[miningmx.com] — PALLINGHURST Resources chairman Brian Gilbertson strategy to consolidate the area around the group’s Platmin platinum mine near Rustenburg has run into trouble.
The next step in the process is being blocked through legal action by the Bakgatla-Ba-Kgafela Tribe (Bakgatla), which owns 90% of the Sedibelo project.
The other 10% of Sedibelo is owned by Barrick Gold, which in April said it had agreed to sell that stake for $15m to Platmin.
Platmin is controlled through a joint venture between Pallinghurst and the Bakgatla.
Platmin had also agreed to acquire “various long-lead items required for the development of Sedibelo from Barrick for a consideration of $45m.’ That deal has also not been concluded.
Sedibelo sits between Platmin’s ground and the farm Magazynskraal, owned 34.4% by Pallinghurst; 46.6% by the Bakgatla and 20% by Anglo Platinum.
On Friday, Platmin published a Stock Exchange News Service (Sens) notice in which it referred to sections of the Barrick Gold June quarterly report, stating that the deal with Platmin over Sedibelo had not closed.
This was because “the Bakgatla-Ba-Kgafela Tribe, owner of the remaining 90% interest in Sedibelo, informed us that they had validly exercised their pre-emptive right to prevent the sale from closing and have filed an action in the South African High Court against Barrick and Platmin.
“We believe that the right was not lawfully exercised and we will defend the action in court and seek confirmation of our rights pursuant to the arbitration provisions of the agreement between the parties.’
Pallinghurst CEO Arne Frandsen was not immediately available for comment.
Platmin CEO Tom Dale commented, “this is between the Bakgatla and Barrick. There’s nothing sinister about it and it’s about businessmen trying to secure as much value as possible for their interested parties.
“We are still interested in regional consolidation in our area and the impact on Platmin will depend on how long it takes to resolve this dispute”.
According to an informed source, the key issue is that the Bakgatla – on the advice of financial consultant Malcolm Dods – “are playing hardball’ with Platmin and Barrick over the terms of the agreement.
The source said “the Bakgatla were expecting a large slug of money on the table upfront from Barrick as a condition for the next stage of the development of Sedibelo.
“They still want that money, but Gilbertson does not want to pay it.’
It’s understood Dods and Gilbertson have been arguing vehemently over terms for the consolidation for months.
Dods referred Miningmx to the Barrick statement when approached.
In April, in an interview with Finweek magazine, Gilbertson had not flagged any problems with the Sedibelo consolidation plans and said: “I can envisage this as a grand complex.’
A source close to the Bakgatla told Miningmx that “this is all about value and where that value should go. Now that Barrick has opted out, the Bakgatla would rather own 100% of Sedibelo than let Barrick’s stake go to Platmin.’
The Platmin share price has been falling in recent months, although this appears to be the result of general weakness among platinum junior stocks rather than issues specific to the company.
The company is dual-listed on the TSX and JSE, but the bulk of the shares trade in Toronto where the price has slid from a 12-month high of C$1.94 to about C$1 at present.
On the JSE, Platmin shares have fallen from 820c to 720c over the last fortnight.
The writer owns shares in Pallinghurst.
