Northam to gain cash injection, PGM resources post Mvela unbundling
Northam Platinum Limited (Northam) announced today its firm intention to make an all share offer to acquire the entire issued ordinary share capital of its major shareholder Mvelaphanda Resources Limited (Mvela Resources) after the distribution by Mvela Resources of its 50.4% shareholding in Northam to its shareholders. This development follows the finalisation of Mvela Resources’ unbundling strategy.
In terms of the offer, Northam will issue 9.5980 new Northam ordinary shares to Mvela Resources shareholders for every 100 Mvela Resources ordinary shares in issue, equivalent to 20.9 million new Northam ordinary shares. The offer is based on a Northam share price of R47.00 and will result in an aggregate offer consideration for the entire issued ordinary share capital of Mvela Resources of R982.8 million. Mvela Resources, which will become a wholly-owned subsidiary of Northam, will be delisted from the JSE post the implementation of the offer by Northam.
As a result of the offer, Northam will acquire Mvela Resources’ remaining assets, which will comprise:
- net cash of not less than R650 million;
- a 50% interest in the Dwaalkop Platinum Project, a joint venture with Western Platinum Limited, a subsidiary of Lonmin Plc;
- a 20.3% interest in Trans Hex, a diamond producing and marketing company listed on the JSE; and
- an initial participatory interest of 51% in the Kokerboom exploration project (a greenfields iron oxide copper gold and massive sulphide exploration project ).
The benefits to Northam and its shareholders include:
- securing R650 million of additional cash funds without incurring the cost or potential dilution of a capital raising, thus allowing Northam to further strengthen its balance sheet in anticipation of its existing, and future capital expenditure requirements, specifically the development of Booysendal.
- acquiring additional resources through another attractive PGM development opportunity (the Dwaalkop JV).
- a significantly enlarged free float (increasing from 35% currently to approximately 64%)adding to Northam’s investment appeal amongst both local and international investors.
- potential for further future earnings uplift emanating from the application of the new shareholder funds.
Commenting on the transaction, Northam chief executive Glyn Lewis said, “The intended acquisition of Mvela Resources provides us with a unique combination of a significant capital raising opportunity and a brownfields PGM project acquisition, without compromising our black economic empowerment status. Post the conclusion of this transaction Northam’s resource base will be around the 140 million ounce (3PGE+Au) level, a step change from the 18 million ounces we could report only two years ago.”
The offer, which is subject to the fulfilment of certain conditions precedent, will be implemented by way of a scheme of arrangement, requiring the approval of three fourths of Mvela Resources’ shareholders either present or voting by proxy at the scheme meeting. The offer is being recommended to Mvela Resources shareholders by the Mvela Resources’ board
The salient dates with regard to both Mvela Resources’ distribution of its shares in Northam and the proposed offer by Northam for Mvela Resources’ share capital are available on this website.
The transactions remain subject to a number of conditions precedent.
For further information contact:
Russell & Associates
Tel: 011 880 3924
Note to editors:
The Dwaalkop Platinum Project hosts a PGM resource of some 17 million ounces PGE (4) on the eastern limb of the Bushveld Complex, some 100km north of Northam’s Booysendal Mine. The property abuts Lonmin’s Limpopo operations, is host to both the Merensky and UG2 reefs and has a strike length of approximately 5.5km. Resource estimates amount to some 9.9 million ounces PGE (4) in the indicated class and 17 million ounces PGE (4) if inferred resources are included. With the relatively high sulphide content of Dwaalkop’s UG2 ore, it could prove to be an invaluable constituent of Northam’s smelter feed. A pre-feasibility study has been completed on the project and a mining right application has been submitted which is currently being processed by the DMR.
Trans Hex is a listed diamond exploration, mining and marketing company with producing assets in South Africa and significant growth opportunities at its new Luana project in Angola, which may offer upside in recovering diamond markets.
The Kokerboom joint venture offers early stage earn-in exposure to a greenfields iron oxide copper cold (IOCG) and massive sulphide exploration project in the north western part of the Northern Cape Province.
13 January 2011