[miningmx.com] — FOR ONCE, difficult ground conditions, which plague Northam Platinum’s existing operations on the western limb of the Bushveld complex, have had a positive spin-off.
They’ve forced a renegotiation of the terms to acquire the Booysendal property, on the southern tip of the eastern limb of the Bushveld complex, from Mvelaphanda Resources (Mvela) and Anglo Platinum which, though minor, looks to be to Northam’s advantage.
The original deal was that Anglo Platinum would sell its 50% of the Booysendal joint venture and 53.1 million shares to its partner Mvela for R4bn cash. Mvela would then pass 100% of Booysendal on to Northam for 125 million shares, cementing its control of that company.
But an independent due diligence study commissioned by Northam concluded that the Booysendal area contained only 94 million oz of 4PGE (the technical term for platinum, palladium, rhodium and gold), not the 112 million oz assumed when the terms were set.
This has led to two amendments. First, Anglo Platinum has had to throw into the pot another 1.3km of reef from its own Der Brochen project, which is contiguous to and immediately north of Booysendal in the Dwars river valley. Secondly, the number of shares Northam will issue to pay for Booysendal has been cut from 125 million to 121 million.
The logic for the second change is not entirely clear, as the cost to Mvela is unaltered; but it may go a little way to assuage criticism that Mvela was taking too rich a turn in passing the asset on to Northam.
The enlarged Booysendal area will contain an estimated 103 million oz 4PGE, still less than the original 112 million oz, but with what’s called “superior geological certainty’, as the quality of the reef improves as one moves northward. And Northam’s pro forma FY2007 HEPS will be trimmed only from 560c to 369c, instead of the original 365c.
That’s still a hefty dilution, but though Booysendal is not generating any revenue yet, its reserves are essential to make Northam a long-life property. The Northam share price has not been immune from recent volatility, the current 4,400 (SA cents) being almost 30% off last year’s high of 6,090c, but the latest news is welcome confirmation of its enhanced prospects.
