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Gold/Mining/Energy : Mining News of Note -- Ignore unavailable to you. Want to Upgrade?

To: LoneClone who wrote (28498)	11/5/2008 8:55:14 PM
From: LoneClone	Read Replies (1) \| Respond to of 193231

Wesizwe goes ahead with flagship SA platinum project miningweekly.com By: Chanel Pringle Published on 5th November 2008 JOHANNESBURG (miningweekly.com) – Platinum junior Wesizwe Platinum will proceed with its flagship 350 000-oz/y platinum-group metals (PGMs) Frischgewaagd-Ledig project, the company announced on Wednesday. As the deferral of the project was considered to be "detrimental to shareholder value" the project would proceed according to plan, but certain amendments to the project structure and financing would be made, the company said in a statement to shareholders. This decision followed an announcement in October that the company would review the project owing to the "unprecedented global economic volatility affecting the capital markets having now filtered into the metals markets". Analysts and industry experts have become sceptical about the future of platinum juniors, as the platinum price has declined in recent weeks and the demand outlook for the metal remained uncertain. RBC Capital Markets in October reduced its average 2008 PGM basket forecast to $1 440/oz, declining to $950/oz in 2009, before starting to recover at $1 100/oz in 2010. However, Wesizwe CEO Mike Solomon on Tuesday asserted that the underlying value of the project remained "relatively unaffected" by the current economic conditions, but added that this did impact on companies' costs and their ability to raise money. "It is this aspect that we have tackled head on," he commented. Wesizwe would now divide the project into a number of phases, with funding to be raised incrementally. The company asserted that the R5,6-billion capital required for the project could be "expended over a period of ten years", noting that it was not necessary to raise the entire amount now. Subsequently, the company would not commit to the full engineering, procurement and contract management (EPCM) contract at once, stating that it has negotiated with the EPCM contractor, TWP Consulting, and the shaft sinking contractor, Murray & Roberts Cementation, to "repackage the arrangements". The contractors would first focus on the critical path items of shaft sinking and development, winders and critical infrastructure directly associated with accessing the ore body, before moving on to the auxiliary items. The first phase, which would take two years to complete, would involve the shaft sinking operation at a cost of R1,8-billion. The funding for this would be raised in more than one tranche, the company said. "By adopting this modular approach [during] this difficult economic environment, we will keep the project on track and enhance our competitive edge, while mitigating shareholder dilution," said Solomon. TWP Consulting CEO Digby Glover added in the statement that it supported this modular approach, as the current market conditions made it difficult for mining projects to proceed with their plans. "It is important for us to remain flexible and accommodate our clients in whatever way we can, especially in the current market environment. We are committed to progress [the project] at a rate that that will suit the revised development plan," said Murray & Roberts Cementation MD Henry Laas. Meanwhile, Solomon said that the company was convinced that "reasonable" long-term platinum industry fundamentals would be restored. He stated that the net present value of the project would be determined on the prevailing commodity prices in 2013 when the company would become cash-generative. "We anticipate that by then the economic recovery will have some traction and we will hit the production road running," he commented. The company noted that five-year platinum price forecasts provided by a number of institutions ranged from between $1 300/oz and $1 500/oz, while its bankable feasibility study had been undertaken at $1 125/oz at a long-term exchange rate of R9,17 to the US dollar.