Shares in Mvelaphanda Resources (Mvela) (MVLJ.J) and its Northam Platinum (NHMJ.J) unit surged on Wednesday on news that Impala Platinum (IMPJ.J) was still involved in talks to acquire the two firms.

The three companies issued a joint statement saying discussions about the proposed acquisition, that could boost output for Impala, the world's No. 2 platinum producer, were ongoing, raising hopes that a deal could still be reached.

The news has certainly whetted investors' appetite, Cape Town-based platinum analyst Barend Ritter of Sanlam Investment Management said.

It's not an easy negotiation because of cashflow constraints, but I feel Impala are still keen to go ahead. The first price was not suitable, it's a question of re-negotiating.

Shares in Mvela and Northam both rose more than ten percent on the news of ongoing talks. Mvela later pared the gains to trade 4.23 percent higher at 27.10 rand and Northam was 5.80 percent up at 27.21 rand at 0924 GMT.

In November, Impala said it would not proceed with a 22 billion rand ($2.35 billion) deal to buy Mvela and Northam under terms it had initially proposed, but said the firms were still in talks. [ID:nLJ456362]

Implats had said it would not proceed with the deal on the basis of a proposed exchange ratio of 35 Implats shares for every 100 Northam shares, given lower platinum prices and capital market volatility.

Analysts have said a deal that would see a ratio of around 28-30 Implats shares for every 100 Northam shares may be acceptable to Implats.

While launching the deal, Implats said it wants to create a South African-controlled platinum champion, and wants to get its hands on Booysendal, Mvela's prime platinum deposit.

The asset has over 100 million ounces of platinum group metals, which can be mined at a lower cost from shallow deposits, compared to Implats current expansion projects. ($1=9.370 Rand) (Reporting by James Macharia; editing by Simon Jessop)

© Thomson Reuters 2009 All rights reserved