[miningmx.com] – NKWE Platinum, the Australian-listed exploration
company, said it would approach the Industrial Development Corporation (IDC) as
one of several sources of capital to help finance its R6bn Garatau platinum project, a
property situated in the eastern Bushveld.
“We have the IDC in our sights,’ said Maredi Mphalele, MD of Nkwe Platinum. “It will
be one of several partners in the project owing the size of capital needed,’ he said.
Earlier this week, Nkwe Platinum published an updated bankable feasibility report in
which it has scaled back Garatau.
In March, the IDC announced it would pump R3.4bn into Pallinghurst Resources’
platinum company, formerly called Platmin, in return for a 16% stake in the
130,000 oz/year producer. It plans to produce 1.1 million oz/year by 2017. By
comparison, Nkwe Platinum’s Garantau will produce about 330,000 oz/year.
Amid strain in South Africa’s platinum industry, which has seen Eastern Platinum
shelve its Crocodile River project and Aquarius Platinum close its Marikana mine,
Nkwe Platinum has reduced capital expenditure R3.6bn to just under R6bn by
delaying development of the deeper lying UG2 orebody in preference for focusing on
Merensky reef. This would deliver cashflow earlier into the project, a proposal that it
believes will improve mine payback to 10 years.
The current life of mine at Garatau is therefore 17 years, but including development
of the UG2 and the orebody on adjacent farms, the project could be extended to 40
years, said Mphalele.
Nkwe Platinum said first production from Garatau was expected in 2017 and that it
had assumed a platinum price of some $1,601/oz and a platinum group element
basket price of $1,336/oz; a forecast drawn from seven independent sources.
The current price of platinum is about $1,452/oz. “We have a positive view of the
platinum price, especially in the medium term. We know sentiment isn’t great now
but we look at things in the medium to long term,’ Mphalele said.
However, what may raise eyebrows is Nkwe Platinum’s expectation that the fixed
and variable cost per ounce of PGM produced would be R7,149/oz. “The platinum
sector is not child’s play,’ said Mphalele. “But we have a project that will be mined
through board and pillar [mechanised] and operated by expert partners in DRA.’
Macquarie Securities said in a recent report that the platinum market was sending
mixed messages about its prospects, with an equal number of short and long
positions being taken in the metal. Short-term investors had been influenced by
poor demand for autocatalysts from Europe, while the “longs’ had taken a
fundamental view of the platinum price, believing it to be too low.
“We think the risk is that short covering will drive prices higher rather than longs
being liquidated, as we think the market is fundamentally in deficit, with the risk
that this deficit gets larger at current prices,’ Macquarie said.
“While further negative newsflow from European woes seems likely short term, if
any metal is at risk of a substantial short covering rally once the Euro newsflow can’t
get any worse, it is platinum,’ it added.
