[miningmx.com] — A long-awaited listing on the Johannesburg bourse by exploration group Nkwe Platinum is scheduled for the fourth quarter of this year after it has tweaked a study into a large platinum project and possibly brought Xstrata in as its partner to foot the bill to build a mine and concentrator.
Nkwe, which is now listed in Australia, owns one of the larger untapped platinum deposits. It owns the majority of Garatau and Tubatse projects, spanning five contiguous farms over 30 km.
The first draft of bankable feasibility study into the Garatau project showed a capital cost of between R6.5bn and R8.3bn, making it potentially one of the most expensive projects on the Eastern Limb of the Bushveld Igneous Complex.
The draft bankable document has been handed over to an international outfit to optimise the project, hopefully bringing down costs, which will be entirely for Xstrata’s account if it exercises its option to acquire 50% of both projects, and pull the construction and production time lines forward, said Nkwe MD Maredi Mphahlele.
“We want to run major components of the study through an international review before we go raising capital, listing and ahead of Xstrata deciding on its option,’ he told Miningmx.
“It will be one of the bigger projects in the industry and our expectation is that we can bring the time line closer and bring the capital expenditure down,’ he said.
According to the study Nkwe has released it plans to start building a mine in 2011 and ramp up to full production in 2016 of between 240,000 and 400,000 tonnes a month. The cost was estimated at between $435/oz and $535/oz based on a basket price of $1,200/oz.
Xstrata, which has strong platinum ambitions, is working closely with Nkwe on the study. Asked whether there were any expectations within Nkwe that Xstrata would walk away from the project, Mphahlele said “It’s an option at the end of the day and they have to make the decision. We’ll only know what that will be when they exercise the option. But so far we’ve had no indication to the contrary.’
Xstrata pulled up short of a $10bn takeover of Lonmin in late 2008, settling instead for a 24.9% stake in the world’s third largest platinum producer. It is understood that Xstrata is taking a hard look at this stake in Lonmin, which is grappling with ongoing problems at its main furnace, to decide whether it should keep that stake or sell it.
Xstrata has other platinum assets in South Africa and is the world’s leading chrome producer. The experience Xstrata has in both these minerals, which are both found in the same geological package, will stand it in good stead if it opts to build a project on the Eastern Limb.
It’s understood that one of the concerns Xstrata has had is the number of court cases contesting Nkwe and its 63% shareholder Genorah’s rights to the properties. The parties have continually renewed the deal with Xstrata as the work on the prospects went on a bit longer than expected.
One of the legal actions was brought by Anglo Platinum, but that has been resolved out of court. There have been some legal actions by communities and various individuals.
“These have been spurious and trivial matters. They have all been turned down in court, even the one that got to the Supreme Court,’ Mphahlele said.
It is understood African Rainbow Minerals (ARM) is unhappy with the Anglo Platinum settlement, but it’s not yet clear whether they will take the matter to court.
ARM is in a joint venture with Anglo Platinum at the Modikwa mine to the east of Nkwe’s properties.
“These rights are very valuable. We are a small company and there have been many attempts to muscle us out,’ said Mphahlele.
Nkwe’s vision is to have two mines on the Garatau property and Tubatse, which is still being explored, with annual production topping 700,000 ounces of platinum group metals a year and a resource of 100 million ounces.
Nkwe has placed A$10m worth of shares with private investors, primarily from the Far East, towards drilling at Tubatse and the completion of a bankable study there. The shares were placed at A$0.50 each.
Nkwe plans to list on the JSE in the fourth quarter of this year at the same time it will join the Hong Kong Stock Exchange.
Nkwe has told the market a number of target dates for a JSE listing in the past but these have been missed for a variety of reasons, including the exodus of investors from risky newcomers at the height of the global economic crisis in late 2008 and early 2009.
Nkwe will raise some capital on listing to continue exploring other platinum properties in its portfolio with an eye to making them attractive enough to bring in partners. The JSE will ultimately become the primary listing for Nkwe.
“The platinum industry is very fluid at the moment and I would most definitely anticipate something happening [with Nkwe’s other properties],’ Mphahlele said.