Wesizwe Mulls Selling Stake in Platinum Group’s Maseve Mine

Feb 24, 2014 11:01 am ET

(Updates with closing share price in sixth paragraph.)

Feb. 24 (Bloomberg) -- Wesizwe Platinum Ltd. is considering the disposal of its minority stake in Platinum Group Metals Ltd.’s Maseve mine as it focuses on developing its Bakubung project, Chief Executive Officer Jianke Gao said.

“The Maseve project is not aligned with our strategy,” Gao said in a Feb. 21 interview at Wesizwe’s Johannesburg office. “Our priority is to build up the Bakubung project on time and on budget, or to reach full production earlier.”

In the case of a sale of its stake in Maseve, Vancouver- based Platinum Group Metals would need to find another partner to meet its legal obligation to ensure black shareholders own at least 26 percent of the asset.

Platinum Group Metals said that Wesizwe told the company in October it would not fund its $21.8 million share of the continued development of Maseve. Wesizwe’s stake was 26 percent before it pulled out of the funding. The project will probably produce 234,000 ounces to 300,000 ounces of platinum, palladium, rhodium and gold a year from mid-2015.

“They have been unreliable and unpredictable,” Platinum Group Metals President R. Michael Jones said in an interview from Vancouver on Feb. 21. “We have sufficient funds so that we can continue without further funding from Wesizwe.”

Wesizwe fell 2.7 percent to 72 South African cents by the close in Johannesburg trading. The shares have fallen 8.9 percent this year, giving the company a market value of 1.17 billion rand ($103 million). The six-member FTSE/JSE Africa Platinum Mining Index has risen 1.6 percent.

‘No Issues’

Wesizwe’s stake in Maseve was diluted by about 5 percentage points after it didn’t participate in the cash call and Platinum Group Metals is seeking a black economic empowerment partner to buy the diluted percentage, Platinum Group Metals said on Jan. 10. Wesizwe contends its dilution will be about 3.5 percentage points, Platinum Group Metals said.

Mnombo Wethu Consultants, Platinum Group Metals’ black empowerment partner at its Waterberg project, is available to take over Wesizwe’s stake, Jones said. “There are no issues with the black empowerment component.”

The African National Congress-run government is pushing South African companies to boost black ownership to help up make up for discrimination during the apartheid era, which ended in 1994. The policy has been criticized for boosting the wealth of a limited group of black South Africans rather than benefiting the majority.

Wesizwe, 45 percent-held by China’s Jinchuan Group Ltd. and the China-Africa Development Fund, said in January 2013 it secured a $650 million loan from China Development Bank Corp. to develop its Bakubung mine in South Africa’s North West province.

Bakubung will produce about 350,000 ounces of platinum group metals a year for about 35 years, according to the company’s website.

Wesizwe won’t pursue the possibility of sharing infrastructure with its neighbors, Maseve and Royal Bafokeng Platinum Ltd.’s Styldrift project, Gao said.

--With assistance from Tshepiso Mokhema in Johannesburg. Editors: Antony Sguazzin, John Viljoen, Ana Monteiro