UPDATE 1-Aquarius to buy 74 pct of Afarak for $109.7 mln

* To pay $70.2 million in cash, issue 6.8 million shares

* Afarak has rights to two properties in South Africa

* Hoedspruit 7.23 mln 4E PGM ounces, Kruidfontein 45.4 mln

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LONDON, April 13 (Reuters) - Aquarius Platinum (AQP.L), the world's fourth-largest primary platinum producer, said it would buy 74 percent of Afarak Platinum for $109.7 million to build up its reserves of the precious metal and cash in on rising prices.

Spot platinum prices XPT= gained over 20 percent in 2010 and are expected to continue rising this year as risk aversion and low interest rates boost their allure. [ID:nLDE70J14P]

Afarak's assets comprise interests in new order prospecting rights to two properties, Hoedspruit and Kruidfontein, located on the west of South Africa's Bushveld Igneous complex.

The company has a 100 percent interest in Hoedspruit, which contains 7.23 million 4E platinum group metal (PGM) ounces. Afarak also has the right to earn a 50 percent interest in Kruidfontein, which contains 45.40 million 4E PGM ounces.

Aquarius said it would pay $70.2 million in cash and 6.8 million Aquarius (AQP.AX) AQP.J shares for Afarak. Following the deal, Aquarius will own 74 percent of Afarak, with the remaining 26 percent held by Watervale.

Aquarius also has the right to spend $15 million of exploration expenditure at Kruidfontein to acquire a 50 percent interest in that property.

Aquarius shares closed at 350.2 pence on Tuesday in London, valuing the business at 1.62 billion pounds ($2.63 billion). ($1=.6149 POUND) (Reporting by Adveith Nair; editing by Rhys Jones)