Platinum mining target says takeover battle damages operations

Platinum Mining Target Says Takeover Battle Damages Operations
Credit: Royal Bafokeng Platinum Ltd.

A South African platinum miner targeted for acquisition said a year-long takeover battle is taking its toll, and urged the Public Investment Corp. — a key investor — to break the impasse between rival bidders.

Royal Bafokeng Platinum Holdings Ltd. said competing offers from Impala Platinum Holdings Ltd and Northam Platinum Holdings Ltd. have created uncertainty, weighing on production in the third quarter.

RBPlat Chief Executive Officer Steve Phiri and Chief Operating Officer Neil Carr have delayed their retirement until April, but face a myriad of challenges, including cost inflation and power supply disruptions.

“We are starting to see the impact of the ongoing uncertainty caused by the current corporate action,” said Lindiwe Montshiwagae, a spokeswoman at RBPlat, which lowered its output guidance on Oct. 21. “We have seen the impact in operational performance.”

RBPlat’s underperforming assets are strategic for both Northam and Impala, given a reluctance to invest in new mines because of uncertainty over future platinum demand.

For Northam, which last month topped Impala’s earlier offer by 15%, purchasing RBPlat would help close the gap on the country’s top tier producers. Rival Impala has already acquired 40.7% of RBPlat as it seeks control of low-cost mechanized assets that are essential to maintaining the profitability of its adjacent Rustenburg operations.

With Northam holding just under 35% of RBPlat, South Africa’s PIC — with a 9.9% stake — is key to the outcome of the takeover battle. Selling those shares could resolve the conflict, according to RBPlat.

“The PIC can break the deadlock for control in the interests of RBPlat and its stakeholders and therefore restore operational normality,” Montshiwagae said.

Two weeks ago the PIC, a fund manager overseeing about $145 billion of mainly government workers pensions, said it would hold onto its RBPlat shares.

In the meantime, RBPlat’s assets show signs of deteriorating, according to Nicholas Hops, a portfolio manager at Coronation Fund Managers Ltd.

“Both Impala and Northam are fighting for control of an asset which is not living up to original expectations and seemingly, from the outside, has deteriorated further,” Hops said.

(By Felix Njini)

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