BCL Limited and Norilsk Nickel have announced that they have entered into definitive transaction agreements to sell Norilsk operations in Africa to BCL, including a 50% participation interest in the Nkomati Nickel and Chrome Mine (‘Nkomati’), South Africa, and its 85% stake in Tati Nickel Mining Company in Botswana. The total expected consideration for the Assets payable by BCL to Norilsk Nickel amounts to US$337 million payable in cash. In addition, BCL will assume all attributable outstanding debt and environmental and rehabilitation liabilities associated with each asset.
“The agreed deal structure envisages the assignment of the Nkomati concentrate off-take agreement from Norilsk Nickel (Metal Trade Overseas AG (“MTO”) to BCL. In addition, Norilsk Nickel (via MTO) will enter into a matte off-take agreement with BCL, whereby the matte will be supplied for processing to Norilsk Nickel’s Harjavalta refinery in Finland,” said a statement from BCL Public Affairns Manager, James Molosankwe. The transaction is the largest in a series of asset disposals by Norilsk Nickel since its new strategy was presented in October 2013 with the aim to exit from non-Tier-1 mining operations.
This marks Norilsk Nickel’s full exit from its African business, which adding to earlier disposals of the Company’s Australian assets, also marks the complete exit from all former operating international assets, but Finland. The simultaneous assignment of the Nkomati concentrate agreement and entering into agreement with BCL are in line with a new Norilsk Nickel’s downstream production re-configuration strategy. For BCL, the transaction has strong strategic rationale and allows for the treatment of both Tati Nickel and Nkomati concentrates at BCL’s smelter, significantly optimizing this operation and delivering increased economic and social benefits to the region as a whole. The acquisition of Norilsk Nickel’s interest in Nkomati marks the first significant investment by BCL into South Africa, said Molosankwe.
“The sale of the African operations marks a major milestone in our commitment to deliver the new corporate strategy. The transaction is part of the management’s roadmap to release capital from non-core assets and will have a positive impact on the Company’s return on invested capital”, Pavel Fedorov, Norilsk Nickel First Deputy CEO commented.
Chairman of BCL Board, Dr Akolang Tombale has said the transaction is a significant anchor to Polaris II Strategy. He added that BCL hass now evolved as a regional player, with high quality mining assets, supported by a strong metallurgical complex. Completion of the sale is subject to regulatory approvals and customary closing conditions. The closing of the transaction is not subject to any financing conditions and is expected to occur within the next six months.
Barclays acted as exclusive financial advisor to Norilsk Nickel and AFI acted as exclusive financial advisor to BCL. Nkomati, located 300 km east of Johannesburg in Mpumalanga province, is the only primary nickel producer in South Africa. The deposit is represented by disseminated sulphide copper-nickel ore and located within Bushveld complex. Other by-product metals include copper, PGMs and chrome. In 2013, Nkomati produced 23.8 thousand tonnes of nickel contained in nickel concentrate. As of 31 December 2013, proved and probable ore reserves of the deposit exceed 113 million tonnes, average nickel content of 0.32% and copper content of 0.13%. Measured and indicated mineral resources amount 241 million tonnes with an average nickel content of 0.35% and copper content of 0.14%. Tati Nickel includes the Phoenix open pit nickel mine, located 35 km east from Francistown, and the Selkirk underground nickel mine, which has been put on care and maintenance since 2002. The Phoenix sulphide deposit has supported mining operations since 1995. In 2013, Tati Nickel produced 8.1 thousand tonnes of nickel in concentrate. As of 31 December 2013, the aggregate proved and probable ore reserves of Phoenix and Selkirk amount to 27 million tonnes, with an average nickel content of 0.19% and copper content of 0.13%. Measured and indicated mineral resources total 239 million tonnes with an average nickel content of 0.22% and copper content of 0.22%.
Open Joint-Stock Company Mining and Metallurgical Company Norilsk Nickel is a diversified mining and metallurgical company, the world’s largest producer of nickel and palladium and a leading producer of platinum, cobalt, copper and rhodium. In addition, the Company produces gold, silver, iridium, selenium, ruthenium and tellurium. Key production units of MMC Norilsk Nickel’s group in Russia are at the Norilsk Industrial District and the Kola Peninsula. MMC Norilsk Nickel’s shares are admitted to trading on the Moscow and on the Saint-Petersburg Exchanges. ADR’s representing shares in MMC Norilsk Nickel are admitted to trading on the over the counter market in the US and on the London and Berlin stock exchanges.
BCL is a mining and smelting company located in the town of Selebi Phikwe and wholly owned by the Botswana Government. BCL has world class metallurgical facilities anchored by its copper nickel smelter with a treatment capacity of just less than one million tons per annum. The company occupies a major strategic position in Botswana’s economy, employing approximately 5,400 people with annual revenues of over US$ 180 million and total assets of US$ 700 million.
BCL currently produces two products for two different refineries, high sulphur (20%S) matte and low sulphur (6%S) matte. Delivery of the matter product to customers is done via a combination of road, rail and sea.