Vaughn,
From the horses mouth:
theminingweb.com
mips1.net
Messina may be platinum hit for gold majors
By: Stewart Bailey
Posted: 04/29/2001 12:00:00 PM | © Miningweb 1997-2001
Southern Era [TOR:SUF] is looking for a partner to help develop the second phase of its majority-held Messina platinum project in South Africa, and it looks as if gold majors are lining up for a slice of the action.
Southern Era (predominantly a diamond player) last year acquired 70.4 percent of JSE-listed Messina Platinum [JSE:MES], with the first 50.4 percent coming from world number two producer Impala [JSE:IMP]. It has embarked on the development of the first phase of the mine, which should start production in August.
Patrick Evans, the chief executive of Southern Era, says there is no pressure on the company to bring in a partner, given that its has all but completed its project financing (through Rand Merchant Bank) for the completion of phase I of the mine.
"But our interest also lies in the rapid development of phase two of the project and an industry partner with deep pockets would allow us to do that," says Evans. But he says the most likely route for Southern Era to take is the sale of an interest in the project, rather than equity in Messina.
He says Messina will be the "next significant platinum project in South Africa", with the potential for 500 000 ounces of platinum group metals a year within five years.
And there is unlikely to be shortage of potential candidates looking for an entry into the exclusive platinum club. But perhaps tellingly, Evans says it is not the Platinum miners queuing at his door, but Canadian and South African gold majors, which have showed the most interest.
He would not give names, but Gold Fields' [JSE:GFI] CE Chris Thompson confirmed last week that he has a 'watching brief' on Messina. And Messina may be right up Gold Fields' alley, given that last week Thompson was bemoaning the dearth of investment opportunities in the gold sector.
The presence of the Canadians is even more interesting. Barrick [TOR:ABX] has said it will look at anything and everything on offer. What some pundits in the Southern African mining fraternity believe is that Barrick is merely compiling an unrivalled database of potential targets, while also getting a good look at what its competitors are up to.
Already, Barrick has been in Placer Dome's [TOR:PDG] back yard at South Deep (surveying an opportunity it is unlikely to make use of). And, like Gold Fields, Barrick and its compatriot Placer are rumoured to have shown more than a passing interest Zimplats before being scooped by Impala.
The right Placer at the right time
But look no further than Placer to take the honours at Messina. Evans only recently jumped the fence into the Southern Era camp, after a long stint as the corporate affairs director for Placer Dome South Africa.
He helped steer the company through a rocky patch with labour and a solid relationship with the Canadians should form an ideal platform for closer ties at Messina.
Timetable
Evans says management at Messina is gunning for the first phase of the project to be completed by August, after which its focus will swing to getting phase II up and running. He says R200 million has already been invested in the mine's infrastructure by previous controlling shareholder Impala Platinum, which then abandoned the project after a senior manager was killed and current CE John Smithies seriously injured in a freak shaft accident.
Messina will now proceed with a R50 million rights issue to raise the cash needed to complete Phase I. This equity will match the R420 million in debt raised by RMB. Evans' certainty of having the funding secured makes the introduction of the partner less pressing, but his sense of urgency in getting Phase II funded and developed, suggest the partner will be announced soon.
The only lingering doubts which will have to be satisfied center around why Impala was so content to walk away from Messina in a platinum market that has boomed over the past two years.
Senior platinum analysts in Johannesburg have backed up Evans contention that Impala walked away from the project because of the death of the project champion. But they say the accident was a manifestation of a deeper problem at the mine.
"It is basically UG2 sub-level stoping – deep, narrow and difficult to mine," said one analyst. "It would just have been a headache for Impala." But whatever the problems associated with exploiting the sharply dipping ore body, there is consensus among pundits that the grades available at Messina will guarantee that there is a taker for the stake in the project.
Another drawcard is the sheer size of the ore body, which boats a reserve of some 16 million ounces at 1000 m. This gets interesting if metal prices hold around current levels, a phenomenon which may prompt Southern Era and its new partner to turn their attention to what lies beyond; the ore body runs as deep as 2000m.
Gold majors go platinum
It is only a matter of time before the gold majors follow Gold Fields' example and make a public foray into platinum. Gold Fields has the Finnish Arctic Platinum prospect in its portfolio, but would obviously like to add a project closer to home. Already it has looked at Zimplats and Messina.
But Gold Field is not alone and it is only a matter of time before one its stablemates crosses the great divide. The opportunities are dissipating fast though, and there are only a handful of known deposits up for grabs.
Perhaps Barrick and Placer are also running the rule over Associated Manganese's [JSE:AMN] Dwaarsrivier platinum deposit, as well as Harmony's platinum prospect in the Kraaipan area, looking to build a formidable PGM portfolio before coming out of the closet. |
