Published on 28th October 2008
Updated 1 hour 16 minutes ago
JOHANNESBURG (miningweekly.com) – Platinum junior Wesizwe Platinum is reconsidering certain options of the project plan for its core 350 000 oz/y platinum group metals (PGMs) Frischgewaagd-Ledig project.
This is owing to the "unprecedented global economic volatility affecting the capital markets having now filtered into the metals markets", the company said in a statement to shareholders on Tuesday.
The company noted that its "strategic imperative" is to technically and financially "de-risk the project" in response to current market conditions, as well as the long-term viability of the project.
Wesizwe is considering a number of options, which will be presented to the board of directors on November 4, after which the company will reveal how it will proceed with the project.
The company stated that it had R340-million cash-on-hand, which provides it with the option of "defining a prudent way forward".
"We are reluctant to risk shareholder value further by delaying the Frischgewaagd-Ledig project unnecessarily because of current market conditions, while losing sight of inevitable future corrections to the market that should manifest before or at the time we commence production," commented CEO Michael Solomon.
Wesizwe stated that the current low commodity prices has impacted on the company's share price and subsequently its market capitalisation, however, the company expected a recovery of the commodity and economic cycles over the next five years.
Solomon noted that the company remained positive about the inherent value and strategic location of the project, while the long-term platinum industry fundamentals would also remain strong.
Wesizwe stated that the project is a high-quality project, which would become cash-generative between 2013 and 2016.
While current PGM prices were "untenably low", Wesizwe expected this to correct to "more realistic levels" during the capital construction period of the project, and during the project's progression towards early production in 2011.
The company added that the medium- to long-term platinum price projections would average at between $1 300 and $1 500.
"The project remains viable in the longer term despite the current economic dynamics," said Solomon.