CORPORATE activity in SA’s platinum sector has picked up, with the platinum price holding above 1000/oz since mid-February and above 1200/oz so far this month.
Compared with the low of 732,50/oz in late October, platinum has gained more than 70%.
Bloomberg yesterday reported Peter Ryan of independent researchers GFMS as saying Tokyo investor sentiment rather than fundamentals was driving the price rally, and there could be a big market surplus this year. Chinese jewellery demand showed signs of ebbing on prices above 1200/oz.
Cadiz African Harvest equities head Simon Hudson-Peacock said the prices of platinum group metals were well off their peaks of last year. Some of them, like rhodium and nickel, had not recovered as much as platinum.
At the same time, the rand had strengthened, which affected costs. Operating costs were difficult to bring down with about 50% of costs labour-related.
Although diesel prices had fallen, electricity prices were rising. Among the big platinum producers, only Impala Platinum was generating a significant cash margin at today’s prices.
But in the year to date, the JSE’s platinum sector index outperformed other resources indices, with a 32% gain compared with 24% for gold and 14,6% for all resources excluding Sasol .
In the past few months, two larger platinum miners, Lonmin and Aquarius Platinum, had big rights issues while smaller companies were placing shares or offering them for acquisition.
Lonmin has raised 457m to repay debt. Aquarius Platinum ’s all-share takeover of Ridge Mining was preceded by a R2,4bn capital raising through a combination of a general share issue, share placing and issue of convertible bonds.
This week, two smaller acquisitions were announced in the sector. Australian-listed Nkwe Platinum will pay A60m to increase its stake in the properties making up its flagship Tubatse/Garatau project on the eastern limb while Sylvania Resources, another ASX- listed miner, increased the premium it was offering to shareholders of Great Australian Resources to 68% from 12%.
Sylvania, which extracts platinum group metals from tailings by agreement with Samancor Chrome and Aquarius Platinum, will offer one of its shares for every 12 Great Australian shares, in an offer worth A8,8m. Great Australian, despite its name, owns platinum exploration properties in SA.
In another deal now under way, Sylvania is offering one of its shares for every 10 shares in SA Metals, formerly Pan Palladium, a transaction worth A25,4m.
Toronto-listed Platinum Group Metals, which owns mineral rights in the western and northern Bushveld, is engaged in raising 32m through an issue of units consisting of shares and warrants. ASX- and AIM-listed Platinum Australia, which is building the Smokey Hills mine near Steelpoort, last month raised A61,2m through a private placing of shares.
Wesizwe Platinum has also recently secured a financing facility, underpinned by equity, from US investment fund YA Global Investments, known as Yorkville.
This entitles Wesizwe to issue shares to Yorkville up to a value of R550m over the next three years.
