Nkwe Platinum buys key stake in Garatau / Tubatse project to move to 74%
Nkwe Platinum Ltd (ASX: NKP) has agreed to acquire a key 15% stake in a platinum project in South Africa owned by International Goldfields Limited (ASX:IGC) in which it had an exclusive option with IGC over, for A$60m.
The acquisition is a big plus for Nkwe shareholders as it provides greater certainty upon exercise by Xstrata of a 50% interest in the project.
IGC owns a 15% interest in a platinum project in South Africa, which comprises three farms within the Bushveldt region of South Africa – one of the world’s premier platinum producing regions – known as the Tubatse Project, of which the Company already has a 59% stake.
The acquisition of IGC’s 15% stake allows Nkwe to move to a 74% interest across the five farms, allowing full control of the Garatau / Tubatse project, a world class platinum project with current JORC resource of 44.0M oz 3PGM + Au. The remaining 26% interest is held by Nkwe’s controlling shareholder, South African BEE Company Genorah Resources.
Interestingly, the Garatau-Tubatse project consists of five contiguous farms with a strike length of more than 30km, stretching all the way in proximity from Implats’ Marula mine in the north, past Anglo Platinum’s Modikwa Joint venture to the border of Eastplat’s Spitzkop – Kennedy’s Vale project in the south.
Nkwe will pay an initial A$20m on or about 15 July 2009, with the balance of A$40m to be paid on or before 28 February 2010. The transaction is subject to government and regulatory approvals. Nkwe is in advanced state of negotations for a $20 million capital raising via a convertible debt security.
Following completion of a Bankable Feability Study (BFS), Xstrata, upon electing to exercise their option to acquire 50% of the Garatau / Tubatse project, will have a 50% participation interest in the Garatau / Tubatse Project from Nkwe and Genorah through the funding of mine development through to concentrator stage.
Nkwe is currently jointly conducting a Feasibility Study with its joint venture partner Xstrata on the Garatau Project Area in the north and Tubatse Project Area in the south with a view to develop two mines with a combined annual production of more than 1 million ounces platinum group metals from a targeted mineralisation base in excess of 100 million ounces PGM+Au.
The two tranched nature of the transaction is designed to coincide with the option that Xstrata has with Nkwe whereby following completion of a Bankable Feasibility Study by Genorah and Nkwe, The parties will form a joint venture, in which Xstrata’s interest will be 50%, while Nkwe and Genorah will collectively have an interest in the remaining 50%.
NKP Price at posting:
34.0¢ Sentiment: Buy Disclosure: Held
