Chinese mining group Zijin Mining has made a friendly bid to acquire the entire issued capital of Nkwe Platinum (ASX: NKP) for A$0.08 per share equating to a 166% premium to the company’s open price on Monday.
The news sent Nkwe Platinum’s share price soaring to see it close out Monday at A$0.072 – up 140%.
Zijin already owns a 60.47% stake in Nkwe Platinum via its wholly-owned subsidiary Jin Jiang Mining.
At this stage the terms are non-binding, with Zijin proposing an amalgamation under Bermudan law.
During a three-to-four-week due diligence period Zijin plans to liaise with Nkwe Platinum on developing a draft definitive agreement that meets the Bermudan legislation.
In addition to due diligence, the deal is subject to other conditions including standard regulatory and board approvals.
One condition is the engagement of an independent financial adviser to ensure the offer price is fair for Nkwe shareholders.
Garatau platinum project
As its name suggests, Nkwe Platinum is focussed on developing its platinum assets in South Africa.
The company owns 74% of its flagship Garatau project, which includes three main platinum deposits covering 5,312.9 hectares in South Africa’s Bushveld Complex.
According to Nkwe Platinum, the project hosts the Merensky Reef and UG2 chromite from 280m to 1,500m below surface.
Total resources at the project include 43.69 million ounces of three platinum group elements plus gold.
The project has reached pre-development stage after a definitive feasibility study confirmed the project’s viability.
By the end of the December period last year, Nkwe Platinum was undertaking its early works program prior to finalising its operational readiness plan.
In preparation for developing the project, Nkwe Platinum has obtained environmental and water use approvals.
Additionally, a power source has been secured from the national energy regulator Eskom.
A mining licence, which was in question for several months was reaffirmed late last year after the South African Minister of Mineral Resources lifted a notice that had been issued in October 2016.