JOHANNESBURG (Business Day) -- Impala Platinum (Implats) [JSE:IMP], the world's second-biggest platinum miner, could make an offer for all the shares of platinum miner African Platinum (Afplats) [AIM:APP], it said yesterday.
The offer being discussed would be worth about R3.4 billion ($475.9 million).
The announcement came as Implats completed a transaction it announced in December to buy 29.9% of Afplats' three South African subsidiaries, which will be housed in a new entity, for a little more than R1 billion ($140 million).
However, speculation about a full takeover offer sent Afplats shares soaring 30% to 53 pence on the London Stock Exchange yesterday before the announcement was made.
Implats shares shed 0.92% or 200 cents to R215 ($30.11) on the JSE. Consolidation of the various small-scale platinum projects on the Bushveld complex, which hosts 80% of the world's platinum reserves, has been widely expected as demand for platinum is expected to remain strong in the next few years and major producers are looking for future growth.
The price of platinum has risen 20% in the past year to $1203/oz while the prices of other platinum group metals such as rhodium and ruthenium have surged even more on new industrial uses.
Although Afplats is quoted on London's Alternative Investment Market, not the JSE, the bulk of its assets are in South Africa. Its main project is to develop the first phase of the Leeuwkop project into a mine and concentrator producing 300,000 ounces a year of four platinum group metals, at a cost of R2.8 billion ($392 million).
The injection of funds from Implats' purchase of 29.9% of the South African assets was expected to provide funding for the first two-and-a-half years of development of Leeuwkop.
The total cost of developing Leeuwkop is R2.3 billion ($321.9 million). Implats said it had discussed with Afplats the possibility of making an offer for all the outstanding shares at 55 pence each but this was not a firm intention and it was possible no offer for Afplats would be forthcoming, or that the price could be lower than 55 pence.
In its offer for 29.9% of Afplats' South African assets, Implats has already encountered some resistance from an institutional shareholder hedge fund, North Sound, which, the Financial Mail reported this year, wanted a higher price.
Senior management of neither Implats nor Afplats could be reached yesterday for comment on the offer.
Implats announced today that it had more than doubled first-half profits on surging metals prices, as expected, but cautioned of no quick rebound at its struggling flagship mine.
The company said today headline earnings per share for the six months to December rose to R8.24 from R3.45 in the same period of the previous year. Implats said in a trading statement last month that headline earnings would surge by 120%-140%.
Refined platinum output rose 8.5% to 1.02 million ounces, and unit costs rose 20.4% to R5,647 ($790.33) per platinum ounce. The jump in costs was partly due to lower production at its main Impala mining operation, where output fell 7.8% to 545 000 ounces due to less ore mined and lower grades.
