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Aquarius Gains Most in Nine Months in London on Northam Assets Acquisition

Aquarius Platinum Ltd. (AQP), the fourth- largest producer of the metal, rose the most in more than nine months in London trading on plans to boost resources with a 1.2 billion-rand ($181 million) purchase from Northam Platinum Ltd. (NHM)

Aquarius rose as much as 8.4 percent, the most since July 20. The company, based in London, will buy Booysendal South assets in South Africa, giving it access to about 31.1 million ounces of platinum and related metals, and increasing resources by about 24 percent, it said in a statement today.

The deal follows Aquarius’s acquisition of Afarak Platinum Ltd. this month as Chief Executive Officer Stuart Murray seeks to add deposits and secure future output. Northam will also gain funding to bring its Booysendal mine into production as it seeks to replace its aging Zondagsfontein operation.

“Aquarius has always been criticized for having a lack of resource growth,” Michael Starke, a mining analyst at Edison Investment Research, said by phone from London. “With these acquisitions they’re showing an ability to replace ounces mined” and Aquarius bought “about as cheaply as they could.”

The company rose 7.1 percent to 359.7 pence by 10:29 a.m. in London after touching 364.1 pence. Northam Platinum gained 1.9 percent to 44.34 rand in Johannesburg.

The Booysendal South deposits are next to Aquarius’s Everest mine on the Bushveld complex, which contains the world’s richest platinum reserves, in the north of the country.

The world’s largest producers, Anglo Platinum Ltd., Impala Platinum Holdings Ltd. and Lonmin Plc (LMI), which all tap the complex, are boosting output as prices climb. Platinum prices jumped 21 percent last year and 57 percent in 2009.

‘Absolutely Obvious’

“This is one of those deals in the platinum industry where it’s absolutely obvious to anyone who looks at it,” Gavin Mackay, business development executive at Aquarius, said by phone from London today. “The synergies are just so obvious.”

The proposal may enable Aquarius to boost output at Everest by about 20 percent in about three years with an investment that is “very modest by industry standards,” Mackay said. Expansion options will be studied in the next 18 to 24 months, he said.

It’s a “hugely positive and long awaited event,” Liberum Capital Ltd. analysts said in a note, adding Aquarius’s resource base will nearly equal Lonmin’s at about 180 million ounces.

In a separate agreement, Aquarius will assist Northam with access to infrastructure services, including power, water and waste, from Everest, Northam said, adding that could speed up development of the second phase of its Booysendal expansion.

To contact the reporter on this story: Carli Lourens in Johannesburg at clourens@bloomberg.net

To contact the editor responsible for this story: Amanda Jordan at ajordan11@bloomberg.net

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