[miningmx.com] — THERE was a time – in April 2007 to be more exact – when Wesizwe Platinum was trading at R14/share. These days the platinum junior miner sports a somewhat humbler market value of R1.85/share; nonetheless, that’s one quarter gain in value since November 2.
The reasons behind Wesizwe’s share price gain last week has been put down to several factors, including the renewal of a cautionary on November 2 which suggest talks to sell 51% of the company to China’s Jinchuan Mining are continuing, and are in good health. There are other factors, however.
Fundamentally, the QE2 – or $600bn US stimulus package, has had a knock-on effect for all commodities including platinum, not just gold. But news that George Soros had lifted his investment in Platinum Group Metals (PTM), the property of which borders Wesizwe’s Frischgewaagd endeavour, has also lifted the profile of exploration in the region.
Consolidation in this part of the western limb of the Bushveld complex is considered an economic must. Part of the reason is that the newly listed Royal Bafokeng Platinum (RBPlat) recognises the illogicality of sinking a new shaft for its Styldrift expansion property if another shaft had already been sunk at the neighbouring Frisch-Ledig property just a few kilometres away.
Still, who will drive such a process of consolidation?
The consensus view is that Impala Platinum continues to ambitiously eye RBPlat’s Bafokeng Rasimone Platinum Mine (BRPM) and may well revisit an earlier R20bn offer to buy the company. And yet there are reasons to confound such a proposition.
The first is that Anglo Platinum has a right of first refusal over shares in BRPM, which means it can always frustrate, and most likely would, any further approaches from its great rival, Impala.
Secondly, there’s no reason why Anglo Platinum wouldn’t leverage RBPlat’s empowerment status, and its ready access to cash flow (from BRPM) to open negotiations to buy the PTM and Wesizwe properties, sooner or later.
The consolidation of the platinum industry has become something of a holy grail: sacred, inviting, long pursued, but ultimately out of reach.
RBPlats is unique in the platinum sector, as highlighted by a well publicised report by RBC Capital Markets, which has suggested that bankrupt empowerment partners in the platinum sector, and the complexity of cross-holdings between them, has rendered consolidation a near impossibility.
That’s because none of the empowerment partners could afford to buy a 26% slug of shares on offer by dint of the minerals legislation.
In Royal Bafokeng Holdings, RBPlat is a quite different proposition and though the company is tightly bound to Impala Platinum, its share of BRPM makes it an equally valuable partner for Anglo Platinum.
