Tharisa Minerals announced on Thursday that it had entered into a R303.3-million deal to purchase a portion of mining fleet and transfer employees from its mining contractor in a bid to transition to an owner mining model.
Tharisa said it would purchase certain existing equipment, strategic components, site infrastructure and spare parts from MCC Contracts Proprietary.
Tharisa Minerals, a European headquartered low-cost producer of platinum group metals (PGMs) and chrome, owns a large scale open pit operation in South Africa. It has a life of 18 years and a further 40 years of underground mine extension.
MCC Contracts Proprietary is the mining contractor at the Tharisa Mine and provides open-cast contract mining services, including drilling, blasting, load hauling and rehabilitation.
Tharisa said the purchase consideration would be funded through a combination of a new bridge finance facility, OEM supplier finance, traditional banking facilities and available cash resources.
The deal would see Tharisa taking direct control over its mining operations and eliminate the contractor’s risk premiums and profit margins.
It is subject to the fulfilment of certain precedent conditions and any approvals from the competition authorities.
In terms of the binding term sheet, Tharisa Minerals would purchase the assets and equipment from MCC for a purchase consideration of R303.3 million.
The purchase consideration would be settled through a cash payment of R250 million within 30 days while the balance would be paid in cash in six equal monthly instalments.
The 153 “yellow fleet” machines being purchased include excavators, off highway dump trucks, articulated dump trucks and
support vehicles, being substantially all of the equipment at the Tharisa Mine, as well as 17 additional machines from another MCC site.
Approximately 900 on-site employees of MCC will be transferred to Tharisa in terms of Section 197 of the Labour Relations Act.
With the long life of the open pit, Tharisa said it believes that the transition to an owner mining model was a logical progression in its development with both cost and operational benefits.
By taking direct control of its mining operations, Tharisa said it would be better placed to control the reef grades, thereby delivering improved quality ore to the processing plants and optimising the feed and recovery within the plants.