Having been blindsided last week when JV partner Wesizwe Platinum Ltd. (GREY:WSZWF, Stock Forum), at the zero hour, decided against financing their 26% stake in the WBJV Project 1 Platinum Mine, Platinum Group (TSX:T.PTM, Stock Forum) has fought back with an announcement of strong drilling results.
Platinum Group stock had fallen 18% Friday on the back of the news, but climbed 14.2% Monday after the company boasted “the 87% owned Waterberg Extension Permits [had] successfully confirmed the extension of the Bushveld Complex and the layered sequence of the F zone rock package for 4.0 km of strike length beyond the previously known northern limits of the Waterberg deposit.”
A company news release continued, “Holes WE 01, 02 03, 04 have all intersected the Bushveld rocks as expected and have intersected layering including the distinctive olivine rich layer at the top of the F Zone. Hole WE 06 is in the rock that overlies the Bushveld in this region. The northern most confirmation of the Bushveld Complex is now at 4.0 km beyond the previously known position. All of these holes are continuing towards the base of the F Zone where the deposit model predicts sulphide mineralization should be present.”
Shares in T.PTM climbed $0.15 Monday to $1.20, coming close to replacing the losses from three days earlier, where shares had traded at $1.24.
The 52-week high is $1.51.
In news relating to the Wesizwe situation, the company stated, “At present Platinum Group is continuing with construction at the WBJV Project 1 with current contractors and will moderate any new contracts […] The Company has initiated discussions with qualified empowerment groups for investment into the WBJV Project 1 as a replacement for Wesizwe as their interest dilutes.”
Wesizwe Platinum announced Monday, “The company considered the cash call and the project fundamentals in detail, which included a definitive due-diligence review supported by third party experts, and concluded that the project does not satisfy its investment criteria under current market conditions," however it will be moving forward with its neighbouring $1.5b Bakubung project, with financing from China Development Bank.
The project reportedly requires capital investment of $300m to move forward.
According to a report on MiningMX.com, T.PTM may well be an attractive takeover target; “In a report by Leon Esterhuizen, an analyst for CIBC Capital Markets in London, the Waterberg deposit is wide and relatively shallow and could result in a mine producing up to 450,000 oz/year of platinum group metals (3E).”
"With so much good news about the Waterberg discovery already known and with clear potential to be expanded significantly over the next year, we believe the market may well be missing a trick," said Esterhuizen.
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