Implats stakes R21,3bn on new platinum giant

platinum producer impala platinum (implats) yesterday unveiled its proposed r21,3bn takeover of two listed groups to form a new platinum giant to rival the scale of sector leader anglo platinum (angloplat).



implats, already the world’s second-biggest platinum pro-ducer, plans to buy out northam platinum and mvela resources to get control of the booysendal project, one of the largest, most advanced platinum projects under development, with first production possible by 2012.

the merged group will have a 20% black empowerment shareholding, which is extremely hard for sizable companies to achieve as black empowerment groups frequently lack funds and access to credit.

the announcement follows xstrata’s decision on wednesday to abandon its hostile bid for lonmin. implats ceo david brown said yesterday xstrata’s decision had not accelerated the announcement.

the parties had been working on an agreement for some time, and only the final touches were needed this week.

implats believes northam’s booysendal project could produce more than 480000oz of platinum group elements (pges) a year starting in 2012. implats now produces 1,96-million ounces of platinum a year, while angloplat produced 2,4-million ounces last year.

brown said it was flattering to draw the comparison between implats and angloplat, but by 2020 when booysendal was at full production angloplat would also have grown.

“we will be a very significant producer, and will do our best to try to grow our output, but have to balance that with market requirements at the time,” he said.

implats said the structuring of the deal would be first through an unbundling of mvela resources’ 62% stake in northam to its shareholders.

implats would then offer 24,5 implats shares and the equivalent of 10,5 implats shares in cash for every 100 northam shares held, at a total cost of r21,3bn. the cash portion would be finalised only when the deal became unconditional.

northam represented about 80% of mvela resources’ intrinsic value at the end of june, but mvela also had stakes in gold fields and trans hex. implats would offer 0,16 of its shares plus the equivalent in cash of 0,07 of a share for every 100 mvela resources shares held.

brown said gold fields and trans hex were clearly noncore for implats, and it would not be a long-term holder.


the financing for the cash portion of the deal would come partly from implats’ existing cash resources, but it would also have to raise some debt, brown said.

“the market is very difficult now, but we have a good track record and strong growth profile so should not have any difficulty raising debt,” he said.

implats will enhance its empowerment shareholding by absorbing mvela resources’ shareholders. former anglo american sa ceo lazarus zim’s afripalm resources holds a 20% stake in mvela resources and zim will take a seat on implats’ board after the deal is completed. tokyo sexwale’s mvela holdings owns 25% of mvela resources.

implats will also offer 25,1-million shares to its existing empowerment shareholders, the royal bafokeng nation, which holds a pre-emptive right. both afripalm and mvela holdings will negotiate with the bafokeng to participate in the issue. with the share issue implats’ empowerment shareholding will rise to 20% from 17%.

brown admitted that reaching valuations for the deal in such a volatile market had been difficult, but the fact that it was being done on a ratio basis eliminated some of the problem because once relative valuations were agreed on, share prices were expected to move in tandem.

after a torrid day for the platinum price, all three companies’ share prices ended weaker on the jse. implats fell 11% to r147, northam 4% to r43,50 and mvela resources 5% to r42,10.