BCL in line to buy Norilsk’s Africa assets for US$337 million

tati photo2Norilsk Nickel and BCL Limited have announced conclusion of definitive transaction agreements to sell its operations in Africa, comprising its 50% participation interest in the Nkomati Nickel and Chrome Mine, South Africa, and its 85% stake in Tati Nickel Mining Company (‘Tati Nickel’), Botswana (together, the ‘Assets’), to BCL.

The total expected consideration for the assets payable by BCL to Norilsk Nickel amounts to US$337 million payable in cash. In addition, BCL will assume all attributable outstanding debt and environmental and rehabilitation liabilities associated with each asset. The agreed deal structure envisages the assignment of the Nkomati concentrate off-take agreement from Norilsk Nickel (Metal Trade Overseas AG (“MTO”) to BCL. In addition, Norilsk Nickel (via MTO) will enter into a matte off-take agreement with BCL, whereby the matte will be supplied for processing to Norilsk Nickel’s Harjavalta refinery in Finland.

The transaction is the largest in a series of asset disposals by Norilsk Nickel since its new strategy was presented in October 2013 with the aim to exit from non Tier-1 mining operations. This marks Norilsk Nickel’s full exit from its African business, which together with earlier disposals of Australian assets represents the complete exit from international operations marked for disposal. The assignment of the Nkomati concentrate agreement and entering into the matte agreement with BCL are in line with a new Norilsk Nickel’s downstream production re-configuration strategy.

For BCL, the transaction has strong strategic rationale and allows for the treatment of both Tati Nickel and Nkomati concentrates at BCL’s smelter, significantly optimizing this operation and delivering increased economic and social benefits to the region as a whole. The acquisition of Norilsk Nickel’s interest in Nkomati marks the first significant investment by BCL into South Africa.

“The sale of the African operations marks a major milestone in our commitment to deliver on the new corporate strategy. The transaction is in line with our goal of releasing capital from non-core assets and will have a positive impact on the Company’s return on capital as well as shareholder return”, Pavel Fedorov, Norilsk Nickel First Deputy CEO said.

“This transaction is a significant anchor to our Polaris II Strategy. BCL is now evolving into a regional player, with high quality mining assets, supported by a strong metallurgical complex.” said Dr. A.R. Tombale, Chairman of Board of Directors of BCL Limited.

Completion of the sale is subject to regulatory approvals and customary closing conditions. The closing of the transaction is not subject to any financing conditions and is expected to occur within the next six months.
Barclays acted as exclusive financial advisor to Norilsk Nickel and AFI acted as exclusive financial advisor to BCL.

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