Northam Platinum Limited has a major new shareholder after Mvela Resources announced its disposal of 12.2% of its holding in Northam to the global diversified mining group Eurasian Natural Resources Corporation plc (ENRC).
Commenting on the transaction, Northam CEO Glyn Lewis today welcomed the presence of ENRC as a significant shareholder in the company: “The interest that ENRC has demonstrated in Northam signals the potential that major global mining groups see in the South African mining space, and in particular, demonstrates confidence in the fundamentals of the platinum group metal (PGM) sector”.
“In addition,” said Lewis, “the transaction provides an opportunity for the diversification of Northam`s shareholder base. And, after Mvela Resources completes its proposed unbundling, Northam`s free float will increase significantly, improving the liquidity and ease of investing in Northam shares in the market.”
Northam`s current assets comprise the long-life Zondereinde platinum mine near Thabazimbi, which produces some 300,000 ounces of PGMs per annum and as well as the 103 million ounce Booysendal PGM project on the eastern limb of the Bushveld complex. As a fully integrated producer, Northam is extremely well placed for growth and industry consolidation in the future the firm said.
Work has recently started at the wholly-owned Booysendal project.
The first module of this project is likely to be in full production by August 2014, with output of 130,000 ounces annually, thereby lifting the company`s total PGM production by almost 40% to 430,000 ounces annually. The project is expected to create more than 1,000 jobs and will have a significant positive impact on a particularly impoverished region of South Africa through employment, skills development, local economic development and corporate social investment.
“Platinum group metals are once again demonstrating their strong fundamentals; less than two years after the massive price slump in mid 2008 platinum is trading at extremely healthy levels well above US$1 600/oz, and palladium at over US$500, further bolstering the Zondereinde mine`s ability to continue to generate cash as it has done over the years in market conditions considerably less robust than we are seeing now.
Lewis concluded: “We will, in due course, be giving shareholders further updates on the Booysendal project. In the meantime we continue to evaluate various project funding mechanisms which include a number of debt funding options.”
Shares in Northam were up 63c (1.2%) by midday on Monday.