Govt will not fund BCL acquisitions
Onalenna Kelebeile | Thursday October 23, 2014 15:41
Earlier this week, state-owned BCL announced that it would in the next six months conclude a $337 million (P3.1 billion) deal to purchase Norilsk’s 85 percent stake in TNMC and a 50 percent shareholding in Nkomati chrome mine in South Africa.
Speaking during a press conference yesterday, Mahupela said the mine amassed funding through collaborative efforts with commercial banks.
Mahupela also said Tati Nickel provided an excellent opportunity for BCL to exploit the current resource base. He noted that possible expansion of Phoenix Mine and BCL was likely to bring back Selkirk open pit mine back into operation. He said the expansion opportunities at Tati Nickel had the potential to boost the life span of the mine, which is expected to operate by the end of 2015.
“There are significant exploration opportunities within the Tati mining lease area and adjacent prospecting license held by the company which will be considered,” he said.
BCL signed an agreement with Norlisk Nickel last Friday in South Africa, to formalise the acquisition of Norilsk’s African assets.
Mahupela said the debt was an impediment to deliver this strategy.
“We can now face the future with a lot of optimism to attract investors, since we now have a clean balance sheet. We will also continue to implement initiatives under Polaris 11,” he said.
He further said the transaction was an opportunity for BCL to diversify its underground mines through incorporation of the large-scale open pit operations at Nkomati mine in South Africa.
“BCL will continue to search for high quality assets as it evolves into a regional mining company within the SADC region. We are pleased with the momentum gained by our Polaris 11 Strategy,” he added.
Mahupela explained that implementation of the transaction was subject to the Competition Authorities in Botswana and South Africa, conditionally or unconditionally approving implementation of the transaction in both jurisdictions. Minister of Mineral Resources in South Africa would be required to give consent for the transaction to be granted. It is also subject to approval by the Financial Surveillance Department of the South African Reserve Bank and Bank of Botswana.
The terms of acquisition stipulate that all risk and reward inherent in Nkomati and Tati Nickel would transfer to BCL investment from January 2014. “BCL agreed a total purchase consideration as from Friday last week and the purchase consideration will be funded through a combination of BCL’s cash resources and debt,” he said. He also noted that BCL has driven its diversification and internationalisation programme through Polaris 11 strategy that aims to position BCL smelter as a prime regional asset with capacity and ability to treat nickel concentrates from regional producers.
It also aims to exploit the significant mining and operational skills it has built up over a 40-year period by entering into partnerships on top tier assets in Southern Africa.
“The transaction represents a major milestone by BCL in the implementation of the Polaris 11 strategy. Nkomati is a well managed highly cash generative asset with a large reserve base and top tier partners African Rainbow Minerals. BCL has executed a concentrate off-take agreement where all of Nkomati’s concentrate would be treated in BCL smelter, on a long term basis,” he explained. Mahupela added that attracting Nkomati’s concentrate to the smelter would enhance the capacity utilisation of the asset and deliver a substantial value to the company.