[miningmx.com] – ANGLO American Platinum (Amplats) wanted to retain the option of listing its non-core Rustenburg assets because it helped “keep pressure on the process”, said the group’s CEO, Chris Griffith.
He was referring to negotiations for a trade sale of the mines – Rustenburg and Union – which are forecast to produce 620,000 ounces of platinum in the 2015 financial year. It is understood Sibanye Gold is still involved in a possible purchase of the mines.
“We need to keep the pressure on process by keeping that option open. We will keep that option open for as long as it’s sensible for us to do so and works in the favour of our shareholders and stakeholders,” said Griffith.
Speaking at Amplats’ interim results presentation, Griffith said a listing of the mines would probably take 18 months to construct. He would not commit to a specific time in 2017 although he told media “early 2017” in a conference call, and added that a listing was marginally the more attractive of the two options.
Asked if the group had any flex in trade sale negotiations, Griffith said Amplats was not trying to wring “the very last dollar” out of the sale and even suggested in an interview with Miningmx that he had an open mind on whether a deal would commit the buyer to selling concentrate to Amplats.
“We would look at all options in respect of the trade sale. We haven’t put a list of conditions down that would make it impossible to get it away,” he said.
It appeared as if Amplats’ hadn’t yet started the ground work for an IPO, but Griffith alluded to the complexity of it as an empowerment deal would be required while management of the independent company would need to establish itself, not to mention regulatory filings.
The notion of Amplats listing Rustenburg on the Johannesburg Stock Exchange has been heavily criticised by analysts.
“Why would investors be willing to take the risk in full knowledge that several companies with detailed access to the data had baulked at the price?’ said Leon Esterhuizen, an analyst for CIBC Markets in April.
“If these assets hardly make sense in the hands of Amplats, how will it be able to make sense in the hands of another company that has to pay away as much as 20% of the revenue line on the offtake agreement (for smelting and refining)?’ he asked.
Griffith’s view, however, was that the attractiveness of the offering “… really depends on the pricing”.
“But much more important is to have momentum,” he said referring to how market conditions would have to change.
“An IPO today …? It would not happen in this price environment. And it takes a year to get an IPO away. If you think this price will prevail maybe an IPO would not work.”
In the meantime, Griffith was at pains to talk up Rustenburg and Union which, he said, both produced cash in the interim period having completed restructuring from 2013 in which the labour numbers were reduced to 8,700 from 32,000.
Rustenburg, which would be further restructured by combining three mines into two, produced free cash flow of R261m in the interim period, largely by dint of the surface retreatment operations, while Union haemorraghed R98m in cash but was free cash flow positive when its chrome production was factored in to the tune of a positive R72m.
The idea of abandoning the sale process completely was dismissed by Griffith who said that while both assets could make a positive contribution, even in the current market, they could not attract new investment as the preference was for low-cost mechanised operations such as Mogalakwena, and Amandelbut provided it could be improved.
