AFRIMAT, the industrial minerals company, will buy the Gravenhage manganese deposit in South Africa’s North Cape province for $ 60 million (Rand 840 million), he said today.
Gravenhage is a deposit owned by Aquila Steel, the company that was embroiled in a licensing dispute that resulted in the Department of Mineral Resources and Energy (DMRE) being taken to court, where its then minister – Ngoaka Ramathlodi – was convicted of incompetence.
The dispute was ultimately heard in a review by the Constitutional Court which ruled in favor of Aquila Steel paving the way for the prospect’s development. This happened more than eight years after the initial announcement of the project.
Aquila is 85% owned by Chinese steelmaker Baosteel Group.
Afrimat said in its announcement that the acquisition of the project represents a new step in its diversification strategy.
It also reinforces the growing interest in the North Cape as a new center for mining development.
In addition to Orion Minerals – which has potential investments in the region of around R6 billion – a new copper tailings processing company is expected to be listed by former Pan African Resources CEO Jan Nelson after bought the copper tailings from Okiep in the province.
Commenting on the rationale for the transaction, Afrimat said the prospect had technical support for a feasibility study and was located 120 kilometers from the company’s Demaneng iron ore mine. “This is one of the last independent and undeveloped manganese deposits in South Africa,” said Afrimat de Gravenhage.
“A definitive feasibility study has been finalized confirming the technical and economic feasibility of the Gravenhage manganese project based on an initial open pit operation with potential for subsequent underground mining,” Afrimat said. “The resource and its significant potential have been well defined by continued exploration drilling,” he said.
Iron ore and manganese are used in steelmaking and are considered essential to global decarbonization efforts. “The successful development of Gravenhage will increase Afrimat’s scale in the ferrous metals value chain and its exposure to currency denominated earnings,” said Afrimat.
Consideration for the transaction will be paid in an initial tranche of $ 30 million followed by $ 15 million relating to the purchase of the property payable on the tenth business day following the fulfillment or waiver of the conditions precedent.
These conditions include an approval of a change of control by the DMRE as well as the approval of the transaction by the Chinese authorities and the granting of a water use permit.
A second tranche of $ 15 million will be paid on the critical condition that Afrimat is able to involve a third party in the transaction, the consequence of which is that it will hold less than 50% of the mining rights of Gravehage. This tranche also requires salable ore to be produced from the mine.