Temasek invests $100m in Platmin

[] — SINGAPORE’S state-owned Temasek Holdings is investing $100m in platinum junior Platmin in a transaction that could be a precursor to other investments in South Africa. Platmin is to raise a further $250m in a rights issue to grow the group.

Temasek is looking for further investments in resources. It opens the possibility that it could look at other parts of the portfolio of Pallinghurst Resources, which is in a consortium holding a considerable stake in Platmin. Pallinghurst has manganese and iron ore in its portfolio and wants to add coking coal — all ingredients for the steel makers.

Temasek’s investment comes in the form of a convertible debenture, which matures at the end of 2010 and is convertible at a price of $1.215 per share or C$1.25, a 10% discount to the five day volume-weighted average price in the five day to 26 March this year.

“This is a very important development not only for Platmin but South Africa. It’s being made at a time when the platinum industry is really challenged to produce the quantities that are needed to supply increasing demand,” said Brian Gilbertson, chairman of Platmin.

“Through this investment it makes it possible for Platmin to get on with its plans, in particular to follow consolidation opportunities in the region,” he told Miningmx.

Asked about further Temasek investments, Gilbertson said: “We see this as the start of an important relationship with Temasek. On the assumption that everything works out smoothly over the next few months in this investment in Platmin, I’d like to think they would be backing us in other investment initiatives in other commodities as well.”

This investment is seen as the largest investment from Singapore into South Africa since the establishment of a South African diplomatic mission there in 1992, said SS Ripinga, South African high commissioner to Singapore.

The money will go into a special account and if Temasek opts to not follow its rights it will be paid back to the sovereign fund. The conversion would give Temasek 82.3 million Platmin shares.

Pallinghurst Investor Consortium also take up convertible debentures in Platmin to inject $30m into the company, giving the consortium 24.69 million more shares in the company, giving it a 38.7% stake.

Platmin intends raising a further $250m via a right issue and will retain agents to do so.

“Funds raised will be used by the Company for working capital, to complete the
build-up to full production at the Pilanesberg Platinum Mine (PPM), to pursue a
number of growth and acquisition opportunities, and to further develop the
company`s Eastern Limb projects,” the company said in a statement.

Platmin will ramp platinum group metal (PGM) production up to 160,000 oz in concentrate this year and it is working on a bankable study for a second project to aggressively grow the company internally and through consolidation.

The Toronto- and Johannesburg-listed Platmin is roughly a year behind reaching its annual target of 250,000 PGM oz because of labour and grade issues from the oxidised part of a complicated ore body, but it has set early 2011 as the new target date. It sold 28,000 oz in the 10 months to end-December 2009.

Tom Dale, Platmin CEO, said in mid-January the company needed to raise further capital because of the year-long delay in reaching full production and to pursue its consolidation strategy immediately north of the Pilanesberg game reserve on the Western Limb of the Bushveld Igneous Complex.

Pallinghurst Resources, headed by Brian Gilbertson and Arne Frandsen, holds a majority stake in the Pallinghurst Investors Consortium, which owned 52% of Platmin.

Temask, which has investments worth some $123bn, has said it is looking for greater exposure to resources. Nagi Hamiyeh, MD of investments, told Bloomberg last week the fund is looking at investments in Africa and Mongolia and elsewhere. Its interests are in platinum, iron ore, coking coal and copper, he told the newswire.

A source told Miningmx that Temasek was looking to invest around 10% of its portfolio in resources.