Wesizwe Platinum seeks unlawful declaration of $70m Maseve deal

AFRICA Wide Mineral & Prospecting Company (Africa Wide), a subsidiary company of Johannesburg-listed Wesizwe Platinum, has taken the unusual step of serving papers on Royal Bafokeng Platinum (RBPlat) and Canadian firm, Platinum Group Metals (PTM) in an attempt to have the $70m sale of the Maseve mine declared unlawful.

The transaction, first announced in September last year and completed in April, saw Africa Wide paid a 17.1% portion of $58m in upfront cash and the balance in RBPlat shares for Maseve which RBPlat bought from PTM.

In September 2017, Maseve was estimated to have had a net asset value of R3.63bn. However, PTM, which was Maseve’s majority shareholder, was heavily in debt after the mine failed to hit production targets which coincided with a rock-bottom platinum price.

PTM and RBPlat said in separate but similar announcements today that Africa Wide believed Maseve was under-valued. It therefore wanted the transaction to be either set aside or for it to be paid additional value commensurate with its valuation, as yet not detailed. Shares in RBPlat have fallen 18.7% in the last 12 months between first announcement of the deal and its completion.

PTM said Africa Wide’s objection came at “… this very late stage” whilst RBPlat stated in its announcement that: “Africa Wide contends that the Maseve Transaction required the consent of Africa Wide in terms of a shareholders’ agreement”. RBPlat added that it had “… consulted with its legal advisers and senior counsel … and … is of the view that the claim is weak and that there are strong prospects of successfully defending this matter”.

Maseve provides RBPlat with immediate access to a concentrator plant which would allow it to treat ore mined from its Styldrift I project. It would also provide RBPlat with ” … strategic flexibility to potentially extend the life of mine of the South Shaft Merensky operations”. The Maseve mine was designed for output of 250,000 ounces/year 4E.

But for PTM the potential reversal of such a deal would be disaster as it used the funds to retire pressing debt and allow it the space to press on with the development of its Waterberg JV, a highly prospective palladium-rich exploration site which has attracted the interest of Impala Platinum.

Said PTM today: “The company has also received legal advice to the effect that the Africa Wide action, as issued, is ill-conceived and is factually and legally defective”. Shares in PTM  were largely unmoved in early Toronto trade whilst RBPlat were nearly 3% higher on an improved dollar platinum price.

Wesizwe Platinum is in the process of commissioning its R10.7bn Bakubung platinum mine which has a nameplate capacity of 250,000 tonnes of platinum group metal-bearing more per month. It’s not the first time the company has clashed with PTM. The two sides were at loggerheads in 2013 when Africa Wide disputed the extent of dilution it suffered after refusing to follow its rights in the development of Maseve.