Western Australia’s junior miners continue to secure South African mining assets, many being hived-off by global resource companies in the wake of a recent shake up of that country’s mining laws.
Western Australia’s junior miners continue to secure South African mining assets, many being hived-off by global resource companies in the wake of a recent shake up of that country’s mining laws.
Changes to some of South Africa’s mining laws are altering the traditional dominance of major resource companies and providing opportunities for juniors.
The latest WA-based companies to join the growing ranks of foreigners with South African assets include Rox Resources, Riversdale Mining and Preston Resources.
Rox announced earlier in the week that it had acquired four alluvial diamond projects from a private South African company, Nyala Resources, in a cash and scrip offer worth $1.5 million.
The deal is a significant broadening of Rox’s interests after the company floated on the ASX last year to explore the historic Menzies gold mining province.
Aside from the affordability and geological potential of the projects, Rox managing director Ian Mulholland said the acquisition was also favourable because of the location.
“South Africa offers excellent conditions for exploration and mining, with its favourable geology, world-class management practices, short lead times to production and relatively low capital costs,” he said.
While Rox acquired the projects from a small unlisted company, others are mopping up South African assets from multinational resource companies.
Riversdale Mining recently entered into an agreement to purchase the Zululand Anthracite Colliery from BHP Billiton subsidiary Ingwe Collieries for $20 million, to be funded through a combination of debt and equity.
Following the completion of a sale and purchase agreement, Riversdale Mining will hold 74 per cent of the Zululand colliery, which produced 561,000 tonnes of coal last financial year. The remaining 26 per cent will be held by a black economic empowerment (BEE) consortium.
Riversdale, which already owns a namesake coal project in South Africa, was floated in 2001 with the specific purpose of building a portfolio of high-quality assets in South Africa.
The company states the BEE process under way in South Africa is making available a range of projects that larger mining groups would otherwise have had little incentive to dispose of in the past.
Preston Resources, which was previously known for its involvement in the controversial Bulong laterite nickel plant near Kalgoorlie, has also recently made a tilt at South Africa.
At the beginning of this month Preston said it planned to acquire 100 per cent of Chrome Corp, which is in the process of acquiring the South African Bathlako chrome mine, formerly owned by BHP Billiton.
Preston has offered Chrome Corp’s shareholders six of its shares for one of Chrome Corp’s and, if successful in acquiring 100 per cent, it would complete the acquisition of Bathlako via a $1.25 million share purchase plan and a $6 million convertible note offer.
Preston also plans to change its name to Chrome Corporation, disassociating itself from its past laterite nickel foray. It would also offer Australian investors exposure to chrome – a mineral mined by only one other company listed on the ASX, Consolidated Minerals.
