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Anglo American Platinum (Amplats), the world’s biggest platinum producer yesterday said that it had finalised the disposal of two assets in line with a strategy to reposition the business and focus only on the most competitive assets.
Amplats said that it had offloaded its 42.5percent stake in Pandora to Lonmin for a deferred cash payment of a minimum of R400million and a maximum of R1billion based on 20percent of free cash flow over six years.
The transaction means that Pandora is now wholly-owned by Lonmin - the world’s third largest platinum producer.
The Pandora sale also included the use of and full operational control of Lonmin’s Baobab concentrator over a three-year period with effect from December 1, 2017.
Amplats said that taking over operational control of Baobab concentrator would allow it to continue processing excess ore from Mogalakwena mine and pursue optimisation initiatives at the Baobab concentrator.
It also announced the completion of the disposal of mineral resources within the
Amandelbult mining right to Northam Platinum on December 6, 2017, for R1bn, which it said would be used towards reducing net debt.
In 2014 Amplats unveiled a plan to exit some of its non-core assets, which it said could be better managed by others who can put more time and energy into them.
Amplats also sold its Rustenburg Mines to Sibanye Stillwater for R4.5bn in 2015.
At the time the industry had begun suffering from an unsustainable mix of labour demands, lack of investment, and uncertainty.
The miner also sold its 85percent interest in Union Mine and 50.1percent exposure in the Masa chrome mine to a subsidiary of Siyanda Resources.
Yesterday, Amplats said that it had received approval from the competition authorities as well as consent in terms of section 11 of the Mineral and Petroleum Resources Development Act.
Amplats chief executive Chris Griffith said: "We believe that we have delivered transactions that are beneficial for all the parties involved, thereby enabling a sustainable future for the Pandora and Union mines,” he said.
“We will continue to focus on completing the disposal of Union and Masa, which is expected to occur in early 2018.”
Seleho Tsatsi, an investment researcher at Johannesburg based Anchor Capital said Amplats portfolio repositioning would help drive down net debt, which would ultimately get the business closer to restarting the dividend.
“But more importantly, the portfolio repositioning changes the profile of the business.
"Once this process is complete, about half of its production will be fixed-margin with is just getting the processing margin,” said Tsatsi.
He also said that Amplats was the lowest-cost of the major platinum group metal miners.
Amplats shares dropped 1.98percent on the JSE yesterday to close at R339.66.