[miningmx.com] – WESIZWE Platinum said the decision of its subsidiary, Africa Wide Prospecting & Exploration Company (Africa Wide) to decline further investment in the Western Bushveld Joint Venture (WBJV) was based on its assessment the $506m platinum project did not “… satisfy its investment criteria”.
WBJV is 74% owned by Platinum Group Metals (PTM), a Toronto-listed company, and is controlled through Maseve Investments. Wesizwe Platinum holds its balancing 26% stake in Maseve through Africa Wide which is, effectively, PTM’s empowerment partner.
“The company considered the cash call and the project fundamentals in detail, which included a definitive due-diligence review supported by third party experts, and concluded that the project does not satisfy its investment criteria under current market conditions,” Wesizwe Platinum said in its statement. It added that a consequence of its non-participation is that Africa Wide could be diluted.
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 WBJV platinum group metal (PGM) mine.
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.
Wesizwe Platinum said that its own project, the proposed $1.5bn Bakubung mine which neighbours WBJV, was ” … firmly on track, within budget and well-funded”. Wesizwe Platinum said in January it had received a $650m capital injection from the China Development Bank for the Bakubung project.
Wesizwe Platinum also implied that it had never ploughed actual cash into WBJV as its initial investment was by dint of an agreement in 2008 in which it, PTM and Anglo American Platinum had agreed to consolidate their mineral rights.
“The proceeds of PTM’s increased interest in Maseve were escrowed by Maseve on behalf of Wesizwe to partially fund Wesizwe’s interest in the development of the Project (the original escrowed amount was R408.81m),” it said.
Wesizwe Platinum chief operating officer, Paul Smith, had not responded to questions at the time of writing.
