A major hurdle for junior miners is the fact that they find it hard to acquire the finance necessary to build capacity to a point where they can acquire an existing project or execute a greenfield project. However, this was not the case with Wesizwe Platinum, a mining junior that is making a meaningful impact on the South African mining industry.
Wesizwe chief executive Jianke Gao pointed out that the company was fortunate in the sense that its flagship project, the Bakubung Platinum Mine, is bankrolled by a Chinese consortium.
“The Bakubung project is financed by a Chinese consortium consisting of the Jinchuan Group, China's largest platinum group metal manufacturing enterprise, and the China Africa Development Fund. The guarantees that the consortium gave Wesizwe are in place until the mine project reaches operational completion, estimated to be in 2018,” he said, adding that it is precisely in the funding environment that junior miners often find challenges in the marketplace.
But in the case of Wesizwe, the company has the continued support of the consortium in the form of a project finance facility to the tune of $650-million, ensuring no further dilution of shareholder value.
“There is no single best road map for a fledgling junior miner to follow if it has aspirations to become a medium-sized mining operation because every company is different. In the case of Wesizwe, our road map was fundamentally fast-tracked as a result of the investment made by the consortium,” said Gao.
The benefits of the deal were immediately tangible, not just in the form of essential financial investment and underwriting, but also in such areas as knowledge and skills transfer, project management and specialist engineering expertise.
Branching out
Because of the benefit of having knowledge and skills transfer, Gao reported that the company is broadening its horizons, eyeing diversification.
“The global mining industry is changing rapidly due primarily to external market forces and the effects of the economic downturn around the world, and with such change comes opportunity – not just to compete for new project development opportunities, but moreover to collaborate. Because of this, the company is looking for a number of synergistic opportunities that may exist with our industry peers.
"A practical example of this approach is Wesizwe's investment in a 26% stake in the Maseve Project, located on properties adjoining the Bakubung Platinum Mine. The remaining 74% interest in this project is held by Platinum Group Metals (RSA) Ltd (PTM),” he said.
The Maseve Project consists of a large-scale, high-grade and shallow platinum mine, with first production projected for 2014.
Read more in the print version of Mining Prospectus, January issue
