The new Impala Platinum-linked Kameni start-up that is intent on building platinum and chrome mines in Zimbabwe senses a “near-term” political settlement in the troubled country where, it says, platinum investment is receiving red-carpet treat-ment.

CEO Stephen Gorven and CFO Michael Jones, both former Rothschild South Africa executives, speak of an excellent reception from Zimbabwe officials and poli-ticians and little objection from potential funders of their Bougai project, close to Anglo Platinum’s Unki, on Zimbabwe’s Great Dyke.

Managing the operations is seasoned campaigner Clem Sweet, who estimates that total costs per ton will be less than R320/t for the opencast platinum-group metals (PGMs) initiative in Zimbabwe.

Owning 100% of the shares at this stage is long-standing mining entrepreneur Loucas Pouroulis.

Gorven says that, contrary to expectations, investment bankers are not raising any objections to the company’s investment plans in Zimbabwe and there is no question of having to pay more for funding because of the Zimbabwe location.

“People bought into the fact that Zimbabwe is the next area of PGM development. South Africa is pretty much taken and, therefore, it makes sense to get in at ground level.

“We will not be investing a lot of money right now. “The exploration doesn’t actually cost a lot of money, and it is only at the time when you actually decide to build the mine that you really have to think about whether it is a sensible thing or not.

“For us to go in and explore in this environment is fine and we are confident that Zimbabweans will, within the near term, come to some political settlement that will restore stability to the area,” he says, defining “near term” as between a month and six months.

Kameni’s Zimbabwe activ-ities are “way down in the rural areas of the country” and several mining companies, including Impala Platinum and Anglo Platinum, are operating in the area.

He says he has detected a sense of imminent settlement as a result of spending time with the likes of Zimbabwe mining and investment organisations, all of which are headed by politicians who express an acute awareness that “the situation cannot continue”.

“We never ran into anybody who said things are going to carry on as they are. “There is a great acceptance that the problems have to be resolved and there is growing irritation with those at the top who are being obstructive,” Gorven reports.

The company has acquired its Zimbabwean mining claims at the low cost of “almost an administrative fee”, rather than a purchase fee.

Moreover, Zimbabwe has a special policy regime for platinum, in particular, says Jones.

“What Zimbabwe has recog-nised is that platinum is going to be one of the growth areas in terms of kick-starting the economy,” Jones adds.

The platinum regime, he explains, allows investors to retain the proceeds from the sale of PGMs in offshore bank accounts in foreign-denominated currency, which offers more security than the arrangement for other precious metals and base metals.

“There is effectively a tripar-tite agreement that is entered into between an authorised dealer in Zimbabwe, the Zim-babwe Reserve Bank and the offshore bank to manage that and to keep designated accounts for capital,” Jones elucidates.

Special platinum-mining licences govern tax concessions and exchange-control regulations.

Kameni’s Zimbabwe prop-erty, Bougai, is near Shurugwi.

The company also has a project at Kalkfontein in South Africa, located on the eastern limb of the Bushveld Complex, close to the Two Rivers and Mototolo platinum mines.

Kameni’s claims on the Great Dyke’s Selukwe sub-chamber constitute 3 500 ha – compared with the 6 000-ha Kalkfontein – and provide access to separate opencast mining for PGMs and chrome, which covers 2 602 ha.

The PGM grades at Bougai are 5 g/t, while chrome ore has a 45% chrome content and a chrome-to-iron ratio of 2,2 to one. Kalkfontein’s upper-group-two reef grades are believed to be 5,68 g/t and the Merensky reef 3,66 g/t.

On the company’s current Zimbabwe ambitions, Gorven says: “We plan to build two mines – one a 250 000-t/m PGM mine and the other a 100 000-t/m chrome mine.

“We believe that we will be able to bring the chrome into production within six months of starting the mine. It’s on surface and relatively simple to mine,” Gorven adds.

The PGM metal split is 44% platinum, 36% palladium, 15% rhodium and 5% gold.

Bougai’s PGMs are con-tained in the main close-to-surface sulphide zone and the chrome seams below it also outcrop.

Kameni’s plan is to have opencast PGM and chrome mines to start with and then to move underground thereafter.

Kameni estimates that the resource contains between 10-million and 20-million PGM ounces and that a 20-year life-of-mine is possible.

It has secured its Zimbabwe prospecting and mining rights and a concentrate offtake agreement with South Africa’s Impala Platinum, which holds 20% of Kameni.

It has an investment licence from the Zimbabwe Investment Authority and approval from Zimbabwe’s Department of Indigenisation and Empower-ment.

“There are no further regu-latory obstacles to us going ahead,” says Gorven.

Some 12 km of exploration drilling is planned in the first half of 2009, involving 102 holes.

Five drill rigs will begin drill-ing in January, with a ramp-up to ten rigs.

Depths will be shallower than at Kalkfontein in South Africa, where Sweet estimates costs at R420/t.

More Zimbabwe prospect- ing rights are under consider-ation, but in the form of claims rather than companies.

Zim Infrastructure

Gorven says that Bougai is close to tarred-road and rail infrastructure and there is a “plentiful” supply of water from the Gwenoro and Mapongokwe dams.

There are power trans-mission lines to neighbouring Unki, which are extendable to Bougai, and it is understood that power can be sourced from Mozambique through the Zimbabwean network.

Gorven says that Kameni has excellent assets, both in South Africa and in Zimbabwe, on the world’s premier ore-bodies, involving a resource of 60-million to 90-million ounces.

He adds that the company will be able to turn the assets to account fast because it has on- and near-surface deposits, with the benefit of early cash flow in Zimbabwe from chrome.

He sees the partnership with Impala Platinum as being beneficial and he believes the company can be a “high-grade and low-cost” operator.

Funding Requirements

The total expected investment spend, which is “not a final number”, is R6,5-billion to R7-billion.

Currently, seed capital of between R300-mil-lion and R1-billion is being raised to fund the exploration, feasibility-study phases and initial construction phases of both the Bougai and Kalkfontein projects, with Pouroulis providing all the funding thus far.

The taking in of seed capital will begin in January and February 2009 and then the idea is to raise further funding ahead of Kameni’s initial public offering in order to fund the building of the mines fully.

Kameni intends listing on the JSE in the first half of 2010.

On obstacles to raising funds for investment in Zimbabwe in this period of a credit crunch, Gorven says: “We have been pleasantly surprised with the response.”

He concedes that Zimbabwe is currently in a poor state, but that Kameni has gone ahead and acquired claims the likelihood of an imminent settlement in mind.

Some of the same investors that backed Eland Platinum, which Pouroulis built and then sold to Xstrata at a handsome profit, are now backing Kameni, including receptive London-based institutions.

Only equity funding is being sought.

The advisory fees that Rothschild and Deutsche are charging Kameni are at the level at what they charged for the Eland project, and the success of the Eland business outcome and belief in the long-term fundamentals of PGMs are creating a level of enthusiasm around Kameni, despite the credit crunch.

“This is a very attractive opportunity of good resources, multiple projects, high grade and low costs,” Gorven reiterates.

As seed-capital investors are brought in, the shareholding will expand to include the new investors, management and other group members that participate in the founders’ equity.
Following all the capital raising, it is anticipated that founders’ equity will represent between 40% and 45% of equity.

Gorven’s view of the current moderated platinum price is that the heady levels of $2 000/oz were excessively high and reminds Mining Weekly that the current $800/oz platinum price was the price when Eland was sold so successfully to Xstrata.

He points out, too, that the weakening rand is also translating into a higher rand price at a time when input costs are falling.

“Drilling companies were hard to find a few months ago and now they are knocking down our door,” Gorven says.

From an expenditure point of view, Kameni’s timing is not bad, he says.

While the Kameni projects are profitable at current prices, he foresees the dollar platinum price, in time, rising to $1 400/oz.

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