Raubex has acquired a majority stake in chrome/ PGM producer Bauba Resources’ shares, with 22% held by trading firm Pelagic Resources

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Raubex has acquired a majority stake in chrome/ PGM producer Bauba Resources’ shares, with 22% held by trading firm Pelagic Resources. Pelagic to market all Bauba’s chrome and PGM output.

Pelagic Resources secured a 22% stake in JSE-listed Bauba Resources (JSE:BAU). This acquisition also provided Pelagic with an evergreen supply contract to market all Bauba’s chrome & PGM ores.

The relationship between Pelagic and Bauba was further enhanced in July 2021, when Pelagic provided a project-financing facility to develop Bauba’s Kookfontein project and secured the contract to market the production. The Kookfontein project boasts 10 million tons of reserves and is expected to reach monthly production levels of 40,000MT chrome concentrate and 45,000MT of primary PGE rich run of mine (ROM).

In April 2021, Raubex acquired a 23% stake in the JSE-listed Company, further strengthening the Company’s finances and effectively driving forward the mine development at its new production line at the Kookfontein project on the Western Limb of the Bushveld complex.

Now, JSE construction giant, Raubex (JSE: RBX), has acquired a majority stake in Bauba Resources. As a company with a market cap of over ZAR7.3 billion, this should accelerate the production of Bauba’s Kookfontein mine and help cement Pelagic’s position as one of the larger suppliers of chrome ore(s) globally.

With respect to the deal and Pelagic’s involvement going forward, CEO of Pelagic, Tom Baring, had this to say: “This transaction represents  a major milestone event for Bauba Resources, which to date has relied on the financial support of Pelagic to grow its business. The Raubex group are the optimal partner for this operating platform and are strategically aligned with the Pelagic group to grow the existing mining operations and to aggregate additional open cast resource into the future. This is just the beginning.”

Raubex group’s CEO Rudolf Fourie had the following to say: “It is Raubex’s strategy to increase its Materials handling and Mining footprint by forming strategic partnerships with resource owners in the mining sector. This will provide more opportunities to participate in materials handling contracts in the future.

Our mining expertise lies in open cast mining and we believe that by acquiring control of the Bauba operations we can maximise the potential at Bauba’s operations. Having control of operations and participating in the materials handling could result in additional upside and as Raubex we want to capitalise on this.”

The chrome ore market has moved up sharply since the start of the year, rising with South Africa’s 42-44% chrome ore prices increasing to $5.03/dmtu in February from $4.76/dmtu in January.

The chrome market continues to be one of South Africa’s most important commodity sectors and is the sixth largest commodity export and product by volume.

From a demand perspective, globally around 40 million tons of chrome is consumed per year, which compares to 23.6million tons in 2010. While chrome is considered a mature market, as demand for high-quality stainless-steel materials continue, chrome ore will continue to find its place as a key commodity of our time.

In terms of PGMs, four of the top five platinum producers are in South Africa, and platinum therefore continues to be a key driver of South Africa’s export economy. As with chrome ore, the price of platinum has also increased sharply from $940/oz in December 2020 to 1020/oz on 7 February 2022.