Anglo American Platinum announces that its wholly-owned subsidiary, Rustenburg Platinum Mines Limited (“RPM”), has signed a sale and purchase agreement (“SPA”) with Glencore Operations South Africa Proprietary Limited (“Glencore”) to purchase its 39% interest in the Mototolo joint venture (“Mototolo JV”) (the “Transaction”).
The Mototolo JV is currently operated as a 50/50 joint venture between Anglo American Platinum and a partnership between Glencore (39%) and Kagiso Tiso Holdings Proprietary Limited (“KTH”) (11%).
Chris Griffith, CEO of Anglo American Platinum, commented on the Transaction: “The acquisition of Glencore’s stake in the Mototolo JV increases Anglo American Platinum’s interest in a mechanised, low-cost, high quality resource, creating another major PGM hub for the Company. The Transaction unlocks significant optionality for the Company in its wholly-owned Der Brochen resource.”
About Mototolo JV
The Mototolo operation is 30km west of Burgersfort in Limpopo in the Eastern Limb of the Bushveld complex and operates under a mining right covering 9km2.
Rationale for the Transaction
The acquisition of Glencore’s interest in the Mototolo JV better positions Anglo American Platinum as the majority owner of a high-quality, fully mechanised operation. The Transaction will secure significant infrastructure for Anglo American Platinum, allowing for value-enhancing optionality between the Mototolo JV area and the adjacent wholly owned Der Brochen resource, creating a major PGM hub for the Company. By combining the Mototolo JV area with the downdip and adjacent Der Brochen resource, the life-of-mine is also significantly extended from the current c.5 year life of mine, to well in excess of a 30 year life of mine.
The consideration for the Transaction comprises an upfront cash payment, which at 30 June 2018 is estimated to be R0.8 billion on a cash free basis and an additional consideration, which will be settled monthly over a six-year period and will be determined based on the Rand PGM prices over the Mototolo JV life of mine. While the additional consideration is not yet determinable it is estimated to be c.R1 billion (cumulative nominal) based on current spot prices. The total Purchase consideration will be capped at R22 billion.
The Transaction is subject to a number of conditions precedent, including Competition Commission approval. The effective date of the Transaction is expected to be in Q4 2018.
Value of Transaction net assets and attributable profits
As at the Company’s year ended 31 December 2017, the value of the net assets, excluding cash pertaining to the Transaction assets was R0.7 billion. The losses attributable to the Transaction assets was R3 million, impacted by the temporary closure of the Mototolo concentrator.
Categorisation of the Transaction
The Transaction constitutes a Category 2 transaction for the Company and, as such, shareholder approval is not required.