Mike Solomon, CEO, Wesizwe
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» Zim crisis will affect Pt output
» Challenges for Wesizwe Pt just starting
» Wesizwe Platinum is in talks
» Wesizwe Platinum ready to start building - Mike Solomon CEO
» Wesizwe plots growth once mine work starts
» Wesizwe triggers a 350,000 PGE oz mine

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Wesizwe Pt facing dilution task
Brendan Ryan
Posted: Mon, 19 May 2008

[miningmx.com] -- WESIZWE Platinum’s (Wesizwe) funding strategy is to dilute its controlling black economic empowerment (BEE) shareholders as little as possible, according to CEO Mike Solomon.

Wesizwe has to raise some R5.6bn to pay for development of its proposed Frischgewaagd-Ledig mine to be built near Sun City in South Africa’s North West Province.

Solomon told delegates at the RBC Capital Markets platinum group metals (pgm) conference held in London last week that the capital raising programme was already underway.

Platinum industry sources believe Wesizwe faces major challenges in funding the mine given that it is 51% controlled by BEE interests. Some of these may not be able to attract the finance to pay their own way but do not want to be diluted.

The largest shareholder in Wesizwe is the Bakubung community holding a 22% stake while other BEE partners include Africa Wide Investments with 11% and Vanani Capital with 7%.

Solomon said Wesizwe’s strategy was: “to stay as black as possible given the situation in South Africa.”

He added the company intending going for a debt/equity ratio of between 50% and 60% which cut the equity requirement down to around R2.8bn.

Solomon also addressed the question of consolidation of the various new platinum developments around Wesizwe’s project.

He described the situation as “incestuous but somewhat interesting.”

The reason is that Wesizwe’s ground is intertwined with that of Toronto-listed junior Platinum Group Metals (PTM) and Anglo Platinum (Angloplat) through the Western Bushveld Joint Venture (WBJV) in which Wesizwe owns a 26% stake.

The WBJV, in turn, is contiguous with Angloplat’s existing Bafokeng Rasimone mine – which is a JV with the Royal Bafokeng Nation (RBN) – and the Styldrift project which is also jointly-owned by AngloPlat and the RBN.

Solomon told the conference that: “The intertwining and overlapping of mineral rights is untenable in a practical sense.

“It would be logical for us to talk to the Bafokeng over Styldrift. Combining the operations could create a significant, world-class mine on the Western Bushveld.”

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If all the developments proposed for the area went ahead, then three vertical shaft systems in close proximity to one another “would be kicking off at more or less the same time and would come into production at more or less the same time.

“There are compelling reasons for a single management with shared services for those shafts,” he said.

The compelling reasons included the severe skills shortage in South Africa as well as the availability of power.

Wesizwe, like all the other juniors, is making plans to provide much of the power it will need through self-generation given the uncertainties over what Eskom will be able to supply.

Solomon, however, reckoned Wesizwe would be at the head of the queue when it came to getting power allocations from Eskom.

“Given the situation in South Africa, it is unlikely that a mine like ourselves creating some 3,500 new jobs will not be at the head of the queue when it comes to getting new power.”