Finweek English Edition - - INVESTMENT -

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.

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