platmin first output in march

Platmin unveils $175m financing plan, sees first output in March

By: Liezel Hill
Published on 9th December 2008

TORONTO (miningweekly.com) – Precious metals junior Platmin will sell shares to the Brian Gilbertson-led Pallinghurst Investment Consortium and the Bakgatla-Ba-Kgafela tribe, to finance the company's Pilanesburg platinum project, in South Africa's North West province.

Shares in TSX- and Aim-listed Platmin gained 15,7% after the plan was announced on Tuesday, to C$0,59 apiece by 14:45 in Toronto.

Miners, and particularly those without existing revenue streams, are having to come up with innovative fundraising plans as financial markets clam up and liquidity remains in short supply.

The company had previously planned to secure a project financing loan to complete the mine, but "as both the credit and PGM commodity prices deteriorated, it became clear that such a facility could not be obtained on the terms envisaged", Platmin said on Tuesday.

The funds will be raised in two tranches - Ivy Lane Capital, a vehicle of the Pallinghurst Investment Consortium, will buy about 185-million shares in Platmin, at C$0,85 apiece, followed by a second sale of around 73,5-million shares, either to the Bakgatla-Pallinghurst JV (BPJV) or to the Pallinghurst Investment Consortium itself, depending on whether certain conditions are met.

The BPJV already owns an indirect 27,61% in Platmin's South African unit, Boynton, as a black-economic empowerment partner.

The first transaction, which will give Pallinghurst a 62,4% stake in Platmin, will raise about $125-million towards the company's Pilanesburg project, and is expected to close by December 19.

The second placement, which will also be priced at either R6,80 or $0,67609 a share (equivalent to C$0,85 at December 8 prices), will be worth some R500-million, and will increase Pallinghurst and the BPJV's combined ownership in Platmin to 69,8% of the company's issued and outstanding shares.

Finally, a group controlled by the BPJV, the Moepi group, will exchange its 27,61% holding in Boynton for Platmin shares, which will consolidate ownership of the Pilanesburg project.

All told, Platmin will raise some $175-million, which it expects will more than cover the completion of the 250 000 oz/y platinum-group metals (PGM) and gold mine.

As part of the agreement with Pallinghurst and the BPJV, Gilbertson and BPJV CEO Arne Frandsen will be appointed to Platmin's board once the first tranche is completed, and current chairperson Rupert Pardoe will resign, to be replaced by deputy chair Keith Liddell.

The Pallinghurst Investment Consortium is a partnership between Gilbertson's Pallinghurst, American Metals & Coal International, NGP Midstream & Resources, Southern Prospecting and the Investec Group.

The BPJV is 50,1%-owned by the Bakgatla tribe and 49,9% by the Pallinghurst Investment Consortium.

PROJECT DEVELOPMENT

The Pilanesburg project is now 85% complete, and is expected to produce the first concentrate in March, according to a presentation posted on Platmin's website.

The project remains on budget, although capital costs have been increased by a decision to install a 10 MVA diesel generator to supply back-up power to the mine.

The company now expects slightly higher operating costs per ton, at R300/t, compared with an estimate of R260/t in the bankable feasibility study.

However, thanks to mine-plan enhancements the cost per ounce has actually improved from feasibility study forecasts, from R511/oz to currect estimates of R400/oz of PGMs plus gold.

The Pilanesburg mine contains proven and probable reserves of 3,2-million ounces of PGMs plus gold, as well as 4,1-million ounces of resources in the measured and indicated categories.

To conserve cash, Platmin will place its other projects, on the Eastern Limb of the platinum-laden Bushveld Complex, on care and maintenance.