Impala reaches Zimplats deal (June 01, 2006)

South African platinum producer Impala Platinum (IMPUY-O, IPLA-L, IMP-J) has signed an agreement with the Zimbabwean government trading some mining properties for cash and an “empowerment credit” for its 86.9%-owned subsidiary, Zimplats.

Under the deal Zimplats gives up properties carrying a resource base of 51 million oz. platinum plus 48 million oz. palladium, rhodium and gold; that is about 36% of its platinum resources. None of the properties Zimplats is releasing figure in current fifty-year mine expansion plans.

The government has agreed to buy the properties for US$51 million in cash — though it is debatable whether the treasury could come up with that much money — and to credit Zimplats with US$102 million in empowerment ownership, or about 20% of the company’s capitalization.

Zimplats and the government had been in negotiations since a March announcement that the government would seek a 51% equity ownership in mining operations, with about half of that bought and half requisitioned. In response, Impala threatened that it would cancel planned expansions of the Zimplats operations: the Selous metallurgical plant southwest of Harare, two operating mines, Ngezi and Hartley, and the Mimosa joint venture with Aquarius Platinum (AQPTY-O, AQP-A, AQP-L, AQP-J).

With the agreement signed, Impala has approved an expansion plan with a budget of US$258 million. Annual production would be increased to 160,000 oz. platinum and 162,000 oz. gold, palladium and rhodium, from the present total of 90,000 and 185,000 oz.