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Nkwe plots 1m oz platinum output, AIM listing
Allan Seccombe
Posted: Tue, 10 Apr 2007

[miningmx.com] -- AUSTRALIA’S Nkwe Platinum, which has as its largest shareholder a South African black-owned company, plans to become an independent million ounce per annum producer and list on AIM and the JSE by mid-2007, managing director Maredi Mphahlele said.

But those plans come with a huge caveat: Nkwe and its partner Genorah must first resolve a legal tussle with Anglo Platinum, the world’s largest platinum company, over the rights ownership of five farms on the Eastern Limb of the Bushveld Igneous Complex.

Anglo Platinum has taken the Department of Minerals and Energy (DME) and Genorah, the black-owned company and owner of the new-order prospecting rights to the farms, to court to prove it has the rights to the property, which Genorah acquired after the change in South African mineral legislation in 2004.
getting a lot of approaches
The matter is expected to come before the courts in June, roughly the time that Nkwe, which is 42% owned by Genorah, plans to shift its primary listing to London’s Alternative Investment Market and the Johannesburg bourse, Mphahlele told Miningmx in an interview.

“This is a huge test case for us, empowerment in South Africa and the Mineral and Petroleum Resources Development Act,” he said. “This puts a cloud over what we are doing and it is in our interests that this goes before the courts as soon as possible.”

“We’ll defend the rights the DME has granted us. We believe we have a strong case and Anglo Platinum a weaker one,” he said.

If the court case is decided in Anglo Platinum’s favour, Nkwe will approach South Africa’s Competition Tribunal, Mphahlele said, pointing out that Anglo Platinum, according to its annual reports and those of other platinum companies, controls more than half the known platinum group metal resources in southern Africa, with an astonishing 71% to 74% of the Eastern Limb’s resources.

This legal fug has not deterred Nkwe from plotting an ambitious role for itself in South Africa’s tightly controlled platinum industry where the major producers have their fingers in many junior and mid-tier projects because of their processing and refining plants that are economically beyond the reach of many smaller companies to install for themselves.

Nkwe is already talking to technical partners on the construction of processing facility, including a base metals refinery, based on the con roast technology being tested by South Africa’s mineral research facility Mintek. Nkwe is also looking for a strategic partner on its mining plans.

Mphahlele declined to identify the potential partners.

“We are getting a lot of approaches, particularly from all the big metal trading companies that the majors hold by the throat. The want to get access to metal outside the majors and their existing agreements,” Mphahlele said.

The precious metal concentrate could be sent to Lonmin or Hereaus for treatment, he said.

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Genorah vended 74% of the two farms into Nkwe in exchange for shares in the Australia-listed explorer. The farms are estimated to have up to 50 million ounces of platinum group metals near Steelpoort.

Genorah plans to vend another three neighbouring farms on strike into Nkwe in time for the new listings, giving it an unassailable dominant position of 80% in Nkwe, which up until recently had the relatively small De Wildt project on the southern tip of the Western Limb as its flagship project, Mphahlele said.

The three farms will boost Nkwe’s in-situ resources at the project up to 150 million ounces, catapulting the junior into an enviable position. Australia’s International Goldfields has put up $10m in exchange for a 15% stake in the three farms. The money has gone towards exploration and a feasibility study.

Nkwe has just raised A$13m, most of which will go towards defining the resources at the two-farm Garatouw project on the Eastern Limb. Additional drilling will be conducted at its other projects on both limbs.

Another A$7m will come into Nkwe on the exercise of management share options around midv-year. The money should be enough to fund the feasibility study into Garatouw.

Resource definition and the pre-feasibility study are being run together up to mid-2008 to expedite the process, said Jackie van Schalkwyk, Nkwe’s chief operating officer. It will take another two years to complete the bankable study into two possible mines on the five farms.

The focus is firmly on developing mines at the five Genorah farms, one of which, the Eerstegeluk has outcropping UG2 reef and a rich chromium deposit, making it the most obvious to bring into production first through opencast mining.

There are also fairly shallow 80-year-old decline shafts at Eerstegeluk that are being brought back into working condition.

Other projects neighbouring projects belonging to Aquarius, Eland Platinum, Platmin, Eastern Platinum and African Platinum could become part of some corporate play.

“We are open to doing deals on our smaller projects,” Mphahlele said, adding development of the four million ounce De Wildt on the Western Limb was continuing.

Aquarius is running short of resource ounces and is known to be scouting around for more deposits. Nkwe’s Kliprivier project with 5.3 million ounce of inferred resources to the south and along strike of Aquarius’s Everest South mine could be a useful addition. There is also Nkwe’s inferred 7.6 million resource ounces at nearby Tinderbox, which could be worth a look.