[miningmx.com] – ANGLO American Platinum (Amplats) lifted the veil on its outstanding non-core asset sales saying it would refinance its empowerment partner, Atlatsa Resources, for a fourth time before selling its 49% stake in the underlying Bokoni Mines while talks over the sale of Union mine had hit a roadblock.
Chris Griffith, CEO of Amplats, also disclosed that Lonmin had not triggered its pre-emptive rights over its 50% stake in the Pandora Joint Venture and that discussions had begun with a third party over the sale of Amplats’s shares in the venture.
“There will be a further refinancing [of Atlatsa] to get us through this period,” said Griffith in response to questions at the announcement of the sale of Amplats’ shares in Rustenburg Platinum Mine to Sibanye Gold.
Amplats said in July 2014 that it would add Bokoni Mines and the Pandora Joint Venture to the Rustenburg and Union section mines deemed non-core. Griffith then reasoned that the assets would “… be better placed in the hands of new owners who would be able to provide the focus and capital for the operations to have a successful future”.
Speaking today, Griffith said: “We need to focus on what would make it [Bokoni] profitable. We are firmly of the view that we would do the right thing. We are very engaged with them [Atlatsa] and we will continue to do the right thing until the very last day we are associated with it”.
Last year, Amplats and Atlatsa agreed a new financial structure – the third since about 2008 when the Atlatsa empowerment deal was first announced – in which Atlatsa sold mineral rights back to Amplats for $171m, cut debt 75% to $150m, and reduced the interest bill on the outstanding debt.
And then in July, Atlatsa announced that some C$42.4m (R437m) in financial support from Amplats which was intended to tide Bokoni Mines over until 2016 amid a period of capital expenditure, had failed – an event that raised questions over Atlatsa’s viability. Bokoni Mines is situated in the northern part of the Bushveld Complex.
Atlatsa, which has a 51% stake in Bokoni Mines, plans to spend up to C$100m (R1.03bn) in order to double production to 240,000 oz/year in low cost platinum production, due by 2019.
While the sale of its shares in Bokoni Mines was not imminent, Amplats appeared to have recorded some progress in the sale of its 49% stake in the Pandora Joint Venture. Said Griffith: “We have received an offer for Pandora and discussions are with Lonmin and potential partners”.
The sale of Union section, however, was back to square one after a proposed offer for the mine was unsuccessful.
“We had a recommenced process at Union, but we didn’t get to a landing on the sale with the partners we were talking to,” said Griffith. “Some of discussions remain open if partners can get the funding,” he said, adding that discussions with other buyers were continuing. “Those conversations are going on and we have prepared the assets for sale and have the data room open,” he said.
“We are further behind on Union and the two joint ventures, but in all three we have a process that is ongoing,” he said.
EMPOWERMENT QUESTIONS
Amplats’ stake in Bokoni Mines has been described as a transaction that the Anglo American owned subsidiary cannot afford to have fail, given that it is an important part of its social license in South Africa.
Asked if he was troubled by the prospect of winning regulatory support for the sale of Rustenburg Mines to Sibanye, Griffith said there was “… always the risk that discussions with the DMR [Department of Mineral Resources] don’t go well”.
“It is one of the most important conditions that we have to overcome in order to make the deal happen, and we don’t anticipate the deal will fail” he said. However, Amplats and Sibanye had set aside up to 18 months to hurdle the regulatory challenges which also includes the support of the Competition Commission.
Neal Froneman, CEO of Sibanye Gold, said his company had had discussions with the DMR and “the ruling party” [the African National Congress] over the transaction.
“We have discussed with the ruling party that the would like to move into the sector. We had meetings with the ANC and the DMR together, and the ANC alone.
“We’ve put our hands up saying we would like to be the champion by moving into other commodities,” said Froneman referring to comments made by mines minister Ngoako Ramatlhodi last year that he would like a ‘national mining champion’ to emerge which would buy up mines the established, diversified companies no longer wanted. “That is not saying we have the deal agreed,” said Froneman.
If Sibanye Gold is successful in buying Amplats’ Rustenburg Mines it would have gold, platinum and uranium to its name whilst Froneman has also flagged an interest in owning a coal mine in order to mitigate the risk of power shortages.
As part of the transaction to sell the Rustenburg mines to Sibanye, Sibanye has set down plans to vendor-financed a 26% share of the assets which will have as shareholders Royal Bafokeng Holdings, the Bakgatla-Ba-Kgafela Traditional Community, employees, and nearby community groupings.
