JOHANNESBURG (miningweekly.com) – Platinum-group metals (PGMs) and gold explorer Eurasia Mining has, through its wholly owned subsidiary Eurasia Investments Limited (EIL), entered into an agreement with Anglo American Platinum (Amplats) subsidiary Rustenburg Platinum Mines (RPM) Cyprus to acquire the 50% of Urals Alluvial Platinum (UAP) that it did not already own.

The transaction would provide EIL with a 100% interest in UAP, which held several PGM projects in Russia, including the 171 km2 licence area at West Kytlim.

This project contained near-to-production-ready State-approved platinum reserves with “significant” additional resources.

The announcement, on Friday, followed a 2003 joint venture (JV) agreement between RPM and EIL, which established UAP in Cyprus as the operating company for, among other things, alluvial platinum exploration in respect of licences in the Ural Mountains, in Russia.

Eurasia was appointed as the manager of UAP.

In 2009, following Amplats’ “strategic decision” to cut back on the funding of mineral development projects outside of Southern Africa, RPM Cyprus exercised its rights under the JV to suspend contributions to UAP.  

“Eurasia continued exploration work on the Russia-based West Kytlim and Monchetundra projects, with EIL solely funding 100% of the work. As a result, EIL's contributions from 2009 to date have not been matched by contributions from RPM.

Taking this into account, on June 19, Eurasia, EIL and RPM Cyprus entered into an agreement that formalised the terms of EIL’s acquisition of the remaining 50% interest in the JV.

Under the terms of the agreement, RPM Cyprus would sell its 50% ownership of UAP, and novate all its rights and responsibilities under shareholders' loans from RPM Cyprus and an affiliate to EIL for a 'de minimis' consideration and a full release from all claims, losses or liabilities which may arise in respect of UAP or its business.

Commenting on the acquisition, Eurasia chairperson Dr Michael Martineau said the work programme on the Monchetundra and West Kytlim projects had produced attractive assets, which were nearing production.

“It is, therefore, an excellent outcome for Eurasia that we should enter this next phase with double the original interest in the projects. The doubling of Eurasia's equity interest in UAP also provides greater flexibility to bring in new partners or to restructure the holdings for improved efficiency of future operations, should the company wish to do so,” he noted.

Eurasia MD Christian Schaffalitzky added that the timing of the agreement “could not be better” for Eurasia.

“We believe our planned platinum production, expected to start in 2015, is well placed to benefit from the rapidly changing landscape in the PGM business. This can only benefit new low-cost mines such as Eurasia's.”

The agreement remained conditional on RPM Cyprus and members of the Amplats group obtaining South African exchange control approval.