JOHANNESBURG - Following the acquisition of Glencore’s stake in the Mototolo platinum mine, Anglo American Platinum (Amplats) will now prioritise investing in its existing assets, chief executive Chris Griffith said yesterday.
Amplats, the world’s largest platinum producer, yesterday announced that its wholly owned subsidiary, Rustenburg Platinum Mines, had bought Glencore’s 39 percent interest in the Mototolo joint venture near Burgersfort in Limpopo.
Mototolo is an equally held joint venture between Anglo American Platinum and a partnership between Glencore (39 percent) and Kagiso Tiso Holdings (11 percent).
The transaction takes Amplats’ overall stake in Mototolo to 89 percent. In terms of the agreement, Amplats will make an R800 million upfront cash payment and additional monthly payments over six years that will be based on the rand price of platinum group metals over the life of the Mototolo mine.
Amplats said the total purchase price would be capped at R22bn.
Amplats, which has undergone extensive restructuring in the past five years, was in no hurry to make further acquisitions to its portfolio of value-accretive assets, said Griffith. “There are not too many opportunities,” he said.
Instead, the group would prefer to invest capital in its existing assets. He said the company’s restructuring – which entailed closing costly mines and reducing the headcount – was paying off, even at the relatively low price of platinum, which yesterday stood at $833.20 (R11 150) an ounce.
Prior to the restructuring, half of Amplats was loss-making at $1 500 an ounce, he said. He said Amplats’ assets were cash-generative at the current platinum prices. Griffith said the Mototolo transaction was critical to the future development of the adjacent Der Brochen deposit, which Amplats owned.
He said there were synergies between Mototolo and Der Brochen.
“The acquisition of Glencore’s stake in the Mototolo joint venture increases Anglo American Platinum’s interest in a mechanised, low-cost, high quality resource, creating another major (platinum group metals) hub for the company.
Optionality
“The transaction unlocks significant optionality for the company in its wholly owned Der Brochen resource,” said Griffith.
He said the acquisition of the additional interest in Mototolo fitted the firm’s focus on mechanised and low-cost operations.
Regarding the prospects of raising its stake at Mototolo to 100 percent, Griffith said this depended on whether Kagiso Tiso Holdings wanted to sell or keep its 11 percent stake.
“We have no say in that. They can choose if they want to tag us along,” he said. But he said that Amplats was prepared to pay another R350m for the 11 percent interest.
The deal, which is subject to a number of conditions, including approval by the Competition Commission, was expected to be effective in the fourth quarter of this year.
Amplats yesterday released its interim results for the six months to the end of June, in which headline earnings increased to R3.4bn from R700m and headline earnings per share increased by 350 percent to 1 282 cents.
The company paid an interim cash dividend of R1bn, equating to R3.74 per share. Shares in Amplats closed 1.15 percent higher at R360 a share on the JSE yesterday.