New capex figure for Wesizwe's Bakubung mine
04 April 2012
Miningmx article – Andre Janse van Vuuren
WESIZWE Platinum has revised the capital budget estimate for the development of the Bakubung platinum mine to R7.9bn, an increase of R1.4bn on earlier estimates, to be funded by the company’s Chinese backers.
Wesizwe CEO Jianke Gao told Miningmx on Wednesday the development of the Bakubung mine, previously called Frischgewaagd-Ledig, was reviewed in detail to validate earlier projections about the mine’s design.
The previous management's estimate of around R6.5bn was done in 2008, an amount which would’ve been covered by the $877m investment made by the Chinese consortium – consisting of the Jinchuan Group and the China-Africa Development Fund – in 2011.
That investment consisted of a $227m cash portion for a 45% stake in the company, as well as a $650m credit facility. The consortium also undertook to provide all additional funding necessary to complete the project.
“From the start we’ve had this guarantee,” Gao said. “Shareholders will not be asked to pay up, or face dilution.” He said Wesizwe’s financial director, Wenliang Ma, would soon fly to China to discuss funding with the consortium and have it finalised by October.
Wesizwe on Wednesday traded close to its 12-month low at R1.25, a far cry from its 2007-peak at R16.50 and almost half the levels of a year ago.
“Our share price has been very low for some time, and we’ve put a lot of thought into the issue,” Gao said.
Wesizwe last week awarded a shaft sinking contract to Aveng Grineker-LTA for R1.64bn. Gao said progress on the project, within budget and schedule, would be one key to gaining the market’s trust.
“Most of the executives have been here for less than one year,” he said. “The management team still needs to instil confidence.”
He said the company is also working on its communications. “Some shareholders wrote to us saying they have very little information about this company,” said Gao. “We need to let the information out.”
The development of the Bakubung mine remained Wesizwe’s first priority, Gao said, but the company would also look out for “near-cash” projects to diversify its portfolio.
“We’re a single-project company which doesn’t generate cash,” Gao said. “If we can bring other near-cash operations in we may increase our share price.”