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Bafokeng slashes Implats holding

4th April 2016

By: Martin Creamer

Creamer Media Editor

  

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JOHANNESBURG (miningweekly.com) – The shareholding of the Bafokeng community in South Africa's second-biggest platinum mining company has become a shadow of its former self.

The JSE-listed Impala Platinum (Implats) advised on Monday that Royal Bafokeng Holdings (RBH) had sold off 5% of its shares, leaving the Bafokeng community with 6.3% of Implats, the shares of which fell 3.69% before lunch to R43.81 a share.

A year ago, RBH sold its entire 28.68% interest in the JSE-listed Merafe ferrochrome company – only to see Merafe shoot the proverbial lights out in its 2015 financial year, when its cash generation went through the roof and every box was ticked, from higher production to improved safety.

Described as a 100 000-strong Setswana-speaking community in South Africa’s North West province, the Bafokeng community is led by Kgosi Leruo Molotlegi, Kgosi being the traditional title of a leader of a Batswana tribe.

The job of RBH is to create intergenerational wealth for the so-called Royal Bafokeng Nation, which also owns a soccer team called Platinum Stars.

The RBH website puts the gross asset value of its investment portfolio at R41.2 billion.

Implats said in a media release that the RBH's structured disposal process had been effected over a period of 18 months.

RBH CEO Albertinah Kekana said the decision to reduce the shareholding in Implats was part of the Bafokeng company's "prudent approach" to portfolio management and in line with its ongoing diversification strategy.

“We remain one of the largest overall investors in the South African platinum sector," she said, adding that RBH platinum holdings represented an important portfolio contributor.

"We believe in the long-term fundamentals of the sector and through our ongoing engagements with
various stakeholders, we remain committed to finding solutions to the current challenges,” Kekana added.

In recent years RBH has been directing its originally platinum-generated investments into financial services, infrastructure, mining, oil and gas services (MOGS), industrials and a wide range of other investments.

It continues to control the JSE-listed Royal Bafokeng Platinum (RBPlat) and hold 100% of both Fraser Alexander and the company known as MOGS.

In September, energy infrastructure companies Black Rhino and the Bafokeng's MOGS Services signed framework agreements for the construction of 550 km of fuel pipeline through Djibouti and Ethiopia in the Horn of Africa.

In financials, investments in RMB Holdings and RMI Holdings represent 41.2% of RBH’s gross assets.

In infrastructure, investments in Attacq and Vodacom make up 11.7% of gross assets and in industrials, it has Metair Investments, which holds a portfolio of companies that service the automotive industry.

DHL Express, M-Tech Industrial, Praxima, RB Engineering and T Jet Helicopters are also companies in which the Bafokeng have investments.

PLATINUM MINING

The JSE-listed RBPlat has terminated major contracts at its Styldrift 1 platinum project and outlined a plan that could see it hit the ground running with a surfeit of mining flexibility in an improved platinum market.

RBPlat plans to develop nearly 7 km of underground infrastructure during 2016, some 6 km of which will be on-reef and thus able to generate 70% of the R1-billion needed for development.

The on-reef development is expected to yield 39 000 oz of platinum at an average basket price of R17 500/oz, with the 30% funding shortfall provided from surplus cash from the company’s Bafokeng Rasimone Platinum Mine, also outside Rustenburg.

By delaying the start of stoping at Styldrift I, RBPlat is seeking to avoid the destruction of the value of quality Merensky ounces into a depressed market.

Instead, the business is positioning itself to begin ramp-up when the market improves.

With the current depressed market cycle expected to prevail for the medium term, Styldrift I is now only scheduled to reach steady state in the first quarter of 2020.

A relatively shallow, mechanised mine, Styldrift I is expected to deliver 230 000 t of Merensky ore a month at steady state, yielding 320 000 oz a year by providing access to 72.9-million Merensky tonnes at a resource grade of 6.94 g/t.

The steady-state operating costs of the 60-year-life Styldrift 1 are expected to be in the first quartile of the industry cost curve, owing to the extraction of high-value Merensky reef in the first 30 years and lower-value upper group two reef in the next 30.

Local operator and maintenance skills development is under way to prepare for an employee complement of an eventual 3 000 people.

Capital expenditure at the end of the third-quarter totalled R5.186-billion on a main shaft capable of hoisting 230 000 t of ore a month.

Edited by Creamer Media Reporter

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