Shallow Booysendal had the potential to be the next Impala Rustenburg and might replace Impala Platinum’s (Implats') deep Leeuwkop project, Royal Bank of Canada (RBC) analysts said on Monday.

RBC Europe analyst Leon Esterhuizen, with associates Arnold van Graan and Yuen Low, said Implats’ bid for Mvelaphanda Resources was aimed at acquiring “significant shallower, low-cost platinum-group-metal (PGMs) ounces”.

Mvela owned 63% of Northam Platinum, which in turn owned Booysendal, acquired from Anglo Platinum.

“It has the potential to be the next Impala Rustenburg,” the analysts said, with more than 100-million attributable PGMs ounces, and could see expensive Leeuwkop shelved.

Implats announced on Friday that it had entered into discussions with Mvela.

RBC said Implats was discussing acquiring Mvela rather thanacquiring Northam from Mvela.

This was so, because an acquisition of Northam from Mvela would be “undesirable from a tax perspective”.

Discussions were “friendly at this stage” with no numbers given.

The JSE regulations meant, however, that Implats would also have to make a comparable offer to Northam minorities.

Implats’ bid for Mvela, in the wake of Xstrata’s bid for Lonmin, was positive for the PGMs sector as a whole.

In particular, the RBC analysts believed that PGM juniors that were in production or close to production and had shallow resources would benefit, including Eastern Platinum, Platmin, Platinum Australia, Ridge
Mining and Sylvania Resources.

It was likely that Implats would sell Mvela’s shareholding in Gold Fields, which would put pressure on Gold Fields' share price.

The RBC analysts believed that Implats was attempting to lock in the low-cost expansion potential of Northam's Booysendal project, which acquisition would be a “good replacement for the much-delayed and very expensive Leeuwkop project”, potentially allowing Leeuwkop to be “shelved”.

Development of the from 1 100-m to the 1 500-m deep Leeuwkop would require capital expenditure R6-billion and was without a power allocation.

In contrast, Booysendal started virtually at surface, and had sufficient water and electricity for initial production.

The company that stood to lose the most was Aquarius Platinum.

“We do not believe Implats would be amenable to the idea of letting Aquarius mine part of Booysendal. Essentially, the only logical bid target of consequence now left for Aquarius would be Eastern Platinum,” RBC said.

Implats was the second-largest fully integrated mine-to-market global producer of platinum.

In its 2007 financial year, it had produced 2,03-million ounces of refined platinum, some 32% of the world's primary platinum production.

Implats’ assets included Rustenburg, Marula, Two Rivers and Leeuwkop in South Africa and Zimplats and Mimosa in Zimbabwe.

The company also had a significant investment in Aquarius Platinum, as well as Impala Refining Services, which toll treated concentrate from several other South African and Zimbabwean mines.

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