Metmar ups stake in Eastern Belt Chrome

File image: Reuters

File image: Reuters

Published Jul 18, 2011

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Commodity trading company Metmar (MML) on Monday said its acquisition of a further 60% interest in Eastern Belt Chrome was the catalyst for its decision to become a “meaningful chrome player”.

The acquisition of the additional 60%, at a cost of 61.4 million rand, takes Metmar's stake in Eastern Belt Chrome to 80%.

“Our majority stake in Eastern Belt Chrome is the first building block of our chrome business. We are confident that we can quickly unlock value from this investment for our existing shareholders,” said Piet Boshoff, CEO of Metmar Investments & Resources.

Announcing the financial effects of the transaction, Metmar said that, for the year to February, earnings per share would have increased by 15.3% from 22.2 cents to 25.6 cents while the net tangible asset value per share would have increased by 5.8% to 248.8 cents.

“Metmar plans to rapidly become a meaningful chrome player to supply China's rampant demand for ferrochrome, a constituent of stainless steel,” the company said.

SA holds about 70% of the world's chrome reserves and the company intends investing in crushing/screening capacity as well as a washing plant in support of the government's vision to increase domestic beneficiation.

In addition, Metmar is pursuing opportunities to derive further value from the Eastern Chrome Belt investment including possible downstream joint ventures for the associated platinum group metal deposits as well as the potential to expand its beneficiation internationally while maintaining the full marketing rights.

“We are currently evaluating various funding mechanisms that will enable us to fast-track our strategy to roll out our vision for Metmar Investments & Resources,” said Boshoff.

The acquisition of the majority stake in Eastern Belt Chrome was also the first tangible step in the implementation of the company's new strategy and operating structure, which was unveiled in March.

Under the new structure, Metmar's three main businesses will be Metmar Investments & Resources, which will house all its investments and mining projects; Metmar Trading, which will act as its trading arm; and Metmar Polychemical Division. - I-Net Bridge

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