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Aquarius, Amplats reach deal to extend Kroondal mine life

25th June 2013

By: Creamer Media Reporter

  

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JOHANNESBURG (miningweekly.com) – Aquarius Platinum South Africa (AQPSA) has entered into an agreement with a subsidiary of Anglo American Platinum (Amplats) that will increase the life of the Kroondal mine by three years to about nine-and-a-half years.

Amplats would, in terms of the agreement, contribute 15.97-million tons of total ore reserves to the Kroondal mine. This will include 9.91-million tons at 2.28 g/t of proven ore reserves and 6.06-million tons at 2.48 g/t of probable ore reserves.

The reserves are located immediately down-dip from the current Kroondal mine and will be mined using the existing Kroondal underground mining infrastructure and treatment plants.

In exchange for the additional reserves, AQPSA would contribute the use of its infrastructure, continue to manage the Kroondal pooling and sharing agreement on the existing terms and conditions, sell its share of concentrate produced from the additional reserves to Amplats as per an existing offtake agreement and pay Amplats a variable royalty with a base rate of R11.50/t mined.

The royalty would increase or decrease in line with movements in the rand metal price, but would range between a minimum of R8.05/t and a maximum of R14.95/t.

The deal was welcomed by analysts, with Investec Securities commenting that this was an important step forward for AQPSA's parent company Aquarius Platinum, providing it with more “breathing space” owing to the pressures of the previous short Kroondal mine life.

Liberum Capital said this was a “solid” deal for Aquarius.

“The cost of mine extension looks acceptable at first glance, with the R11.50/t ore royalty rate reflecting just a 1% royalty rate on the value of platinum in each ton of ore mined,” it noted.

Edited by Chanel de Bruyn
Creamer Media Online Managing Editor

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