In return for 91.2 million shares plus $1.7 million in cash, Vancouver-based Anooraq will pick up Pelawan’s rights to a 50% participation interest in the Ga-Phasha platinum group metals project on the Eastern Limb of the Bushveld complex.
Under the deal, about 89 million of the shares would be held in escrow for six years, or until a year after startup at Ga-Phasha. Pelawan will also be required to maintain at least a 52% stake in the company to ensure its qualification as a black empowerment company. The empowerment partner would be allowed to sell up to $10 million worth of Anooraq shares for a year after closing.
To compensate for dilution after any financing, Anooraq would have to issue additional shares to Pelawan. At the end of the year-long period, any shares held by Pelawan in excess of its 52% stake would be returned to Anooraq for cancellation.
The deal is expected to close April 22, subject to shareholder and regulatory approval in both South Africa and Canada. The deal is also subject to Pelawan’s agreeing to pick up a half-stake in Ga-Phasha from
Late last year, AngloPlat said that while it had scaled back its previously announced plans to expand platinum production, thanks to a stronger rand, it was still committed to carrying on talks at Ga-Phasha.
Ga-Phasha is on the northern part of the Eastern Limb of the Bushveld complex. The 97-sq.-km property comprises four farms: Paschaskraal, Klipfontein, De Kamp and Avoca. These are adjacent to Anglo Platinum’s Twickenham-Hackney PGM property, where a feasibility study has been approved and site infrastructure is being developed.
The project is host to both the UG2 and Merensky Reefs, which are the Bushveld’s main PGM-bearing horizons. Measured and indicated resources in the UG2 reef on the Paschaskraal and Klipfontein farms are estimated to be 65.7 million tonnes grading 7 grams combined platinum-palladium-rhodium-gold (PGMs) per tonne. An additional 137.4 million tonnes of inferred material on all four farms grades 4.3 grams gold. The estimate is based on a cutoff grade of 5 grams PGMs per tonne. The reef averages 0.74 metre in width.
Based on a cutoff of 3.5 grams PGMs, the Merensky Reef is estimated to host 43.3 million tonnes of measured and indicated resources grading 4.4 grams PGMs on Paschaskraal and Klipfontein. Inferred resources on the four farms total 111.5 million tonnes grading 7.1 grams PGMs. The Merensky reef averages 1.19 metres in width.
The estimates were prepared under standards set out by the Canadian Institute of Mining, Metallurgy and Petroleum (CIM) in 2000, and are based on 81 drill holes.
Late last year, Anooraq joined forces with Anglo Platinum in the hunt for platinum group elements, gold and nickel on Anooraq’s Drenthe farm, and on the northern portion of Anglo Platinum’s Overysel farm.
A preliminary economic assessment of Drenthe by Australian-based RSG Global concludes that Drenthe is capable of supporting a robust open-pit mine with a life-of-mine stripping ratio of 3.5-to-1. The study employed recovery rates from surrounding operations, as metallurgical tests have not been completed at Drenthe.
The study envisages pretax cash flow (excluding royalties and interest) of US$435 million over a 17-year life. The net present value is US$144 million, based on a 10% discount. Mine construction carries an estimated price tag of US$58 million, excluding future exploration and feasibility costs. At an internal rate of return of 39%, payback would come in just under three years.
The proposed operation is based on inferred resources totalling 99.4 million tonnes grading 0.6 gram platinum, 0.63 gram palladium, 0.012 gram rhodium, and 0.06 gram gold per tonne, plus 0.16% nickel and 0.1% copper. The estimate uses a cutoff grade of 0.5 gram PGMs.
Assumed metal prices are US$650 per oz. platinum, US$180 per oz. palladium, US$600 per oz. rhodium, US$340 per oz. gold, US$3.60 per lb. nickel, and US77 per lb. copper. An exchange rate of 8 rand per US$1 was applied.
The joint venture plans a major, multi-rig program of infill drilling at Drenthe to test the southern extension of the deposit on to the northern portion of the Overysel farm. An updated resource estimate will follow.
The Drenthe deposit is 80 km west of Anglo Platinum’s recently completed PGM smelter at Polokwane.
News of the deal with Pelawan sent shares in Anooraq soaring $1.48, or 55%, to $4.18 once they resumed trading in Vancouver in the late afternoon on Jan. 22.
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