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Anooraq strikes major deal with Anglo Platinum
Allan Seccombe
Posted: Tue, 15 Apr 2008
[miningmx.com] -- ANOORAQ Resources has concluded agreements with Anglo Platinum that would give the junior company control of South Africa’s third-largest platinum group metal (PGM) resource and potentially become an independent producer by owning part of the Polokwane smelter.
Anglo Platinum, subject to a number of conditions, has agreed to sell a majority interest in the 187,700 PGM oz/year Lebowa mine to Anooraq for R3.6bn cash, for which Anooraq will use existing cash resources, debt and equity to fund.
Anglo Platinum is also selling a one percent controlling stake in their 50/50 joint venture exploration partnership to Anooraq, giving the TSX Venture Exchange and JSE-listed company control of three prospects.
“The execution of the definitive agreements with Anglo Platinum represents a major step towards Anooraq’s transition from an exploration and development
company into a significant independent PGM producer,” Anooraq CEO Tumelo Motsisi said.
Anooraq will control some 193 million ounces of platinum, palladium, rhodium and gold in reserves and resources after the transaction is finalised.
As part of the agreement, which should be completed late in 2008, Anooraq has given its support to an Anglo Platinum plan to boost production at Lebowa in two stages over the next eight years.
Lebowa has a five-year concentrate offtake agreement with Anglo Platinum and can opt for a further five years.
Anooraq has the option to acquire an ownership interest in Anglo Platinum’s Polokwane smelter, relative to Anooraq’s feed to the smelter and subject to a number of conditions.
Anooraq will investigate the synergies that might exist between the Lebowa mine, which has two concentrators, and the neighbouring exploration property of Ga-Pasha.
The Lebowa mine, which has vertical and decline shafts, produces 85,000 tonnes of Merensky ore a month and 45,000 tonnes of UG2 ore.
The first phase up to 2013 will see UG2 ore ramped up to 125,000 tonnes/month and Merensky to 120,000 tonnes. Annual refined production is expected to increase
to approximately 200,000 refined platinum oz or some 430,000 oz of PGMS by 2012.
In the second phase from 2016, UG2 ore will be increased to 255,000
tonnes/month and Merensky will remain unchanged.
The cost of the Middlepunt Hill decline expansion, which focuses on UG2, is R1.8bn, of which Anglo Platinum will incur for its own account R200m and then provide a project finance facility for the balance.
Among the conditions are completed due diligences by both parties, work on which has already progressed "substantially", Anooraq shareholder approval and competition authority approval among others.
Pelawan, the empowerment equity stakeholder in Anooraq, in December last year purchase warrants in the company worth R1.6bn, which will provide a portion of the funds Anooraq needs to fund the transaction.
Anglo Platinum will provide Anooraq with an interest-bearing standby loan.
"This facility enables Anooraq to utilise up to 80% of all cash flows generated from the Lebowa operations should this be required to support external acquisition senior debt finance secured by Anooraq for the
purposes of the Lebowa transaction."
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