Minerals, mining and processing company Petmin (PET) on 13th of Sep. announced the sale of its SamQuarz silica mine in Mpumalanga for R259 million to Thaba Chueu Mining, a subsidiary of Spain's Grupo Ferroatlantica SL.

The group highlighted an average net return of 45% year on year after tax, for the six years since it acquired the operation for R85 million.

The sale of SamQuarz was agreed to at a Petmin board meeting on September 12.

Petmin said that the final purchase price may be adjusted upwards to around R270 million once final approval was secured from the Competition Commission and Department of Mineral Resources.

SamQuarz, near Delmas, was the largest producer of high quality silica in SA and a key supplier to the South African clear glass and metallurgical industries. It had stable production of 1.1 million tonnes per annum and a life of mine in excess of 40 years.

Bradley Doig, Petmin chief operating officer, said: “The sale of SamQuarz for a 305% overall return is consistent with Petmin's reputation for delivering superior value to shareholders.

"We acquire good undervalued and or underperforming assets, operate them efficiently, and use the proceeds of a well-timed sale to invest in high potential exploration and development projects.”

Petmin said its return on SamQuarz would pay for and fund current projects and new investments aligned to its focus on commodities, which supported infrastructure development and which were being used in the steel value chain.

Petmin's investments this year included a 50% stake in a Liberian iron ore joint venture, an entry into Turkish copper (potentially securing up to 37.5%), and a phased investment in Canadian iron sands (potentially securing up to 40%).

Petmin had joint management control in all of the above projects.

"These projects provide Petmin with significant potential optionality and are clearly representative of Petmin's strategy to diversify geographically into those commodities that are consumed in the steel value chain, specifically in infrastructure development and urbanisation,” the group said in a statement.

It advised shareholders that caution was no longer required when dealing in its securities.