Monday, January 24

Implats acquires a 24.5% stake in RBPlat

ROFHIWA MADZENA: Impala Platinum is taking another turn by buying a stake in Royal Bafokeng Platinum, and this just days after Northam Platinum finalized its acquisition of 32.5% of the miner.

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I have Johan Theron, who is part of Impala Platinum, joining us in discussing the decision to re-attempt to acquire shares in RBPlat. Thank you very much for your time, Johan. Maybe it just gives us an idea why Impala Platinum delved into another attempt to buy those shares on RBPlat.

JOHAN THERON: I think it is no secret that we have been trying for the better part of 20 years to do a transaction with RBPlat. In this latest iteration, we probably spent two years on due diligence and working up to this point. The original intention was to try to acquire 100% and we were ready to make that offer. Sadly, that didn’t quite work out, with a competitor coming in and buying a significant 33% -odd share of the shareholders.

That left us again with a couple of questions to ponder. We still see deep value in the benefits of the two assets working a bit more together, and we also feel more confident that we could still unlock that value by making an offer to the minority and thereby gaining a position in the company. . – not 100% as we had imagined before, but certainly 50% – where we can control and consolidate [it] in our own books. That would certainly allow us to unlock most of the value that we originally anticipated through the first transaction.

ROFHIWA MADZENA: This movement is very interesting, and you have mentioned a number of reasons why you are delving into it again. But initially RBPlat’s holding company, Royal Bafokeng Holdings, had indicated that they were not very interested in a deal with Impala Platinum and would obviously vote against the deal. In your engagements with stakeholders, has that point of view changed?

JOHAN THERON: No. I think you have to put that in perspective. Clearly our original transaction, having spent time crafting a value proposition, had a value proposition that was significantly lower than the share / R180 offering than them. [RBPlat] had gotten. So clearly they were incentivized by a competitor who came in and made a great premium offer. It would have been negligent on your part not to think about the business logic of getting the maximum dollars for your participation. It certainly wasn’t something we were contemplating offering, and they obviously maximized business performance. I think the relationship and work together have never been in question, it’s just that they couldn’t support a lower offer when they had a much higher offer on the table.

ROFHIWA MADZENA: Then just explain how this exact acquisition will work. It is a 24.5% stake in Royal Bafokeng Platinum. I spoke to some market analysts today to tell them ‘they are offering R115 / share, whereas Northam had offered R180 / share’, which you just mentioned. So how exactly is it going to work now with Northam Platinum in the mix?

JOHAN THERON: I think there are a couple of important things. The first thing is that Northam only offered R180 to Bafokeng as the main shareholder, no one else; there was no other offer for the other minorities. Obviously that generated a lot of unhappiness with the other shareholders. With our offer now for all (there is a low probability that Northam will accept our offer), we anticipate that our offer is an attractive offer and that a large number of minority stakeholders, shareholders, will accept it.

In fact, we have already bought a 25% discount, so we have already made and have a 25% discount. Obviously, through this transaction that is now open, we anticipate acquiring more with the momentum that we clearly have on our side.

I would not be surprised if very soon we will surpass 30% and approach 40%. Obviously, RBPlat shareholders are free to endorse our offer, sell us their shares or keep them. There is no other offer on the table as things stand today. Those are the two options that you essentially have. R180 stock was never offered to them, so the two options they have are to either keep their capital or consider selling us the offer we opened today.

ROFHIWA MADZENA: Should they consider doing, or actually doing, the process? How long do you think it will take because there are so many regulatory frameworks that need to be met in terms of finalizing that acquisition? When it comes to timing, interested shareholders are probably thinking about when it will all be finalized. Is there a vague idea of ​​that?

JOHAN THERON: With this particular offer, we now have to complete and publish the circular and this offer on the open market, which would open in early January. Typically, these offers stay open for a month or two. But equally, because the offer is on the market, just as institutional shareholders have already sold us, other institutional shareholders or shareholders can certainly approach us and, in a bilateral agreement, sell their shares to us at the offer price.

But, as you alluded to, I think at up to about 40% we have a clear track in front of us with no overly burdensome regulations or obstacles to cross. Once we reach 40%, we will no longer be able to accept unconditional offers to buy. There, the Competition Commission process would first have to unfold, and that would normally take three months or so, or up to six months. So we certainly see a path where we can get to 40% pretty quickly. Beyond that point, as you point out, it could take three to six months to finish. But whoever comes up with an offer, that would be the same for them, but they would start their process only when they make the offer. Our process would have traveled a certain distance by then.

ROFHIWA MADZENA: Of course, a Competition process, Johan, will include conversations about jobs like this. I am sure that Implats is willing to come to the table with an open mind to ensure that there is minimal, if any, loss after this transaction takes place, if at all.

JOHAN THERON: Absolutely. I think that is perhaps one of the attractive parts of our offer. The combined entity employs 55,000 people. There are many jobs. Across Western Limb, we saw many job losses during the last down cycle.

In our view, what this offering does is link these two assets much more closely, a lot of value is unlocked, and those 55,000 jobs become much more secure than they would be if the two companies were operating quite apart. So, in my opinion, it would be good for our proposal.

ROFHIWA MADZENA: I have read a lot about this and it is very interesting to see it, because many market participants say that there would be better synergies between you and RBPlat. Tell us why people would think that. Of course, it includes the fact that it would likely become one of the largest platinum producers, above some of the other large miners currently operating. That’s obviously a great thing, not just for the economy, but for business as well.

JOHAN THERON: Yes. I think the way of thinking is that these two operations are side by side and divided by a fence. If you think about it, there are two farms next to each other, and essentially by placing the two companies closer to each other, you are effectively removing that farm fence and allowing the two to operate almost as one, thereby It has the benefit of scale from using each other’s infrastructure where it makes sense. That is certainly true for us and is available immediately.

Northam, on the other hand, is somewhat remote. Your closest mining operation is probably 120/150 kilometers away. Therefore, there are no obvious regional synergies in which infrastructure, people and resources can be incorporated as we would.

ROFHIWA MADZENA: One of the big talking points right now, and I can’t let it go without asking this, is vaccination drives. You just talked about a complement of employees of more than 50,000 people, and vaccinating people in the country right now is quite important. What is Implats’ position here in terms of its vaccination campaign and how has it been able to implement it?

JOHAN THERON: We certainly see vaccines as a key tool in terms that not only we, but also the country and the world, can combat Covid. We were the first mining site to be licensed to administer vaccines to our employees. We have also expanded it to use the same facilities for the surrounding community.

Within the group, I am pleased to report that our Canadian operation is already 100% vaccinated, our Zimbabwe operation has already reached 100% in its own right, and the South African operations were off to a slightly delayed start compared to the rest of the country. world, but they are far ahead of the South African statistics. We probably have a kind of 75%, 80% vaccination level, which is much higher than other industries and the country in general.

We have prioritized it and made it easier for our people to get vaccinated because we believe that providing that opportunity for them and their families is the best way to protect their health and well-being in terms of the challenges we all face. COVID-19.

ROFHIWA MADZENA: And finally, Johan, the opportunities for the future, the medium and long term future for platinum mining; we’ve had an amazing raw materials supercycle, but all those good things come to an end, just an overview in terms of the sector, particularly PGM? Are you optimistic about global demand for PGM and continued demand, even though after Cop 26 we will see economies and governments move in different directions?

JOHAN THERON: We certainly do, but there are also risks associated with that, as you well point out. The biggest risk for PGMs is undoubtedly electrification in the automotive sector. Building more battery-powered cars will certainly have an impact on us.

But what we are also looking to support, and what is being developed as part of the long-term response to global warming, is hydrogen and a hydrogen economy. It’s clear to us that that offers a lot of attractive processes going forward and platinum in particular, as one of the PGMs in the PGM range that we mine, will play a key role in that. So while we still have good support, we certainly have a tough road ahead with the electrification that is consuming our markets. But hopefully, with continued work and investment, we can also build the hydrogen economy to take advantage of much of that downside risk. So in the long term, we remain very positive about PGMs, and specifically the role that platinum will play in the future.

ROFHIWA MADZENA: Shiny. Thanks a lot for your time. Johan Theron, executive of the corporate affairs group at Impala Platinum, also known as Implats, joined us in discussing the offer they made to buy shares of RBPlat, Royal Bafokeng Platinum. Thanks for your time.

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