Platinum Group has deal for project surface rights, in 'active discussions'
miningweekly.com
By: Liezel Hill
26th August 2010
TORONTO (miningweekly.com) – Platinum Group Metals (PTM), which has said it will make a decision soon on whether to sell or build its South African platinum project, has locked in a right to buy the surface rights for the property, and has also made progress on securing power and water infrastructure for the mine.
The firm also said on Thursday that it is still considering how best to get value for shareholders, and is in “several active discussions”.
It did not provide further details, but has said previously that options included building the company's Project 1 platinum mine using conventional debt and equity, hedging some of the project, or the sale of the company.
PTM has paid a deposit of R13-million for the right to buy 1 713 ha of surface rights, including housing facilities, in the area of the planned mine for R130-million (about C$18,57-million in today's money).
The surface rights acquisition is something the company has been working on “for some time”, CEO Michael Jones said.
Combined with rights that the company already holds, the combined land position will be approximately 2 655 ha, covering all the functional areas of PTM's Project 1 and also covering approximately 581 ha overlying the western portion of the Styldrift project area operated by Royal Bafokeng and Anglo Platinum.
“The agreement strengthens our position, provides infrastructure that would otherwise need to be built and improves the certainty of schedule for the Project 1 platinum mine,” Jones said.
“We now control a large surface landholding including ample room for tailings impoundment, mill facilities and a perimeter buffer.”
The company also noted that its surface land position is also right next to the south of partner Wesizwe Platinum's Frischgewaagd-Ledig platinum project.
China's Jinchuan and China Africa Development agreed to buy 51% of Wesizwe earlier this year, and have been touted as potential suitors for PTM.
The company said it will use the 350 chalets, bungalows, flats and hotel rooms which are included in the property acquisition, and capable of accommodating more than 1 000 people, for construction and workers accommodation, as well as administration infrastructure.
PTM actually allocated R230-million in its feasibility study for the acquisition of surface rights and construction of accommodation and office buildings, and the firm expects that, even including refurbishments, it will come in below budget.
Shares in PTM slid 0,56% on Thursday morning, to C$1,79 a share by 10:12 in Toronto.
POWER, WATER
The company also reported that it has paid a deposit of R9,2-million to South African power utility Eskom, to start engineering for construction power, and later commercial production power for the project.
An allocation for construction power has been made and the company is formally in process for the delivery of production power.
“The company is also in communication with the local water authority and is moving toward a detailed programme for delivery of production water,” it added.
In April this year, the company restructured a joint-venture agreement with Anglo Platinum and Wesiszwe Platinum, which had included three PGM projects.
PTM now holds 54,75% in Projects 1 and 3 of what was formerly the Western Bushveld Joint Venture, with a right to subscribe for a further 19,25%.
JSE-listed Wesizwe holds the other 26%, plus 100% of Project 2.
Mining Weekly Online reported earlier this month that Jones and PTM CFO Frank Hallam had been appointed to the same positions at another junior company, West Kirkland Mining, indicating that a sale of the company may be on the cards. |
