TORONTO (miningweekly.com) Africa-focused project developer Ivanhoe Mines, which is planning to build its $1.7-billioin flagship Platreef platinum group elements project in South Africa, on Thursday announced that it had finalised a broad-based black economic-empowerment (BBBEE) deal, giving 20 local communities a 26% interest in the project.
The deal now paved the way for the Department of Mineral Resources (DMR) to formalise and execute the mining right granted to Ivanhoe in May.
The project is located in the heart of South Africas Bushveld Igneous Complex, which is a most-important global platinum-producing region, having been likened to an lsquo;Aladdins Cave for its colossal mineral wealth.
TSX-listed Ivanhoe said about 150 000 people lived in the 20 host communities that formed part of the BBBEE transaction. A total of 187 local entrepreneurial companies, representing a combined 333 individual shareholders, participated in the entrepreneurial subscription.
Upon execution of the mining right, a community trust for the 20 host communities would receive a yearly fixed contribution of R11-million (about C$1.1-million) while the mine was being developed.
Ivanhoe subsidiary Ivanplats (previously known as Platreef Resources) transferred the 26% interest in Platreef to a BBBEE special purpose vehicle, as required by South Africas mining laws on June 26, fulfilling the requirements under the companys mining right application.
With arrangements for individual funding contributions in place, the final allocation of ownership to local entrepreneurs was concluded on September 3, which completed the BBBEE transaction, Ivanhoe explained.
The Platreef Projects BBBEE structure established a 20% interest held by a trust established for the benefit of the 20 local host communities in the vicinity of the planned Platreef mine development; a 3% interest held by a trust established for the benefit of historically disadvantaged, nonmanagerial South African employees at Platreef and a 3% interest held by a consortium of local entrepreneurs and managerial employees.
Executive chairperson Robert Friedland commented that the new BBBEE ownership stake was a landmark for the Platreef project, demonstrating Ivanhoes commitment to the empowerment of black, historically disadvantaged South Africans.
Ivanhoe Mines is extremely proud of the innovative BBBEE transaction that has just been concluded with Platreefs host communities, local entrepreneurs and the projects employees. We believe that this agreement represents one of the broadest empowerment transactions seen in the mining sector, placing a major ownership stake in what will be a very significant mine in the hands of historically disadvantaged South Africans and meeting the policy objectives of South Africas mining laws, particularly the Mining Charter, he noted.
The traditional chief of Mokopane (previously Potgietersrus) Kgoshi Kekana added that the deal marked a new beginning for our villages and Mokopane as a whole.
We are confident that this BBBEE transaction is going to contribute significantly to the socioeconomic development and upliftment of our host communities. Small and medium [-sized] enterprises will reap not only the benefits of having a new-era mine development on their doorstep, requiring the provision of extensive goods and services, but will also have participating ownership in the project, VP of transformation and stakeholder relations Dr Patricia Makhesha said.
Ivanhoe in March released its preliminary economic assessment (PEA) of Platreef, which used a base-case output scenario of 785 000 oz/y of platinum, palladium, rhodium and gold, with an estimated preproduction capital cost of about $1.7-billion.
The project was believed to contain the highest concentration of base metals among Africas platinum group metal (PGM) producers, helping to rank it at the bottom of the cash-cost curve, at an estimated $341/oz of PGMs plus gold, net of by-products.
The PEA estimated the project to have an after-tax net present value of $1.6-billion at an 8% discount rate and an internal rate of return of 14.3%.