Sage poised to close deal on platinum play 8th June 2009, 7:45 WST It has taken more than a year but the long-awaited friendly takeover of Tony Sage’s International Goldfields by joint venture partner Nkwe Platinum is on track to be wrapped up sooner rather than later.
The deal has been dragging on since March last year when Nkwe first made overtures to IGC in a bid to combine the two groups’ stakes in the Genorah Farms platinum project on the Bushveld Complex’s eastern limb in South Africa.
The groups have since agreed to tentative terms that would see Nkwe pay a total amount made up of $60 million for IGC’s stake in the platinum project as well as the takeover target’s cash backing when the deal is wrapped up — a figure that depends partly on how many stock options are exercised first.
Talk last week was that Nkwe has been dragging its feet because it wants to see the proposed cash deal done on a scrip basis instead and IGC is refusing to agree.
But it seems like that argument may be old news, with Nkwe’s European roadshow having apparently paid off and the platinum chaser poised to put its hands on some cash.
IGC executive chairman and veteran Perth dealmaker, Mr Sage, flew to London last night to meet Nkwe’s team and the deal could be finalised as early as tomorrow.
Although Mr Sage is apparently unwilling to see the deal done on a scrip basis, it looks likely a few terms may have to be tweaked to keep both sides happy.
Since the two groups began hammering out terms, Nkwe has unveiled a bumper resource upgrade at the Tubatse-Garatau project that would make it capable of supporting a 50-year mine life. Platinum prices have also jumped as much as 25 to 30 per cent from lows late last year.
Along with Xstrata, which has a right to earn up to 50 per cent in the project, Nkwe is fast-tracking a bankable feasibility study based on production of one million ounces of platinum a year.
Completion of the takeover should be good news for shareholders, who have been awaiting the deal, including Mr Sage’s Cape Lambert Iron Ore, which stands to pocket a profit as IGC’s biggest backer, with 8.7 per cent.
It should also cap off a busy few weeks for Mr Sage, who has also taken the helm of Cauldron Energy, the result of a merger between Scimitar Resources and Jackson Minerals. Wasting no time, Cauldron has appointed Greenday Corporate to come up with about $7.5 million to fund an exploration program. • Norton Gold Fields, the miner backed by the management team that took Felix Resources from a $13 million junior to a $1 billion coal play, has taken another step towards its target of 200,000 ounces a year with the opening of its Homestead underground mine in the Goldfields.
Norton, which took over the Paddington mine in August 2007 from global giant Barrick Gold, hopes the move will help lower its comparatively high cash costs, with first gold expected by the end of the year.
The company is chaired by former Barrick board member and one-time Felix chairman Tony McLellan, with Jon Parker as managing director, also formerly with Felix.
Separately, but still on gold, the wheels continue to turn for Navigator Resources as it inches closer to bringing WA’s Bronzewing gold mine back into production.
The junior working on an agreement with millionaire prospector Mark Creasy to deal with a pre-emptive right he holds over some of the project’s ground. Once that has been overcome, Navigator can get some traction on raising the $30 million or so it intends to sink into Bronzewing.
• The fine print on the infrastructure deal between Andrew Forrest’s Fortescue Metals Group and BC Iron may have been swamped by news of the BHP Billiton-Rio Tinto alliance on Friday, but it is an interesting one.
Specifically, the deal, under which Fortescue will take a 50 per cent stake of BC’s Nullagine project, sends a clear message to the region’s fledgling producers that if they want to use the miner’s rail and port facilities they will have to pay for it.
Recent scuttlebutt suggested Mr Forrest has been playing hardball over terms and it looks like he may have got what he wanted. Even so, it is a company-making deal for the Mike Young-headed BC, which could now be in production by early next year.
KATE EMERY
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