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There’s a new stock in the JSE’s mining complex that we can all choose from. It’s called Southern Palladium, and its shares were admitted [as a secondary] listing on the Johannesburg Stock Exchange and Australia’s ASX, the Australian Securities Exchange, today – although official trading in the company that mines palladium and rhodium and other PGM metals will only start on Wednesday.
Here to tell us more about the company ahead of Wednesday’s official trading day, I am joined by Johan Odendaal, the managing director of Southern Palladium. Johan, thanks so much for your time. Quite a lot of positive things have been said about your company so far. I spoke to two analysts this afternoon, and everybody’s kind of liking what they’re seeing. So for us can you tell us a little bit more about Southern Palladium and what it is bringing to the market?
JOHAN ODENDAAL: Good evening Fifi, and thank you. Yes, it’s certainly exciting times for us to bring this specific project to the market. We’ve just completed a very successful fundraise as well, a capital raise of A$19 million, and there has been very good interest. I think it just shows that South Africa and, in particular, platinum deposits on the Bushveld Complex, are still very sought after.
The project that we have is situated on the eastern limb of the Bushveld Complex, about 300km from Johannesburg. I think the benefit of these South African projects is that [they sit] within a mining hub. We have the necessary skills on the farm and in the neighbouring areas. There are also the necessary mining services in the towns of Steelpoort and Burgersfort, and the infrastructure in terms of electricity and water is there.
It seems that what investors sometimes forget about South African projects is that we still have excellent infrastructure at the mines. Southern Palladium owns 70% of the underlying company, Miracle Upon Miracle [Investments]. The other 30% is directly held by the local community, the Bengwenyama community. The community also has an indirect stake via Southern Palladium, via their direct 12.3% interest in Southern Palladium. So they’ve got both a direct stake in the underlying holding company or holder company, and also in Southern Palladium, which gives them that upside.
FIFI PETERS: So essentially your BEE credentials tick all boxes – that’s what you’re saying?
JOHAN ODENDAAL: Absolutely. For us, it’s not [just] a BEE partner, it’s a real partner that we have in this project. In terms of BEE, it exceeds that, absolutely.
FIFI PETERS: You mentioned the money that you raised ahead of the official listing this week, and in rand terms I believe it’s around R212 million. So there’s a lot of interest in this company, as you did express. I saw that your IPO, your initial public offering, was ‘heavily oversubscribed’. So all this money – is it going to go to the Bengwenyama project, or will it also be going elsewhere?
JOHAN ODENDAAL: No. What we intend to do is to embark on an exploration programme and drill in the order of 40 000 metres. So that means 75 boreholes that we drill, and that is basically in two phases.
In the one phase we will drill the shallow areas to bring the ‘inferred’ resource that we currently have into ‘indicated’, and then convert it into ‘reserve’.
Then we’ll embark on a second phase, which is the remaining part of the farm, and then bring that also into inferred.
So what it basically means is that currently we have a stated inferred resource of 18.8 million ounces, and we will virtually double that within a year. So absolutely, the money will go into the ground and in the order of 70% of our budget will go towards the exploration and to the project. The rest is, of course, the normal running of our business and fees.
FIFI PETERS: It’s not every day that we have a new [secondary] listing on the JSE, a new mining company coming to the JSE. So what are your plans for South Africa, and ultimately what does this mean for shareholders and the community?
JOHAN ODENDAAL: Well, I think first for the community it’s such an important programme and project that we have here to uplift the community and again generate that income that’s so necessary in this area. For Southern Palladium of course our first priority is to get this project up and running.
Once we show that we can do this successfully I think other opportunities will arise. We of course have an excellent board and management team to take this project forward. It is a very experienced team with a good platinum background, also in terms of underground and open-cast mining and also mine development. So I believe [there are] all the ingredients to make this a successful project.
FIFI PETERS: All right. Johan, all the best for listing day on Wednesday. We will certainly be tracking your stock price and your new journey on the JSE and on Australia’s ASX. That was Johan Odendaal, managing director of Southern Palladium.
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