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Wesizwe Eyes Opportunities for Growth

07 May 2012

Wesizwe Platinum, which has a Chinese consortium as its largest shareholder, has signed a number of confidentiality agreements with other platinum groups as it looks for growth beyond the R7,9bn mine it is building near Pilanesberg nature reserve.The Chinese consortium, which includes that country's second-largest metals company, Jinchuan Group, has fully funded the project, which could see the capital cost escalate to R12bn but Wesizwe and its partners are looking for every possible way to curtail that increase. The consortium owns 45% of Wesizwe.

The focus for Wesizwe is very much on delivering the Frischgewaagd Ledig mine on time but the company is looking for other opportunities in projects that are delivering cash, or which are close to that point, Jianke Gao, Wesizwe's CEO, said on Friday.Jinchuan's platinum strategy would be carried out through Wesizwe exclusively, he said.

"We need to carry out detailed due diligence studies of all the projects we might be interested in and then could decide whether to go into commercial negotiations with any of them or not," Mr Gao said through his translator Haiyao Zheng. "We have signed a few confidentiality agreements, asking for information. It's all very early stage, but, while our main focus is our core project, we will try not to miss any opportunities that may come our way."In the next five to 10 years, Wesizwe would like to double its resource base and is looking at a range of options to achieve this, Mr Gao said.

Wesizwe is a 26% shareholder in the neighbouring platinum mine project developed by Canada's Platinum Group Metals and the two companies are working on a study to unlock synergies to cut costs on the two projects.

One of the projects is to jointly secure water for the two new mines in a R200m project. There would also be benefits on sharing electricity supply. There is also a study under way by minerals research group Mintek into the treatment and metallurgy of the ores of both projects so that the parties can sensibly negotiate a potential shared concentrator, which, if jointly owned, will deliver capital savings of about 15%-20% for each company compared to building individual plants, said Jacob Mothomogolo, projects executive at Wesizwe.

Platinum Group would like to have the study finalised as well as offtake agreements — jointly with Wesizwe or alone — finalised in June so that it can complete a $260m capital raising.Asked whether Wesizwe had appetite for the risk presented by Zimbabwe, which hosts the world's second-largest known platinum deposit, Mr Gao said: "Zimbabwe's nationalisation policy had a big impact on foreign investment. So Wesizwe is taking a break on Zimbabwe and it's not considering it."

seccombea@bdfm.co.za


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