Wesizwe cuts Bakubung capex 11% to R10.7bn

[miningmx.com] – WESIZWE Platinum said it had reduced the capital required for its Bakubung Platinum Mine (BPM) by just over 10% to R10.7bn, and said it would produce platinum from the mine about two years earlier than first planned.

This follows a mine optimisation the details of which it released today on the Johannesburg Stock Exchange in which it said annual production would also be one fifth higher than previously estimated at 420,000 ounces of platinum group metals.

The optimisation study builds on a 2009 bankable feasibility study but took into account developments in the platinum sector including increased cost pressures and lower metal prices. “We spent a lot of time on costs,” said Paul Smith, chief operating officer of Wesizwe Platinum at a presentation in Johannesburg today.

As the cost savings are bench-marked against the original bankable feasibility study, there had been a 9% real capital cost increase largely owing to higher capital costs such as conveyor belts and chair lifts which were aimed at lower operating costs.

There had been a reduction in the average mining employee in service to 3,135 people, a reduction of 235 individuals. The mine would be partly mechanised. “We can’t claim to be entirely mechanised,” added Smith.

The improvements in production schedule, and the lower project capital required, was a result of developing the BPM orebody ‘on-reef’ which allowed Wesizwe Platinum to sink shorter shafts. There had also been an increase in hoisting capacity to support the expected increase in production.

The mine was partly funded with a $650m facility provided by the China Development Bank of which about $100m had already been drawn down. Jinchuan Group is Wesizwe Platinum’s major shareholder with a 45% stake with the balance owned by Anglo American, and the Micawber empowerment grouping among others.

“There is a funding shortfall which will come into play around 2017,” said Smith. “We are fully aware of it; we know the magnitude of that and we are assessing how we will fund it,” he said.

Smith said the company was “not panicking” as there were “quite exciting options out there”, he said, adding that investment options were increasing given the improved prospects for the platinum price”.

“The platinum price doesn’t affect us right now … The [platinum supply] deficit is growing daily given what’s happening in the world so we are comfortable in terms of where metal prices will be when we come into production,” said Smith.

Asked why Wesizwe Platinum was building a mine rather than buying one, given the troubled nature of the sector currently, Smith said: “It’s all about what’s in the ground and the quality of the reserves. That makes a mine.

“Good quality Merensky resources you will not find any more. That is the excitment of the mine,” he said.