PTM to seek more funds after $287m loss sends it to precipice

Michael Jones, CEO, PTM

THE resolve of shareholders in Toronto-listed Platinum Group Metals (PTM) may be tested further after the company said on July 17 it may seek up to $20m more in finance.

The funds would be used to keep the company afloat whilst it completes a restructuring of its Maseve mine which is most likely to result in significant job losses.

Maseve, situated north of Rustenburg in South Africa’s Western Bushveld, has struggled with grade control and has opted to convert to a hybrid mining method which employed mechanized and conventional labour intensive mining.

Commenting in its results for the nine months ended May, in which it reported a $287m net loss (2016: $1.6m), the company alerted shareholders of having to raise an additional $10m to $20m. This would be “… by way of refinancing its existing debt, the issuance of new debt, private or public offerings of equity or the sale of project or property interests.”

“The company has active discussions in all areas of additional funding with several parties,” it said. Current cash on hand was $20m, it added.

The net loss was largely down to a $280m impairment on missed production targets and the transition to a hybrid mining method of which $225m was recognised in the three months ended May.

In an environment of low platinum group metal prices, PTM is clearly teetering on bankruptcy with the change in mining method effectively the last throw of the dice. Miningmx reported earlier this year that the company had inquired of Anglo American Platinum whether it wanted to buy Maseve. A corporate deal with Royal Bafokeng Platinum may also be an option, although it’s thought both companies would only be interested in Maseve’s surface infrastructure.

On June 29, PTM said it had raised a further $20m through the issue of convertible notes making a total of $65m it has raised in three funding deals so far this year to keep its struggling Maseve mine going.

PTM had previously raised $143m through the issue of shares during its 2016 financial year to finance operations at the Maseve mine which has fallen way short of management’s production forecasts putting the company under financial pressure.

Annual output was initially forecast to be 110,000 ounces of PGMs equivalent to an average monthly production of 9,100 oz – which would subsequently increase to 180,000 oz annually. That first year output estimate was subsequently revised to 85,000 oz – or 7,000 oz a month. In the three month period, the mine had delivered 6,925 oz of platinum, palladium, rhodium and gold (4E) in concentrate.

‘Active’ mining at Maseve had been temporarily suspended while contract activity and labour is restructured, said PTM which added that “negotiations and consultation have been going well”. Equipment and mobile machinery maintenance and underground infrastructure improvements are being undertaken during this period, it said.

“A significant number of the mine workforce will be affected by the restructuring. Final numbers will be determined in the next few weeks,” the company said.