PLATINUM Group Metals (PTM) hoped to make its Maseve platinum mine cash flow positive in the first half of this year and produce up to 120,000 ounces (4E) platinum group metals, the company said in its first quarter results announcement.
The mine is designed for production of 250,000 ounces a year (4E). Output was forecast to be 110,000 oz in its first year rising to 180,000 oz, but the company in October put output in the first 12 months at 91,500 oz.
The Toronto-listed business also said it would issue nearly 600,000 shares to lenders Sprott Resource Lending Partnership and Liberty Metals & Mining Holdings in return for waivers on existing loan facilities and extensions of covenants.
PTM impaired Maseve for $41.4m last year following slower than anticipation production ramp-up. It subsequently replaced its then contractor with Redpath Mining Contractors & Engineers following the poor delivery of production ramp-up.
Nonetheless, the delayed cash flow and continued poor performance of the platinum price throughout much of 2016 had exerted pressure on PTM’s balance sheet.
It said in its first quarter results announcement that it expected to raise $5m to $15m of additional funding to refinance its debt either through new debt, private or public offerings of equity or the sale of project or property interests.
At November 30, the company held $27.5m in cash slightly down on the $28.5m in cash as at the year-end stage which it published in November.
During the three-months ended November 30 – the first quarter of its 2017 financial year – the company incurred a net loss of $2.45m (2015: -$0.712m). The loss per share for the period was $0.03 (2015: -$0.01/share).
The company issued shares for a total of $143m, or some R2bn, of which $73m worth was in public offerings during its 2016 financial year. It also amended facilities with shareholders were draw-downs were attached to production targets.
Some $143m was spent on the development, construction, equipment and other costs at the Maseve Mine while some $7.3m was also spent progressing its Waterberg platinum prospect.
For all this, there is optimism that Redpath will set Maseve on a positive production trajectory. Existing contractor services will be consolidated under Redpath, headquartered in Canada, with the focus of operations falling on Block 11 of the Maseve property which is flat, with good thickness and a high grade.
Redpath will also install a $1.8m conveyer system direct to Block 11, a capital item that will be paid for on a per tonne basis, still to be negotiated.
It is envisaged that Block 11 will contribute 50%, equal to 30,000 tonnes, of mined ore flow in January with mining rates expected to improve through the year such that the block contributes up to 80% of total ore flow (76,000 tonnes a month).
“The more tonnes mined from Block 11, the better both Redpath and the company will do,” said Michael Jones, CEO of PTM in a statement. “We see Redpath as an excellent partner,” he said.
