Merafe joins Xstrata chrome project
South Africa’s Merafe Resources said on Thursday it had agreed to take a stake in a plant producing chrome pellets with partner Xstrata Plc and issued 40-million shares to help pay for it.
Merafe, which already has a chrome joint venture with Xstrata, said it would have a 20,5% stake in the Bokamoso plant, the same percentage as in the other operations in the venture.
Merafe said it raised R66-million ($9,45-million) by placing 40-million shares to help pay for its share of costs for Bokamoso, estimated at R181-million. The issued shares represent around 1,7% of existing shares.
All the shares were placed with United States firm North Sound Capital at R1,65 per share, compared with Wednesday’s close of Merafe shares at R1,66.
The Bokamoso operation is a plant that turns chrome ore into pellets and has an annual capacity of 1,2-million tonnes.
The pellets, which are fed to furnaces producing ferrochrome, improves the efficiency and helps cut costs at the smelters, a statement said. The first line of the plant was commissioned in July, and the second line is due to be commissioned by the end of this month.
Xstrata is the world’s biggest producer of ferrochrome, mainly used as an alloy in stainless steel to prevent corrosion.
The Xstrata-Merafe Chrome venture has a total capacity of 1,96 tonnes of ferrochrome per year. - Reuters
