Implats pulls plug on further investment in Waterberg JV as COVID-19 changes risk appetite

Impala Platinum CEO, Nico Muller

IMPALA Platinum (Implats) will not invest further in the Waterberg Joint Venture, a large palladium-rich project in South Africa’s Limpopo province.

Its partner in the project, Platinum Group Metals (PTM), said in an announcement today it had received notice from Implats that the COVID-19 pandemic had led to a re-evaluation in its risk appetite “.. in the short, medium and long term”.

In terms of an option agreement, Implats had to decide whether to extend its 15% stake in the joint venture to 50.01% and carry on with development costs. Waterberg was scoped for first production of some 420,000 ounces of platinum group metals from 2023 following investment of as much as $874m. Full production was planned for 2027.

Implats would continue to fund a R55m study (Call Period Program) on the project through to completion in August. The South African firm would also negotiate in good faith a potential smelter off-take agreement for the project, said PTM.

Implats’ decision is nonetheless a bitter blow to PTM, as well as other shareholders in the project including Hosken Consolidated Investments (HCI), the black-empowerment group as Implats would have ploughed in the half of the development. Shares in PTM fell just over 12% in New York and were last trading at US$1.44 per share.

PTM said that Implats intended to remain “an active participant” in Waterberg by funding its share of the costs, subject to future considerations.

PTM, which holds a 50.2% interest in Waterberg JV, said it had recently received interest in the Waterberg Project “… for funding and strategic off-take from other interested parties” without providing additional details. “These discussions will continue while the Call Period Program and mining right application work are ongoing,” the company said.

Implats’ effective withdrawal from future investment in Waterberg Joint Venture does present PTM with some short term liquidity problems as a non-brokered private placement of $2m arranged in June had been postponed in the wake of the news.

Implats’ decision is not a complete surprise, however.

Nico Muller, CEO of Implats, said in March that he didn’t want to make “a life altering decision” in deciding to invest in Waterberg. “We can’t make a big cash flow decision with an uncertain outcome … We do favour near cash flow which is why we are treading cautiously,” he said.

Implats had in October surprised the market with a $758m cash offer for North American Palladium – a Toronto-listed firm that owns the 237,461 oz/year Lac des Iles mine in Canada. Once this deal was under its belt, the question was whether Implats would commit to a long-lead, capital intensive project in the shape of Waterberg JV.

Implats had been given until 90 days after the award of a mining licence by the South African government to the Waterberg JV project to make its decision. Therefore, today’s announcement indicates the decision-making process was informed by recent events.

The onset of COVID-19 has scattered investors nerves with market signals proving complex insofar as no-one is sure of the shape of the economic recovery.

Implats has so far withstood the impact of the COVID-19 related lockdowns in good form with the PGM rand basket price remaining robust throughout – assisted by rand weakness – whilst its processing facilities remained open and made hay with some excess inventory totalling 350,000 oz (6E).


  1. Muller is the best manager Impala has had since the Union Corporation days.

    Conservative, but able to pounce when required to (LdI)
    Rational (Let the drill bit and the Met lab tell us what’s there, not our guts)
    No ego issues

    Do yourself a favour and get the book, “Who the hell wants to be in Platinum”, the history of Impala.
    If you read it carefully, you’ll see the infighting, back biting, egotism etc that pervaded this company’s history since the formation of Gencor.

    What a breath of fresh air to finally get somebody of Muller’s character and capability in charge.

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