[miningmx.com] — AQUARIUS Platinum (Aquarius) is about to spend $109m to make another acquisition – this time close to its existing Marikana and Kroondal mines near Rustenburg.
CEO Stuart Murray declined to identify the target at question time during an investors’ conference call on Thursday.
A platinum industry source told Miningmx it was believed Aquarius was buying the platinum assets that Optimum Coal announced it was putting up for sale in a trading statement released on January 31.
Murray could not be reached for comment. Optimum CEO Mike Teke declined to answer a direct question on whether the assets were be sold to Aquarius and would only comment that they were “up for sale.”
RBC Capital Markets platinum analyst Leon Esterhuizen commented, “it’s not clear at this stage what Aquarius is buying but the important thing is that Stuart is finally pulling the trigger. That’s what we want to see.’
Reason for Esterhuizen’s assessment lies in the widely-held belief in the market that Aquarius has to make such acquisitions to extend its economic life given the relatively limited platinum resources that it owns.
JP Morgan Cazenove analysts Steve Shepherd and Allen Cooke commented in a research note that, “at an apparent transaction multiple of around R16.44/oz compared to the average transaction price since December 2005 of R79.4/oz this appears to be a well-priced deal – though clearly we can only make this judgement when the identity of the target is disclosed.’
A terse statement in the interim results for the six months to end-December released on Thursday said Aquarius would acquire 100% of a company “which owns a number of prospecting rights on the western limb of the Bushveld Complex of strategic importance to Aquarius.’
On completion of the deal Aquarius will pay $67m in cash for the company with an option to pay for the balance in cash or Aquarius equity.
In reply to questions on the conference call Murray said the target company controlled two projects, one of which contained a resource of between 7m and 8m ounces (m oz) of platinum group metals and was situated near Aquarius’ Marikana and Kroondal mines.
He commented, “that is close to home and potentially quite strategic to us in terms of our ability to sit with our partners in those pool and share schemes and extend the life of those pool and share schemes.’
He said the second deposit was a substantial property containing between 30m oz and 40m oz of pgm but “at depth’. He said drilling work carried out so far had shown the platinum was there in reefs at depths of “800m in one case and 1,000m in the other.’
Murray added Aquarius had not paid much for this second asset but intended spending some $15m to $20m on further exploration and drilling work to improve the quality of the asset taking it from an inferred resource to the reserve category.
“Given that we have concentrators that might be free in 10 years time we felt it was opportune to pick this up and start working on these properties. We will be able to lift the veil a little further as soon as the vendors enable us to do so’.
Murray’s broad brush description of the two deposits matches closely the details provided in Optimum’s 2010 annual report for the platinum interests it is selling. These consist of 26% stakes in two platinum projects – Hoedspruit and Kruidfontein.
Hoedspruit contains an in situ pgm resource of between 7.23m oz and 8.23m oz depending on how it is measured in terms of the contained metals. The project covers some 585 hectares about 15kms east of Rustenburg and immediately north-east of Anglo Platinum’s Rustenburg section.
Kruidfontein consists of three farms covering an area of 10,200ha situated immediately north-east of the Pilanesberg game reserve and 15kms south of Anglo Platinum’s Union mine.
The Optimum annual report gives an in-situ resource for Kruidfontein of between 31.8m oz and 37.2m oz after allowing for geological losses of 30%.
Aquarius’ last acquisition was AIM-listed Ridge Mining which it took over in 2009 gaining control of the Blue Ridge mine and the Sheba’s Ridge project. The Blue Ridge mine is currently closed as Aquarius makes major changes to the underground infrastructure.
The writer owns shares in Aquarius Platinum.
