Anooraq, Anglo Platinum team for Bushveld hunt (November 26, 2003)

Despite having postponed an update of its expansion plans until sometime in December, Anglo American Platinum (AAPTY-Q) has agreed to join forces with neighbour Anooraq Resources (ARQ-V) to hunt for platinum group elements, gold and nickel on the Northern Limb of the Bushveld igneous complex in South Africa.

Under the plan, the pair will form a 50-50 joint venture to explore Anooraq’s Drenthe farm, and the northern portion of Anglo Platinum’s Overysel farm for five years. Anooraq will act as operator and spend up to US$1.8 million on exploration. Thereafter, Anooraq will have the option to proceed on a year-by-year basis and to take the project to a bankable feasibility study.

Following the study, the companies can begin mining together or on their own. A joint management committee would oversee a combined operation, with each partners’ respective stake in the joint reflecting the relative value of the metals contained on each property as outlined under the bankable feasibility study. The pair will then look for a required Black Economic Empowerment partner that would ultimately take a 26% interest.

If Anglo Platinum decides to go it alone, it will retain at least a 12.5-15% non-contributory interest in the joint venture.

At Drenthe, inferred resources total 99.4 million tonnes grading 0.6 gram platinum, 0.63 gram palladium, 0.012 gram rhodium and 0.06 gram gold per tonne, plus 0.16% nickel and 0.1% copper. The estimate employs a cutoff grade of 0.5 gram PGEs plus gold.

In addition to contributing Drenthe, Anooraq will also chip in its Witrivier farm, adjacent to the northeast, should the Drenthe deposit extend there.

For its part, Anglo Platinum will donate its rights to the northern portion of the Overysel farm contiguous to the south of Drenthe. Historical drilling on Overysel, within 400 metres of the Drenthe boundary, returned 10.4 metres grading 1.88 grams PGE+gold, 6.4 metres of 1.86 grams PGE+gold and 29 metres grading 2.02 grams PGE+gold.

The world’s largest primary producer of platinum has also committed to treat and dispose of PGE ore from any eventual operation at its recently completed smelter at Polokwane, about 80 km to the east of Drenthe. Anglo Platinum also owns and operates the 12,000-tonne-per-day Sandsloot open-pit mine, 12 km south of Drenthe. The mine, in operation since 1993, produces around 350,000 oz. PGEs plus gold annually.

Anooraq also controls the Rietfontein property, 25 km to the south of Drenthe, where it has outlined extensive, near-surface nickel-PGE-copper mineralization contiguous with mineralization on the adjacent Turfspruit farm. American Minerals is reportedly busy delineating some 1 billion tonnes exceeding 1 gram PGMs plus gold on Turfspruit. African Minerals, a private affiliate of Robert Friedland’s Ivanhoe Capital, can earn a half-interest in Rietfontein by spending at least $1.5 million on exploration.

Anooraq plans a program of infill drilling on Drenthe plus drilling aimed at determining the southern limit of the deposit on Overysel for early 2004. A new resource estimates will follow.

Earlier this year Anglo Platinum tabled plans to boost its platinum output by about 60% by 2006. The company was to have announced new targets sometime in November, but the strengthening rand has forced the miner to rethink its plan.

News of the deal sent shares in Anooraq up 18, or more than 9%, to $2.11 in mid-afternoon trading on Nov. 26.