(Bloomberg) — The owners of a Russian-backed project to build Zimbabwe’s biggest platinum mine have held talks to sell a stake of at least 20% to Impala Platinum Holdings Ltd., according to people familiar with the matter.
Great Dyke Investments views Impala as an attractive partner partly because the Johannesburg-based company also has the capacity to process ore from the mine, said the people, who asked not to be identified as the details aren’t public. That would give Great Dyke an offtake agreement to help it to raise financing to complete the mine, they said.
Great Dyke — owned jointly by tycoon Vitaliy Machitski’s Vi Holding and undisclosed Zimbabwean investors — is in talks with a number of potential equity partners, Chairman David Brown said in an interview, without being more specific.
Great Dyke’s Darwendale project has the potential to become one of the world’s biggest platinum mines and its development is central to the Zimbabwean government’s plans to reboot its collapsing economy.
“The size of the stake we plan to sell is subject to negotiations,” said Brown, a former chief executive officer of Impala. He declined to comment further.
Impala said it isn’t in formal negotiations with Great Dyke.
Impala already operates mines in Zimbabwe. One stumbling block to a deal is Great Dyke’s valuation of the project, the people familiar said. Great Dyke would consider selling a bigger stake, but for the moment the existing shareholders want to retain a majority holding, they said.
Zimbabwe has the world’s third-largest platinum group metal reserves after South Africa and Russia. Former president Robert Mugabe handed the Darwendale concession to Russian investors in 2006 after the government repossessed land from a local unit of Impala.
While Impala remains cautious about committing to huge spending in Zimbabwe in the short term, it has a “great future” in the country, CEO Nico Muller said Wednesday during a virtual mining conference. He didn’t comment on specific projects.
“The potential offers the kind of future we think of,” Muller said. “Lower cost, mechanized assets and in spite of socio-economic challenges in the country, we don’t have the same infrastructure challenges that we have in South Africa.”
Great Dyke hopes to secure about $500 million in initial capital by the end of the year and the mine could be commissioned in 2023, CEO Aleksandr Ivanov said last month. It could produce more than 860,000 of PGMs a year at full production. Ivanov declined comment when spoken to by Bloomberg on Tuesday.