Platinum Miner Ridge Likely Acquisition Target? By Viwe Tlaleane...

Platinum Miner Ridge Likely Acquisition Target?

By Viwe Tlaleane and Charlotte Mathews
23 Mar 2007 at 10:52 AM GMT-04:00


JOHANNESBURG (Business Day) -- Platinum company Ridge Mining [AIM:RDG] could be one of the next most likely acquisition targets for the major platinum groups in the current round of consolidation in the industry.

Ridge has a proven resource of 5.34 million ounces of four platinum group metals at its Blue Ridge project on the eastern limb of the Bushveld, which it is developing into a mine. A pre-feasibility study at its second project, Sheba’s Ridge, showed a resource of 19 million ounces of platinum, palladium and rhodium, together with 1.4 million metric tonnes of nickel and 0.5 million metric tonnes of copper.

These resources compare with 92 million ounces of four platinum group metals (PGMs) at African Platinum’s [AIM:APP] Greater Leeuwkop property and 33.7 million ounces of three PGMs at AfriOre’s [TSX:AFO; AIM:AFO] Akanani project.

Afplats is the subject of a takeover offer by Impala Platinum [JSE:IMP], and Lonmin [LSE:LMI] bought control of AfriOre last year. Apart from Anooraq Platinum [TSXv:ARQ; AMEX:ANO] whose mineral resource ranks in size between Afplats’ and AfriOre’s (according to a diagramme in Afplats’ latest annual report), Ridge Mining is the next most attractive target among the junior platinum miners.

Asked whether Ridge Mining had received any approaches from a major platinum company, commercial director Francis Johnstone said yesterday that Ridge would prefer not to comment and if it were in the situation where it had to notify shareholders, it would do so. Asked whether Ridge would welcome an approach, he said Ridge was moving towards production from Blue Ridge and would like to see it through.

Still, if Ridge were to be targeted by a major mining company, there is little hint on who it would be. Ridge has signed an offtake agreement with Implats for production from Blue Ridge, but Johnstone said Implats held no shares in Ridge. Ridge’s joint venture partner on its Sheba’s Ridge project is Anglo Platinum.

Ridge’s major shareholders are China’s Zijin Mining Group and the Merrill Lynch investment funds.

Ridge Mining Chairman Oliver Baring said this week that the company had shelved plans to list on the JSE but had not ruled out the possibility entirely,

He was commenting on the London’s AIM-quoted company’s results for the year to December, which included an update on the Blue Ridge platinum mine being built near Groblersdal on the eastern limb of the Bushveld complex at a capital cost of $143 million.

Ridge commercial director Francis Johnstone said yesterday that although in theory a listing on the JSE was attractive to Ridge, it had decided against it for the moment because it had raised funding for the development of Blue Ridge; a JSE listing would not benefit its black empowerment partners because of Reserve Bank restrictions on offshore holdings by South African companies; and because Ridge would lose certain tax breaks that it enjoyed from being quoted on AIM.

Last year, Ridge Mining succeeded in raising R610 million ($84.5 million) in project finance from a consortium of four South African banks and has also agreed with black empowerment group Imbani Platinum to sell a 50% equity interest in the project for R320 million ($44.3 million).

Baring said Imbani was arranging the financing with the Industrial Development Corporation and Development Bank of South Africa to be available ahead of the project financing.

Baring said the mine was originally expected to produce 125,000 ounces a year of four platinum group metals, platinum, palladium, rhodium and gold. Iridium and ruthenium were excluded from the calculation but after the sharp increase in the prices of iridium and ruthenium in the past year, the inclusion of these metals would increase forecast production to 150,000 ounces a year of the six platinum group metals.

Contractor Murray & Roberts Construction started work on the site in January and the project was on target to deliver its first concentrate in the third quarter of next year, he said.

Ridge Mining is also completing a feasibility study, which should be completed by the end of this year, on a second project, Sheba’s Ridge, in which it holds a 60% interest and Anglo Platinum [JSE:AMS] holds 40%. Sheba’s Ridge is relatively close to Blue Ridge.

To focus on its two core projects, late last year Ridge sold its 51% interest in the Fountain Ridge property to Madibeng Platinum for R70 million ($9.7 million) and its interests in Fonte Verde, Rooikraal and Red Bush Ridge to Bushveld Platinum for R20 million ($2.77 million).

Ridge made a headline loss of US1.8 cents a share (US5.4 cents) for the year and held $17.7 million in cash at the end of December after raising a net $25.1 million from financing activities.