Platinum Group Metals Moving Forward with Maseve Mine Sale

The firm plans to focus on its palladium dominant Waterberg project.


Platinum Group Metals (TSX:PTM,NYSE:PLG) is proceeding with its $74 million sale of its Maseve Mine to Royal Bafokeng Platinum (RBPlat) (JSE:RBP), which was first announced in September. The company said it had completed due diligence and and the execution of binding legal agreements regarding the sale.

The firm said RBPlat is to pay an initial $58.0 million in cash to acquire the concentrator plant and certain surface assets of the Maseve Mine, which is located on the Western Limb of the Bushveld Complex near Rustenburg, South Africa. RBPlat already paid a $3 million deposit regarding this step of the deal on October 9. Closing of the first step of the deal is subject to RBPlat shareholder approval at a meeting scheduled for November 30. The transaction must also gain the approval of the South African Competition Commission.

The second step involves acquiring 100 percent of the issued equity in Maseve by way of a scheme of arrangement for $4 million in cash and approximately $12 million in RBPlat ordinary shares. Platinum Group Metals notes that closing the second step of the transaction is subject to approval from RBPlat’s shareholders, the South African Department of Mineral Resources and Maseve’s 17.1 percent minority shareholder.

Platinum Group Metals said it plans to use the proceeds from the sale to pay down a portion of the firm’s debt. In July, the company announced that mining had been suspended at Maseve in order for the company to restructure mine operations. The firm had found that although tonnes produced from the mine were increasing the “fully mechanized bord and pillar mining method had resulted in excess dilution, and therefore lower than planned grades delivered to the plant.” The firm noted in its Q3 report that its liquidity would be constrained in the near term because developing Maseve will “continue to utilize a majority of the company’s cash on hand until positive cash flow is achieved.”

Platinum Group Metals said it now plans to focus on developing its Waterberg project. The firm noted that 61 percent of Waterberg’s reserves and resources are palladium. The price of palladium has risen over 50 percent year-to-date and as of 3pm on November 23 was up $6 to $1,013 per ounce. A 2016 independent prefeasibility study concluded that Waterberg is one of the largest, lowest cost undeveloped PGM assets globally.

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Securities Disclosure: I, Melissa Shaw, hold no direct investment interest in any company mentioned in this article.

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