| Tue 28 Oct 2008, 14:58 | | WEZ - Wesizwe Platinum Limited - Frischgewaagd-Ledig Project Update |
|
WEZ
WEZ
WEZ - Wesizwe Platinum Limited - Frischgewaagd-Ledig Project Update
Wesizwe Platinum Limited
(Incorporated in the Republic of South Africa)
(Registration number: 2003/020161/06)
JSE code: WEZ & ISIN: ZAE000075859
(the "Company" or "Wesizwe")
FRISCHGEWAAGD-LEDIG PROJECT UPDATE
In line with Wesizwe`s stated strategic intention of developing its core 350,000
ounce per annum platinum group metals ("PGM") Frischgewaagd-Ledig Project ("the
Project"), the Company would like to provide the following shareholder update.
Given the unprecedented global economic volatility affecting the capital markets
- having now filtered into the metals markets - Wesizwe management has revisited
the Project and certain options pertaining to the Project plan are being
considered.
There are a number of fundamental considerations defining our approach forward:
1. Current low commodity prices have had a substantial impact on the Company`s
share price and therefore its market capitalisation. These factors in turn
influence the dilutive impact for existing shareholders of new equity
capital issues;
2. Commodity and economic cycles are a reality and expectations that the
markets will recover over the next five years are realistic;
3. The Company`s strategic focus takes the above market conditions into
account in order to maximise value for shareholders.
The context of sector response to this situation is all important to our
strategy and in respect of Wesizwe`s project, the conclusions drawn are:
a) The Project is a high quality project and one of the best projects in the
industry in terms of head grade, revenue basket, geo-structural integrity
and depth;
b) It is scheduled to become cash generative between 2013 and 2016, and it is
this period that is the point of focus in terms of commodity prices and
project value, not those prevailing in 2008;
c) Current PGM prices are untenably low and should correct to more realistic
levels during the period of capital construction of the Project and its
progression towards early production in 2011;
d) Medium to long term platinum price projections canvassed from analysts and
financial institutions average in the US$1,300-US$1,500 range and it is
therefore these ranges that inform our NPV calculations and project
viability;
e) Demand-side predictions from a number of commentators indicate a peaking in
demand in 2016, the year that Wesizwe`s steady state production will be
achieved and continue for the planned 35 year life of mine;
f) Management is of the view that the Company`s current market rating does not
therefore represent the intrinsic underlying value of the Project; and
g) Being one of the more attractive projects in the PGM industry`s inventory
of new properties, the Project remains viable in the longer term despite
the current economic dynamics.
The strategic imperative adopted by Wesizwe management will be to technically
and financially de-risk the Project in response to current market conditions on
the one hand and the longer term viability of the Project on the other.
There are a number of options available to Wesizwe that are being considered by
Wesizwe`s management. These will be presented to the Board of Directors on 4
November 2008, after which a detailed announcement will be made on the path
forward.
It is an important to note that the company has R340 million cash on hand and
this provides for the optionality in defining a prudent way forward.
Michael Solomon, Wesizwe CEO commented, "We are reluctant to risk shareholder
value further by delaying the Frischgewaagd-Ledig project unnecessarily because
of current market conditions whilst losing sight of inevitable future
corrections to the market that should manifest before or at the time we commence
production. Our innovative reverse engineering strategy and aggressive
exploration programme have been remarkably successful, and we are again taking
innovative and appropriate steps to keep the Project on track.
Wesizwe believes strongly in the inherent value and strategic location of our
Project. We will continue to work to unlock the underlying value for
shareholders. We believe the long term platinum industry fundamentals are strong
and that Wesizwe is well positioned to deliver into the growth and further
consolidation of the industry."
Enquiries
Wesizwe Platinum +27 11 994 4600
Mike Solomon, CEO
www.wesizwe.com
Lucidity Investor Relations +27 83 604 0820
Ilja Graulich
College Hill +27 11 447 3030
Fred Cornet
Ashleigh Dubbelman
Qinisele Resources +27 82 492 4957
Dennis Tucker
Notes to editors
Frischgewaagd-Ledig Project
The Frischgewaagd-Ledig Project, also known as Project 2 of the Western Bushveld
Joint Venture, is Wesizwe`s core project. Located on the western limb of the
Bushveld Complex, it is approximately 30 km north of Rustenburg and incorporates
portions of the farms Ledig 909JQ and Frischgewaagd 96JQ.
The project will consist of an underground mine and a surface concentrator
plant. The capital costs to build the mine are estimated at R5.6 billion -
including the overall contingency of R275.3 million and an electrical self-
generation contingency of R168 million.
The original mine execution programme, detailed in the Bankable Feasibility
Study released in March 2008, envisaged a 58 month construction programme which
included sinking activities and construction of the first module of the
concentrator plant. According to this schedule, ramp-up of the project is
planned between 2011 and 2016, with first platinum production set to commence in
February 2013.
28 October 2008
Sponsor: Investec Bank Limited
Date: 28/10/2008 14:58:01 Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or
implicitly, represent, warrant or in any way guarantee the truth, accuracy or
completeness of the information published on SENS. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
