SHARES in Royal Bafokeng Platinum (RBPlat), the mid-tier platinum group metals (PGM) producer sky rocketed by nearly 24 percent on the JSE yesterday following Impala Platinum's (Implats) proposed buyout of the company's issued entire share capital.
Should the transaction receive the green light from regulatory bodies, and shareholders it will create a significant PGM producer in South Africa and will see the delisting of RBPlat, which is valued at R27 billion and led by chief executive Steve Phiri.
RBPlat's market capitalisation grew by more than 200 percent in the period ended June 2021 due to the high metal prices, according to the latest PricewaterhouseCoopers Mine Report.
In a joint statement the companies said they are in discussions relating to a non-binding indicative proposal from Implats to acquire 100 percent of the issued ordinary shares of RBPlat without disclosing the value of the transaction.
The companies said they had completed a reciprocal due diligence exercise and are progressing a proposed transaction implementation agreement. They said shareholders would be kept informed of developments.
“The proposal, which contains terms and conditions customary for a transaction of this nature, does not constitute an offer or a firm intention to make an offer as contemplated by regulation 101 of the Companies Regulations, 2011.
“Accordingly, shareholders are advised to exercise caution when dealing in their RBPlat and/or Implats shares until a further announcement is made,” said the statement.
RBPlats, owned by the Royal Bafokeng nation in the North West, listed on the JSE in November 2010 as the first truly community led company to do so, and operates the Styldrift and Bafokeng Rasimone Platinum Mine.
Implats was established in 1968 and is one of the world's leading PGM producers with mines in Rustenburg, Zimbabwe and Canada.
Noah Capital Markets' consulting mining analyst René Hochreiter said Implats has been eyeing the RBPlat acquisition for a long time and they were waiting for the right time to act.
“It has been suggested for a long time, but the timing was wrong. The PGM prices were sky-high high up until September. They have improved again now. Six months ago you would have been crazy to do the deal. Impala has always been eyeing the transaction, and it has a whole lot of options. The obvious option was to buy out RBPlats,” said Hochreiter.
Hochreiter said the Impala lease was an old lady with high production costs and it had 15 years of life left. “If it wants to carry on after that it will have to go much deeper and it is obvious that one of the cheaper ways to extend the life of mine beyond 10 to 15 years is to go and buy RBPlats,” said Hochreiter.
He said the transaction would not only improve Implats' asset base but also extend the current operations life of the mine. “They have basically extended their life from 10 years to 20 years,” said Hochreiter. Commenting on the share price movement, he said it was going to be a fight. “If you look at the share price Impala is down and RBPlat is up which is the market thinking Implats is stupid and RBPlat is worth more than it is.”
RBPlat's shares rose to a high of R117.20 on the news, closing the day 20.57 percent higher at R114.30. Implats shares closed at R208.18, 1.36 percent lower.
BUSINESS REPORT ONLINE