PERTH – The world's top three platinum companies, along with South Africa's number two gold producer and diversified giant, Rio Tinto, are all keeping a watching brief on Australian platinum explorer, Goldstream Mining. With scarcely seven months of sampling activity at its Mibango property under its belt, Goldstream's initial sample results have been enough to pique the interest of Anglo Platinum, Impala Platinum and Lonmin, all of which have held talks with the Aussie junior. Even Gold Fields and Rio Tinto have held cursory discussions with the company in an early bid to get in on the ground floor of what could be the world's next major platinum find.
Earlier this month, Goldstream announced its grades from sampling at Mibango ranging between 1 g/t and 10.6 g/t platinum and palladium. "The average platinum:palladium ratio was 2.2:1, with values over 5.5 g/t having an average ratio of 1:1," the company said. Chairman George Kenway says the grades were extracted from weathered bedrock beneath a laterite layer, discovered during an extensive trenching programme toward the end of last year.
"The weathered bedrock results demonstrate the potential of the complex to host substantial grade and widths of platinum mineralisation," said Goldstream in a statement released earlier this month. "These results confirm the widespread distribution of platinum mineralisation in the near surface oxidised environment. It is notable that the tenor of mineralisation appears to increase with depth."
Goldstream to go it alone … for now
But, as flattering as it is to have the world's largest miners beating down the door, Kenway says Goldstream is in no rush to do a deal which will dilute its stake in the project. This year's field programme will sink 5,000m of diamond-drill holes and will set the company back about A$3 million. He says the budget can be funded comfortably from Kenway's own balance sheet, which currently has $6 million in cash, allowing management greater leverage when dealing with the majors further down the track.
"We probably won't have to do any more fundraising until later in the year when the diamond drill results are in," says Kenway. "If we got a partner now we could do a good deal but with risk still attached to the project – and there is risk – they will tend to squeeze us very hard. If we were not confident [in the prospects for Mibango], we would be doing a deal, taking out the risk for us and passing it on to a major."
As it turns out, there is little chance of one of the heavyweights getting in the door until Goldstream has determined whether or not the pgm deposit is viable; to get to that point will take more cash and Kenway is confident there will be no shortage of financiers. He says US-based IBK Capital has offered to do a private placement of the group' s shares to raise about A$3 million and there is also a raft of South African banks keen to provide debt and equity funding to juniors operating in the South African Development Community region. Kenway has already held talks with South Africa's Rand Merchant Bank and Investec.
Kenway's choice to go it alone for the time being is a bold one; if the platinum deposit turns out to be a dud, he will have burnt the company's cash reserves and sterilised the prospects of attracting more funding for platinum exploration in Tanzania. But if the deposit shapes up to his expectations, the rewards for the company's shareholders will be astronomical.
Majors – champing at the bit
If the early interest from the majors is anything to go by, there is a better-than-average chance of there being significant levels of platinum at Mibango. Kenway says early talks with Lonmin have proved most promising, particularly in light of the company's shortage of mineable ore relative to rivals Impala and Angloplat who, between them, have an embarrassment of riches and decades of steadily increasing production ahead of them.
But Kenway is noncommittal on which of its early suitors will end up in bed with Goldstream. He says, however, the motivation for their interest is well founded, with the area shaping up to be one of the world's most significant pgm finds. Interestingly, the entire region has been staked out by Goldstream, making the junior the only entry point for platinum production in the region. "This is a very big mineral occurrence and we have all the prospective rocks under title," he says.
Angloplat already has its foot in the door, courtesy of a 6.5 percent stake in Goldtsream held by Anglo American. The interest is a legacy of erstwhile Anglo vassal Minorco and, while the shareholding offers Anglo American a pre-emptive right on participation in all of Goldstream's Australian projects, the Tanzanian projects fall outside of the agreement. Kenway says, however, that the shareholding places no obligation on Goldtream to do a deal with the world's number one producer. Impala Platinum has also thrown its hat into the ring; its new business representatives held exploratory meetings with Kenway as recently as November.
Gold Fields has repositioned itself as a precious metals group and has tried unsuccessfully to get into platinum projects in South Africa and Zimbabwe, while Rio Tinto would dearly love to get some shallow platinum production into its portfolio.
Either way, though, the market will be waiting with bated breath for the latest set of drill results to be released by Goldstream. The results will be a handy indicator of how robust the deposit is and what the company's ability will be to extract top dollar from potential buyers. Kenway says the figures will be made public by the end of the month.
bye.dub
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