Impala to buy Platexco for $191 million

The long wait for Platexco (PTX-T) shareholders is over.

South African platinum-miner Impala Platinum Holdings has announced a cash offer to acquire all of Platexco’s 20.1 million fully diluted shares for $9.50 each, for a total of $191 million.

Platexco’s principal asset is its Winnaarshoek property in South Africa’s Eastern Bushveld complex, where proven and probable reserves in the Merensky and UG-2 reefs now stand at 62.5 million tonnes grading 5.5 grams combined platinum-palladium-rhodium plus gold per tonne.

In 1997, using the South African courts, Platexco wrested the property from Anglo American (AAUK-N) and then launched a multiphase drilling program (T.N.M., Dec. 1, 1997) in hopes of quickly selling the property to a major. A prefeasibility study of the property was completed in July 1999 and a bankable US$1.8-million feasibility study is still ongoing.

The feasibility study is exploring several new options that were not examined in the prefeasibility study, including trackless wide-cut mining of the UG-2 reef, treatment with a dense-media separator and the construction of an on-site smelter.

In an added wrinkle, the Impala offer for Platexco is conditional on the completion of a three-way deal between Impala, Platexco and Anglo American regarding the Driekop property, situated immediately east of the Winnaarshoek property.

Under that deal, Trojan Platinum (a Platexco subsidiary) will acquire from Rustenburg Platinum Mines (an Anglo American Platinum subsidiary) a right to mine platinum-group and associated metals from a 12-sq.-km portion of the Driekop property, which is subject to a 1.5% net smelter royalty payable to Rustenburg and the Lebowa Minerals Trust. The latter is a group that holds mineral rights to the property on behalf of the area’s inhabitants. As well, Rustenburg must secure the rights to Driekop from Lebowa.

Upon completion of this side deal, Driekop will be included in an enlarged feasibility study at Winnaarshoek.

Impala and Rustenburg will also swap other South African mineral rights. Rustenburg will get Impala’s Hendriksplaats property in return for its rights to the Clapham property and a portion of the Forest Hill properties, which are contiguous to Winnaarshoek and Driekop.

In the event of an unmatched and unsolicited competing transaction, either party can terminate the agreement at any time before shareholder approval. Platexco has agreed to pay Impala a $7.6-million break fee if it completes a competing transaction within a specified time. The deal will be terminated if it is not completed by Sept. 30, though either party could extend that deadline to Dec. 31.

Platexco shareholders will vote on the deal in late July. The company says that 64% of shareholders are already in favour of the deal, with a two-thirds approval rating being required.

The deal is also subject to regulatory and court approval and requires the consent of the South African Competition Commission.