Falconbridge regains platinum firm investment

Caught in something of a bind, Falconbridge Ltd. has regained its or iginal equity investment (49%) in Western Platinum, a South African producer of platinum group metals, as well as of gold, nickel, copper and cobalt.

A substantial producer, Western Platinum this year is expected to sell about 15% of the platinum coming out of South Africa.

Falconbridge is paying $31.6 million(US) for the 24% share held by Mobil Exploration and Producing North America, (MEPNA), a subsidiary of Mobil Corp., primarily, says Falconbridge Chairman William James, so that Falconbridge will be in a much better position to exercise a positive influence on Western Platinum’s operations.”

The move appears to fly somewhat in the face of Canadian government policy on investment in South Africa, but Mr James says in any case it’s Falconbridge’s objective to sell its 49% Western Platinum interest at an early date, using the proceeds to reduce corporate debt.

There is one company interested in buying,” he tells The Northern Miner, and I think they’ll be around.”

The sale, when it materializes, would in fact be just another in a series of selloffs by the company in recent months, including Kiena Gold Mines, Giant Yellowknife Mines and Corporation Falconbridge Copper.

Falconbridge originally held a 49% interest in Western Platinum under a 1970 agreement with Lonrho Ltd., but later transferred a 24% interest to Superior Oil, a predecessor of MEPNA.

Then, as Mr James explains it, Falconbridge and MEPNA recently received a proposal to sell their combined 49% interest in Western Platinum to an undisclosed third party, but Falconbridge concluded it would not be in its best interests, (nor that of its shareholders) to accept.

If MEPNA had sold its 24% interest to another party, Falconbridge would have lost its rights under the 1970 agreement providing for Falconbridge repre sentation on the board of Western Platinum.

Especially in the light of Ottawa’s anti-apartheid position, Falconbridge was faced with a difficult choice.

Without an acceptable offer for its existing 25% interest in Western Platinum, Falconbridge could either simply maintain that interest and become an ineffectual minority shareholder with no board representation, or instead, as it has done, reacquire MEPNA’s interest, and, as noted, be better placed to exert an influence on the South African producer.