building the company’s platinum mine, which is near Sun City in the North West, seemed remote owing to funding shortfalls. Eventually, the Chinese took control.
The takeover by China’s Jinchuan Group, which bought 45% of the company and helped introduce some finance – $650m was provided by the China Development Bank – has steadied the ship, but Smith acknowledges that language and culture changes at Wesizwe brought its own challenges.
Wesizwe controversially expressed a no-confidence vote in a joint venture with a neighbouring project owned by Toronto’s Platinum Group Metals (PGM) last year, saying that the enterprise, known as Maseve, fell below its own investment levels.
The fact is, however, conditions in the platinum market have changed. The depressed metal prices won’t affect Wesizwe right now, owing to the fact that f irst production from BPM won’t be until 2019 at the earliest, but the cost of building a project is expensive.
As a result, Smith completed an optimisation study on the mine – it had already been started by Jinchuan – and found that some 11% of the capex could be cut compared to the bankable feasibility study completed in 2009. There is still a real increase in costs while the $650m from China Development Bank does not fully fund BPM.
Wesizwe Platinum’s remaining shares in Maseve could be liquidated to plug some of the funding shortfall. “We are fully aware of the situation and we’re keeping our options open,” says Smith.
Quite how much Wesizwe Platinum can earn from Maseve is questionable. Wesizwe declined to follow its rights in the project and was therefore diluted, but it and PTM differ on the extent of the dilution. Wesizwe thinks its stake fell 3.5 percentage points whereas PTM thinks it is five percentage points.
Either way, it’s unlikely Wesizwe will look to issue its own shares to plug the funding deficit. Despite the improvement in the share price, there’s a belief that Wesizwe still remains undervalued; in fact, Wesizwe’s stake in Maseve was worth more than its share price once.
Wesizwe Platinum is 16% empowered, of which a part is related to the Bakubung community’s stake. The shares in this stake, however, can’t be found and are related to events ultimately wrapped up in the attempted board coup of 2010. “There will be debate about this,” says Smith, and soon.
That’s because the Department of Mineral Resources is conducting an empowerment audit, which it hopes will be completed by December with compliant companies demonstrating 26% empowerment.