[miningmx.com] – IN a development that echoes Anglo American Platinum’s (Amplats’) difficulties in selling its non-core assets, rival Impala Platinum (Implats) has called off plans to sell Marula Platinum, its 78,500 oz/year mine.
Implats said in an announcement today that following an assessment over the last quarter it would instead focus on “strategic interventions” that would optimise performance – a decision that included expanding the mine to 90,000 oz/year.
“Consequently, the board has ended the formal disposal process,” it said.
Marula, which is situated near Burgersfort in South Africa, was identified in February as an asset for sale by Implats as part of its sweeping, five-year restructuring programme that would focus on “a more concentrated footprint” at Rustenburg whilst sticking to a 850,000 ounce/year output by 2019.
Days later, however, Sibanye Gold, said Marula was “too small for our purposes” and that it was chasing “more meaningful assets,” such as Amplats’ Rustenburg and Union mines.
Three months on, though, Sibanye Gold has not yet bid for the Rustenburg mine for which it’s thought Amplats wants R10bn, although the gold producer recently told Bloomberg News that it was still committed to exploring the purchase process.
Johan Theron, head of corporate affairs at Implats, said the company was initially surprised at the number of interested parties, especially international investors, but then was disappointed at the fall in interest at the non-binding offer level.
“We had developed a strategy of optimising the mine and so we had a firm handle on what it was worth,” said Theron. “However, the biggest hurdle seemed to be uncertainty to do with the regulatory environment and power [in South Africa],” he added.
Theron said that Implats would not have to allocate fresh sources of capital to Marula now that its expansion was its responsibility again. “We already knew what we had to do to get the mine to 90,000 oz/year. It is well capitalised with a low capital burden,” he said.
“Given that currently there appears to be more sellers than credible buyers in the South African platinum industry, the termination of the disposal process should probably not come as a great surprise,” said Edward Sterck, an analyst for BMO Capital Markets.
Asked to comment on Implats’ restructuring plans, Theron said that there had been progress. “It’s still early days but everything remains firmly on track. The big uncertainty is the power situation and we’ve been trying to get our heads around that particular challenge,” he said referring to load-shedding implemented by Eskom.
The key points of the firm’s strategic review announced in February was to complete the build on its 16 and 20 shaft projects which would contribute towards the already announced R30bn in capital spend by 2019. However, Implats would also consolidate mature shafts and mine them out “as fast as possible”.
This is to efficiently generate cash as the shafts – E/F 4, 6, 7, 7A, 8 & 9 – are among the lowest cost operations owing to shallower mining and low capital needs. Mid-life shafts will be optimised. There would be no loss of jobs.
