Amplats CEO Chris Griffith. Picture: ARNOLD PRONTO
Amplats CEO Chris Griffith. Picture: ARNOLD PRONTO

Anglo American Platinum (Amplats), the world’s biggest miner of the metal, is exiting another venture in SA as part of its strategy to focus on mechanised, low-cost mines that it operates and controls.

Amplats has agreed to sell its 33% stake in the RBPM Rasimone joint venture to partner Royal Bafokeng Platinum (RBPlat) for R1.863bn at a discount of 15% based on the company’s current share price.

RBPlat will pay for the transaction through the issue of new shares, which is expected to raise about R200m.

The bulk of the money will be payable in three tranches by the end of 2021. Amplats, which will earn interest of about 12% per year on the outstanding amount, will continue to purchase concentrate from the mine.

Since the end of 2015 Amplats has sold its Rustenburg operations, Union mine, a portion of its Amandelbult operations and its stake in the Pandora venture with Lonmin and placed its Bokoni mine on care and maintenance.

It said the benefits of mechanised, open-pit mines include lower-cost production, the need for fewer and higher-skilled staff and improved safety.

“It’s all about getting Amplats as lean and mean as possible,” said one adviser who worked on the deal and spoke on condition of anonymity.

Martin Prinsloo, chief financial officer of RBPlat, described the transaction as a “great deal”, giving RBPlat access to a high-quality, low-cost resource. The transaction is done at a discount while platinum prices are “at the lower end of the cycle”.

RBPlat’s share price rallied on the news, closing 12.33% higher at R22.50. It is down 19.6% since January, partly reflecting the malaise in the platinum sector, where prices are down nearly 10% since the start of the year and trading at the lowest level since January 2016.

Amplats shares were down 2.2% at R353.32.

“The timing is pretty good for RBPlat. They’re getting this at an attractive value at a depressed point in the market, when capital spending on Styldrift is nearing its end,” one analyst said.

By the end of the first quarter of 2018 capital expenditure on Styldrift totalled about R9bn, with R3.5bn more to be spent by the third quarter of 2020, RBPlat said.

A second analyst who spoke on condition of anonymity said Amplats might very well have done a great deal, “depending on what your view is on the outlook for PGM [platinum group metal] prices. Yes, they’re selling at a discount when prices are depressed and the bulk of capex on Styldrift is done, but you can also argue that prices will remain depressed for much longer. The JV [joint venture] has been weighing on earnings and there are still some funding gaps for the remaining capex.

“Amplats has secured deferred payments at interest of about 12% and they maintain their purchase agreement for concentrate,” the analyst said. “Also, for Amplats, this deal is too small to really be relevant.”

Amplats CEO Chris Griffith said that the transaction allowed Amplats to “focus its capital allocation into its own-managed mines and projects”, while contributing to empowerment “with RBPlat fully owning and operating low-cost, high-quality assets with attractive growth optionality at Styldrift”.

With the government confirming the once empowered, always empowered principle for mining firms, Amplats would also keep its points for the original transaction, Prinsloo said.