JSE-listed platinum group metals (PGMs) miner Northam Platinum has announced its firm intention to acquire all remaining shares in fellow PGMs miner Royal Bafokeng Platinum (RBPlat) which it does not already own at R172.70 a share.

The offer is a premium of about 15% to the November 8 offer by Impala Platinum (Implats), which has been steadily increasing its interest in RBPlat and which is awaiting approval from South Africa’s competition authorities for its offer to acquire all RBPlat shares it does not already own.

Northam says in a November 9 statement that its offer is equivalent to the R180.50 paid to Royal Bafokeng Holdings (RBH) in November 2021, adjusted for the dividends subsequently declared by RBPlat of R5.35 apiece in March and R2.45 apiece in August.

Northam currently holds 34.52% in RBPlat and, together with call options and a right of first refusal secured with the RBH group, may increase its shareholding in RBPlat to 37.8%.

Implats, meanwhile, has increased its shareholding in RBPlat to above 40%.

Northam’s offer consideration will be fully settled in cash, or a combination of cash and Northam Holdings shares, depending on the level of acceptance of the offer by way of a cash ratchet mechanism.

To date, Northam has committed R10-billion for the cash consideration, with the miner saying that, if RBPlat shareholders collectively holding less than 19.9% of the RBPlat shares in issue, accept the offer, the offer consideration will be fully settled in cash.

Northam CEO Paul Dunne says the company’s offer to RBPlat shareholders is aligned with the group’s growth strategy and presents a unique opportunity to acquire a controlling interest in a scarce, high-quality orebody with established and well capitalised infrastructure.

“We are confident in the rationale for all stakeholders in Northam and RBPlat, as well as the value unlock and value creation opportunities underpinned by the inherent value and growth potential embedded within RBPlat’s attractive asset base.

“Since acquiring our initial shareholding in RBPlat, our balance sheet, liquidity position and credit outlook have strengthened significantly, enabling Northam to present an offer construct to RBPlat shareholders with a compelling cash consideration and an attractive premium, whilst limiting the number of Northam shares to be issued,” he adds.

Northam points out that, if RBPlat shareholders holding more than 19.9% accept the offer, the cash consideration will decrease and the balance of the offer consideration will be settled in Northam Holdings shares.

However, should all RBPlat shareholders accept the offer, the minimum cash consideration an RBPlat share will amount to R54.40 apiece and the balance of the offer consideration amounting to R118.30 a share will be settled in Northam Holdings shares.

If all RBPlat shareholders other than Implats accept the offer, the cash consideration will increase to R152.42 an RBPlat share, based on Implats’ shareholding in RBPlat of 40.71%, as per an Implats announcement on November 4, and the balance of the offer consideration, amounting to R20.28 a share, will be settled in Northam Holdings shares.

Northam states that its offer presents an opportunity for RBPlat shareholders to realise the value of their investment in RBPlat at a significant premium, underpinned by a “compelling” cash component.

In addition, RBPlat shareholders that receive Northam Holdings shares as part of the offer consideration (unless the offer consideration is fully cash settled) will diversify their investment across the Northam group, while retaining indirect investment exposure to RBPlat (through Northam) and will participate in growth initiatives at Northam, as well as at RBPlat should Northam acquire a controlling interest in RBPlat.

Northam says it has identified various initiatives for both unlocking value and creating additional value at RBPlat’s existing mines – the Bafokeng Rasimone Platinum Mine and Styldrift – as well as at the currently undeveloped Styldrift II. Northam intends to pursue these initiatives if it obtains a controlling interest in RBPlat.

Northam explains that its experience and expertise at its Booysendal mining complex, together with the innovative mode of development of the 3 Shaft project at its Zondereinde mine, “bodes well” for modular development and growth initiatives at Styldrift II.

Northam further believes there is a “good cultural fit” between its current operations and those of RBPlat. This will “harmonise” the management and, consequently, the performance of the combined group’s assets, should Northam acquire a controlling interest in RBPlat, Northam says.

Further, Northam says it is supportive of an extension to the existing royalty arrangements with Implats in respect of the two Implats Shafts (6 and 20) operating on the RBPlat mining area, on commercially reasonable terms, should Implats request an extension.

Northam believes this arrangement will strengthen regional job preservation and stability and will be a beneficial outcome for all affected parties.

In the event that Northam obtains a controlling interest in RBPlat, it says RBPlat’s employees, together with host and affected communities, will be granted significant participation in Northam’s 15-year extended broad-based black economic empowerment transaction, which received overwhelming support from Northam shareholders in 2021.

RBPLAT'S RESPONSE
RBPlat has confirmed that a previously constitute independent board of directors, comprising Mark Moffett, Zanele Matlala, Louisa Stephens, Peter Ledger, Mike Rogers and Thoko-Mokgosi-Mwantembe, will again fufill the role of assessing the Northam offer.

As part of its work, the independent board will appoint an independent expert to issue a report on the Northam offer and to express an opinion on whether the offer is fair and reasonable.