Mike Solomon, CEO, Wesizwe
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» Wesizwe triggers a 350,000 PGE oz mine
» Wesizwe plots growth once mine work starts
» Wesizwe Pt rejigs deal, attracts investor
» Wesizwe plots growth in competitive platinum market
» Wesizwe Pt lines up targets

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Wesizwe Platinum is in talks
Allan Seccombe
Posted: Tue, 01 Apr 2008

[miningmx.com] -- WESIZWE Platinum, which will start construction on a 350,000 oz platinum group metals mine later this year, has been approached by a number of parties, but no formal offers have been presented to the junior company, CEO Michael Solomon said.

Wesizwe unveiled its bankable feasibility study (BFS) into its R5.6bn Frischgewaagd-Ledig platinum project on 31 March, which showed a mine coming into production from 2011 and hitting steady state production five years later, averaging the 350,000 oz of four platinum group elements.

The completion of the BFS clears the way for a number of things. Wesizwe can now begin talks on offtake agreements for its concentrate, it can put in place financing arrangements, it can begin looking for other projects and it can also be the target for another company.
Everyone is talking to us
The most likely scenario, analysts believe, is that Wesizwe will look for a shallower, quicker-into-production asset that could ease its financial burden for the 980 metre deep mine it will start constructing in the third quarter of the year.

Asked if Wesizwe had been approached by any suitors, Solomon told Miningmx: “Everyone is talking to us one way of the other.”

“There are no formal offers, but we’ve been in discussions with a lot of people,” he said. “A lot of people want to get into the platinum business. There is not a lot of greenfield stuff out there.”

Xstrata swooped on Eland Platinum, which brought a surface platinum mine into being quickly, as well as a sizeable land package. Impala Platinum bought African Platinum, which was planning one of the deeper mines on the Bushveld Complex on a large resource.

It is understood that major mining companies are looking for an entry point into the platinum industry and the South African deposit is the world’s largest followed by the one in its economically devastated neighbour Zimbabwe.

Solomon’s strategy has been to build a black-owned platinum mining company, not one that is set up for sale, he said. However, if an offer was made for the company it would be up to the shareholders to decide whether to accept it.

“You’ve got to ask if anyone is prepared to buy a mine that will only really have production in six or seven years. There are other options on the table that would make better take-out targets, companies with surface production, low-cost, no big capital requirements and so on. There are companies like that around,” said Leon Esterhuizen, a precious metals analyst with RBC Capital Markets.

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In fact, should be something that Wesizwe considers, he added.

“I’d rather see Wesizwe as an acquirer than a target,” he said. “If he can buy something that will bring in cash flow and Wesizwe can pay for it with shares that are fairly valued, there’s no problem with that.”

Solomon said, while Wesizwe has a couple of very early stage greenfield exploration plays on both limbs of the Bushveld Complex, the company was looking elsewhere for more ounces.

“It’s highly likely that growth of the company will come through mergers and acquisitions rather than our greenfield projects,” he said, adding it had always been the intention to use Frischgewaagd-Ledig as a “value card” in a growth strategy.

"We do have a number of plans."

While the new mine will make for a respectable mine, it is not enough, Esterhuizen said.

“It’s a decent project that can stand on its own feet, which very few of the juniors can claim. Solomon just needs to build something around that. That’s the core of Wesizwe but it’s not good enough as the only project,” he said.

One option for growth would be to grow the stake in the neighbouring Western Bushveld Joint Venture (WBJV), in which Wesizwe already has a 26% stake. It is owned by Platinum Group Metals (PTM) and Anglo Platinum.

“PTM has a shallower project that can be accessed via declines. “It would make a lot of sense for Wesizwe to make a bid for PTM and get the cash flows going sooner rather than later,” Esterhuizen said.

Solomon said in current circumstances the WBJV project is seen by Wesizwe as the second production asset in the pipeline. A bankable study is nearing completion at that project.