JOHANNESBURG (miningweekly.com) – Aim-listed Sylvania Platinum has entered into a binding R25-million agreement to acquire the rights to platinum group-metals- (PGMs-) and chrome-bearing minerals on certain key portions of the Grasvally and Zoetveld farms to which it already owned the surface rights.

The relevant portions of the Grasvally and Zoetveld farms are adjacent to Sylvania’s existing Volspruit PGM project, 16 km south of Mokopane, in Limpopo.

“This acquisition potentially adds to the resource base of the Volspruit project and also brings a modest, but attractive, chromite ore production opportunity into consideration for the company,” Sylvania said.

The R25-million would be paid in two tranches. The first R5-million would be paid within 14 days after the lodgement of the application for Ministerial consent to transfer the rights to Sylvania, which was expected to take place in January 2014, with the remaining R20-million to be paid on the registration of the transfer of the mineral rights, which was expected to take place in early or mid-2015.

The acquired rights covered an area on which prior mining and exploration for PGMs and chrome had been done.

Published geological maps indicated that the Volspruit pyroxenite, which was host to the PGM mineralisation in the North pit of the Volspruit project, extended up to about 150 m across the farm boundary into Zoetveld; however, further drilling and trenching was required to allow for a meaningful resource estimation.

In addition to the added PGM potential for the Volspruit project, the acquired rights likely also encompassed significant amounts of chrome ore.

The company stated that while it remained focused on its core business as a PGM producer, the directors believed there was significant value in both the PGM and chrome minerals and that the acquisition had the potential to deliver significant returns for shareholders.

"Sylvania's stated objectives are to generate free cash flow from our dump operations for distribution to shareholders, but the favourable pricing of this PGM and potentially high-grade chrome ore resource presents an excellent opportunity to increase shareholder returns.

“The acquisition has been structured [in such a way that] the majority of the transaction costs are long-dated, and the value to the company of the acquisition is significantly enhanced by virtue of the company's existing surface rights ownership. As a board, we are confident that this transaction will return value over and above the PGM ore potential, meriting the acquisition cost and, ultimately, enhancing the Volspruit project," Sylvania CEO Terry McConnachie commented.