Implats finalises NAP bridging facility ahead of December 4 shareholder vote

SHAREHOLDERS of North American Palladium (NAP), the Toronto-listed company for which Impala Platinum (Implats) bid $758m, are to vote on the proposed cash transaction on December 4.

The plan of arrangement would then be submitted for court sanction in the Ontario Superior Court of Justice on December 9, said Implats in an announcement in which it also stated that a bridging loan facilitating the deal had been made available for draw-down.

The transaction will be financed through a combination of R6bn in cash resources and the bridging facility. The bridging facility will then be refinanced with additional cash, debt and possibly the sale of Implats’ treasury notes, Implats said on October 7.

The offer price comprises a blended C$16.77 per share consisting of a higher C$19.74/share offer to minorities and C$16/share to Brookfield Business Partners, an entity that previously financed NAP’s Lac des Iles from bankruptcy.

The minority consideration represents a 15% and 23% premia to NAP’s 30-day and 60-day VWAP as of October 4 respectively. The total consideration is just over a billion Canadian dollars and about R11.4bn in South African terms.

Lac des Iles mine, NAP’s operating asset, has been in production since 1993 and is expected to produce between 220,000 and 235,000 oz this year at an all-in sustaining cost (AISC) of $785 and $815 per palladium ounce produced. At current palladium pricing it is highly cash generative: in 2018 it generated C$45m in free cash flow, some R512m.

The asset consists of an underground mine, surface mining activities and a concentrator plant with a 400,000 tons per month capacity.

There is scope for expansion and, if converted, could “easily” take the mine to a 15-year life, although new exploration resources were about 60km from the plant in the Sunday Lake Project where NAP and Implats have cooperated previously.