AMN - SOUTH AFRICA: Siyanda to acquire two RPM assets

Rustenburg Platinum Mines Ltd (RPM), a wholly-owned subsidiary of Anglo American Platinum, has agreed to sell its 85% interest in Union mine and its 50.1% interest in MASA Chrome Co Pty Ltd to a subsidiary of Siyanda Resources. Anglo American Platinum will retain the Mortimer smelter operation.

Union mine and MASA Chrome are in the Limpopo and North West provinces of South Africa and Union mine operates under a mining right covering an area of 119sqkm.

Under the terms of the agreement, the transaction consideration comprises an initial disposal consideration of R400 million, payable in cash, as well as a deferred consideration based on 35% of cumulative positive distributable free cash flow paid annually as an earn-out, for 10 years from the effective date of the transaction, which deferred consideration has a cap of R6 billion. The maximum transaction consideration receivable by RPM is R6.4 billion.

Anglo American Platinum intends to use the transaction consideration proceeds to reduce debt.

Anglo American Platinum CEO Chris Griffith said, “We are pleased to deliver another important milestone in the strategic repositioning of Anglo American Platinum’s portfolio. The Union mine and Masa Chrome operations are quality assets that I believe have long-term and sustainable potential under Siyanda’s ownership. This transaction is beneficial for both parties, whilst also creating a sustainable future for the operation.”

Siyanda will sell concentrate produced by the Union mine to Anglo American Platinum for seven years from the effective date of the transaction on pre-agreed commercial terms and thereafter Anglo American Platinum will toll treat concentrate for the remaining life of Union. The charge payable by Siyanda under the toll treatment arrangement will reflect smelting and refining costs as well as an economic return on the proportional share of the capital base that Anglo American Platinum has invested in its processing assets.

In January 2013, Anglo American Platinum announced its intention to reconfigure, and thereafter exit the disposal assets. Since then, significant restructuring has been delivered at Union, including combining North and South mines into a single operation and placing North declines, South declines and the Mortimer Merensky concentrator on care and maintenance. Operational improvements have also had a significantly positive effect on Union mine’s cost position and cash generation.

The sale of Union and MASA Chrome advances the company’s repositioning to focus on its most competitive assets, consisting of largely open pit and mechanised operations which will deliver higher margin production, a more highly skilled workforce, safer operations and a less complex organisation.

www.angloamericanplatinum.com

News courtesy of International Mining