The deal will see Lonmin spend as much as $11 million to earn up to a 50-percent interest in Wallbridge Mining’s Parkin properties in Sudbury, Ontario.
There hasn’t been much great Lonmin (LSE:LMI) news lately with the platinum price falling and the company’s share price hitting a 27-year low in August.
However, the South African platinum miner looks to be restating its interests in Sudbury, Canada. Lonmin signed an agreement to amend its existing North Range joint venture agreement with Wallbridge Mining (TSX:WM) on Wednesday, and will spend up to C$11 million on or before September 30, 2019 to earn up to a 50-percent initial interest in Wallbridge’s four Parkin properties.
Under the terms of the deal, Lonmin can then earn an additional 15-percent interest by committing to fund the properties through to a feasibility study.
“This plan provides the Company with sustainable cash flow while maintaining active exploration for large-scale discovery upside in the Sudbury camp” said Marz Kord, president and CEO of Wallbridge, in a statement. “Our recent option agreement with Implats to purchase their portion of the project, the positive results of the drilling program in the first quarter of this year, and the recent mechanical stripping attracted a number of potential joint venture partners for our Parkin Properties and ultimately resulted in securing this agreement with Lonmin.”
Certainly, it makes sense that the latest Lonmin news concerns investing in platinum outside of South Africa. While the country still accounts for the lion’s share of global platinum production, Reuters reported in August that Lonmin CEO Ben Magara had said that over 80 percent of South African platinum production was loss making. “Many mines in the platinum sector today are extremely ill and have not responded to the one single cure of cash injections,” the article quotes him as saying.
“The Parkin Properties are located in Sudbury, Canada, a major centre of the Canadian metal mining industry,” states Lonmin in Wednesday’s release. “Detailed geological modelling has identified the potential to expand the near‐surface resource to 1.5 – 5.0 million tonnes with typical Sudbury grades from surface to 600 metres depth with significant blue‐sky potential to depth and along strike.”
Lonmin signed a previous agreement to earn in on 14 of Wallbridge’s North Range properties in 2012, but has now added the Parkin properties to the mix.
Wallbridge’s Parkin properties are being explored for nickel, copper and platinum-group metals over a 9.4-kilometer strike length. Highlights of drill results from 2015 include 4.02 meters of 2.96 percent copper, 0.69 percent nickel, 1.51 g/t platinum, 0.44 g/t palladium and 0.36 g/t gold, as well as 11.6 meters of 0.61 percent copper, 0.81 percent nickel, 0.49 g/t platinum, 0.44 g/t palladium and 0.36 g/t gold.
Impala Platinum (JSE:IMP) previously held a 49.6-percent interest in the Parkin properties, but Wallbridge signed an agreement with Implats in December to buy back the interest “at a substantial discount to Implats’ $7.2 million past expenditure.” Wallbridge will make cash payments to Implats over the next five years.
The exploration program at the Parkin properties is set to begin October 1, 2015, and is set to cost C$2 million. Certainly, investors will be keeping an eye out for more news from Wallbridge and Lonmin.
Securities Disclosure: I, Teresa Matich, hold no direct investment interest in any company mentioned in this article.