February 24, 2017 / 6:56 AM / 3 years ago

Northam Platinum to buy Glencore's Eland mine for about $14 mln

JOHANNESBURG (Reuters) - South Africa’s Northam Platinum Ltd said on Friday it would acquire Glencore Plc’s Eland platinum mine in North West province for 175 million rand ($14 million).

The logo of commodities trader Glencore is pictured in front of the company's headquarters in Baar, Switzerland, September 30, 2015. REUTERS/Arnd Wiegmann

Global miner and commodities trader Glencore had closed the Eland platinum mine in 2015 due to a fall in prices.

Northam said it will acquire all of Eland’s assets, including its two mining rights, surface and underground infrastructure, the company said in a statement.

Northam said Glencore would sell chrome produced at Northam’s Zondereinde and Booysendal operations.

“The chrome marketing agreement establishes a long-term relationship between Northam and Glencore, a leading global chrome trader, which will contribute to maximising Northam’s chrome revenue,” said Northam’s Chief Executive Paul Dunne.

The transaction, which remains subject to the consent of the minister of mineral resources, would provide Northam access to Eland’s resources, which the South African company estimated at 21.3 million ounces.

The company said it would reimburse Glencore for care and maintenance costs until the deal closes, amounting to about 30 million rand a year during the period.

Northam posted a lower headline loss of 64.7 cents for the six months ended 31 December compared with a loss of 66.3 cents for previous period, following an increase in revenue aided by a weaker rand and dollar exchange rate.

Northam said it will not pay an interim dividend due to the continuing difficult conditions in the mining industry and the cash requirements for the acquisition of platinum assets. The firm did not pay a dividend in the comparable period either.

The platinum producer said the global economic outlook and low dollar metal prices remain a concern for the group, at a time when it faces increasing power and labour costs.

($1 = 12.9019 rand)

Reporting by Tanisha Heiberg; Editing by James Macharia

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