JOHANNESBURG (miningweekly.com) – JSE-listed Bauba Platinum on Thursday entered into a two-year chrome ore supply agreement with ASA Metals, with a provision for a prepayment of up to R5.6-million over the next seven months until the mining operations kicked off.
Following the platinum miner’s R150-million acquisition of a 60% stake in the prospecting rights over the farms Moeijelik 412KS and Waterkop 113KT, in Limpopo, earlier this month, Bauba subsidiary Bauba A Hlabirwa Mining Investments applied for both a bulk sample authorisation and a mining permit over Moeijelik.
“The company has been advised that the issuance of the bulk sample authorisation is now imminent and, furthermore, anticipates the mining permit to be awarded by the Department of Mineral Resources during June 2014,” Bauba CEO Syd Caddy said in a statement.
Site establishment would start in July 2014, with cash flow from the supply of 480 000 t run-of-mine chrome ore to ASA – a joint venture between China’s Eastern Asia Metals and the Limpopo Economic Development Enterprise of South Africa – expected to emerge mid-August.
Bauba said in a statement that ASA, which had a chrome mine, an extensive on-site smelter and other processing facilities located about 30 km from Moeijelik, had expressed an interest to materially increase the quantity.
“ASA’s location and local beneficiation plant fits well with Bauba’s future strategy of sustainable development in the area,” Caddy commented.
The acquisition of the beneficial rights over the chrome assets, which boasted low-cost opencast exploitation potential, and the offtake agreement with ASA secured the potential of a steady cash flow stream, which could “satisfy all Bauba’s financial requirements” to advance future projects.
Hlabirwa also entered into a lease and option agreement with Jibeng Investment, the landowners of the farm Moeijelik, to facilitate access to the chrome mining area.
The agreement also provided for an option to acquire the portion of the farm where the mining operations would be established.
“This transaction foresees the company benefitting from an early cash-flow-generating enterprise and distinguishes Bauba from many of its peers in that its current exploration programme will become, to a substantial degree, self-funded, thereby avoiding early dilution of shareholder value until its platinum projects and this newly acquired chrome project have been advanced well up the value curve,”
Caddy concluded.