Implats opens talks with RBPlat on takeover in major consolidation of SA PGM industry

Nico Muller, CEO, Impala Platinum

IMPALA Platinum (Implats) is in discussions with Royal Bafokeng Platinum (RBPlat) regarding a possible takeover of RBPlat which, if carried out, would greatly strengthen the prospects for Implats’ flagship Rustenburg division operations.

A joint cautionary announcement released today said: “The parties have completed a reciprocal due diligence exercise and are progressing a proposed transaction implementation agreement

“The proposal, which contains terms and conditions customary for a transaction of this nature, does not constitute an offer or a firm intention to make an offer as contemplated by regulation 101 of the Companies Regulations, 2011.”

Rene Hochreiter, consulting mining analyst for Noah Capital commented: “This is a good deal for Implats in terms of extending the life of its Rustenburg operations but Implats is going to have to pay up for those RBPlat assets”.

Implats group executive Johan Theron responded that “We are buying a Mercedes Benz, not some second-hand skedonk. This is a good time to do the deal because both companies are on the front-foot.

“This deal is not just about the price. It’s about the assets to be acquired and the value to be created over an extended period when those assets are combined with our existing operations,” he added.

On the face of it this development would appear to run counter to the strategy implemented by CEO Nico Muller when he took over Implats in 2017. Muller announced a drastic restructuring at Implats’ Rustenburg Division to shut down ageing and deep loss-making shafts as well as focussing on acquiring shallow, low-cost operations elsewhere.

He subsequently bought North American Palladium in Canada and opened up talks on a possible takeover of Platinum Group Metal’s Waterberg project in northern Limpopo which are on-going.

Theron replied: “We have always been interested in acquiring the RBPlat’s ground and assets and now it has become possible to do a deal. It makes sense for Implats in terms of any number of strategic reasons.

“Now is a good time to do it because we have made a dramatic turnaround at our Rustenburg operations while RBPlat is in a good position as you can see from their latest quarterly report,” he said.

The RBPlat September quarter report showed it had no debt and cash on hand of R3.8bn while good progress was being made with the production build-up from the Styldrift mine.

Theron agreed with Hochreiter’s assessment that Styldrift is a key asset and commented: “Styldrift is a mechanised operation and it is a lot shallower than Implats’ other operations in the Rustenburg region so it ticks those boxes on our overall development strategy.”

RBPlat shares jumped nearly 20% to R113 in trading in Johannesburg this morning immediately after news of the possible merger was released while Implats shares dipped 2% to R206.8 per share.