JOHANNESBURG (miningweekly.com) – Aquarius Platinum on Thursday announced that it would dispose of its noncore assets the Kruidfontein prospecting rights and its interest in Blue Ridge Platinum and Sheba’s Ridge Platinum.

This came as the company had agreed terms to dispose of 100% of the shares held in its indirect subsidiary, C&L Mining & Resources, to Pilanesberg Platinum Mines, a subsidiary of Sedibelo Platinum Mines, for $30-million in cash. 

The material asset of C&L was the Kruidfontein prospecting right, in which C&L had a 90% economic benefit. 

The sale was conditional on renewal of the prospecting right and its approval in terms of Section 11 of the Mineral and Petroleum Resources Development Act, No 28 of 2002. 

Upon completion of the sale, Aquarius would receive $16.2-million in consideration for its economic interest in the prospecting right, with the remaining $10.8-million due to the original vendors of the right.

In terms of an agreement with the original vendors of the Kruidfontein prospecting right, Aquarius could elect to retain the remaining $10.8-million in return for an issue of shares in Aquarius, of the same value, at the time the sale became unconditional, resulting in net cash inflows of $27-million to Aquarius.    

In addition, the platinum miner had agreed terms to dispose of its indirect interests in Blue Ridge Platinum and Sheba’s Ridge Platinum to a consortium led by the China National Arts & Crafts Corporation for $37-million in cash.

Of this, $4.3-million would be lent and advanced by Ridge Mining to Blue Ridge for a period of two years from the closing date.

The sale agreement was subject to a number of conditions precedent, including Chinese government approvals, South Africa Competition Commission approval and a number of Department of Mineral Resources regulatory approvals. 

The outside date for the fulfilment of the conditions precedent had been fixed at June 30, but may be extended if required.

Commenting on the disposal, fund manager Liberum Capital said the $60-million post-tax proceeds gave the company more optionality in refinancing its convertible bond, which was due early next year.

“We understand these sales are the culmination of 18 months’ work for Aquarius and, while risk remains in the transactions in obtaining regulatory approval, we see considerable sense in the transactions, as the assets do not feature in the company’s immediate or medium-term growth plans,” it stated.

Further, the price for the disposals reflected optionality on future platinum-group-metals prices and generated “important” immediate cash for Aquarius as it approached a key hurdle with the convertible later this year.

“Aquarius has earned a reputation as a respected operator in very tough environments and this deal reflects sense and opportunism in its corporate strategy,” noted Liberum.