[miningmx.com] – ROYAL Bafokeng Platinum (RBPlats) said it would
likely have to tap shareholders for funds in 2014 to complete funding for its share
of the R11.8bn Styldrift project; an expansion slated to double the company’s
platinum production to 600,000 oz/year.
In February, the company said it was hoping to avoid entering the market to finance
its R7.9bn share of the project (equal to 67% stake), preferring instead to use cash
flow from its operating asset, the Royal Bafokeng Rasimone Mine (BRPM).
The project is shared with Anglo American Platinum (Amplats), which has the
remaining 33% of the project.
RBPlats CFO Martin Prinsloo said today, however, that additional equity funding
would be required, although not before 2014. “We’re still comfortable that we won’t
have to come to the market before that date,’ he said in a telephonic interview.
He added that there would not be significant alterations to the funding plan and that
there was time for the platinum market to recover.
“Perhaps the debt to equity was slightly too conservative’ in the funding plan, he
said, suggesting that the one-fifth in equity funding – equal to R1.7bn – might be
increased.
Prinsloo’s comments come a day after RBPlats said it intended to defer R462.4m in
capital spending comprising exploration drilling at BRPM and Styldrift II North shaft
(R71.1m); construction of a chairlift at BRPM’s South shaft (R90.7m) and R300m in
BRPM concentrator facility upgrades.
“We have taken proactive measures to preserve cash and squeeze as much as
possible from our assets. In the end, this kind of industry pain is good for platinum
producers and we think Styldrift will start producing in a strong market,’ he said.
“Obviously, there’s potential for the market to impact [on the funding plan] if the
basket price stays where it is over the next five years. But I don’t think it will,’ said
Prinsloo.
In terms of the financing for Styldrift, RBPlats has no debt, raised R1bn from its
listing last year and was able to save R1bn (R670m attributable share) off the
project’s capital costs through optimisation. It also said 50% would be financed from
cash generated by BRPM.
“We’re really keen not to go to the market,’ Prinsloo told Miningmx in
February, although even at that time he said there was a risk shareholders would be
asked to contribute to the project.
Double digit cost increases (mostly from labour), and poor basket prices for platinum
group metals, partly predicted on poor autocatalyst sales in Europe, have combined
to send the South African platinum market into an asset and project review.
Amplats is undergoing an asset review – of which the RBPlat deferments probably
relate – while Aquarius Platinum has mothballed its Marikana and Everest mines
until platinum prices improve.
