Anglo American Platinum has agreed to dispose of its 50% interest in the Kroondal pool-and-share agreement (“Kroondal PSA”) and the Marikana pool-and-share agreement (“Marikana PSA”), (collectively the “PSAs”) to Sibanye-Stillwater Limited (“Sibanye-Stillwater”), the other 50% owner of the PSAs.

CEO of Anglo American Platinum, Natascha Viljoen said:

“We are pleased to have agreed to sell our 50% interest in the PSAs to Sibanye-Stillwater. Whilst the Marikana operation is on care and maintenance, the Kroondal operation has a short mine life under the current PSA terms. By enabling Kroondal to mine through the boundary at Sibanye-Stillwater’s Rustenburg operations, we will extract our attributable share of the Kroondal reserves more quickly and efficiently than under the previous mine plan, unlocking greater value for Anglo American Platinum and Sibanye-Stillwater. This transaction will also allow for the Kroondal life-of-mine to be extended under Sibanye-Stillwater’s ownership, sustaining employment at the operation for longer.”

Background

In 2003, Anglo American Platinum entered into the Kroondal PSA with Aquarius Platinum (“Aquarius”) in which both companies agreed to pool their assets for mutual benefit, whilst retaining individual ownership. Since then, there have been several transactions that contributed further ground to the PSA to maintain production levels. The companies entered into a subsequent agreement for the Marikana PSA in 2005.

A life-of-mine purchase-of-concentrate (POC) agreement was entered into when the PSAs were formed, in which our partner’s share of concentrate produced is sold to Anglo American Platinum. Sibanye-Stillwater became Anglo American Platinum’s partner in the PSAs following its acquisition of the entire issued share capital of Aquarius, in 2016.

Following the restructuring and repositioning of Anglo American Platinum’s portfolio, Kroondal is not considered a strategic asset in the portfolio due to its short remaining life. The two companies have worked together to optimise the Kroondal mine plan, which has delivered over R8 billion in EBITDA between 2017 and 2020 for Anglo American Platinum. The next step for value creation was to optimise the mine plan to include resource from Sibanye-Stillwater’s adjacent operations to mitigate the impact of declining production as the mine approached its end of life, and for the Company to exit its interest in Kroondal.

Overview of the transaction

As at 31 December 2020, Kroondal had Mineral Reserves of 0.7 million 4E ounces (and an inclusive Mineral Resource of 1.30 million 4E ounces). The Mineral Reserve could be economically extracted, under the existing Kroondal PSA arrangement, over the remaining life of mine to 2025.

Under the terms of the new agreements, Kroondal’s infrastructure will be used to mine into Sibanye-Stillwater’s adjacent Rustenburg resource. As a result, Anglo American Platinum will generate cash flows from its 50% share of the 1.35 million 4E ounces earlier (by the end of 2023), at a lower cost of production (after optimising the mine plan to extract the resource from both the Kroondal and Rustenburg mining right areas) and under the pre-existing Kroondal purchase of concentrate terms.

Thereafter, Anglo American Platinum will exit its interest in the PSAs, transferring all assets and liabilities to Sibanye-Stillwater, with no outstanding economic interest in the Kroondal mining operation. The Company will continue to process the concentrate produced from the Kroondal concentrators until 2026 under the toll-and-purchase agreement with Sibanye-Stillwater which was concluded as part of the Rustenburg disposal transaction (refer to Anglo American Platinum announcements dated 9 September 2015 and 1 November 2016).

The Marikana PSA has an inclusive Mineral Resource of 4.7 million 4E ounces attributable to Anglo American Platinum. The Mineral Resource in Anglo American Platinum’s view cannot be economically extracted, and therefore the Marikana operation was placed on care and maintenance in 2012.

Economic consideration

Under the terms of the transaction, Sibanye-Stillwater will acquire Anglo American Platinum’s interest in both the Kroondal PSA and Marikana PSA for a purchase price of R1. In exchange, Sibanye-Stillwater will take over all closure costs and rehabilitation liabilities. In addition, should the remaining unmined Merensky mineralisation (which is not declared as a Mineral Resource) be mined in future, the Company will earn a deferred compensation on a Rand per tonne mined (the rate is dependent on metal prices at that time).

Conditions precedent

The terms of the transaction are conditional on mandatory regulatory approvals including Competition Commission approval and Section 11 ministerial consent to transfer the mining right, as well as the delivery of 1.35 million 4E ounces of metal in concentrate by the Kroondal PSA (on a 100% basis).