[miningmx.com] — SHAREHOLDERS in Wesizwe Platinum (Wesizwe) have approved the R6.6bn transaction through which a consortium of Chinese investors will take control of the company and fund construction of a new platinum mine near Rustenburg.
A strong presence by the South African Police Service, and a private security firm armed with shotguns, were on hand at the company’s back-to-back annual and special general meetings which were held in Johannesburg on Wednesday.
This was because of the chaos that had erupted at the Wesizwe shareholders meeting in the Sandton Convention Centre on December 17 2009.
At that stage, the company was caught up in a complex civil and legal battle between factions in the Bakubung Ba Ratheo community, Wesizwe’s black economic empowerment partner.
Community members at that meeting disrupted proceedings by shouting down and insulting various company executives and singing and dancing.
But the security presence was not required as Wednesday’s meetings went off without incident, and with the questions raised by various shareholders focusing on the details of the deal.
Wesizwe CEO Arthur Mashiatshidi said after the meetings that he was “excited’ by the outcome, and that construction work on the mine had already started.
The Wesizwe AGM was to have been held on August 19, but was postponed because of legal action concerning the issue of who had the right to vote certain blocks of shares on behalf of the Bakubung Ba Ratheo community.
Wesizwe chairperson Dawn Mokhobo told the meeting that the AGM had now been resumed because the applicant in the legal case had withdrawn.
Mokhobo said: “It was sad that the relationship between the company and the community broke down, but I believe the company and the community have found each other once again.’
Wesizwe will now build a mine at its Frischgewaagd-Ledig Complex, which has the potential to produce up to 350,000 ounces of platinum group metals (pgm) per year.
But the implications of the deal could extend far beyond construction of this single mine, depending on the strategic aims of Wesizwe’s new major shareholders – the Jinchuan Mining group and the China Africa Development Fund.
One platinum industry executive said: “When did you last see an investment of this magnitude made in SA’s platinum sector by an outsider and not one of the existing major producers?
“This is a benchmark deal because of the Chinese involvement and it is going to revitalise the entire platinum mining scene.’
Another platinum industry source said he believed the Chinese interest was being driven by the surging requirements for pgm in China, which last year became the world’s largest automobile market.
Three pgm metals in particular – platinum, palladium and rhodium – are used to manufacture the autocatalyst needed to clean up vehicle exhaust emissions.
The executive said: “The bulk of the world’s platinum business is tied up in contracts between the three major platinum producers and the world’s major automobile manufacturers.
“China has to source much of its requirements in the spot market, which raises issues over price volatility and security of supply. What you are now seeing is Chinese investors moving to secure their own direct sources of pgm supply.’
The implication is that Wesizwe could be used as a vehicle for further consolidation in the sector.
That was referred to by Mokhobo in her opening remarks to the AGM, when she said: “The Jinchuan deal gives Wesizwe the financial muscle to consider further growth opportunities.’
If Wesizwe does intend looking for further acquisitions, the most obvious is right next door in the form of Toronto-listed junior Platinum Group Metals (PTM), which has also started building its own mine.
The two are already partners in what is known as the Western Bushveld Joint Venture, while PTM CEO Mike Jones has made it abundantly clear he’s open to a takeover deal.
He told Miningmx at the recent Mining Indaba: “As I have said before – our business plan is open for review every morning. This is not about philosophy, it’s about money.
“We are prepared to take the project all the way to becoming a producing mine but, if someone came along and offered the right price, then the company is gone.’
Jones said his 2010 annual review that “our area promises to be the centre of platinum mining development for the next 20 years and beyond.
“The last few months have seen takeover bids, retracted IPOs and the entry of new players. Our mineral rights and surface rights are in the centre of the activity.’
– The writer owns shares in Wesizwe.
