Challenges for Wesizwe Pt just starting
Brendan Ryan
Posted: Thu, 10 Apr 2008
miningmx.com
[miningmx.com] -- THE decision by Wesizwe Platinum to go ahead with a R5.6bn platinum mine near Rustenburg could have implications for other projects in the area - in particular, the proposed Western Bushveld Joint Venture (WBJV).
The WBJV involves Wesizwe, Anglo Platinum (Angloplat) and Canada-listed junior Platinum Group Metals (PTM).
PTM and Wesizwe have adjacent projects that they currently propose to develop through stand-alone mines. However, since April last year they also have some common interests through the WBJV. That resulted after Wesizwe bought Africa Wide Exploration for R650m, which gave it a 26% interest in the WBJV. PTM and Angloplat each hold 37% of the WBJV.
There's been long-running speculation over an eventual tie-up between PTM and Wesizwe and that concept was initially promoted by Wesizwe CEO Mike Solomon. PTM has consistently played such suggestions down and both sides have maintained their proposed mines are attractive enough to be viable as stand-alone operations anyway.
The counter argument is for a combined, larger project that would ease the capital burden on both companies through sharing the cost of building a common infrastructure that could be used to open up both areas.
Wesizwe recently announced the go-ahead for its mine after the positive outcome from the bankable feasibility study it had been carrying out into the viability of its Frischgewaagd-Ledig complex.
Construction will start in third quarter 2008, with first production scheduled for 2011. The ramp-up to a steady state of production of 350,000oz/year of platinum group metals (PGMs) will take five years and the mine will have a life of 35 years at that production rate.
Funding will be found through a mix of equity and debt finance arranged through a consortium of South African banks, made up of Deutsche Securities, Absa Capital and the Development Bank of SA.
Raising the money is viewed by some platinum sector sources as a major challenge for Wesizwe, given its junior status, and also the issue of dilution of its 51% black empowerment ownership. Wesizwe would also have to fund its share of the WBJV should it decide to go ahead with the first of its projects.
According to PTM, the WBJV is "likely to be one of the last, large-scale, near surface new developments on the western limb of the Bushveld Complex".
In addition to combining PTM's properties with ground owned by Angloplat, the WBJV also sits adjacent to Angloplat's Bafokeng Rasimone mine as well as the Styldrift project, a joint venture between Angloplat and Royal Bafokeng Holdings, business arm of the Royal Bafokeng Nation.
Proposed development of the WBJV is split into three separate project areas, with the bankable feasibility study for Project One due to be released within the next three months.
Portions 4 and 11 of the farm Frischgewaagd are owned 50:50 by Wesizwe and the WBJV and form part of the Project Two area of the WBJV. According to a statement from PTM, the WBJV holds an effective 18% stake in Project Two, which covers the majority of the surface area assessed by the feasibility study now published by Wesizwe.
PTM said the technical disclosure by Wesizwe hadn't been reviewed or confirmed in sufficient detail at this stage. It said PTM would provide more technical information once its own qualified people had completed their review of Wesizwe's feasibility study.
The company added: "PTM, Angloplat and Wesizwe are in amicable discussions regarding the business arrangement over the areas of shared mineral rights within the Wesizwe area covered by the study. The Project Two mineral rights form a logical block for consideration."
Whatever the outcome, the current booming conditions for South Africa's platinum sector are driving interest in those projects.
Interviewed at the recent Mining Indaba about the likely impact of Eskom's problems on his project, PTM president Michael Jones stressed the high grade and shallow depth of his proposed mine and quipped: "Adversity? Bring it on!" |
