Talks on Implats-Bafokeng deal founder

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Resources Correspondent 

TALKS between the Royal Bafokeng nation and Impala Platinum (Implats) about a deal that could have seen the Bafokeng convert their royalty into an equity stake in the world's second-largest platinum producer have broken down, it emerged yesterday. 

Stephen Kearney, chairman of Royal Bafokeng Resources, said the talks between Royal Bafokeng, a company formed in 2002 incorporating all of the Bafokeng's minerals assets, foundered when Implats entered a deal with Lonmin in September. 

"(Their) effort to turn (the) Implats royalty into equity proved unsuccessful," he said. 

After the passing of the Minerals and Petroleum Resources Act there was much speculation that the Bafokeng would strike a deal with Implats for the royalty the company pays them for mining on its land to be converted into an equity stake in the platinum miner. 

Converting its royalty payments into equity would have given Implats the black economic empowerment component required in the mining charter. 

In September last year Implats entered a deal with London-listed Lonmin to sell the 27% stake it held in Lonmin. At the time the company said this would be equivalent to black economic empowerment investors holding 15% of Implats's equity. For Lonmin the credits from the deal should equate to 18% empowerment at a holding company level. 

Yesterday, though, Kearney raised doubts as to whether the Lonmin-Implats proposed transaction would be accepted as an equity deal by the minerals and energy affairs department. 

Implats corporate affairs director Cathie Markus said yesterday the miner had a number of options to bring empowerment to the firm, including the conversion of the Bafokeng Royalty and the Lonmin deal. 

"There are a lot of discussions going on. I would not like to comment on third-party speculation," Markus said. 

It seems that the two parties could not agree on a price, and while talking with the Bafokeng, Implats was also working on another transaction with Lonmin. 

Royal Bafokeng has also hired KPMG to carry out an audit on the royalty it is paid by Implats. 

This indicates that the Bafokeng may have some issues with the valuation of the royalty. 

Kearney would not comment on this yesterday. 

Markus said the right to carry out an audit on the royalty was in the terms of that agreement. 

Outlining Royal Bafokeng's future strategy, Kearney said the company, whose shareholders are the Bafokeng people, would still be listing at some point. 

Royal Bafokeng, which has assets worth R3bn excluding the Implats royalty, is diversifying and would need funds for this. Kearney said a listing was one way to raise money. 

Royal Bafokeng has a 50/50 venture with Anglo Platinum called Bafokeng Rasimone and is busy developing a new mine at Styldrift, which should double capacity to 500000oz of platinum group metal a year. 

Mining conference: Page 15 
Feb 12 2004 07:53:19:000AM Julie Bain Business Day 1st Edition