Impala Platinum, the world’s No 2 miner of platinum group metals (PGMs), is to offer ZAR 21bn (US$2.47 bn) to acquire all of Tier II PGM miner Northam, 62% held by Mvelaphanda Resources, “to create a South African controlled platinum champion”.  Impala is also bidding to acquire the balance of Mvelaphanda Resources.

The deal values Northam at just over ZAR 51 a share; the stock closed at ZAR 43.50 on Thursday. Impala is proposing to settle 70% of the purchase of Northam in new Impala shares, and the 30% balance in cash. Upon completion, Northam shareholders would receive 24.50 Impala shares for every 100 Northam shares held, and the cash equivalent of 10.50 Impala shares.

The cash value of the 10.50 Impala shares will be determined by the 30-day volume weighted average price (“VWAP”) of an Impala share on the day that all conditions precedent to the deal are met. Impala has structured a similar mix of shares and cash in the offer to acquire the balance of Mvelaphanda Resources.

The moves from Impala follows yesterday’s announcement that Anglo-Swiss diversified miner Xstrata had effectively delayed its acquisition of Lonmin, a Tier I PGM name. On 6 August 2008, Xstrata announced intention of a hostile GBP 33 a share cash bid for Lonmin, effectively valuing Lonmin at around USD 10bn.

In the days prior to Xstrata pulling its intention to make a full bid, Lonmin traded as low as GBP 21 a share, indicating the market’s disbelief that the bid would be formalised. In a further announcement yesterday, Xstrata said it had acquired additional Lonmin shares, such that it now holds around 25% of the entity, ranked the No 3 platinum group metal (PGM) miner in the world, after Anglo Platinum and Impala.

PGM prices have plummeted over the past six months, by 50% and more. Analysts at RBC Capital Markets argue that with the “basket” PGM price – calculated mainly from the prices of platinum, palladium, rhodium and gold – now hovering around USD 900/oz (against USD 2,000/oz  six months ago), the logic of Xstrata pulling its bid made  sense: “We expect Xstrata to acquire Lonmin over time. Our ‘back of the envelope’ value for Lonmin is approximately GBP 15, against the current market price of around GBP 19″. Lonmin’s market value has more than halved to USD 4.6bn in the past two months.

Impala had announced on 12 September that it was in talks with Mvelaphanda Resources and Northam. The news followed weeks of buzzing activity around the PGM sector; the day before Impala’s announcement, Aquarius Platinum said it was “considering options for participating in South African platinum industry consolidation”, adding, however, that “the options under consideration do not include a possible offer by the company for Lonmin”.

One of the most desirable assets in the overall story is Booysendal, recently acquired by Northam. Northam, crucially, ranks as the only PGM miner with smelters, outside of the Big Three. Booysendal has boosted Northam’s PGM ounces-in-the-ground, massively, to a total of 120m, ranking fourth only to Anglo Platinum, with 725m, Impala, with 415m, and Lonmin with 166m. Aquarius holds a relatively modest 71m, but is highly regarded for excellence in management, and powerful cash generation.

Selected platinum stocks

 

 

 

 

Stock

From

From

Value

 

Tier I platinum

price

high*

low*

USD bn

 

Anglo Platinum

ZAR 706.50

-52.3%

4.7%

19.845

 

Impala

ZAR 147.00

-60.1%

0.0%

10.495

 

Lonmin

GBP 16.81

-55.2%

6.4%

4.637

 

Averages/total

 

-55.9%

3.7%

34.976

 

Weighted averages

 

-55.3%

3.4%

 

 

Diversified

 

 

 

 

 

Anglo American

GBP 17.04

-53.7%

1.1%

40.364

 

Mvela Resources

ZAR 42.10

-39.0%

19.9%

1.068

 

Norilsk

USD 12.93

-61.4%

26.1%

24.648

 

ARM

ZAR 164.01

-46.6%

42.6%

4.096

 

Averages/total

 

-50.2%

22.4%

70.176

 

Weighted averages

 

-56.3%

11.0%

 

 

Tier II platinum

 

 

 

 

 

Stillwater

USD 5.29

-76.7%

-0.6%

0.493

 

Aquarius

GBP 2.32

-74.9%

1.6%

1.062

 

Northam

ZAR 43.50

-45.5%

16.0%

1.846

 

NA Palladium

CAD 1.79

-81.1%

-5.3%

0.140

 

Zimplats

AUD 10.80

-32.5%

35.0%

0.902

 

Eastplats

CAD 0.79

-81.1%

12.9%

0.537

 

Anooraq

CAD 0.74

-86.2%

0.0%

0.127

 

Averages/total

 

-68.3%

8.5%

5.108

 

Weighted averages

 

-67.2%

12.2%

 

 

Developers and explorers

 

 

 

 

 

Platmin

CAD 2.85

-70.9%

24.5%

0.295

 

WeSizwe

ZAR 2.75

-77.6%

17.0%

0.190

 

Noront Resources

CAD 1.22

-83.6%

-6.2%

0.147

 

Aquiline

CAD 3.78

-68.2%

26.0%

0.220

 

Pt Australia

AUD 1.55

-50.8%

6.2%

0.265

 

Polymet Mining

CAD 2.34

-47.9%

14.1%

0.298

 

Sylvania

GBP 0.44

-70.5%

-1.1%

0.138

 

Starfield

CAD 0.44

-75.1%

4.8%

0.132

 

Ridge

GBP 0.48

-66.6%

4.3%

0.077

 

PGM

CAD 1.36

-69.5%

30.8%

0.079

 

Solitario

CAD 3.55

-41.3%

7.6%

0.098

 

Jubilee

GBP 0.23

-76.6%

7.1%

0.042

 

Nkwe

AUD 0.35

-69.7%

0.0%

0.051

 

Braemore

GBP 0.04

-84.1%

93.0%

0.047

 

Marathon

CAD 1.26

-76.7%

5.9%

0.034

 

Caledonia

CAD 0.11

-52.3%

10.5%

0.049

 

Freegold Venture

CAD 0.38

-85.9%

8.6%

0.023

 

Magma Metals

AUD 0.49

-35.8%

120.5%

0.042

 

Franconia

CAD 0.58

-78.9%

13.7%

0.032

 

Cons. Puma

CAD 0.14

-92.8%

-12.5%

0.007

 

Avalon Ventures

CAD 0.85

-60.6%

0.0%

0.051

 

Rusina

AUD 0.06

-87.1%

21.2%

0.012

 

Largo Resources

CAD 0.21

-86.7%

-6.7%

0.028

 

Macdonald Mines

CAD 0.13

-90.5%

19.0%

0.016

 

Hard Creek

CAD 0.29

-80.0%

16.0%

0.016

 

Birch Mountain

CAD 0.08

-95.8%

0.0%

0.006

 

MetalCORP

CAD 0.37

-80.5%

17.7%

0.016

 

Wallbridge

CAD 0.11

-79.4%

5.0%

0.009

 

Benton

CAD 0.18

-86.7%

0.0%

0.012

 

Mustang Minerals

CAD 0.17

-83.0%

3.1%

0.012

 

Northern Shield

CAD 0.34

-72.1%

13.3%

0.018

 

Platina

AUD 0.39

-78.5%

18.2%

0.018

 

Darnley Bay

CAD 0.20

-71.0%

29.0%

0.009

 

Pacific NW Cap.

CAD 0.12

-80.3%

0.0%

0.007

 

Niplats

AUD 0.28

-82.8%

7.8%

0.016

 

Starcore

CAD 0.13

-84.6%

4.2%

0.007

 

Huston Lake

CAD 0.40

-48.7%

17.9%

0.011

 

Goldplat

GBP 0.11

-46.8%

29.2%

0.021

 

Beartooth

CAD 0.03

-84.6%

0.0%

0.005

 

Pan Palladium

AUD 0.04

-84.4%

0.0%

0.004

 

Premium Exp.

CAD 0.24

-68.0%

29.7%

0.009

 

Eurasia Mining

GBP 0.02

-62.5%

9.1%

0.004

 

Silvermet

CAD 0.08

-78.9%

45.5%

0.007

 

Minerva

GBP 0.02

-72.6%

6.3%

0.004

 

Hinterland Metal

CAD 0.04

-86.7%

0.0%

0.002

 

Developer averages/total

 

-75.2%

15.0%

2.582

 

Weighted averages

 

-71.9%

13.8%

 

 

 

 

 

 

 

 

Overall averages/total

 

-74.7%

13.6%

42.666

 

Overall weighted averages

 

-58.6%

5.0%

 

 

* 12-month

 

 

 

 

Source: market data; table compiled by Barry Sergeant

 

 

 

 

MARKET VALUATION OF OUNCES

 

 

 

Market

PGM

 

 

 

Value, USD bn

Resources, Moz

USD/oz

 

Anglo Platinum

19.84

725

27.37

 

Impala

10.49

415

25.29

 

Lonmin

4.64

166

28.00

 

 

 

 

 

 

Aquarius

1.06

71

14.95

 

Northam

1.85

120

15.34

 

Eastplats

0.54

74

7.24

 

Anooraq

0.13

110

1.16

 

 

 

 

 

 

Platmin

0.29

17

17.25

 

WeSizwe

0.19

16

12.10

 

PGM

0.08

9

8.88

 

Ridge

0.08

20

3.85

 

Pt Australia

0.26

5

51.88

 

Jubilee

0.04

31

1.36

 

 

 

 

 

 

Eland (Xstrata)

1.1

23

48.46