IMPALA Platinum (Implats) had made its play for Royal Bafokeng Platinum (RBPlat) buying last week from a group of institutional shareholders 24.52% of the company for R10.6bn.
This paves the way for Implats to speak to the balance of shareholders with a view to taking 50.1% control of the company and comes nearly three weeks after Northam Platinum’s shock move for 32.8% of RBPlat for about R17bn.
RBPlat confirmed in a separate announcement that it had received notice from Implats of its intention to acquire shares in the company it didn’t already hold. Implats’ general offer is on condition it achieves a 50.1% foothold in RBPlat.
In acquiring its 24.52% stake, Implats offered R150 per RBPlat share consisting of a R90 cash component – to be funded from cash reserves – which matches the cash component offered by Northam in its higher R180/share bid for its stake in RBPlat. The balance of Implats’ offer consists of Implats shares in a ratio of 0.3 shares per RBPlat share.
Implats’ offer is a 23% premium to RBPlats’ share price on November 24 and is much higher than its initial bid in October which it sought 100% of RBPlat, speculated to be about R130/share.
RBPlat shareholders who sold into Implats offer are Abax Investments, Allan Gray, Coronation Asset Management, MandG Investment Managers and Ninety One. Implats will now put the same proposition to the balance of shareholders which include the Public Investment Corporation, Old Mutual, Sanlam and Schroeders among others.
Should Implats to achieve more than 50% of RBPlats, it will be able to consolidate RBPlat into its books, but the aim will be to achieve 65% of the company thus putting it squarely in a joint venture arrangement with Northam Platinum.
Implats had initially sought 100% control of RBPlat in a takeover offer launched on October 27 in which it offered shares and cash for the company.
However, the firm’s best laid plans were disrupted by Northam which on November 9 said it had negotiated a higher offer with RBPlat’s major shareholder Royal Bafokeng Holdings (RBH) giving it an unassailable 32.8% stake in RBPlat.
This offer deal was queried by some investment analysts who said that while Northam had secured further scale in PGM production it didn’t have the same operational synergies with RBPlat as those possessed by Implats.
Nico Muller, CEO of Implats, said in a media conference this morning there were a host of operational synergies that could be extracted owing to the contiguity of its Rustenburg Mines with RBPlat’s BRPM and Styldrift operations. These included expansion potential at certain shafts – especially Rustenburg 20 shaft – and better economies for metal off-take.
Muller added that while RBH had been offered a R180/share deal with Northam, its R150/share included exposure to its company’s strong dividend yield, a well financed balance sheet and vertically integrated platinum group metals company of scale.
For Implats, the deal will increase the ore reserves of its assets on the Western Limb of the Bushveld Complex by 100% to 29.7 million tons (on a 100% basis), and increase the production base by between 600,000 to 800,000 6E ounces a year and – most critically – provide a life extension of between 10 and 15 years for the Rustenburg Mines which currently have an estimated 10 years of life left.
16 shaft accident
Implats’ joint venture announcement today comes against a backdrop of tragedy after the firm announced on Sunday evening a fatality at 16 Shaft at Rustenburg Mines and another event at that operation’s 6 Shaft in which five miners were unaccounted for following a mud rush at the bottom of the shaft.
Muller said today it could “take weeks” to resume full production at 6 Shaft and Rustenburg Mines in general. Although 6 Shaft contributed only about 7% of total PGM production from Rustenburg Mines, there were ripple affects likely to affect the complex.
Muller said 6 shaft was a relatively dry shaft so the water ingress behind the mud rush had to be located and efforts were required to make sure similar events might not happen at other shafts. The accident would have “an important bearing” on PGM production from Rustenburg Mines, he said.
The South African mining sector was heading for a second successive increase in annual fatalities this year. As of end-October, the number of fatalities at the country’s mines stood at 55 compared to 43 at the same time last year.
“This is the second year of regression in the safety performance since the 2019 record low of 51 fatalities,” the Minerals Council said in a statement at that time.