Lonmin confirms it now owns 100pc of Pandora venture

Lonmin announced the completion of the acquisition of Anglo American Platinum's 42.5% interest in the Pandora joint venture on Wednesday, as well as Mvelaphanda Resources’ 7.5% interest.

The company said the agreement to acquire AAP's interest in Pandora was first announced on 11 November 2016, and the acquisition of Mvelaphanda's interest was announced on 13 May 2017.

Lonmin now owns 100% of Pandora, with the effective date for both transactions being 1 December 2017.

The completion of the Pandora transaction unlocked “significant synergies” for Lonmin, the board claimed.

It would allow Lonmin to extend mining at its Saffy Shaft without having to spend ZAR 2.6bn of capital expenditure, of which ZAR 1.6bn would have been required over the next four years.

It also provided “”significant future opportunities to develop Pandora's potential.

Pandora mines platinum group materials from the UG2 and Merensky reefs underlying the Pandora mining area.

Lonmin said 100% of the ore produced by the Pandora joint venture was sold to Lonmin for processing and refining.

The gross assets of the Pandora joint venture were ZAR 1.1bn at 30 September 2016.

Pandora made an operating loss of ZAR 109m in financial year 2016, of which 50% was reflected in Lonmin's 2016 accounts.

Lonmin said it received a contribution of ZAR 117m in its 2016 financial year from the ore purchase agreement, which offset the loss reported by the joint venture.

“Lonmin now owns 100% of Pandora,” reiterated CEO Ben Magara.

“This is an excellent strategic fit for us, which equips us with a valuable contiguous asset with long-term development potential and allows us to maintain production levels at Saffy while significantly reducing our capital expenditure requirements at this operation over the short- and medium-term.”