THE consolidation of South Africa’s platinum group metals (PGMs) sector has taken an intriguing twist after Royal Bafokeng Holdings (RBH) said today it is to sell its 32.8% stake in Royal Bafokeng Platinum (RBPlat) to Northam Platinum.
The upshot is that Northam has stymied an offer its rival takeover Impala Platinum (Implats) had been preparing for RBPlat, first announced on October 27. RBPlat consequently withdrew a cautionary announcement regarding a proposed takeover by Implats saying it no longer had support for the deal from RBH.
Northam said it had offered RBH some R180.50 per RBPlat share – an enormous 50% premium to the current share price – equal to a total sum of R17bn which will be settled through a combination of cash and shares.
Northam had also installed a put and call option agreement with RBH such that it will inch up its stake in RBPlat to 33.3%. The initial exercise price in respect of the put and call options is R135.00 per RBPlat share, said Northam. It could then increase its RBPlat stake to 34.9% as RBH had agreed to have one of its subsidiary companies enter into a put and call option agreement with Northam.
At this level of shareholding, Northam will have the right of first refusal over RBH’s remaining 1.2% in RBPlat (for total of 36.1%). In other words, Northam’s take in RBPlat will be unassailable.
Shares in Northam Platinum Holdings were 8.5% weaker in early morning trade on the Johannesburg Stock Exchange. Shares in RBPlat were 3.2% weaker but are 85% stronger on a 12 month basis.
“The transaction concluded with RBPlat gives Northam a strategically important shareholding in RBPlat, creating significant long-term optionality for Northam,” said Paul Dunne, CEO of Northam.
Dunne said that RBPlat’s platinum dominant orebodies complimented Northam’s basket of PGMs. “The RBPlat assets are young, shallow and well capitalised and occupy a strategically important position in the Western Bushveld,” he added.
The details of the offer for the initial 32.8% in RBPlat will be settled through the issue of about 34.4 million Northam shares to RBH Group – equal to 8.7% in Northam – and R8.6bn in cash. Of the cash element, R3bn will be paid upfront with deferred amounts of R4bn and R1.6bn to be paid no later than April 30 and September 30, 2022 respectively.
Whereas Implats was seeking to takeover RBPlats in its entirety, Northam has kept RBH in the PGM game and offered various community partnerships with the Royal Bafokeng Nation (RBN), the ultimate beneficiary of RBH’s efforts.
These joint initiatives include renewable energy and battery storage projects that will enhance the security of supply for the RBN, and an Enterprise and Supplier Development Fund and programme to promote and support the participation of SMMEs from within the RBN in the mining value chain.
“In considering and accepting the offer made by Northam, RBH continues to firmly focus on prioritising the socio-economic interests and needs of the RBN,” said RBH CEO, Albertinah Kekana.
Said Dunne: “We recognise the Royal Bafokeng Nation’s important contribution and ongoing legacy in respect of RBPlat and are cognisant of our responsibility in respect of the long-term sustainability of RBPlat’s operations and its impact on the broader communities and the Royal Bafokeng Nation as a whole”.