Lonmin PLC Lonmin acquires a further 42.5% stake in Pandora (9803O)
November 11 2016 - 4:00AM
UK Regulatory
TIDMLMI
RNS Number : 9803O
Lonmin PLC
11 November 2016
11 November 2016
Lonmin acquires a further 42.5% stake in Pandora
Lonmin Plc ("Lonmin") is pleased to announce that, on 10
November 2016, it entered into a conditional Sale and Purchase
Agreement to acquire Anglo American Platinum's ("AAP") 42.5% of the
Pandora Joint Venture ("Pandora JV") for a deferred cash payment of
20% of the distributable free cash flows generated by the Pandora
E3 operations on an annual basis for a period of six years, subject
to a minimum deferred consideration of R400 million (in nominal
terms) in total (the "Transaction"). The Company's current
expectation is that the aggregate consideration payable to AAP will
be R400 million (nominal terms). The Transaction will increase the
Company's ownership interest in the Pandora JV to 92.5%. The
Company has also entered into a 36 months' rental agreement with
AAP for the Baobab concentrator in Limpopo, conditional upon the
Transaction completing, whereby AAP will pay Lonmin a rental fee of
at least R46 million per year.
The Pandora JV is currently held 50% by Lonmin's subsidiary,
Eastern Platinum Limited ("EPL"), 42.5% by AAP through Rustenburg
Platinum Limited and 7.5% by Northam Limited through Mvelaphanda
Resources Proprietary Limited.
Rationale for the Transaction
The acquisition of AAP's 42.5% stake in the Pandora JV allows
Lonmin to consolidate its position in this relatively shallow and
high-grade mineral resource providing an attractive option for
development by EPL in both the short and longer term. The Pandora
JV area, which is contiguous with our existing EPL operations,
relies on Lonmin's mining and processing infrastructure and is
already operated by EPL. The Pandora JV contributed 37,553 Platinum
ounces (74,019 platinum group metal ("PGM") ounces) to Lonmin in
the 2015 financial year.
Consideration payable to AAP
In consideration for the sale of its 42.5% interest in the
Pandora JV to Lonmin, AAP will receive cash payments calculated at
20% of the distributable free cash flows generated by the Pandora
E3 operations on an annual basis for a period of six years
commencing on completion of the Transaction, subject to a minimum
total deferred consideration of R400m (in nominal terms) and a
maximum total consideration of R1 billion (in nominal terms). This
deferred consideration is based on the Pandora JV cash flows on a
mine-to-ore basis as set out in the ore sales agreement between
Pandora JV and Lonmin. AAP will also receive 20% of any proceeds of
any Pandora JV resources that are disposed of within that six year
period.
Description of the business of Pandora JV
The Pandora JV mines PGMs from the UG2 and Merensky reefs
underlying the JV mining area. 100% of the ore produced by the
Pandora JV is sold to Lonmin for processing and refining. The value
of the Pandora JV gross assets were R1.1 billion as at 30 September
2015. Pandora JV made an operating loss of R157 million in
financial year 2015 which 50% was reflected in Lonmin's 2015
accounts.
Use of Baobab concentrator
AAP will be granted continued access to, and full operational
control of the Baobab concentrator for a further period of three
years from the date of completion of the Transaction. AAP will pay
Lonmin, with immediate effect, an annual rental fee of
approximately R46 million.
Conditions precedent and effective date
The Transaction remains subject to certain conditions precedent
including approval by the competition authorities of the Republic
of South Africa; and all necessary consents being obtained from the
Department of Mineral Resources of South Africa, including Section
11 approval for the transfer of the mining rights. The Transaction
is also subject to approval by Lonmin's lending banks and remaining
Pandora JV partner, Northam Limited. The Transaction is expected to
become unconditional during 2017 following the fulfilment of all
conditions precedent.
Commenting on the Transaction, Ben Magara, Lonmin's Chief
Executive Officer said: "We are pleased to announce the acquisition
of Anglo American Platinum's stake in the Pandora JV. This is an
excellent strategic fit for Lonmin, which increases our exposure to
a valuable asset with long-term development potential."
END
ENQUIRIES
Investors / Analysts:
Lonmin
Tanya Chikanza (Head of Investor Relations) +27 11 218 8358 / +44 207 201 6007
Andrew Mari (Investor Relations Manager) +27 11 218 8420
Media:
+27 11 218 8300
/
Wendy Tlou +27 83 301 9663
Cardew Group
Anthony Cardew / Emma
Crawshaw +44 207 930 0777
Notes to editors
Lonmin, which is listed on both the London Stock Exchange and
the Johannesburg Stock Exchange, is one of the world's largest
primary producers of PGMs. These metals are essential for many
industrial applications, especially catalytic converters for
internal combustion engine emissions, as well as their widespread
use in jewellery.
Lonmin's operations are situated in the Bushveld Igneous Complex
in South Africa, where more than 70% of known global PGM resources
are located.
The Company creates value through mining, refining and marketing
PGMs and has a vertically integrated operational structure - from
mine to market. Underpinning the operations is the Shared Services
function which provides high quality levels of support and
infrastructure across the operations.
For further information please visit our website:
http://www.lonmin.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
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