Sylvania Platinum will underpin its production of about 60,000 ounces a year of platinum group metals (PGMs) with the R89m purchase of the Phoenix tailings business from gold-focused Pan African Resources.
Pan African has undergone a clean-up of its portfolio in recent months, selling its Uitkomst colliery in KwaZulu-Natal to Coal of Africa Ltd for R125m and now its noncore and small Phoenix business, which processes chrome tailings to extract PGMs.
The R89m cash deal depends on a number of conditions being met.
The sale of Phoenix near Brits was not an easy decision considering the project was conceived, planned and built by Pan African, said CEO Cobus Loots.
"The PGM fundamentals are very tough and so is the operating environment. You need a certain scale that was difficult for us and which we didn’t have. We weren’t in a position to grow it aggressively. We know where all the potential feedstocks are and they’re all accounted for," he said.
"It’s never nice for us to sell one of our assets, one of our children. But you have to ask the hard questions about the portfolio and the ability to really contribute to our portfolio in the future," he said. He declined to say what exactly Pan African had invested in Phoenix.
London-listed Sylvania expected 65,000 ounces of PGMs in 2017, marking a peak in production as two of its operations reached the end of their lives, dropping production to between 55,000 and 60,000 ounces for the next five to 10 years.
With its 2.4-million tonnes of tailings resources and 30,000 tonnes-a-month processing plant, Phoenix is close to Sylvania’s operations in the Brits area.
"The Phoenix project is a significant acquisition for Sylvania as we look for growth opportunities. Phoenix is a PGM dump operation with potential synergies with our existing operations which will assist us in increasing our production and earnings profile going forward," said Sylvania CEO Terry McConnachie.