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Dale moves Platmin into top gear

A shallow new platinum mine on its way to full production, and hunting for expansions.




JOHANNESBURG – Toronto- and London- and Johannesburg-listed Platmin on Thursday declared that it would be at full production in about a year from now, at around 250 000 ounces of PGMs (platinum group metals, viz, platinum, palladium, rhodium and gold). CEO Tom Dale, who has been in his new job for little more than a month, spoke around results for the three and nine months to November 30, and addressed issues that have caused delays of about a year, according to Dale, in reaching full production at the Pilanesberg Mine, situated near the heart of South Africa’s Bushveld igneous complex.

Labour issues, combined with acquiring more detailed knowledge of the mine’s geological features, and fine tuning mining operations, were the main culprits, according to Dale. Production for the ten months to December 31 2009 is anticipated at around 28 000 PGM ounces, building up to 160 000 ounces for this year, before running at the annualised rate of some 250 000 ounces a year hence.

A new, commissioning platinum mine is a rare animal in the global PGM industry, where around three-quarters of output is generated from southern Africa. As PGM prices collapsed during the second half of 2008, the global sector went into something of a crisis, further aggravated by the swoon in the world auto industry, a major user of PGMs, for exhaust catalysts.

Anglo Platinum found itself taking increasingly larger loan facilities from parent company Anglo American, while fellow Tier I PGM miner Lonmin was forced into a dilutive rights issue. The third Tier I name, Impala Platinum, dropped a bid for Mvela Resources and its platinum subsidiary Northam, while global diversified stock Xstrata abandoned a full bid for Lonmin. Tier II miner Aquarius was forced into a dilutive rights issue and Anooraq was given substantially easier conditions and financing for assets it acquired from Anglo Platinum.

Rationalisation, cutbacks, delays in new projects, and even closures, ruled across the PGM sector, but Platmin was able to forge ahead mainly due to the support of Pallinghurst Resources, headed by Brian Gilbertson. Pallinghurst’s continued funding of Platmin has seen the Pallinghurst consortium, which includes South African partners, rise to around the 50% level.

Dale is a long-term associate of Gilbertson; Dale was CEO of Gold Fields for a spell during the 1990s alongside one of the many transactions arising from the Gencor stable. Those would eventually culminate in the acquisition of Billiton, and later still the creation of BHP Billiton, which for some years now has ranked as the world’s biggest diversified resources group.

Over the past three years or so, Platmin has raised around $324m from equity issues, and spent some $345m in capital expenditure, up to November 30 2009, when Platmin held net cash of $38m. Dale says that Platmin is now looking to raise some short-term debt, and possibly longer-term debt, as it continues towards full production. PGM prices have, meanwhile, recovered strongly; Dale also notes improved investor sentiment towards the PGM sector and concludes that “the international capital markets provide attractive opportunities. Platmin remains debt-free, un-hedged and continues to maintain a conservative funding structure during the build-up period to full production”.

Dale, who is known in some quarters to be merciless in meeting production targets, has moved to site, and is drawing trusted skilled mining people into the Platmin stable. Expansion plans are already on the cards, given the scalability of the concentrator at the Pilanesberg Mine where, in addition, Dale is keen to attract third party material.

In a specific move, Dale has created a new division focused on exploration and development opportunities, to be headed up by Platmin veteran Terry Holohan, a PGM metallurgist with an extensive background in the business. As a first initiative, the team will conduct a Bankable Feasibility Study (BFS) over the nearby 20m PGM ounce resource Magazynskraal property, which is controlled by Platmin’s largest shareholders, the Pallinghurst Investors Consortium and black empowerment partner, the Bakgatla community.

As something of a mining veteran, Dale can be said to be of the school that prefers to under-promise and over-deliver. Around mid-2009, Platinum executives were anticipating full production about a year ahead, suggesting that Dale’s statement that full output has been delayed by a year is cautious; six months would be more like it. In any event, early trade on Thursday in Toronto saw the stock price knocked down at stages by up to 10%. The stock price has tripled over the past year.

Selected platinum stocks

 

 

 

Stock

From

From

Value

Tier I platinum

price

high*

low*

USD bn

Anglo Platinum

ZAR 804.50

-1.8%

112.8%

25.819

Impala Platinum

ZAR 217.00

-5.1%

102.0%

18.463

Lonmin

GBP 20.33

-7.5%

178.5%

6.399

Averages/total

 

-4.8%

131.1%

50.681

Weighted averages

 

-3.8%

115.0%

 

Diversified

 

 

 

 

Anglo American

GBP 27.65

-6.7%

205.2%

60.533

Mvela Resources

ZAR 50.00

-6.5%

194.1%

1.442

Norilsk

USD 16.67

0.1%

374.9%

31.778

Camec

Now at ENRC

 

 

ARM

ZAR 182.50

-3.6%

111.7%

5.218

Xstrata

GBP 12.25

-6.0%

324.2%

58.693

Averages/total

 

-4.1%

221.5%

98.971

Weighted averages

 

-4.4%

235.7%

 

Tier II platinum

 

 

 

 

Stillwater

USD 12.90

-4.4%

385.0%

1.246

Aquarius

GBP 4.27

-6.8%

230.1%

3.220

Northam

ZAR 51.80

-1.4%

213.9%

2.515

NA Palladium

CAD 4.70

1.1%

250.7%

0.583

Zimplats

AUD 11.74

-1.3%

235.4%

1.177

Eastplats

CAD 1.33

-5.0%

366.7%

0.905

Anooraq

CAD 1.45

-2.0%

339.4%

0.285

Averages/total

 

-2.9%

288.7%

9.932

Weighted averages

 

-3.8%

253.5%

 

Developers and explorers

 

 

 

Platmin

CAD 1.51

-22.2%

319.4%

0.654

WeSizwe

ZAR 2.37

-33.6%

134.7%

0.187

Noront Resources

CAD 1.80

-40.2%

260.0%

0.293

Goldbrook Ventures

CAD 0.42

-2.3%

740.0%

0.073

Pt Australia

AUD 1.24

-3.9%

143.1%

0.371

Chromex

GBP 0.16

-29.5%

5.1%

0.021

Sylvania

GBP 0.56

-35.7%

90.7%

0.163

Starfield

CAD 0.12

-60.3%

35.3%

0.056

PGM

CAD 2.53

-4.5%

181.1%

0.229

Solitario

CAD 2.31

-11.5%

80.5%

0.067

Colossus Minerals

CAD 5.45

-14.2%

358.0%

0.386

Jubilee

GBP 0.36

-40.2%

405.3%

0.137

Nkwe

AUD 0.68

0.0%

518.2%

0.379

Marathon

CAD 1.35

-12.3%

309.1%

0.041

Caledonia

CAD 0.07

-50.0%

30.0%

0.032

Freegold Venture

CAD 0.10

-72.1%

11.8%

0.008

Duluth Metals

CAD 2.81

-16.6%

1907.1%

0.222

Franconia Minerals

CAD 0.63

3.3%

530.0%

0.036

Avalon Rare Metals

CAD 2.96

-30.2%

640.0%

0.238

Rusina

AUD 0.10

-31.0%

203.0%

0.028

Largo Resources

CAD 0.24

-12.7%

336.4%

0.051

Macdonald Mines

CAD 0.16

-27.9%

244.4%

0.024

Hard Creek

CAD 0.25

-35.1%

177.8%

0.015

Polymet

CAD 3.85

-1.0%

434.7%

0.536

MetalCORP

CAD 0.18

-32.7%

94.4%

0.009

Wallbridge

CAD 0.29

-14.7%

383.3%

0.032

Benton Resources

CAD 0.68

-11.7%

300.0%

0.045

Mustang Minerals

CAD 0.14

-64.9%

170.0%

0.012

Northern Shield

CAD 0.13

-71.3%

108.3%

0.009

Platina

AUD 0.28

-38.2%

69.7%

0.023

Darnley Bay

CAD 0.43

-32.8%

760.0%

0.037

Pacific NW Cap.

CAD 0.22

-12.2%

186.7%

0.014

Niplats

AUD 0.46

-32.8%

360.0%

0.034

Starcore

CAD 0.24

-6.0%

235.7%

0.014

Huston Lake

CAD 0.28

-51.7%

100.0%

0.011

Goldplat

GBP 0.12

-9.3%

46.3%

0.022

Hinterland Metals

CAD 0.07

-33.3%

250.0%

0.004

Eurasia Mining

GBP 0.01

-52.0%

38.5%

0.005

Premium Exp.

CAD 0.62

-7.5%

726.7%

0.028

Blackthorn Resources

CAD 0.99

-3.9%

1287.3%

0.172

Silvermet

CAD 0.12

-40.0%

380.0%

0.014

Andulela

ZAR 0.11

-68.6%

175.0%

0.006

Developer averages/total

-29.2%

344.2%

4.740

Weighted averages

 

-21.1%

278.3%

 

 

 

 

 

 

Overall averages/total

 

-22.7%

305.1%

65.353

Overall weighted averages

-5.3%

136.5%

 

* 12-month

 

 

 

 

Source: market data; table compiled by Barry Sergeant

 


Write to
Barry Sergeant: barry@moneyweb.co.za

 

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