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Shanduka In The News

Shanduka sets sights on Limpopo mine

Lonmin, the world’s third- largest platinum producer, yesterday agreed with Cyril Ramaphosa’s Shanduka Group to a R1,1bn deal that could see the empowerment company taking a controlling stake in a mothballed mine and access to more than 20-million ounces of platinum group metal (PGM) resources.

Shanduka has to complete a feasibility study into Lonmin’s Limpopo division, which includes the Baobab mine and concentrator that can treat 90000 tons of ore a month, yielding between 100000oz and 120000oz of PGMs a year.

It will take up to 15 months to conclude the transaction.

Shanduka will make a decision on how to fund the transaction if the study shows it to be a viable investment, looking at a blend of project and equity funding, Cobus Loots, Shanduka’s investments executive, said yesterday. Shanduka is invested in coal, gold and base metals.

Mr Ramaphosa is on the Lonmin board and Shanduka is invested in Lonmin via its majority stake in Incwala Resources. The deal would give Shanduka 50% plus one share in Messina Platinum Mines, in which Lonmin would hold the balance.

Lonmin is focused on reaching 950000oz of PGM production by 2015 from its Marikana operation near Brits. The funds from Shanduka would stay within Messina.

Liberum Capital in London described the transaction as a "small but canny deal by Lonmin, which extracts value from a small and noncore asset".

The current price for platinum metals meant the cash injection into the asset came at an "opportune time", it said.

Shanduka is likely to use the services of mining engineering firm DRA in which it has a 25% stake. If the deal goes ahead DRA is likely to be called upon.

DRA describes itself as the "world’s most experienced" contractor when it comes to designing, building and managing platinum concentrators.

For Lonmin, the deal will bring it closer to the 26% empowerment target the mining industry and the government have set for mining companies to reach by 2015.

Lonmin has not yet had negotiations with the Department of Mineral Resources on what credits the transaction with Shanduka would earn it, Tanya Chikanza, head of Lonmin’s investor relations, said yesterday .

By: Allan Seccombe

Business Day


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