Implats targets Canadian palladium


Implats targets Canadian palladium

Published Date: 2019-10-08 | Source: Stephen Gunnion | Author: Stephen Gunnion

Implats targets Canadian palladium

Buying North American Palladium will provide geographical diversification and increased palladium exposure.

Impala Platinum says it has reached a deal to buy 100% of North American Palladium (NAP) for C$1,01 billion, or around R11.4 billion. The move would diversify the group's asset base beyond Southern Africa, where it owns platinum mines in SA and Zimbabwe. It would also raise its exposure to palladium, which has far outperformed platinum over the past few years.

Under the proposed transaction, Implats said it would pay NAP's majority shareholder, an affiliate of Brookfield Business Partners, C$16 per share for its 81% stake, while minority shareholders would receive C$19.74 a share, a 15% premium to the company's 30-day volume-weighted average price. It said that implied a blended offer price of C$16.77 per share.

NAP's board has unanimously approved the deal, which received a fairness opinion from BMO Capital Markets. It will recommend that shareholders also vote in favour.

NAP is listed on the Toronto Stock Exchange and trades in the US over-the-counter (OTC) market. It owns and operates the Lac des Iles Mine in Canada's Ontario province and has an ownership in two exploration properties - one of which Implats also holds a 24% stake in. Once the purchase is finalised, it will be delisted and become a wholly-owned subsidiary of Implats.

Implats said the acquisition met its strategy of repositioning itself as a high-value, profitable and competitive producer of platinum group metals (PGMs), with a strong focus on low-risk, shallow, mechanised, palladium-rich assets. Last year, Lac des Iles produced more than 237-thousand ounces of palladium at an all-in sustaining cost (AISC) of $690 per ounce. This year, it is on track to produce between 220- and 235-thousand ounces at an AISC of $785 to $815 per ounce. It's a low cost producer of platinum group metals (PGMs) and is fully mechanised with a low labour component.

Implats said it would pay for the deal using existing cash, the proceeds raised from a metal prepayment of excess inventory and a $350 million bridging loan, which will later be replaced with competitive funding.

Its shares closed 1% higher at R104.27 yesterday. The announcement was made after the close of trade.

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