[South Africa] Afrimat acquires Gravenhage manganese mining right to further strengthen diversification
Afrimat, an open-pit mining Company providing industrial minerals, commodities, and construction materials, announced the acquisition of the Gravenhage manganese mining right and associated assets (Gravenhage), in the Northern Cape, South Africa.
Afrimat is purchasing the Gravenhage manganese mining right and associated assets from Aquila Steel and Rakana Consolidated Mines (the Sellers), for a total purchase consideration of roughly R650 million (or the Rand equivalent of $45 million and R15 million for the property).
There are conditions precedent that include approval in terms of section 11 of the Mineral and Petroleum Resources Development Act, Competition Commission approval, the granting of a water use license, and approval having been obtained by Aquila Steel (S Africa) Proprietary Limited from the Chinese State-owned Assets Supervision and Administration Commission of the State Council (SASAC) for the sale of the assets and the assumption of the assumed liabilities as contemplated in the agreement.
Afrimat CEO Andries van Heerden said that there are many positives to the acquisition, the first being that the Group will be adding another commodity, i.e. manganese, to its diversification strategy within the Bulk Commodities segment of the business, the second being that this sizeable acquisition will propel Afrimat into the mid-tier mining space.
The resource is well positioned within Afrimat operationally as it is not dissimilar to its existing operations given the process and is considered attractive in both size and quality of the resource. Gravenhage is a long-life, near-development manganese resource situated in the northern part of the Kalahari Manganese field approximately 120km from Afrimat’s existing Demaneng iron ore mine. Current studies show an extensive Life of Mine in excess of 20 years. A Definitive Feasibility Study was finalised confirming the technical and economic feasibility of the Gravenhage Manganese Project based on an initial open cut operation with the potential for subsequent underground mining. The resource and its significant potential has been well defined by continued exploration drilling.
Afrimat has ensured sustainability through diversification. Afrimat has been able to successfully invest into commodities that generate a strong cash flow – cash that the Group has in turn spent on making further strategic acquisitions to grow cash incrementally. “The successful development of Gravenhage will increase our scale in the ferrous-metal value chain and provide further exposure to foreign currency denominated earnings, said van Heerden.“ This approach has proved successful for us and will be applied to this acquisition and in turn by ensuring focused execution of Gravenhage, I am confident we can achieve growth of the Group.”
Operational synergies with the Demaneng iron ore mine are expected to be realised, and a plan is in place to accommodate logistics to extract manganese product from Hotazel to ports for outbound international markets. Afrimat already has an excellent working relationship with Transnet through Demaneng and it is envisaged that the further co-operation of Transnet as a partner to enable new entrants like Afrimat into the manganese sector, will be forthcoming.