[miningmx.com] – THE partner of Canadian firm Platinum Group Metals (PTM), Africa Wide Prospecting & Exploration Company (Africa Wide), has dealt a body blow to plans for a $506m platinum mine after saying it would not follow its rights.
PTM announced on October 18 that it had been informed Africa Wide would not stump up $21.8m (R213m) in funds for the proposed 275,000 ounce/year Western Bushveld JV (WBJV) platinum group metal (PGM) mine.
Africa Wide is a subsidiary of Wesizwe Platinum through which it owns 26% of WBJV Phase 1. Wesizwe Platinum is 45% by Jinchuan. Africa Wide and Wesizwe Platinum hold their shares in WBJV Phase 1 through the operating company, Maseve Investments.
PTM said it may suspend development of the project which was scheduled to produce first PGMs in mid-2015. The project is expected to have $506m in peak funding and was to later this year require the draw down of a $260m loan provided by a syndicate of lenders including Barclays/Absa and Standard Bank.
“The currently proposed project loan structure for the project is unlikely to proceed in its current form,” PTM said in an announcement on Friday (October 18).
“As a result of the potential changes in the structure of ownership in Maseve, and potential changes in funding arrangements for Maseve and the project, there may be substantial delays or a stop in construction and production plans for the project,” it said. Shares in PTM dived 18.67% in Toronto on the day.
The development clearly came as a complete surprise to PTM judging by its statement in which it said “… there was no indication from Wesizwe or Africa Wide until late today in Johannesburg that they would not fund their pro-rata share of the project”.
“The cash call to Africa Wide for the project had been timed to coincide with the final expenditure of funds held in escrow by Maseve for Africa Wide,” it said.
“Wesizwe had previously indicated that they would be a funding participant through Africa Wide and that they supported the proposed project loan in respect of the project,” it added.
Wesizwe Platinum said in January it had received a $650m capital injection from the China Development Bank for its own project – the $1.5bn Bakubung mine which neighbours WBJV in South Africa’s North West province – and indicated to Miningmx at the time that funds for Maseve Investments would be forthcoming. Messages from Miningmx to Wesizwe Platinum went unanswered on Sunday.
Asked for an update today, Kris Begic, a spokesperson for PTM, said: “As per the press release this issue may cause a delay but no decision has been made. Operations continue at this time”.
PTM said it would assess its options over the next few days. “The company holds approximately $90m in cash at present which is sufficient to cover the costs of any stoppage at the project,” it said.
