[miningmx.com] — PLATFIELDS CEO Bongani Mbindwane has refused to rule out any scenario following the meltdown of the company’s share price since listing in December, in which time the platinum junior has traded down from R1.40 to its current level of 17 cents per share.
“We are conducting detailed surveillance of the share price activity,’ Mbindwane said in an interview on Thursday. “I need to be careful with my words, but there is probably some unsophisticated shareholders participating in what is going on.”
Asked whether the selling of shares in the stock was suspicious, Mbindwane said: “I really can’t rule that out. We’re considering everything. But we don’t know why shareholders would sell at such foolish levels. It simply does not relate to the business case or quality of our assets,” he said.
Miningmx warned in December Platfields was not for widows or orphans after the share fell 50% on its first day of trade to 70c/share. At the time it was thought that challenges to ownership and title might be behind investor jitters, although these issues were pointed out in the company’s prospectus.
The Mathabatha community is disputing ownership of Platfields’ Leeuwkop farm, which is part of the Liger resource in the northern end of the eastern limb of the Bushveld. The 1,100 hectare Liger concession is one of three areas Platfields says it wants to mine, and is close to Bokoni Mines which is being mined by Anooraq Resources.
The other dispute comes from platinum giant, Anglo Platinum, which is contesting in a High Court review application the award of new order mining rights to Platfields over the Tigerpoort property which is also part of the Liger area. The benefits of owning this property was not included in Platfields’s prelisting prospectus.
Platfields has said it would defend its position against Anglo Platinum, but that time was on the company’s side as mining would begin at Leeuwpoort first.
Mbindwane said there was no evidence of such concerns about the business during over-the-counter trade in which the company traded at levels above R3/share.
However, since going public, Mbindwane has seen his personal stake in the company, equal to 14% of issued shares, halve to R77m (on the first day) down to the current R19m. An analyst, who asked not to be named, said Mbindwane had “probably received the shares for nothing so he was still R19m to the good”.
Mbindwane, and his non-executive directors, will nonetheless be perturbed to see future share options with a strike price of R1 firmly out of the money.
Shares in other JSE-listed platinum junior and exploration mining firms were nearly all higher since the beginning of year, including Platmin, Anooraq Resources and Eastern Platinum.
Only Wesizwe Platinum has been under pressure, though barely on the same scale as Platfields. The R1.8bn Wesizwe, now controlled by Chinese shareholder, Jinchuan group and the China Africa Development Fund, was trading at R2.23/share, a decline of 2.6% on the day and some 15% off its pre-Christmas levels.
The near catastrophic performance of the share price is expected to delay plans to raise R200m in the first quarter of 2011. “At these levels, there will be a serious challenge to the capital raising; anyway, we value our paper very, very highly,’ he said. “There are other means of raising the money such as a structure loan element,” he added.
NO SLAM DUNK
The failure of Platfields thus far is no great surprise given the number of failed junior mining listings over the years including such classic meltdowns as Noble Minerals and Amalia Gold. However, it may surprise investors to see a platinum listing struggle given the profoundly strong fundamental market position of the white metal.
Piet Viljoen of asset management firm Re:CM warns investors against putting funds into listings which he claims is normally “somebody selling something for more than its worth”.
“If the asset is that great, then there are probably other ways of raising money to develop it. The trouble with listings is that it’s always someone on the inside, who knows the most about the assets, selling to less informed people on the outside”.
In Platfields defence, however, the company stated in its prelisting statement that there were challenges to ownership over all three of its mining properties.
