Wesizwe flexes platinum muscle
Chinese finance results in lift-off for junior mine
PLATINUM junior Wesizwe’s share price has risen nearly 30% since the beginning of the year, driven partly by a new mining plan and improved relations with its host Bakubung community.
The revised plan for the mine has resulted in a cut in its capital budget from R12-billion to R10.6-billion, thanks mainly to different mining methods that will greatly improve efficiency, said corporate affairs and investor relations executive Hamlet Morule. The production target has increased to 420 000 ounces from an original 350 000 ounces.
Wesizwe, darling of speculative investors before the 2008 global financial crisis, was bailed out by China’s Jinchuan, which bought a 45% stake in 2010. It also received a loan facility of $650-million (R6.9-billion) from the China Development Bank at discounted rates. Wesizwe had invested R2.6-billion by the end of December.
Wesizwe gained 28% since January, compared with a 2.5% drop in the JSE’s platinum index. However, its R1.01 share price is a far cry from its peak of R14.95 in 2007.
Thanks to Chinese involvement, the company now has enough funding to bring the mine, near Sun City in North West, to production.
“We are in a better space than many juniors,” Morule said.
This week, Platfields, a junior miner that has been trying to raise funding to complete an exploration programme at its Leeuwkop project in Limpopo, said it had been approached by a third party and had commenced negotiations for the acquisition of mining assets, which would result in a reverse listing, a change of control and a cash injection.
The JSE suspended Platfields last July after the company failed to produce financial statements on time. The last period for which it published results was the six months to August 2012, which showed a cash balance of R2.66-million, exploration assets worth R55.2-million and long-term liabilities of R36-million.
But Wesizwe, under its new management team, has made significant progress on its Bakubung mine. Last week, it cut the first station on the ventilation shaft, about 690m below the shaft collar and roughly 45m above the first intersection of the Merensky platinum reef.
The main shaft has reached a depth of 520m, and is forecast to be finished 85 days earlier than planned, in October 2015. The new ventilation shaft is now forecast for completion in February 2017, more than two months earlier than planned.
Morule said production was expected to start in 2018, with full out- put to be attained two years later.
Wesizwe’s operations have been largely unaffected by unrest in the Rustenburg area. There are currently about 650 people on site, mainly contractors, while Wesizwe employs 60 people. At full production, the mine will employ 3 300 workers.
Morule played down reports that Wesizwe might be looking at buying assets in the area, with Anglo Amer- ican Platinum (Amplats) saying it planned to restructure its operations.
“For now, our focus really is on delivering the project on time and budget,” he said.
Improved relations with the Bakubung community and a strategy to source as much labour as possible from the local community had also helped, Morule said.
“We have worked very hard to improve the relationships. We meet periodically with the acting kgosi and the royal council, and ensure there is a platform to exchange information.”
In May, the Bakubung community, its royal family and the community’s financial adviser, Musa Capital, signed an agreement that ended a seven-year feud over control of the tribe’s and community’s finances.