South Africa: Volatility Prompts Wesizwe Rethink
Charlotte Mathews
3 March 2009
Johannesburg — FLEDGLING platinum miner Wesizwe Platinum has revised the year-old bankable feasibility study into its Frischgewaagd-Ledig project near Sun City because of the sharp volatility in prices since the original study was released, CEO Michael Solomon said yesterday.
But the revised study had not shown any "material economic show-stoppers" and, in fact, some of the costs would have to be revised downwards again because input costs in the mining industry were falling. He said the revised study would be discussed with investors shortly.
Although projects planned by junior miners across the sector have been jeopardised by the credit squeeze and falling commodity prices, platinum miners have been affected particularly severely. Platinum dropped from more than $2 000/oz a year ago to almost $700/oz late last year, although it has recovered some ground recently on a strong gold price.
Wesizwe said last year it planned to build a mine costing about R5,6bn to produce 350000oz of platinum group metals a year over a life of 35 years. In November it said the board of directors had decided it would not be in shareholders' interests to defer the project but Wesizwe would consider dividing the project into a number of phases and raising the money as it was needed.
Solomon said Wesizwe was in the fortunate position that it held cash in the bank. The company's interim results showed it held R194m at the end of June.
He said financial markets were difficult and Wesizwe did not want to raise debt at the current high interest rates or excessively dilute shareholders by issuing shares in the equity environment.
In January, industry website Miningmx reported that Sun International, which owns Sun City, and Legacy Hotels & Resorts, which owns the Bakubung resort, had lodged appeals to North West province's approval of the environmental aspects of the mine. This is part of the necessary procedure for securing a mining licence.
The appeals are being considered by the province.