Implats moves on Zimplats' minority shares
Group offers R972m for outstanding stake
IF IMPALA Platinum's R972m offer to the minority shareholders of Australian company Zimplats succeeds it will boost Implats' reserves but also its exposure to politically unstable Zimbabwe.
The world's second-biggest platinum producer said yesterday that it was offering Zimplats shareholders A4,08 a share. The Zimplats board has backed the Implats offer.
Implats said the maximum potential purchase price payable if all Zimplats' shareholders accepted its offer would be R972m. The group said it would fund the purchase from existing cash resources.
In a separate transaction yesterday, Implats said it was buying Absa Bank's 14,82% indirect interest in Zimplats Platinum Mines for R142m.
There has for some time been speculation that Implats would move to buy out the Zimplats minorities. Its decision to go ahead indicates that Implats, which already has operations in Zimbabwe, is confident that it can continue to make money in a country subject to continuing political unrest and economic decline.
David Brown, financial director of Implats, said: "Like all these decisions they have to weigh up the risk and reward equation. At Implats we are taking a bet that the significant economic hurdles the country is facing now will not continue in the medium to long term."
Existing interests of Implats in Zimbabwe make up about 4% to 5% of the group's annual platinum output.
Implats will have a 50,5% stake in Zimplats when its deal to buy Absa's stake is concluded.
At the moment Implats holds 70% of the Ngezi open-cast mine and the Selous Metallurgical Complex, which is made up of Makwiro Platinum Mines. Implats owns 30% of Makwiro currently.
Assuming a 100% take-up of its offer to minorities, said Brown, the contribution from Implats' Zimbabwean operations could rise to 10% of its total annual platinum production by 2005 or 2006.
Brown said Implats had been working with colleagues and associates in Zimbabwe for the past two years, and they had shown they could make an investment pay despite difficult conditions.
Rob Still, the chairman of Zimplats, said: "Given the current uncertain socioeconomic and political circumstances in Zimbabwe, it is clearly in our interest to align the company with a major global player."
In anticipation of a possible offer from Implats, Zimplats has commissioned an independent technology and economic valuation by Venmyn Rand.
The independent valuation, taking into account the growth potential of Zimplats, estimated a value at between A3,28 and A4,78 a share, said Implats.
Implats CEO Keith Rumble said: "It is a significant move for the company as it provides access to rights over 165-million ounces of platinum resources on the Great Dyke, which is the largest-known, near-surface, undeveloped platinum group metal resource in the world."
Brown said that Zimplats was currently carrying out underground mining trials at the Great Dyke in Zimbabwe, and if these trials proved fruitful, the underground mining potential in the area could be significant.
Implats' Zimbabwean operations could be producing up to 400000 ounces of platinum a year by 2010.
Jul 01 2003 08:41:32:000AM Julie Bain Business Day 1st Edition
01 July 2003