of Everest Mine from Aquarius.

“Given Northam’s Booysendal South ore body can be mined through existing Everest infrastructure, we believe the deal should be undertaken by Northam given our view of Aquarius being a willing seller of its non-producing assets in its current cash strapped environment with a convertible bond repayment looming,” he said.

Paul Dunne, Northam Platinum CEO, told Miningmx on October 21 that the company was considering a number of potential platinum acquisitions beyond those put on the table by Amplats.

He added that internal growth was another strategic target with the increase in production of Booysendal considered a ‘no brainer’ by the company.