A strange silence falls over 68.5m ounces of precious metal in the ground. JOHANNESBURG - For a company with 68.5m ounces of platinum, palladium, rhodium and gold held in deposits in South Africa's Bushveld igneous complex, the most prolific platinum basin in the world, Australia-listed Nkwe Platinum seems to be a strangely unenthusiastic company.
For some time Nkwe has been saying that it planned to list in Johannesburg during the fourth quarter of this year, but that seems to have gone quiet. Market conditions are probably not the reason; Royal Bafokeng Platinum listed earlier this week.
Nkwe has been flirting with the possibility of a big financing from transnational miner Xstrata, which in August 2008 took up an exclusive option to acquire a 50% interest in five Nkwe PGM (platinum group metal) properties.
The option is exercisable within 90 days after completion of a bankable feasibility study (BFS) for Nkwe's Garantau project. A crucial part of the deal is that Xstrata "will fund the total development costs of the properties from mining through to concentrating". The BFS for Garantau, expected in April 2010, has been delayed, and was "expected to be completed" in the fourth quarter of 2010.
Exercising of Xstrata's option is subject (of course) to Nkwe obtaining the necessary regulatory approvals, but Nkwe seems to be "well behind", as one analyst puts it, the likes of other PGM developers such as Johannesburg-listed Wesizwe and Canada-listed PGM.
It seems that "deadlines" for Nkwe come and go. Most of the Garantau resource is below or down-dip of existing mines. This implies a capital cost for building a mine of at least R12bn (US 1.7bn). The ounces available go on and on, but these are deep ounces.
Strategically, Nkwe has a cool land situation, down-dip of Impala Platinum's Marula Mine and the Modikwa Mine (ARM and Anglo Platinum). Pt Australia's Smokey Hills (small and somewhat disappointing) is also in the area, as is Jubilee's (deep) Tjate project.
The other project within Nkwe is known as Tubatse (where Xstrata also has an option) and while development here is not as advanced as Garantau, Tubatse offers surface access to shallow ounces.
Xstrata ranks as the world's biggest ferrochrome miner, mainly from its operations in South Africa, located in and around the platinum basin (PGM miners consider ferrochrome to be a nuisance, and prefer to run it out with waste, providing dumps and tailings for possibly retreatment specialists). Xstrata also has its own PGM operations, not least Eland, which was purchased for an astonishing $1.1bn in cash in 2007.
It seems that, unofficially at least, Xstrata would regard PGM mines as part of its ferrochrome division. Xstrata's PGM ambitions are well flagged: after the Eland acquisition, Xstrata made a bid for South Africa's No 3 PGM miner, Lonmin, but abandoned the chase after the bottom fell out of PGM markets in 2008, leaving Xstrata with 25% of Lonmin. Xstrata also attempted a "merger" with Anglo American, which owns 80% of Anglo Platinum, the world's No 1 name in PGMs. The merger did not work out.
There are a number of possible outcomes for Nkwe; an analyst says that "the often spoke about and recently commented on option agreement between Nkwe Platinum and Xstrata could well see a bigger deal taking place there. The biggest benefit for Nkwe is the fact that the Tubatse block has surface access and, crucially, is located very close to the Xstrata ferrochrome smelting facilities".
Genorah Resources, a black economic empowerment (BEE) entity, holds 63% of Nkwe. Nkwe director Peter Landau, who seems to move mainly between Australia and London, has for many months declined to provide a see-through list of individual shareholders in Genorah. Landau has been very quiet of late. Nkwe Managing Director Maredi Mphahlele is not replying to e-mails or returning telephone calls.
Among the options available, Nkwe has but scant chance of making it alone. One big reason is the company's market value, which computes at $322m. Even a massive one-for-one rights issue at prevailing stock prices would only raise $322m, far from what is needed to build even a Phase I mine. And the BEE partner, Genorah, would be diluted, which creates any number of complications in terms of recent stringent changes to BEE rules, regulations and laws.
Selected platinum stocks
Stock From From Value
Tier I platinum price high* low* USD bn
Anglo Platinum ZAR 709.93 -14.6% 17.5% 27.206
Impala Platinum ZAR 213.80 -6.5% 29.9% 19.651
Lonmin GBP 18.41 -16.2% 37.0% 5.992
Averages/total
-12.4% 28.1% 52.850
Weighted averages
-11.9% 23.9%
Diversified
Anglo American GBP 29.69 -2.3% 34.3% 64.154
Mvela Resources ZAR 46.60 -19.0% 22.7% 1.470
Norilsk USD 20.60 -3.1% 61.8% 39.269
Camec Now at ENRC
ARM ZAR 197.00 -4.4% 34.7% 6.099
Xstrata GBP 13.82 -2.5% 65.9% 65.901
Averages/total
-7.2% 38.4% 110.993
Weighted averages
-3.0% 42.8%
Tier II platinum
Stillwater USD 19.92 -8.3% 168.5% 1.950
Aquarius GBP 3.90 -20.3% 84.6% 2.910
Northam ZAR 49.05 -15.0% 32.3% 2.574
NA Palladium CAD 5.25 -10.6% 91.6% 0.779
Zimplats AUD 14.46 -0.3% 52.2% 1.559
Eastplats CAD 1.84 -4.7% 135.9% 1.257
Anooraq CAD 1.33 -26.1% 70.5% 0.267
Royal Bafokeng ZAR 69.00 0.0% 0.0% 1.647
Averages/total
-12.2% 90.8% 11.297
Weighted averages
-22.5% 40.9%
* 12-month
Source: market data; table compiled by Barry Sergeant
Developers and explorers
Platmin CAD 0.95 -51.0% 33.8% 0.616
Wesizwe ZAR 1.93 -26.9% 35.9% 0.224
Noront Resources CAD 1.06 -60.3% 3.9% 0.186
Goldbrook Ventures CAD 0.21 -51.2% 16.7% 0.038
Pt Australia AUD 0.66 -48.8% 30.7% 0.212
Chromex GBP 0.36 -0.7% 145.8% 0.052
Sylvania GBP 0.52 -25.7% 35.9% 0.149
Starfield CAD 0.06 -53.8% 71.4% 0.033
Ridge Now at Aquarius
PGM CAD 2.25 -22.9% 37.2% 0.355
Solitario CAD 2.39 -12.5% 32.8% 0.071
Colossus Minerals CAD 8.27 -9.6% 106.8% 0.708
Jubilee GBP 0.31 -30.1% 18.3% 0.126
Nkwe AUD 0.58 -20.7% 74.2% 0.322
Braemore Now at Jubilee
Marathon PGM CAD 4.33 -4.2% 341.8% 0.148
Caledonia CAD 0.13 -3.8% 150.0% 0.062
Duluth Metals CAD 2.95 -26.1% 195.0% 0.303
Franconia Minerals CAD 0.62 -21.5% 163.8% 0.051
Great Australian Now at Sylvania
Avalon Rare Metals CAD 3.59 -28.2% 89.9% 0.330
Eurasia Mining GBP 0.01 -36.4% 68.0% 0.010
Largo Resources CAD 0.30 -21.1% 122.2% 0.087
Macdonald Mines CAD 0.18 -40.7% 59.1% 0.034
Hard Creek CAD 0.33 -49.2% 106.3% 0.022
Polymet CAD 2.13 -45.2% 60.2% 0.317
MetalCORP CAD 0.15 -44.4% 87.5% 0.009
Wallbridge CAD 0.24 -38.5% 84.6% 0.030
Benton Resources CAD 0.76 -9.5% 105.4% 0.057
Mustang Minerals CAD 0.15 -6.5% 107.1% 0.014
Northern Shield CAD 0.19 -24.0% 90.0% 0.016
Platina AUD 0.34 -12.8% 78.9% 0.029
Darnley Bay CAD 0.18 -71.9% 44.0% 0.019
Pacific NW Cap. CAD 0.15 -38.8% 87.5% 0.010
Starcore CAD 0.10 -60.0% 33.3% 0.008
Huston Lake CAD 0.17 -41.1% 43.5% 0.007
Goldplat GBP 0.13 -14.8% 57.6% 0.023
Village Main ZAR 2.20 -38.9% 168.3% 0.083
Premium Exp. CAD 0.47 -30.6% 116.3% 0.053
Blackthorn Resources CAD 0.66 -35.6% 73.7% 0.114
Silvermet CAD 0.15 -19.4% 163.6% 0.022
Andulela ZAR 0.40 -20.0% 566.7% 0.024
Developer averages/total
-29.9% 97.7% 4.975
Weighted averages
-33.7% 66.8%
Overall averages/total
-24.4% 88.3% 69.121
Overall weighted averages
-14.1% 32.9%
* 12-month
Source: market data; table compiled by Barry Sergeant