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Johannesburg - So the unbundling of Mvelaphanda Resources (Mvela Resources) can proceed. This follows the group’s successful defence last week against litigation in terms of which Khumama Platinum was claiming unpaid monies after it sold to Mvela Resources a 50% stake in the Booysendal platinum deposit.
Mvela Resources subsequently vended Booysendal into Northam Platinum which it controls.
Having won the case with costs, Mvela Resources is now hopeful of unbundling its 50.6% stake in Northam Platinum, a 20.7% stake in Trans Hex [JSE:TSX] and some 22.2 million shares in Gold Fields [JSE:GFI], possibly in three months. After years of uncertainty, the delisting and termination of Mvela Resources is nigh.
The major consequence of all this, however, is most surely the fact that Northam Platinum is now firmly in play.
London-listed, Kazakh miner Eurasian Natural Resources Corporation (ENRC) is clearly waiting in the wings.
It most recently lifted its holding in Northam to 14.5% from 12.5% which one assumes is in preparation for a full tilt.
A company like ENRC is not in the business of asset management. It aggressively swooped on Congo base metals miner Camec while in August ENRC’s CEO, Felix Vulis, declared the company wanted to build a portfolio in African resource assets.
As with most things regarding South African mining presently, any bid for Northam will be heavily complicated by the country’s empowerment laws.
In order to secure tenure over Booysendal’s 127 million ounces of unmined platinum, a 26% empowerment holding will have to be maintained.
Whether this will secure the minerals tenure for ENRC is anyone’s guess, but one can imagine the matter is being pressed with the mineral resources department.
In the meantime, shares in Northam Platinum are suffering somewhat, down 10% from the R50/share level of mid-November. As of Tuesday, shares in Northam were R44.50/share, a 4.3% decline on the day.
All platinum miners are shedding value currently with Anglo Platinum 2.29% weaker while shares in Aquarius Platinum were 1.51% lower.
The extra pressure on Northam, however, is most likely owing to the arbitrage opportunity following the settlement and imminent unbundling of Mvela Resources.
Mvela Resources trades at a 22% discount to NAV which provides traders with a cheaper entry into Northam, but requires they cover their positions by selling Northam shares.
Nonetheless, there are plenty of reasons to buy Northam long-term. Depending on the platinum price, it’s a pretty cash generative business: R1bn in cash end-June proves the point.
It could also be a vanguard in the consolidation of the platinum sector, assuming the government is able to provide a simple means of investment for foreign capital.
- Fin24
