[miningmx.com] – AFRICAN Rainbow Minerals (ARM) hopes to be a
beneficiary of Anglo American’s intention to “reconfigure’ its platinum business, Anglo
American Platinum (Amplats), by lining up a potential takeover of Modikwe – the
300,000 oz/year platinum operation they share.
In an interview after ARM’s half-year results ended December, Andre Wilkens, CEO of
ARM, said the company would be interested in buying Amplats’ 50% stake in
Modikwe, or diluting Amplats’ stake by investing more capital to build a 500,000
oz/year platinum group metal mine at an estimated cost of R5bn.
Wilkens said ARM had been in discussions with Amplats about the mine, but Amplats
now had guidance from its major shareholder Anglo American, which owns 80% of
Amplats. Anglo American said earlier this month that it was seeking to restructure
Amplats, despite making in-roads into its cost structure and efficiencies over the last
two to three years.
Amplats reported a 29% fall in headline earnings in its 2011 financial year, and
dropped its platinum sales forecast for the current financial year to 2.5 and 2.6 million
ounces; a 200,000 oz reduction over the previous forecast. Amplats capital
expenditure was also cut by R1bn.
“Modikwa is now a 200,000 tonne/month [ktmp] mine, but we would like to get it
back to 240 ktpm,’ said Wilkens. “After that we would like to take the mine to 360
ktpm [equal to 500,000 PGM oz/year], giving it a 50-year life of mine.’
Developing the mine in this way would also open up the prospect of eventually
developing additional PGM minerals, known as Modikwa Deeps.
However, this is the land over which Nkwe Platinum has been granted a prospecting
licence by the Department of Mineral Resources after several years of legal
confrontation. Wilkens said that ARM would continue to dispute the award.
“We won’t let it go, which is why we’re going to court. If we are going to double the
size of the mine we need on certainty on the deeps,’ said Wilkens, who added it
would help in planning the size of the shaft needed to access Modikwa’s additional
resources.
“A lot of these ounces are 50 years away, but we need to plan now as platinum is
going to fly,’ he added.
Nkwe Platinum has said it is unfazed by the prospect of more legal duelling with ARM,
and said it would proceed with its 23.3 million PGM ounce project on the site which
could produce 400,000 oz/year of platinum.
Not everyone is convinced about improving the size of Modikwa. Said one analyst: “It
is a proposal that is short on details. The other problem is that Amplats is not going
to rush to do this. The review of its operations will take 12 months, and they could
delay things if they wanted to.’
Wilkens told Reuters that ARM was also considering R5bn to R6bn in three
opportunities in the platinum sector.
“There are three opportunities that we are looking at, and those together will
probably require purchase money of R5bn or R6bn, and then we need to capitalise
those assets,’ Wilkens told Reuters.
“So we are probably going to need over the next four years R6bn to R8bn in platinum
alone, but then we can double, even treble our current capacity,’ he said.
