PTM says “line of sight” over $400m funding will secure SA’s newest PGM project

PLATINUM Group Metals (PTM) could begin construction on the $600m Waterberg palladium project this year as the company had “line of sight” over the majority of the funding, said Mike Jones, CEO of PTM.

“We have line of sight of about $400m of the $600m we need to build it,” said Jones in an interview last week. “We know what the terms are, we know who the counterparty is, we’re in detailed documentation.”

The remaining $200m must be financed by shareholders in the project which includes Impala Platinum (Implats). Jones said “partner equity” would be used to finance the balance with only $26m of the project which relates to the uncarried share of PTM’s black economic empowerment (BEE) partner, currently unfunded.

The shareholders in the Waterberg Project consist of PTM – which has a controlling 50.02%  – Japan Oil, Gas and Metals National Corporation (JOGMEC), Japanese trading group, Hanwa, and Implats which has a 15% stake.

Jones said PTM would have to raise $100m in equity in terms of its share of the project. “We’ve talked to our major investors and they support the project and see the vision of the metal,” he said.

The Waterberg Project has been scoped for production of some 420,000 oz of platinum group metals (PGMs), with a bias towards palladium production. First production would be three years after construction with full production reached after five years.

Jones said he was confident the firm’s mining permit would be upheld by the South African government following an appeal against it by a community representative. The community claimed not to have been consulted about the mine’s development. Mining permits are suspended to allow for an appeal to be heard in terms of South African minerals legislation.

“We’ve got the mining right, we’ve got the right to access to the ground, and we’re in position with sufficient equity to start our work on surface,” he said. “We’re in position to start the work on-site and now we’re hoping to do that this year.”

PTM has been working on the Waterberg Project for about three years after selling its concentrator on the Maeseve project, which it closed, to RBPlat for $70m. Implats bought a control option in the Waterberg Project which it decided not to exercise owing to its long lead times, preferring instead to invest $751m in North American Palladium.

South Africa’s supply response to record PGM pricing, especially in rhodium and palladium, has been muted, although some brownfields developments are on the cards.

Sibanye-Stillwater said it would spend R3.9bn on the development of the K4 PGM project at its Marikana operations whilst Implats is to approve R10bn in 360,000 ounces of new PGM production at the Two Rivers joint venture and Zimplats. Ivanhoe Mines said in April it did not anticipate running into funding problems raising $1.4bn for its Platreef project.