ANGLO American Platinum (Amplats) kept up the momentum of portfolio restructuring announcing today it had agreed to sell its 42.5% stake in the Pandora Joint Venture to Lonmin for between R400m and R1bn.
The Pandora joint venture was among a number of joint ventures, including its 49% stake in Bokoni Platinum Mines, that it deemed non-core last year in terms of a strategic review of its assets.
Lonmin will pay the consideration by distributing over six years some 20% of the operation’s free cash flow whilst also allowing Amplats the use and full operational control of Lonmin’s Baobab concentrator for three years.
The use of the concentrator is an important economic add-on for Amplats. Paid on an annual rental basis, it is estimated Amplats will part with R43m annually for use of Baobab which will allow it to process excess ore and unlock value at Mogalakwena mine.
“The benefits of operational control over Baobab will enable us to unlock further value at Mogalakwena mine and achieve cost savings,” said Chris Griffith, CEO of Amplats in an announcement.
“We believe we have concluded a beneficial transaction for both parties, whilst also securing a sustainable future for the Pandora mine,” he added.
Said Ben Magara, CEO of Lonmin: “We are pleased to announce the acquisition of Anglo American Platinum’s stake in the Pandora JV. This is an excellent strategic fit for Lonmin, which increases our exposure to a valuable asset with long-term development potential”.
Amplats’ deal momentum has been high in the last quarter having completed the sale of Rustenburg Platinum Mines to Sibanye Gold as well as R1bn worth of mineral rights to Northam Platinum. It also signed a new wage agreement with the Association of Mineworkers & Construction Union (AMCU).
These deals will allow it to reduce net debt to R7.4bn. It was at R12bn to R13bn at the end of 2015.
Among the conditions precedent, Northam Platinum has to give its blessing for the transaction as it is a joint venture partner in the asset. The deal is due for consummation in 2017, Amplats said.
