South African mining firm Northam Platinum has agreed to acquire a 32.8% stake in platinum group metals (PGM) producer Royal Bafokeng Platinum (RBPlat) for $1.13bn (R17bn).

The stake will be acquired from a fully-owned unit of Royal Bafokeng Holdings Proprietary Limited (RBH Group), for $11.97 (R180.5) a share. RBH Group currently holds a 36.1% stake in RBPlat.

According to the agreed terms, Northam Platinum will issue 34.39 million of its shares to RBH Group and make a cash payment of $570m (R8.6bn).

Upon deal completion, RBH Group will have an 8.7% interest in Northam Platinum.

The acquisition comes amid recent talks by Impala Platinum to take over RBPlat.

Furthermore, Northam Platinum will have the option to raise its stake in RBPlat to 33.3% in aggregate.

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By GlobalData

Northam Platinum will pay $8.95 (R135) per share as the initial exercise price for the put and call options.

With an additional call and put option arrangement, Northam Platinum will have the option to further increase its stake to up to 34.9%.

RBH Group CEO Albertinah Kekana said: “We recognise Northam’s extraordinary success in implementing its long-term growth and diversification strategy and are pleased to become a significant strategic shareholder in Northam whilst also realising a significant value unlock from our long-term investment in and commitment to RBPlat.”

Northam said that the deal is in line with its operational diversification strategy and provides it with direct exposure to RBPlat’s mining operations and shallow ore bodies.

Commenting on the transaction, Northam Platinum CEO Paul Dunne said: “The RBPlat assets are young, shallow and well capitalised, and occupy a strategically important position in the Western Bushveld.

“We recognise the Royal Bafokeng Nation’s important contribution and ongoing legacy in respect of RBPlat and are cognisant of our responsibility in respect of the long-term sustainability of RBPlat’s operations and its impact on the broader communities and the Royal Bafokeng Nation as a whole.”

RBPlat’s operations include the Bafokeng Rasimone platinum mine (BRPM), BRPM concentrator complex, Maseve concentrator plant, as well as the Styldrift platinum project.