[miningmx.com] — AS THE MAN who actually has to manage the relationship with Anglo Platinum, Royal Bafokeng Platinum (RBPlat) CEO Steve Phiri is understandably striking a more conciliatory tone.
Just to recap, RBPlat is the company that owns the Bafokeng Rasimone Platinum Mine (BRPM), a company in which Anglo Platinum has a one third stake. The rest is owned by Royal Bafokeng Holdings (RBH) which, along with Anglo Platinum, received an offer from Impala Platinum for 100% of BRPM. The offer was turned down by Anglo Platinum which incensed Niall Carroll, CEO of RBH.
Carroll’s rancour was clear for all to hear: “We are frankly disappointed that the industry leader, which has dominated the platinum group metals landscape for decades, has chosen to frustrate our legitimate aspirations, even as a minority shareholder in a significant black-owned entity,” he said at a platinum conference in Sun City on Tuesday.
In a podcast with Miningmx, Carroll again expressed his disappointment, although he added Anglo Platinum had been chary of the deal from the get-go. “I’m just really disappointed this has resulted in an opportunity cost to us of between R3.5bn and R4bn which was the additional premium that would have accrued to us if the deal had been done now,” he said.
All in all, Impala seemed to value RB Plat at about R20bn, a valuation that will unavoidably colour the IPO which will now proceed. Yet one wonders what the temperature is like in the joint venture with a frustrated RBH on one side, which controls the asset, and Anglo Platinum on the other. Carroll doesn’t hold out much hope for future harmony between the shareholders either.
“We’ve disagreed with Anglo Platinum in the past and I imagine we will do so in the future.”
Phiri’s view is that even with an offer in the wings, RBPlat continued to press ahead with preparations for the IPO as if, on the ground, the partners are united. “Both partners are fully behind the IPO,” he says. “It’s not unusual for two corporates to be fighting at a corporate level. The dispute was inconsequential at the management level,” says Phiri.
“If anything, the offer [from Impala] helped us express to investors the importance and quality of this asset and we deserve nothing less than full value,” he says.
There is certainly a nice bid underpin to RBPlat but neither Phiri nor Carroll can say where the pricing will end up. “It’ll be an interative process between shareholders over the next few weeks,” says Carroll.
SPOTLIGHT ON BUSINESS CASE
Phiri says, however, that “if all goes well”, the prospectus will be issued on October 18 (Monday). There’s also an expectation that the free-float will be between 25% and 30% suggesting that investors will be able to trade the stock reasonably easily notwithstanding that Anglo Platinum and RBH don’t want to see too many shares released.
And then there’s RBPlat’s business case which seems to have been drowned out in the corporate economic and political noise following Impala’s offer.
The key for Phiri is trying to overcome the hideous effect of a much stronger than anticipated rand on margins, and finding a way to finance Styldrift, the next development on RBPlat’s plate. Phiri says cash flow from BRPM will be used but he adds that RBPlat will be raising some capital.
It wouldn’t surprise me that RBPlat will be looking for more capital than it would initially or ideally require owing to rand strength which seems to be blotting out the new highs to which the dollar price of platinum is being pushed.
And should Impala return to the negotiating table, this time seeking RBH’s [diluted] stake following the IPO? “We’re in charge of our own destiny,” says Phiri. “We don’t want to be taken out,” he adds. “This company is going to be with us for a long time.”
As a former CEO of Merafe Resources, which is 29.4% owned by RBH, Phiri is a Bafokeng man somewhat overcooking a show of his independence; still, he will need more of that objectivity going forward as RBPlat may be caught in a storm again before long.
