JOHANNESBURG, May 11 (Reuters) - The chief executive of South Africa’s Northam Platinum said on Monday the firm could spend 4 billion rand ($334 million) on shallow, mechanised mines after selling some its stock to black shareholders.
In October Northam, the world’s No.3 platinum producer by market value, sealed a 6.6 billion rand deal that increased its black ownership to over a third and injected cash to fund growth and potential acquisitions.
South Africa’s government requires companies to have at least 26 percent black ownership by this year.
Northam was enticed by the low risk profile of shallow mechanised ore bodies, Chief Executive Paul Dunne said.
“We are targeting shallow mechanisable ore bodies in our neighbourhood,” Dunne told reporters at the listing of Northam’s empowerment partner, Zambezi Platinum Consortium, on the Johannesburg Stock Exchange.
“At this stage we feel the better opportunities lie in South Africa. We would like to position the company with a diversified asset, or a diversified asset base which implies a lower risk.”
Northam said in February it would buy Aquarius Platinum’s Everest mine for 450 million rand.
The firm has also said it would use the cash from selling its stake to blacks to ramp up its Booysendal mine.
Dunne said Northam was positioning itself for a turnaround in the platinum prices, which the firm forecast would happen in the next few years due to a “fundamental supply/demand deficit.”
Platinum prices have been depressed by a supply glut that even a record five-month platinum strike in South Africa last year was unable to deplete.
Following the strike, bigger rival Impala Platinum said it would sell its South African Marula mine while the leading firm in the sector, Anglo American Platinum, also put its labour-intensive Rustenburg assets on sale.
Northam sold its stake to black shareholders under the government’s policy of black economic empowerment, or “BEE”, designed to address the inequalities of the apartheid system that ended in 1994.
$1 = 11.9840 rand Editing by James Macharia