Big platinum mine capital raising to start after Western Bushveld rationalisation
Prominent platinum juniors Wesizwe and Platinum Group Metals (PTM) are set to start capital raising for their platinum mines after acquiring Anglo Plats’ stake in the Western Bushveld Joint Venture (WBJV) projects.
Author: Tessa Kruger
Posted: Tuesday , 02 Sep 2008
JOHANNESBURG -
Wesizwe Platinum (JSE:WEZ) and Platinum Group Metals (TSX:PTM) are to embark on separate capital raising efforts in the South African and North American markets for what they describe as two large, long life platinum mines with good grades, following some corporate action around its Western Bushveld Joint Venture (WBJV) projects today.
Wesizwe has bought Anglo Platinum's 37% stake in the Western Bushveld Joint Venture (WBJV) to gain 100% control of its core Ledig-Frischgewaagd project for R1.162bn ($148m), by issuing 211,850,125 new ordinary shares in the company to Anglo Plats..
At the same time the company is selling Anglo Plats' 37% stake in the WBJV's "PTM projects" 1 and 3 to Platinum Group Metals for R785.5m ($100m), while PTM is selling its 18.5% stake in the WBJV project 2, primarily comprising of Ledig-Frischgewaagd, to Wesizwe for R376.9m ($48.3m).
The result of the transactions is that Anglo Platinum now holds a significant 26.5% of Wesizwe, which lends both credibility to its core project and the company. However, chief executive officer Mike Solomon said today that although Wesizwe is delighted to have Anglo Platinum on board, the parties have reached agreement that should the platinum major sell its share in Wesizwe, both companies would endeavour to enhance existing black shareholding in the company.
Both Wesizwe and PTM said they would "phase" fundraising for the development of their platinum mines over the full project periods. Wesizwe requires R5.2bn ($665m) to build its first platinum mine to be developed over the next eight years.
Solomon said Wesizwe would firstly concentrate on the South African market and then move to the European and North American markets for capital raising. Similarly, PTM would first look to the North American market for equity raising before moving to the South African and European markets.
Capital raising for both projects would have a debt component that will reduce the need for equity raising. Solomon said they have not decided on the level of gearing yet, but projects of this nature typically carried a 50% gearing.
Wesizwe is leaving the balance of R408m ($52m) owed to the company for the 37% stakes in WBJV projects 1 and 3 in the WBJV for the capital construction of these "PTM projects". Wesizwe is retaining its initial 26% stake in the projects that will be 74% owned by PTM on conclusion of today's announced transactions.
The parties to the deal envision straightening out overlapping mineral properties on the western limb of the Bushveld complex and giving the market a clear idea of where the projects and value lie.
Commenting on the current difficult capital raising environment, Solomon and PTM's president and CEO Michael Jones said the easiest thing to do in current market conditions would be selling on projects to platinum majors. However, the companies believed its projects were strong enough to take to the market to build further shareholder value.
Competitive aspects such as platinum grades became even more important in difficult market conditions.
Solomon said difficult times would recur in the commodity cycles that lay ahead and the companies had to navigate their paths through this.
The announced transaction implies another black economic empowerment deal for Anglo Platinum which conducted two large BEE deals with Northam and Anooraq last year.
Today's transaction lifts Wesizwe's PGM resources from 13m ounces to 15.7m ounces and takes forecast attributable production from 331,000 ounces per year to 415,000 ounces.