EASTERN Platinum Limited (Eastplats) has reached an agreement in principal with Hebei Zhongbo Platinum Co Limited (HZP) to restructure the transaction whereby HZP is to acquire the company’s entire South African platinum group metal (PGM) business and all investments and loan agreements it has with subsidiary companies.
In June the parties agreed to proceed to complete the purchase and sale of the Crocodile River Mine and associated inter-corporate loans for US$85 million, payable in cash on closing which was estimated to occur on or before August 7.
However, on August 10 Eastplats that the proposed restructuring of the transaction continued to remain subject to execution of definitive agreements and the receipt of all necessary South African regulatory approvals.
As such, Eastplats determined it to be prudent to extend the final date under the original agreements with HZP until December 31, 2015. This is the date following which either party may elect to terminate the agreements without recourse.
The Crocodile River Mine is on the western limb of the Bushveld Complex, near the town of Brits in South Africa’s North West Province. The Maroelabult section was previously operated successfully as an open pit mine but both Maroelabult and Zandfontein are now underground operations.
A combination of the rising Rand exchange rate and the contractors’ inability to mine the operation efficiently using highly mechanized mining methods underground resulted in the mine being placed on care and maintenance in December 2003. The mine was re-opened in 2004 and has since undergone extensive development and refurbishment of surface facilities. However, in June 2013, due to continuing negative outlook in the global economic environment, the sustained weakness in PGM pricing and the operating environment in South Africa, Eastplats decided to suspend funding for the Crocodile River Mine.
The project comprises four mining sections - Maroelabult in the east, Zandfontein in the centre, Crocette in the west, and Kareespruit (to be developed) between Maroelabult and Zandfontein.
Restructuring of the HGZ transaction was determined to be in the best interests of the company and HZP as the manner to best address timing issues with respect to various submissions on a regional asset basis that are required for regulatory approvals.
The sale of the balance of the company’s remaining PGM business (the Spitzkop, Kennedy’s Vale and Mareesburg projects and inter-corporate loans) continues for total consideration of US$140 million.