[miningmx.com] – WESIZWE Platinum said it could not discount capital cost escalation before completion of Bakubung by 2023, the firm’s platinum group metal (PGM) project for which additional funding was recently secured.
Earlier this year, Wesziwe Platinum said the cost of building the mine, forecast to produce 325,000 ounces of PGMs by 2023, would increase to R7.9bn from R6.4bn previously.
“Between 2018 and 2023 we may need more finance, especially during the ramp-up period,” said Jianke Gao, CEO of Wesizwe Platinum, in an interview. “We intend to update the finance requirement on the mine every two to three years,” he added.
Gao also said the company had met with its bankers recently to finance additional funding to retain its 26% stake in Maseve project, a joint venture with neighbour Platinum Group Metals. “We only need $200m to retain a 26% stake so that is not considered too much of a financial burden on finances,” said Gao.
Wesizwe Platinum is controlled by China’s Jinchuan Group following a takeover first announced in 2010 when it and the China Africa Development Fund said they would buy a 45% stake in Wesizwe Platinum for $227m, and fund the mine to completion estimated then to cost $650m (R5.7bn at today’s exchange rate).
The partners also pledged not to dilute existing shareholders if there were an additional capital call – a promise it has so far honoured.
Gao added that while the shareholders were critical of the size of salary increases granted to miners in the wake of Lonmin’s Marikana massacre, they remained committed to the South African platinum sector.
“We have factored in cost inflation in excess of the national CPI (consumer price inflation) but the kind of increases offered by Lonmin cannot be sustainable in the long run,” Gao said. “We are in a fortunate position at the moment to be still a development project,” he added.
“The PGM sector in South Africa offers a good investment. We have confidence in the long-term prospects for the sector,” he said.
There have been advances at Bakubung, formerly known as Frischgewaagd-Ledig, following the appointment of a R1.64bn shaft sinking contract to Aveng Grinaker-LTA Mining.
The mineral resources department had signed the surface lease agreement, while the election of a new leader by the Bakubung-Ba-Ratheo community had restored more stability among the Bakubung where internal divisions were an integral part of a leadership struggle in the company during 2009.
The technical, regulatory and community related improvements are, as yet, not reflected in Wesziwe Platinum’s share price. The stock is down nearly 57% since the beginning of the year and was last trading at 63 South African cents per share.
Said Gao: “The whole market has been under pressure, but certainly Wesizwe Platinum did not reflect the new owners coming in [in its share price].
“As the management team we are doing our best to attract new, potential investors. Since our last roadshow, I think we have done that,” he said.
