Sunday, January 16

The battle for Royal Bafokeng Platinum heats up

Northam Platinum and Impala Platinum (Implats) are locked in a battle for control of Royal Bafokeng Platinum (RBPlat), although Implats need this deal more.

Just south of Sun City, RBPlat mines platinum group metals (PGM) on the Merensky and UG2 reefs on the Boschkoppie, Styldrift and Frischgewaagd farms in the Rustenburg area. These sites represent the last undeveloped Merensky Reef at the western end of the Bushveld complex.

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RBPlat’s assets are the only known shallow, high-grade Merensky resources and reserves still available for mining in South Africa, and this makes them some of the best real estate in the PGM sector.

Implats put RBPlat on the line in October when it made a cash and stock offer for 100% of RBPlat’s shares.

RBPlat’s main shareholder, Royal Bafokeng Holdings, appeared disappointed by this offer, and two weeks later announced that it had agreed to sell 32.8% of its stake to Northam, with the option to expand this offering to 33.3%.

Royal Bafokeng Platinum Shoots Almost 20% Over Proposed Implats Purchase Offer

Northam beats Impala Platinum with R17bn deal with Royal Bafokeng

This triggered a counter offer by Implats of R150 per share which, while lower than Northam’s R180 per share, did not take into account the strong dividend flow from Implats, which would reward shareholders in the long term.

Read: Implats renews Royal Bafokeng’s offer, valuing the miner at R43.4bn

Implats reached agreements to acquire 24.52% of the institutional shareholders of RBPlat. The offering is comprised of R90 per cash share and 0.3 Implats common shares per RBPlat share, representing a 22% premium over RBPlat’s closing price of R121.92 on November 24.

RBPlat’s share price hit an all-time high this week of R140, driven by the auction now underway for its prized platinum assets.

There is no question that Implats need the deal more. Fundamentally, RBPlat’s operations are contiguous with those of Implats.

Nico Muller, Implats CEO, told the media this week that this would create a number of operational synergies, such as shaft expansions and increased metal extraction.

Implats expects a successful acquisition of RBPlat to produce more than 600,000 ounces of PGM 6E (platinum, palladium, rhodium, ruthenium, osmium and gold) per year and extend the life of its Rustenburg mines from 10 to 15 years.

With only 10 years of production at these mines, this life extension is vital for Implats.

Justified battle

The fact that RBPlat manages a Merensky-rich mechanized deposit that fuels what is expected to be strong future demand for platinum, nickel and copper, provides a compelling case for the takeover bid for both mining companies.

Explaining the benefits of the deal to RBPlat shareholders, Implats says it gives them exposure to a global portfolio of PGM assets and a toll refining business designed to capture PGM’s entire value chain through integrated processing facilities. , including wholly owned smelters and base and precious metal refineries.

The deal would also allow RBPlat shareholders to benefit from regional diversification into the Eastern Limb of the Bushveld Complex in SA, augmented by assets in Canada and Zimbabwe, and planned expansion of processing capacity across the group.

In a statement issued on Monday (November 29), RBPlat notified shareholders of Implats’ intention to make a blanket offer for the shares of RBPlat that it does not yet own. Implats’ offer is conditional on obtaining a minimum of 50.1% in RBPlat.

RBPlat position

RBPlat CEO Steve Phiri, responding to Implats’ latest offer, says the focus remains on delivering value to all stakeholders, including shareholders, employees, and communities.

“We will continue to engage, as appropriate, with all parties in good faith in our quest to create value for all of our stakeholders. The Implats offering and the recent acquisition of RBPlat shares by Northam are testament to the inherent value of this business and the hard work our teams have put in. We will continue to engage with all shareholders as we finally seek to deliver value. ”

RBPlat has convened an independent board to review and consider the offer made to all shareholders.

“At this stage, the board does not have an opinion or recommendation on the offering but, in the interest of shareholders and potential value creation, it has agreed to facilitate the offering,” RBPlat said in a statement.

Ironically, if Implats is successful in their attempt to acquire RBPlat, this will crown a decades-long campaign by the Bafokeng nation for a share of the world’s richest PGM deposits that lie beneath tribal lands.

The Bafokeng fought a long and painful battle against Implats and the former Bophuthatswana bantustan for mining royalties, which it managed to obtain under former Implats CEO Steve Kearney, and then converted those royalties into Impala stock.

Listen: Impala Platinum’s Johan Theron Discusses Acquisition of His 24.5% Stake in RBPlat

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