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PLATINUM GROUP METALS
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Xstrata makes yet another platinum move
Xstrata, which announced a bid for platinum producer Lonmin today, has also acquired an option to take a 50% interest in Nkwe Platinum’s “attractive properties” on the eastern limb of the Bushveld.

Author: Tessa Kruger
Posted: Wednesday , 06 Aug 2008

JOHANNESBURG -



Xstrata made another interesting platinum move today when it announced an agreed option to take a 50% interest in junior Nkwe Platinum's (ASX:NKP) properties on the eastern Bushveld currently undergoing a feasibility study.

Chief financial officer of Xstrata Alloys, Mark Moffet said Xstrata's potential acquisition of platinum producer Lonmin and stake in Nkwe Platinum were entirely complementary as Xstrata would gain immediate access to ounces through Lonmin, while Nkwe offered the company an opportunity to grow its platinum portfolio.

Xstrata would exercise its right to acquire a 50% stake in Nkwe Platinum upon the completion of the feasibility study of a mine and concentrator that would cost about R2bn ($269m). The agreement to the exclusive option comes as Nkwe has acquired a new order prospecting right over its five platinum group metals properties on the eastern limb of the Bushveld.

Nkwe Platinum is a subsidiary of Genorah Resources, a mineral resources company with a portfolio of mineral rights.

The company's properties of De Kom, Garatouw, Hoepakrantz, Nooitverwacht and Eerstegeluk are contiguous and adjacent to Anglo Platinum's Modikwa and Implats's Marula mines. Two projects, Garatau and Tubatse are currently planned on the northern and southern properties respectively.

Nkwe director Mxoleli Nkuhlu said the company has already delineated a resource of 20m PGM ounces on the properties, while it aimed to establish a resource of 100m PGM ounces. The company "hoped" to produce 1m PGM ounces annually from the properties. This target has been independently assessed.

Nkwe anticipates to complete the bankable feasibility study by the end of 2009 and to start production at its projects in the fourth quarter of 2010. Xstrata will fund the total development costs of the properties from mining to concentration once it has excercised its option.

The new partners will also undertake an independent study into building a smelter and refinery on the eastern limb that would treat the company's concentrate and potentially that of other juniors, over the period of reaching bankable feasibility stage. A rough cost estimate of the complex is currently between $200m and $400m (R2.9bn).

Nkuhlu said the intention was to establish an integrated entity that could access the entire value chain from production to market.

Moffat said the agreement represented an exciting opportunity for Xstrata to be active in the development of PGM properties that presented the most attractive opportunity on the eastern limb. Xstrata believed Nkwe was a complementary partner to the company with a good track record in South Africa.

He said there would be no further imminent announcements about further acquisitions on the eastern limb, while the company remained active in looking at assets across the South African Bushveld.

Lonmin was not concerned about platinum pricing and remained optimistic about the long-term fundamentals for platinum.

Nkwe Platinum plans to complete additional listings on the JSE and AIM by October this year.