In September 2007, Anglo Platinum, the world's No 1 digger of platinum group metals (PGMs), announced two black economic empowerment (BEE) deals that have ended up in very different places. One of these, where Anglo Platinum sold assets to Anooraq Resources, for R3.6bn, has now blown up with an announcement on Thursday stating that the value of the deal would be reduced by R1bn in favour of Anooraq.The other deal, where Anglo Platinum also sold, for R4bn, certain South African PGM assets, effectively to Northam, and its parent company Mvelaphanda Resources, has been an entire success, not least due to the success of other BEE deals involving the two companies. Northam, a Tier II PGM miner, has since been eagerly eyed by the likes of Xstrata, Lonmin, Alisher Usmanov, and ENRC, and, most of all, Impala Platinum, No 2 in the global PGM game.

Anooraq, by contrast, lost C$13.5m in 2008, suffers from an awkward and unwieldy BEE structure, a non South African primary listing, and a bleeding mine in Lebowa Platinum. Given the collapse of PGM prices, which are yet to recover to even breakeven levels for most PGM mines, Anooraq has effectively been burdened by taking up 51% of Lebowa Platinum in its deal with Anglo Platinum.

Northam/Mvelaphanda acquired no operating assets, but mainly the Booysendal prospect, generally regarded as one of the most prospective, low life, low cost PGM properties in the world. Northam itself, along with Impala, stand as two of the strongest names in a desperate and depressed global PGM sector, dominated by production out of southern Africa.

The severity of the blow up at Anooraq cannot be understated. Within the bailout package, Plateau, a wholly owned subsidiary of Anooraq, will raise R1.2bn through the issue of cumulative redeemable A preference shares, to Rustenburg Platinum Mines, none other than a wholly owned subsidiary of Anglo Platinum.Beyond that, Anglo Platinum, in its own name, has agreed to reinvest R1.1bn of the new transaction consideration proceeds into Anooraq through a special purpose financing vehicle (Pelawan Finance SPV) established between Anglo Platinum and Pelawan. Pelewan, a BEE entity, is Anooraq's controlling shareholder.Beyond that, in order to ensure the sustainability of Anooraq and Lebowa Holdco, a new vehicle held 51% by Anooraq and 49% by Anglo Platinum, Anglo Platinum will make two further facilities available to Plateau, including an operating cash-flow shortfall facility of up to a maximum of R750m, which Plateau may utilise to fund its share of any operating cash flow shortfall. Lebowa Holdco holds the assets seen after the original Anooraq deal with Anglo Platinum.By its own description, Anooraq is engaged in the exploration and development of PGM properties in South Africa's Bushveld Complex, and has a long-term objective of becoming a significant and independent PGM producer in South Africa through organic and acquisitive growth.Market

PGM

Tier I

Value, USD bn

Resources, Moz

USD/oz

Anglo Platinum

13.358

725.10

18.42

Impala

12.020

325.00

36.98

Lonmin

2.884

158.00

18.25

Tier II

Aquarius

1.632

107.00

15.25

Northam

1.346

120.40

11.18

Eastplats

0.323

74.20

4.36

Anooraq

0.171

110.10

1.55

Developers

Platmin

0.362

17.10

21.18

WeSizwe

0.116

13.00

8.90

PGM

0.087

6.70

12.99

Ridge

0.118

13.00

9.06

Pt Australia

0.221

5.10

43.28

Jubilee

0.027

30.70

0.88

Totals/average

32.663

1705.40

19.15

Developers

0.930

85.60

10.87

Anooraq, through Plateau, also holds interests in several PGM projects, including the advanced stage Ga-Phasha and Boikgantsho projects, and the early stage Kwanda project. All of these projects are currently 50/50 joint ventures with Anglo Platinum.Anooraq, incorporated in the Province of British Columbia, Canada, is currently 61.8% owned and controlled by Pelawan. Anooraq has a primary listing in Toronto, and secondary listings on the NYSE AMEX and in Johannesburg.Seriously dilutive PGM mine capital raisings are now coming to the markets. On Monday this week Lonmin announced a rights issue where it will sell 35.072m new shares, to raise the equivalent of around $478m. This follows the recent success of the Aquarius Platinum rights issue, where the sale of 46.33m new shares raised around $126m; Aquarius also issued convertibles that have provided it with $78m in hybrid debt-equity. Aquarius also has a friendly bid in now for Ridge.Record PGM prices seen during 2008 inspired a spate of potential and actual corporate activity. On September 12 2008, Impala Platinum announced that it was in talks with Northam and Mvelaphanda Resources, which holds 63% of Northam, to create a South African controlled platinum champion. As PGM prices started to head for the cliff, Impala's released a cold feet announcement of October 17 2008, before its intentions with Northam and Mvelaphanda turned into an inelegant exit. The day before Impala's initial announcement, Aquarius Platinum said it was considering options for participating in South African platinum industry consolidation, adding, however, that the options under consideration do not include a possible offer by the company for Lonmin. On August 6 2008, Xstrata, the Anglo-Swiss diversified miner, announced intention of a hostile GBP 33.00 a share cash bid for Lonmin, effectively valuing Lonmin, global No 3 in PGMs, at around $10bn. Xstrata later dropped the bid, but not before it ended up with 25% of Lonmin.On April 14 2008, Anooraq had announced that it intended to fund the purchase price for the so-called Lebowa Transaction through a combination of debt and equity financing. On October 2 2008, Anooraq announced that it would not be affecting a general public offering of new Anooraq shares.Selected platinum stocks

Stock

From

From

Value

Tier I platinum

price

high*

low*

USD bn

Anglo Platinum

ZAR 480.00

-67.6%

37.1%

13.358

Impala Platinum

ZAR 170.00

-53.4%

96.4%

12.020

Lonmin

GBP 12.03

-66.7%

124.2%

2.884

Averages/total

 

-62.6%

85.9%

28.261

Weighted averages

-62.6%

64.8%

Diversified

Anglo American

GBP 14.43

-60.8%

59.3%

29.432

Mvela Resources

ZAR 30.30

-56.1%

95.5%

0.758

Norilsk

USD 9.77

-69.1%

178.3%

18.624

ARM

ZAR 123.00

-59.9%

61.8%

3.046

Averages/total

 

-61.5%

98.7%

51.860

Weighted averages

-64.2%

89.0%

Tier II platinum

Stillwater

USD 5.15

-68.4%

192.6%

0.485

Aquarius

GBP 2.59

-70.6%

238.6%

1.632

Northam

ZAR 32.00

-58.5%

93.9%

1.346

NA Palladium

CAD 2.79

-59.3%

144.7%

0.206

Zimplats

AUD 7.00

-51.7%

100.0%

0.570

Eastplats

CAD 0.48

-85.2%

156.8%

0.323

Anooraq

CAD 1.08

-71.9%

390.9%

0.171

Averages/total

 

-66.5%

188.2%

4.733

Weighted averages

-68.0%

152.9%

Developers and explorers

Platmin

CAD 1.15

-85.6%

259.4%

0.362

WeSizwe

ZAR 1.69

-80.7%

67.3%

0.116

Noront Resources

CAD 0.67

-86.7%

54.0%

0.088

Aquiline

CAD 2.62

-69.3%

263.9%

0.152

Pt Australia

AUD 1.18

-62.5%

227.8%

0.221

Chromex

GBP 0.20

-56.5%

33.3%

0.025

Sylvania

GBP 0.50

-61.4%

108.3%

0.135

Starfield

CAD 0.19

-86.2%

171.4%

0.054

Ridge

GBP 0.84

-37.6%

301.2%

0.118

PGM

CAD 1.51

-54.0%

112.7%

0.087

Solitario

CAD 1.50

-73.0%

17.2%

0.038

Colossus Minerals

CAD 2.85

-28.8%

562.8%

0.134

Jubilee

GBP 0.17

-79.9%

131.6%

0.027

Nkwe

AUD 0.27

-75.0%

165.0%

0.102

Braemore

GBP 0.06

-42.3%

520.0%

0.074

Marathon

CAD 0.60

-84.2%

140.0%

0.015

Caledonia

CAD 0.08

-60.5%

200.0%

0.032

Freegold Venture

CAD 0.15

-88.6%

38.1%

0.008

Magma Metals

AUD 0.40

-36.5%

90.5%

0.039

Franconia

CAD 0.30

-83.6%

195.0%

0.015

Cons. Puma

CAD 0.07

-95.2%

100.0%

0.003

Avalon Ventures

CAD 0.65

-66.7%

120.3%

0.038

Rusina

AUD 0.06

-75.8%

93.9%

0.012

Largo Resources

CAD 0.11

-93.0%

144.4%

0.018

Macdonald Mines

CAD 0.10

-76.5%

280.0%

0.012

Hard Creek

CAD 0.19

-77.4%

137.5%

0.010

Polymet

CAD 1.53

-63.7%

155.0%

0.179

MetalCORP

CAD 0.16

-83.2%

166.7%

0.007

Wallbridge

CAD 0.11

-74.7%

214.3%

0.009

Benton Resources

CAD 0.38

-33.3%

245.5%

0.022

Mustang Minerals

CAD 0.14

-72.5%

180.0%

0.010

Northern Shield

CAD 0.08

-88.4%

45.5%

0.004

Platina

AUD 0.31

-57.0%

117.9%

0.014

Darnley Bay

CAD 0.11

-78.1%

110.0%

0.004

Pacific NW Cap.

CAD 0.12

-63.6%

140.0%

0.006

Niplats

AUD 0.22

-62.1%

266.7%

0.012

Starcore

CAD 0.10

-64.9%

100.0%

0.005

Huston Lake

CAD 0.25

-64.8%

19.0%

0.007

Goldplat

GBP 0.12

-16.4%

41.5%

0.020

Hinterland Metals

CAD 0.04

-88.3%

250.0%

0.001

Premium Exp.

CAD 0.10

-74.4%

122.2%

0.003

Eurasia Mining

GBP 0.02

-48.3%

87.5%

0.004

Silvermet

CAD 0.16

-20.0%

966.7%

0.014

Andulela

ZAR 0.06

-94.0%

50.0%

0.003

Developer averages/total

-74.1%

195.4%

2.259

Weighted averages

-74.8%

167.5%

Overall averages/total

-67.9%

175.6%

35.253

Overall weighted averages

-64.5%

77.5%

* 12-month

Source: market data; table compiled by Barry Sergeant