JOHANNESBURG, TORONTO, and TOKYO, Aug. 11, 2005 (PRIMEZONE) -- Impala Platinum Holdings Limited (Implats) (Pink Sheets:IMPUY) (JSE:IMP) (LSE:IPLA) (ADRS:IMPUY), Dynatec Corporation (TSX:DY) and Sumitomo Corporation (TSE:8053) (ADRS:SSUMY) today announced that Dynatec and Sumitomo have entered into an agreement, confirmed by Implats, whereby Sumitomo will acquire a 25% interest in the Ambatovy Nickel Project in Madagascar. Sumitomo is one of Japan's largest integrated trading and investment companies with total assets of 5.5 trillion yen (US$49.4 billion) and a market capitalization of 1.16 trillion yen (US$10.4 billion).
Bruce Walter, President and Chief Executive Officer of Dynatec commented, "Sumitomo, with its significant financial capacity and expertise in developing major resource projects, is an excellent addition to Ambatovy. We now have the equity partners in place to move the Project forward. We are confident that the combination of strengths which Implats, Sumitomo and Dynatec bring to Ambatovy will ensure that the Project is a major success."
Mitsuhiko Yamada, Corporate Officer, General Manager of Mineral Resources Division 1 of Sumitomo, said, "Sumitomo is pleased to join the Ambatovy partnership. Ambatovy is a highly competitive project with the potential for large-tonnage long-life production of nickel metal and cobalt metal, two metals with excellent long-term fundamentals, and very low operating costs. Implats and Dynatec are excellent partners who are committed to the long-term operation of the Project and we are looking forward to working with them."
Keith Rumble, Implats Chief Executive, said, "Implats is delighted that Sumitomo will be the third partner in the Ambatovy Project. Implats has had a long-standing relationship with Sumitomo built on a strong foundation of mutual trust."
In accordance with the terms of the Implats/Dynatec agreement (announced on May 26, 2005), both companies will reduce their respective interests in Ambatovy to 37.5%, with Dynatec to receive the full financial consideration related to Sumitomo's entry as a 25% shareholder.
Key features of the Sumitomo agreement include:
i. Sumitomo will fund 25% of the equity requirement for
Ambatovy and provide its pro rata share of project financing
completion guarantees related to the project debt funding
being sought for the Project. The partners are seeking
project debt representing at least 50% of the total funding
requirement.
ii. Subject to certain conditions, Sumitomo will provide
Dynatec with a subordinated loan facility, which will be used
to fund a portion of Dynatec's equity contributions to the
Project. The loan will be repaid from 60% of the
distributions to Dynatec from the Project.
iii. Subject to certain conditions, Sumitomo will provide a
project completion cross guarantee with respect to a
substantial portion of Dynatec's financing guarantees related
to project debt, for which Dynatec shall pay to Sumitomo a
fee of 10.2 million common shares of Dynatec, payable
annually in arrears in four equal installments of 2.55
million shares each, commencing on December 31st of the year
in which the project debt financing closes.
iv. Sumitomo has undertaken to ensure that for the first
15 years of production not less than 30,000 tonnes per annum
of nickel produced by the Project will be acquired by
offtakers (or, if required, by Sumitomo) on arms-length
terms.
Implats, Dynatec and Sumitomo have agreed to modify the pending Implats-Dynatec shareholders agreement with respect to the Ambatovy Project as necessary to reflect Sumitomo's entry into the Project by no later than September 30, 2005.
The Ambatovy feasibility study released by Dynatec in February 2005 indicated the potential for 60,000 tonnes per annum (tpa) of nickel metal and 5,600 tpa of cobalt metal, with cash operating costs expected to be near the bottom of the global cost curve. Over the first 10 years of full production, the Project is expected to have average cash operating costs of US$0.67 per pound of nickel after credits and to generate average after-tax cash flow of US$338 million per annum, assuming base case pricing of US$3.50 per pound nickel and US$10.00 per pound cobalt.
The feasibility study estimated that the capital costs for the Project would total US$2.25 billion. These costs are currently being reviewed in light of the potential savings as a result of the decision to locate the refinery portion of the Ambatovy Project in Springs, South Africa, thereby leveraging Implats' core competencies and existing infrastructure.
Detailed engineering work at Ambatovy is progressing, and is expected to be sufficiently advanced for construction to begin by the second quarter of 2006, assuming sufficient progress with negotiations for project debt financing. Based on this timing, and the current construction schedule, initial production could be recorded by the end of 2008.
About Sumitomo
Sumitomo Corporation is one of Japan's largest integrated trading and investment business enterprises. The Corporation not only conducts commodity transactions in all industries utilizing worldwide networks, but also provides related customers with various financing, serves as an organizer and a coordinator for various projects, and invests in businesses from mining and metals, to the information industry, to the retailing industry.
About Implats
Implats is the world's second largest primary producer of platinum. As a natural consequence of platinum group metal production, Implats has been producing nickel for in excess of thirty years. Exposure to a large laterite project will enable Implats to process and refine nickel at comparable cost to primary nickel producers. It therefore represents growth in one of Implats' most important metals, and fits neatly into Implats' strategic envelope. Implats employs some 31,600 people across its operations and, in the 2004 financial year, produced approximately 1.96 million ounces of platinum (around 3.73 million ounces of PGMs).
About Dynatec
Dynatec Corporation is a growing mining company with extensive mining and metallurgical expertise. Dynatec's strategy is to create shareholder value by applying the expertise of its 1,300 employees to attractive projects as an owner/operator. The Company currently has four projects in its portfolio: the large-tonnage Ambatovy Nickel Project in Madagascar; a 25% interest in the Sudbury Basin Joint Venture, which currently has one producing mine and is pursuing development of several others; a 50% interest in Aurora Platinum Corp., which has a 60% interest in the historic Falconbridge Mine and significant land holdings and exploration targets in the Sudbury basin; and a wholly owned coal-bed methane project in West Virginia.
About Madagascar
Madagascar is the world's fourth largest island and is located 500 kilometres off the east coast of southern Africa. The population of Madagascar is approximately 17 million. A former French colony, the country gained its independence in 1960 and is now a democratic republic. The current government, headed by President Marc Ravalomanana, was elected in 2002. The government has identified the responsible development of large-scale resource projects as an important element of the country's economic development strategy. In pursuing this strategy, the Malagasy Government has received guidance from the World Bank with respect to large-scale mining laws and environmental impact assessment.
Forward-Looking Statements
This news release contains certain forward-looking statements. These forward-looking statements are subject to a variety of risks and uncertainties beyond the companies' ability to control or predict which could cause actual events or results to differ materially from those anticipated in such forward-looking statements. In this news release, forward-looking statements are made related to the ownership and potential development and operation of the Ambatovy Nickel Project. Readers should not place undue reliance on these or other forward-looking statements.