Implats - Sumitomo Corporation to Acquire 25% OF Ambatovy Project
Impala Platinum Holdings Limited
(Incorporated in the Republic of South Africa)
Registration No. 1957/001979/06
Share code: IMP/IMPQ ISIN: ZAE000003554
LSE: IPL ADR`s IMPUY
(`Implats` or `the company`)
Sumitomo Corporation to Acquire 25% OF Ambatovy Project
Impala Platinum Holdings Limited (Implats - JSE: IMP, LSE: IPLA, ADR: IMPUY),
Dynatec Corporation (Dynatec - TSX: DY) and Sumitomo Corporation (Sumitomo -
TSE:8053, ADR: SSUMY) today announced that Dynatec and Sumitomo have entered
into an agreement, confirmed by Implats, whereby Sumitomo will acquire a 25%
interest in the Ambatovy Nickel Project in Madagascar. Sumitomo is one of
Japan`s largest integrated trading and investment companies with total assets of
5.5 trillion yen (US$49.4 billion) and a market capitalization of 1.16 trillion
yen (US$10.4 billion).
Bruce V. Walter, President and Chief Executive Officer of Dynatec commented:
`Sumitomo, with its significant financial capacity and expertise in developing
major resource projects, is an excellent addition to Ambatovy. We now have the
equity partners in place to move the Project forward. We are confident that the
combination of strengths which Implats, Sumitomo and Dynatec bring to Ambatovy
will ensure that the Project is a major success.`
Mitsuhiko Yamada, Corporate Officer, General Manager of Mineral Resources
Division 1 of Sumitomo, said: `Sumitomo is pleased to join the Ambatovy
partnership. Ambatovy is a highly competitive project with the potential for
large-tonnage long-life production of nickel metal and cobalt metal, two metals
with excellent long-term fundamentals, and very low operating costs. Implats and
Dynatec are excellent partners who are committed to the long-term operation of
the Project and we are looking forward to working with them.`
Keith Rumble, Implats Chief Executive, said, `Implats is delighted that Sumitomo
will be the third partner in the Ambatovy Project. Implats has had a long-
standing relationship with Sumitomo built on a strong foundation of mutual
trust.`
In accordance with the terms of the Implats/Dynatec agreement (announced on May
26, 2005), both companies will reduce their respective interests in Ambatovy to
37.5%, with Dynatec to receive the full financial consideration related to
Sumitomo`s entry as a 25% shareholder.
Key features of the Sumitomo agreement include:
i. Sumitomo will fund 25% of the equity requirement for Ambatovy and provide
its pro rata share of project financing completion guarantees related to
the project debt funding being sought for the Project. The partners are
seeking project debt representing at least 50% of the total funding
requirement.
ii. Sumitomo will provide Dynatec with a subordinated loan facility, which will
be used to fund a portion of Dynatec`s equity contributions to the Project.
The loan will be repaid from 60% of the distributions to Dynatec from the
Project.
iii. Sumitomo will provide a project completion cross guarantee with respect to
a substantial portion of Dynatec`s financing guarantees related to project
debt, for which Dynatec shall pay to Sumitomo a fee of 10.2 million common
shares of Dynatec, payable annually in arrears in four equal installments
of 2.55 million shares each, commencing on December 31st of the year in
which the project debt financing closes.
iv. Sumitomo has undertaken to ensure that for the first 15 years of production
not less than 30,000 tonnes per annum of nickel produced by the Project
will be acquired by offtakers (or, if required, by Sumitomo) on arms-length
terms.
Implats, Dynatec and Sumitomo have agreed to modify the pending Implats-Dynatec
shareholders agreement with respect to the Ambatovy Project as necessary to
reflect Sumitomo`s entry into the Project by no later than September 30, 2005.
The Ambatovy feasibility study released by Dynatec in February 2005 indicated
the potential for 60,000 tonnes per annum (tpa) of nickel metal and 5,600 tpa of
cobalt metal, with cash operating costs expected to be near the bottom of the
global cost curve. Over the first 10 years of full production, the Project is
expected to have average cash operating costs of US$0.67 per pound of nickel
after credits and to generate average after-tax cash flow of US$338 million per
annum, assuming base case pricing of US$3.50 per pound nickel and US$10.00 per
pound cobalt.
The feasibility study estimated that the capital costs for the Project would
total US$2.25 billion. These costs are currently being reviewed in light of the
potential savings as a result of the decision to locate the refinery portion of
the Ambatovy Project in Springs, South Africa, thereby leveraging Implats` core
competencies and existing infrastructure.
Detailed engineering work at Ambatovy is progressing, and is expected to be
sufficiently advanced for construction to begin by the second quarter of 2006,
assuming sufficient progress with negotiations for project debt financing.
Based on this timing, and the current construction schedule, initial production
could be recorded by the end of 2008.
About Sumitomo
Sumitomo Corporation is one of Japan`s largest integrated trading and investment
business enterprises. The Corporation not only conducts commodity transactions
in all industries utilizing worldwide networks, but also provides related
customers with various financing, serves as an organizer and a coordinator for
various projects, and invests in businesses from mining and metals, to the
information industry, to the retailing industry.
About Implats
Implats is the world`s second largest primary producer of platinum. As a
natural consequence of platinum group metal production, Implats has been
producing nickel for in excess of thirty years. Exposure to a large laterite
project will enable Implats to process and refine nickel at comparable cost to
primary nickel producers. It therefore represents growth in one of Implats` most
important metals, and fits neatly into Implats` strategic envelope. Implats
employs some 31,600 people across its operations and, in the 2004 financial
year, produced approximately 1.96 million ounces of platinum (around 3.73
million ounces of PGMs).
About Dynatec
Dynatec Corporation is a growing mining company with extensive mining and
metallurgical expertise. Dynatec`s strategy is to create shareholder value by
applying the expertise of its 1,300 employees to attractive projects as an
owner/operator. The Company currently has four projects in its portfolio: the
large-tonnage Ambatovy Nickel Project in Madagascar; a 25% interest in the
Sudbury Basin Joint Venture, which currently has one producing mine and is
pursuing development of several others; a 50% interest in Aurora Platinum Corp.,
which has a 60% interest in the historic Falconbridge Mine and significant land
holdings and exploration targets in the Sudbury basin; and a wholly owned coal-
bed methane project in West Virginia.
About Madagascar
Madagascar is the world`s fourth largest island and is located 500 kilometres
off the east coast of southern Africa. The population of Madagascar is
approximately 17 million. A former French colony, the country gained its
independence in 1960 and is now a democratic republic. The current government,
headed by President Marc Ravalomanana, was elected in 2002. The government has
identified the responsible development of large-scale resource projects as an
important element of the country`s economic development strategy. In pursuing
this strategy, the Malagasy Government has received guidance from the World Bank
with respect to large-scale mining laws and environmental impact assessment.
Forward-Looking Statements
This news release contains certain forward-looking statements. These forward-
looking statements are subject to a variety of risks and uncertainties beyond
the companies` ability to control or predict which could cause actual events or
results to differ materially from those anticipated in such forward-looking
statements. In this news release, forward-looking statements are made related
to the ownership and potential development and operation of the Ambatovy Nickel
Project. Readers should not place undue reliance on these or other forward-
looking statements.
Johannesburg, Toronto, Tokyo (August 11, 2005):
For further information, please contact:
Keith Rumble Cathie Markus
Chief Executive Executive Director
Impala Platinum Impala Platinum
+27 11 481 3956 +27 11 481 3925
Bruce Walter Mark Utting
President and CEO Director, Communications
Dynatec Corporation and Investor Relations
905-780-1980 x339 905-780-1980 x329
Mitsuhiko Yamada Mitsuru Iba
Corporate Officer General Manager,
Sumitomo Corporation Corporate Communications Dept.
81-3-5166-3089
Issued by sponsor: Deutsche Securities (SA) (Proprietary) Limited
Date: 11/08/2005 09:02:01 AM
Produced by the JSE SENS Department
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