[miningmx.com] – PLATINUM Group Metals (PTM), the Toronto-listed exploration firm, said it would sell shares for C$180m (US$182m) ahead of drawing down a $260m loan facility that it announced on December 6 had been arranged by a syndicate of South African and international banks.
The book-build and syndicated loan fully fund Project 1 of PTM’s WBJV venture which it estimated in an updated feasibility report would cost $443m to build. The funding is inclusive of heavy capital items such as construction of a concentrator, mill, and facilities to treat tailings. PTM has a 74% stake in the project.
There are some loose ends, however.
Among the conditions precedent ahead of the loan facility drawdown is that Wesizwe Platinum provide equity funding as well. Wesizwe Platinum is the ultimate owner of the other 26% in WBJV through empowerment company, Africa Wide Mineral Prospecting and Exploration.
Jianke Gao, CEO of Wesizwe Platinum, told Miningmx on December 6 that the company was looking to complete its funding obligations to the “Maseve Project’, so-called because the holding company which houses the investments of PTM and Wesizwe Platinum in WBJV is called Maseve Investments.
The finance provides further evidence that the South African platinum sector is able to attract foreign capital. At the time the syndicated loan was announced, Mike Jones, CEO of PTM, said: “The international bank approval is an important indicator for PTM and South Africa that the platinum industry is open for business”.
Proceeds from the book-build, led by syndicate of three banks BMO Capital Markets, RBC Capital Markets and GMP Securities, will be directed towards the second phase of the WBJV Project 1 which is forecast to produce 275,000 ounces of platinum, palladium, rhodium and gold, known collectively as ‘4E’ (four elements).
The proceeds of the $260m loan facility will be directed into completion of the first phase of Project 1 which includes securing surface rights, site establishment, water and power connections as well as the business end of the project: digging of the box cut and the tunnels from which mining will proceed. About 80% of phase one had been completed.
First production from WBJV Project 1 is due in 2014 at which time sentiment around platinum is expected to have improved, said Jones.
Jones’ upbeat comments come amid a torrid six months for the platinum group metal (PGM) sector which has been buffeted by poor autocatalyst demand, and fearful headlines as platinum miners fought South African police in violent, and sometimes fatal, protests. The encounters were triggered by poor living conditions in hostels set in squatter camps around the mines, as well as demands for wage increases.
Despite the poor newsflow, Robert Freidland, a well-known North American mining entrepreneur, raised more than C$300m for his recently floated IvanPlats, which has an exploration property in the northern part of South Africa’s Bushveld Complex.
This was followed weeks later by the listing of Sable Platinum, an exploration PGM stock led by James Allan, a former mining analyst, and Rene Hochreiter, a former platinum analyst and sector veteran.
