M&A IN THE AIR: Northam says unnamed PGM rival made unsolicited approach, spoor points to Valterra

Could some kind of asset swap be on the cards, or a potential joint venture? That’s just speculation, but Valterra seems to be on the hunt suddenly, and Northam seems to covet some of its assets. Are the two circling each other in the bushveld?

Northam Platinum said on Tuesday that a major South African platinum group metals (PGM) producer made an unsolicited approach for an “asset-level” or “corporate” transaction and that it was now considering proposals from “pre-selected third parties“ regarding potential deals.

The announcement was a bolt from the blue as South Africa’s main PGM producers have been focused on organic growth, and the announcement narrowed the potential list of suitors down to three: Valterra Platinum, Impala Platinum and Sibanye-Stillwater.

But spokespeople for Implats and Sibanye both said they were not the party referred to in the announcement, and that leaves Valterra, which was formerly Anglo’s PGM unit.

Lo and behold, the market spoor also points to Valterra. Its share price fell more than 5% at one point on Tuesday – if you are buying and markets don’t know the details, they don’t react well.

Meanwhile, Northam’s had shot up 6% by mid-afternoon trade. If your assets are a target of a potential suitor it means you have something of significant value that someone else wants – and they are willing to pay.

Valterra has not responded to Daily Maverick’s queries, but all trails at this point lead to its boardroom.

Northam pointedly referred to “asset-level” and “corporate” transactions and not a complete takeover. That also narrows things down.

Northam’s Zondereinde operation in Limpopo is the world’s deepest platinum mine and, while hi-tech, is also conventional. This is perhaps not a good fit for Valterra which is heavily focused on mechanised mining, a trend that was launched when it was still an Anglo operation.

Having said that, it is only a few kilometres from Valterra’s last mostly conventional South African asset, its Amandelbult mine, and so “synergies”, to use the corporate speak, could be realised on this front.

What makes this interesting is market speculation that Northam has had its eye on Amandelbult.

Northam CEO Paul Dunne has publicly expressed interest in this asset in the past.

Northam’s hybrid Eland mine east of Brits seems an unlikely candidate, which leaves its cash-spinning and mechanised Booysendal mine that straddles the Limpopo-Mpumalanga border. And that is not far from Valterra’s Der Brochen operation.

Could some kind of asset swap be on the cards or a potential joint-venture? That’s just speculation, but Valterra seems to be on the hunt suddenly and Northam seems to covet some of its assets. Are the two circling each other in the bushveld?