[miningmx.com] — I DON’T know what they put in the water at Anglo Platinum, but it certainly isn’t urgency.
The group has dithered so long on its empowerment deals that they’ve all turned into slightly dysfunctional. The sale of Anglo Platinum’s 22.5% in Northam Platinum to Mvelaphanda Resources, for instance, probably took about four years to complete. I’ve been hard on Pine Pienaar, Mvela’s CEO, for his apparent inaction, but I’m also aware that his frustration with Anglo Platinum was so palpable, you could have framed it.
Now, it seems torpor lurks at the heart of Mvela and that it doesn’t have the heart to continue, although it’s unbundling plan may still result in a pretty well empowered Northam Platinum.
Anglo Platinum’s other logjam is Anooraq Resources. A price of R3.6bn was put on the sale of Anglo’s Lebowa Platinum, and some of its satellite projects as far back as June 1 2007.
Nearly two years later, the parties haven’t been able to find a way of completing the deal and now, with the platinum price a shadow of its former glory, the whole bang shoot is being renegotiated. Finance boffins are plugging in new numbers as we speak.
Why is Anglo Platinum’s negotiating technique the mining finance equivalent of the Chinese water drip torture? Cynthia Carroll, Anglo American CEO, has taken a management level or two out of Anglo American to make it leaner and quicker. Can’t she do the same at Anglo Platinum, its listed subsidiary?
The sticking point at Anooraq is that the two parties have been unable to agree upon the equity finance portion of the deal; certainly, some R2.2bn in finance had already been agreed with Standard Chartered. The other problem seems to be the market assumptions, and the fact the market has completely outpaced what Anglo wanted to do.
With some alarm, I see the feasibility of the Lebowa mine is based on a platinum price of $1,273/oz, although the rand to dollar exchange rate is more conservative at 8.09.
Let’s hope plans to finally close the Anooraq Resources deal at end-April are not another false dawn. In the meantime, here’s a quick recap of what the transaction entails.
Anooraq will buy an effective 51% of Lebowa Platinum Mines, which geographically is the northern end of the Bushveld Complex. The deal also includes a 1% control interest in certain joint venture projects, such as Ga-Phasha, which is on the eastern limb of the Bushveld Complex.
More immediate concerns
The outcome is the creation of a company with 200 million ounces of platinum group metals, which also includes palladium, rhodium and the like, and a life of mine at Lebowa of about a century.
Philip Kotze, however, has more immediate concerns. While the finance propellor heads find a way to finance Anooraq’s hundred years of resources, Kotze is trying to find ways of making the existing Lebowa mine profitable in a somewhat shorter timeframe. In the world of Anooraq, this is where “bluesky” meets the cold grey of the morning.
Kotze is Anooraq’s relatively new CEO (appointed on July 1 2008). Remember speculation involving Harmony Gold a few years ago in which it was to split itself into two separately listed companies, a “QualityCo” and a “Crapco”?
According to the market tittle-tattle, Kotze was going to run the Crapco. Then there was a falling out between Kotze and Bernard Swanepoel, the then CEO of Harmony, and Kotze pushed off into consulting for a while before returning to corporate life with Anooraq.
“It [Lebowa] is a world class orebody that is begging to be mined properly,” says Kotze in an interview. The trouble is that at a platinum price of $800/oz, Lebowa is losing money.
The basic plan to is give the older Lebowa mine the correct focus and perhaps ease off on the rate of development of Brakfontein, a nearby mine much vaunted for its growth. There’s less foot on pedal with some of Anooraq’s other projects as well.
What’s planned is good sense and apple pie: the mine has to be properly developed before mining starts on certain sections, and the right equipping of the mining face has to be implemented. Vamping, which is basically sweeping up all the ore instead of letting it lie around, will be implemented for the first time ever, much to Kotze’s astonishment.
It’ll be 18 months before the Lebowa mine sees the benefits but Kotze’s convinced that once this is achieved, Anooraq will have a different business model. Sure, there are long-term projects are safely in the cupboard, but the company intends to have the know-how to joint venture with other marginal platinum producers which, at a platinum price of $800/oz, could include quite a few potential business partners.
