[miningmx.com] — Wesizwe Platinum and Platinum Group Metals (PTM) are both at a point now where they can advance their contiguous platinum projects after a long lull waiting for South African government approval the rationalisation of their properties.
The similarities in their approaches to the next step in unlocking value from their undeveloped platinum deposits immediately to the south of the Pilanesberg game reserve are marked. Both companies have outlined similar options of going it alone and raising funds, bringing on board a strategic partner or an outright sale of the assets.
JSE-listed Wesizwe has not only had to contend with the difficulties of raising finance for its Frischgewaagd Ledig project amidst a global financial meltdown, it also had to quell a boardroom coup, which was a damaging blow to investor sentiment.
TSX-listed PTM on the other hand has kept a relatively low profile but has been working hard behind the scenes. “Discussions with strategic partners, potential financing groups and banks are well advanced with RBC Capital Markets acting as advisor,’ said Mike Jones, president of PTM.
“There is active interest to support all three strategic directions including a build decision utilising a staged approach within feasibility study, a potential sale of the company and hedging or partnering type transactions,’ he said.
In terms of the finalisation of the transaction, PTM acquires ownership of 74% of Projects 1 and 3 in the Western Bushveld Joint Venture. Wesizwe holds the remaining 26%.
“We are now in a position to advance the Project 1 Platinum Mine and make a final decision on our strategic alternatives in the weeks ahead,’ Jones said. “We have a high degree of interest in the project from several different global players and financing groups at a time when the fundamentals for platinum and palladium have never been better.’
Project 1 has measured and indicated resources of 8.2 million oz of four platinum group metals (PGMs). The reserves stand at 4.67 million oz. and 1.9 million inferred ounces of those four metals in Project 3.
In its feasibility study, PTM envisioned a 275,000 oz/year mine at Project 1.
In closing the latest transaction, PTM paid C$25.5m or R186.5m to Anglo Platinum, leaving it just C$7m in cash.
Wesizwe has issued nearly 212 million shares to Anglo Platinum subsidiary Rustenburg Platinum Mines (RPM), making RPM the single largest shareholder in Wesizwe with a 26.9% stake. Anglo Platinum’s Michael Rogers has joined the Wesizwe board.
The shares were issued to buy RPM out of its 37% stake the Western Bushveld Joint Venture.
Wesizwe now owns 100% of its Frischgewaagd project, up from 68%.
“In the context of future mining development of the area, it is critically important that the two companies [Wesizwe and PTM] continue the excellent working relationship that will provide for synergies in optimising their respective projects,’ said Wesizwe CEO Mike Solomon.
Solomon has also told the market the options open to Wesizwe in developing a mine at Frischgewaagd. These include going it alone and raising the capital, securing a strategic offtake partner or an outright sale of the asset. The latter option is understood to fallen out of favour.
Frischgewaagd is planned as a R5.6bn – R6bn twin-shaft underground mine, going down 980 metres and producing 350,000 oz of platinum group metals a year.
In boardroom minutes leaked during the battle for control of Wesizwe late last year it was revealed that Impala Platinum wanted to conduct a due-diligence study of the asset.
Chinese precious and base metals producer Jinchuan Group was also said in the minutes to be interested in Frischgewaagd. It wanted to form a strategic offtake alliance and facilitate funding from the China Africa Development Fund.
Since regaining control of Wesizwe in December, Solomon has declined any comment on the minutes, pointing out the company is trading under a cautionary notice to shareholders.