11th Nov 2016 10:15
LONDON (Alliance News) - South African platinum miner Lonmin PLC on Friday said it has conditionally agreed to buy Anglo American PLC's stake in the joint venture between the two companies.
The Pandora joint venture is currently owned 50% by Lonmin and 42.5% by Anglo American, with the remaining balance held by Nortam Ltd.
Anglo American is offloading assets as part of its ambitious restructuring efforts to streamline the business, although platinum is remaining one of the miner's three core commodities. For its part, Lonmin sees an opportunity to build a high-grade mineral resource that is relatively shallow by increasing its stake. The venture already "relies" on Lonmin's mining and processing infrastructure and is already operated by the company's subsidiary.
For its stake, Anglo American will receive a deferred cash payment from Lonmin equal to 20% of the distributable free cashflow from the Pandora E3 operations on an annual basis for six years - with a minimum payment of ZAR400.0 million, or USD28.0 million, and a maximum of ZAR1.00 billion, equal to USD69.8 million.
Lonmin's share of platinum production from the joint venture was 37,553 ounces in 2015.
Anglo American will be granted continued access to, and full operational control of, the Baobab concentrator for a further period of three years as part of the deal, paying Lonmin an annual rental fee of ZAR46.0 million, equal to USD3.2 million.
Lonmin shares were down 2.9% to 212.50 pence per share, while Anglo American shares were down 0.9% to 1,166.00 pence.
By Joshua Warner; [email protected]; @JoshAlliance
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