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Mvela establishes independence credentials Posted: Tue, 04 Sep 2007 [miningmx.com] -- A CRITICAL aspect of Mvelaphanda Resources’ (Mvela’s) transaction with Anglo Platinum is there’s no offtake agreement between the two parties on the R4.5bn Booysendal project, planned to begin production in 2010. Though a detail, this is being hailed by Mvela as an emblem of its new-found independence. Anglo Platinum is to sell 50% in the 112 million oz Booysendal prospect to Mvela, which already owns the other half of the project. Mvela will then on-sell Booysendal to Northam Platinum in return for shares. Mvela will own 63.4% of Northam Platinum after also buying Anglo Platinum’s 22.4% stake in the firm. “The outcome is that Northam Platinum will be fourth largest, truly independent platinum producer in South Africa. It’s a major deal for the company,” said James Wellsted, spokesman for Mvela Resources. Offtake agreements, in which South Africa’s smaller platinum producers sell concentrate to companies with refineries, such as Anglo Platinum and Impala Platinum, are much loathed in the junior mining sector. This is owing to the high tolls attached which the major platinum producers justify on the basis of the large capital costs of building a smelter and refinery as well as the specialised technology required in the smelting and refining process. Northam Platinum refines its metal through Heraeus's precious metals refinery in the eastern Cape province, and in Germany. However, it had been in negotiations with Anglo Platinum on which firm will smelt Booysendal’s production, estimated to be about 325,000 oz/year at full tilt in 2012. "The question of an offtake agreement from Booysendal was never a debating issue," said Lazarus Zim, chairman of Northam and Mvela Resources. "Booysendal's right to treat its own concentrate was part of a package deal," he said. Mvela’s stake in Northam also means it can dictate the pace on timing of the capital, unlike Anooraq Resources which by dint of its joint venture in the Lebowa Holdco means it must agree with its partner on capital scheduling and project implementation. “We’re getting close to becoming a full operating company,” said Wellsted who added that the transaction to buy Booysendal is “extremely cheap.” From July 2005 to July 2007, the average cost of platinum acquisitions has been equal to $12 per PGM ounce in the ground against the Booysendal deal which was done at $7.84/oz. The recent purchase of Eland Platinum’s Elandsfontein prospect in the southern part of the Bushveld Complex by Xstrata was done at an estimated $70 per PGM oz. Click Here to subscribe to our daily newsletter
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