Move over junior platinum producers, Anooraq Resources (ANO) is the newest to join the club. The small platinum exploration company will complete a transaction on July 1st to obtain 51% ownership in the Lebowa Mine, making it a junior platinum group metals (PGM) producer.
On June 15, shareholders approved the company’s R 2.6 B ($ 322 M) purchase of Lebowa from Anglo Platinum (AGPFF), the world’s top platinum producer. Upon completion, Anooraq will likely have the third largest PGM resources in the world.
Lebowa is located in the northeastern portion of the prolific Bushveld, South Africa minerals region which contributes 75% of all the world’s platinum and contains nearly 80% of resources. Already several years into production, the mine has proven and probable reserves of about 11 M ounces of PGM.
With an expected 100 years of life, Lebowa has an anticipated production rate of 150,000 ounces of platinum per year by 2012. Nonetheless, safety issues hammered Angloplat’s platinum production here to just 71,000 ounces last year. Anooraq has since announced a plan to boost production and significantly reduce cash costs by avoiding expensive mining at deep levels and instead concentrating on near-surface levels within 650 m.
In addition to Lebowa, Anooraq owns a 50% stake in several other mineral rich properties in northern and northeastern Bushveld. Closest to production are the Ga-Phasha and Boikganthso mines. The former has 23.9 M ounces of measured and indicated resources and the latter has 7.6 M indicated resources.
ANO shares reached a high of over $ 5 in 2007 and $ 2.91 in 2008; however, last year’s platinum price decline has left the stock price at less than $ 1 today. Could this price be considered a real bargain for the third largest holder of PGM resources in the world?
