[miningmx.com] -- WESIZWE Platinum has secured R6.6bn or $877m in funding from a Chinese consortium, including Jinchuan Group (JNMC) and China Africa Development Fund, which gives it a 51% stake in the platinum junior.
It provides Wesizwe the funds it needs to build a platinum mine on a well-explored prospect on the Western Limb of the Bushveld Igneous Complex. The market liked the news, driving the shares up nine percent to 218 cents on the JSE.
According to the term sheet the parties have signed, the transaction will include an equity as well as a debt component. There will also be an offtake agreement that will guarantee the sale of all platinum group metal concentrate.
The Chinese consortium will, subject to certain conditions, subscribe for 51% or nearly 830 million new shares in Wesziwe for $227m, which translates to 207 South African cents per Wesziwe
"The debt funding has been secured at globally competitive financing rates and the provision of financial guarantees, provided by JNMC, enhances the certainty that Wesizwe Platinum’s shareholders will not be called upon for further funding,” said Wesizwe CEO Mike Solomon.
"In the event of any funding shortfall, JNMC has undertaken to provide the required funding shortfall needed in order for the project to reach full production via a shareholders loan to Wesizwe Platinum on the same commercial terms as the Debt Component," he said.
Miningmx reported in December Wesizwe received an offer from Impala Platinum and China’s Jinchuan for its undeveloped project or a stake in the company, according to Wesizwe board minutes.
Jinchuan is China's largest nickel and platinum producer.
Wesizwe had frozen work on a R6bn project to build a twin-shaft mine and concentrator at its Frischgewaagd-Ledig property. The project would entail a 980-metre deep
mine capable of producing 350,000 oz of platinum group metals a year.
The minutes were dated 26 October.
JNMC and the China-Africa Development Fund (CAD Fund) have a letter of commitment from the China Development Bank for a $650m project finance facility.
Solomon has long talked of consolidation in the region, where another platinum explorer, Canada's Platinum Group Metals (PTM) has a contiguous undeveloped property. There is also the Bafokeng project at Styldrift, which is next door to Frischgewaagd and will also soon be built.
“The introduction of JNMC means that Wesizwe Platinum has secured an experienced mining, financial and technical partner and this transaction also provides Wesizwe Platinum with the financial muscle to enable it to examine future growth opportunities, which is an objective of both JNMC and the CADFund,” Solomon said.
The conditions include Wesizwe shareholder approval for the transaction, the signing of definitive
agreements and regulatory approvals in South Africa and China.