A mine worker returns from the Lonmin mine at the end of his shift, outside Rustenburg.    File picture: REUTERS/SIPHIWE SIBEKO
A mine worker returns from the Lonmin mine at the end of his shift, outside Rustenburg. File picture: REUTERS/SIPHIWE SIBEKO

In the first transaction since announcing a major restructuring of its portfolio to raise capital, Lonmin sold its entire Northern Ireland exploration portfolio to Australia’s Walkabout Resources for $100,000.

While the Northern Ireland exploration options have not featured in any presentations by Lonmin CE Ben Magara, the sale of the assets show intent from the company to streamline its focus and raise cash in a variety of methods, including sales, joint ventures and securing debt.

It is highly unlikely that Lonmin will be able to conduct a fourth rights issue after the dismal uptake of the hugely diluted and dilutive $400m rights issue at the end of 2015.

Walkabout describes itself as an energy minerals-focused company, with the Lindi Jumbo Graphite project in Tanzania its flagship asset.

It also owns 60% of the 7-billion tonne Takatokwane coal deposit in Botswana and a lithium deposit in Namibia.

Graphic: RUBY-GAY MARTIN
Graphic: RUBY-GAY MARTIN

The Northern Ireland assets would give Walkabout “an excellent base from which to expand shareholder value through exploration into one of the most geologically diverse and relatively underexplored regions”, the company said.

“This acquisition further provides a platform for growth and diversification both geographically and in terms of commodities,” said Walkabout executive chairman Trevor Benson.

Walkabout would make the $100,000 payment to Lonmin in two tranches.

Lonmin has spent about $7m on its Northern Ireland
exploration work over the past nine years. Any commercial production from these properties would secure Lonmin a 2% net smelter payment from Walkabout.

“This acquisition allows immediate access to a ‘ready to go’ exploration portfolio with significant upside potential in minerals such as gold, lithium, and base metals,” it said, pointing out the purchase included a 50% stake in a UK gold mining
company called Koza, which is exploring Ireland’s Dalradian gold belt.

The exploration portfolio included mineral licences, applications, extensive data sets, exploration equipment, vehicles and leased premises, whereas the exploration entailed a search for lithium, gold, base metals and platinum group metals.

This is one of the fringe assets Lonmin can easily dispose of, with another exploration joint venture project in the Sudbury Basin in Ontario, Canada, with Vale and Wallbridge Mining. It has already sold gold exploration assets in Kenya for $5m in 2016.

Among Lonmin’s other assets for sale are the mothballed Limpopo mine, which was suspended in 2009, and the undeveloped Akanani prospect with its 29-million ounces of platinum, palladium, rhodium and gold in SA.

Lonmin, which delayed the release of its annual results from this week to an indefinite date before the end of January, hopes to finalise third-party financing of its R1.2bn MK1 extension project at its Rowland Mine and possibly a financing deal to complete its K4 mine.

seccombea@bdfm.co.za

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