Platinum explorer International Goldfields will sell its 15 per cent stake in three farms in the Bushveldt platinum region of South Africa to Nkwe Platinum for $60 million.
Under the deal, Nkwe will pay $20 million about the middle of next month, with the balance of $40 million to be paid on or before the end of February next year.
The deal will give Nkwe full control of the Garatau/Tubatse project, in which it already holds a 59 per cent stake.
The remaining 26 per cent stake is held by Nkwe’s controlling shareholder Genorah Resources, a South African black empowerment company.
The transaction is subject to government and regulatory approvals.
The two companies have had an option agreement in place since late 2008 that enabled Nkwe to negotiate exclusively to buy IGC’s stake in the farms.
The two parties had been considering a proposed merger via a scheme of arrangement, but IGC’s board decided a sale of the asset was in the best interests of its shareholders.
IGC chairman Tony Sage said the board believed having cash when there were many good opportunities on the market represented the best opportunity for IGC to deliver value to its shareholders.
The company said it was reviewing a number of possible acquisitions.
Nkwe and Genorah plan to complete a bankable feasibility study over the project after which mining giant Xstrata is expected to exercise its option to acquire a 50 per cent stake in exchange for funding the mine to production.
Nkwe said it planned to pay for the initial $20 million payment for Garatau/Tubatse through a convertible debt instrument.
IGC shares were up half a cent, or 2.27 per cent, to 22.5 cents at 9.50am while Nkwe shares were off half a cent, or 1.45 per cent, to 34 cents.
STUART McKINNON
NKP Price at posting:
34.0¢ Sentiment: Buy Disclosure: Held
