PTM closes share placement raising $1.71m after losing Implats as key Waterberg JV investor

PLATINUM Group Metals (PTM) closed a $1.71m private placement of shares despite losing Impala Platinum (Implats) as the lead investor in its proposed $840m Waterberg JV Project, a palladium-rich prospect located in South Africa’s Limpopo province.

The Toronto-listed firm said in an announcement that an aggregate of 1.2 million shares were bought at a price of $1.40 per share raising funds that would be used to finance its contribution to ongoing Waterberg JV development, and for general corporate purposes.

The funds raised are slightly less than the $2m planned. The capital raise was postponed on Monday following the firm’s announcement that Implats would not take up an option to become a 50.01% shareholder in Waterberg JV.

Implats said on Wednesday that COVID-19 had played a role in its decision not to take on the investment which would have seen it seeking finance for about $400m. It also cited a reluctance of lenders to fund long-term, greenfields projects, and that its focus had shifted to balance sheet strength and dividend payments.

However, PTM said it had received interest in the Waterberg Project for funding and strategic off-take from other interested parties. “These discussions will continue while the Call Period Program and mining right application work are ongoing,” it said.

The Call Period Program expires when Waterberg JV is granted a mining licence by the South African government – the time initially allowed to Implats in order to make a decision on whether to exercise its option.

PTM’s New York listed securities weakened about a fifth in the wake of Implats’ announcement, but have since recovered marginally ending at $1.45/share, an increase of nearly 3% on Wednesday.

Investor confidence in PTM will be important going forward whilst the company comes up with an alternate funding plan. The tide has tended to turn against significant greenfields development even before the onset of COVID-19 as the attention of company boards turned to shareholder returns rather than promises of future market share and cash flow.

Hosken Consolidated Investments (HCI), the South African black-owned group, followed its rights in the share placement taking 500,000 common shares through its subsidiary, Deepkloof. HCI owns about 30% of PTM.