JOHANNESBURG (miningweekly.com) – JSE-listed platinum miner Northam was likely to go to the market to finance the proposed R3-billion 1 200-employee Booysendal platinum mine in Mpumalanga province, its CEO Glyn Lewis said on Tuesday.

Lewis said in reply to mining analyst Nic Dinham that the timing of the expected equity raising was dependent on the timing of the proposed unbundling of its majority shareholder, Mvelaphanda Resources.

Lewis added that the timing of the environmental-management programme (EMP) approval for the long-awaited platinum project would also dictate the rate at which the capital would be spent.

"We have done some work on exploring various funding options, but more remains to be done. In the meantime, I must reiterate that we remain cash positive.

"We have an unencumbered balance sheet without any debt and in all likelihood we should be in a position to start the development of Booysendal from internal cash retentions," Lewis said.

Northam's cash balance was just below R1-billion as at December 31 and the company on Tuesday declared a three-times covered 20c dividend.

"I certainly think that, in time to come, we'll have to come back to the market to raise additional capital," Lewis said.

Meanwhile, the board had approved R340-million capital expenditure (capex) from its own cash for early works at the Booysendal site, on the eastern limb of the Bushveld Complex.

Northam's René Rautenbach told fund managers, analysts and journalists at the results presentation that Booysendal's project capex would be R3,05-billion, in addition to the R340-million contingency allowance for the provision of access roads, water, power and other basic infrastructure at the Booysendal site, which abuts Aquarius' Everest South platinum mine and is close to AngloPlat's Der Brochen and Implat's Two Rivers.

Rautenbach said that the proposed Booysendal mining operation was expected to produce 130 000 oz/y of platinum from 2014.

Commissioning of the platinum concentrator was expected in May 2013 and the peak capex of R1,2-billion-plus would be required in 2012.

The start of construction of the mine would depend on the approval of the amendment to Anglo Platinum's approved EMP, which Northam inherited as part of Mvelaphanda Resources' black-economic empowerment transaction with AngloPlat.

"We expect approval in June and when that happens, we can start real construction," Rautenbach added.

Some R97-million will be spent on early works by June and the rest of the R340-million by December.

Northam marketing manager Jerry White told the meeting that Northam's market outlook was one of "cautious optimism".

White said that vehicle sales in China had surpassed 13-million units during the course of 2009, an increase of 40% on 2008, and there were good indications that further growth could yet be achieved, creating demand for platinum-group metals.

He said that jewellery demand would remain price sensitive and the current environment of higher platinum prices would result in the likelihood of reduced demand for platinum "at least in the immediate term".

The outlook for investment interest in platinum and palladium exchange-traded funds remained positive, but only a modest recovery was likely in the industrial market, where demand in the chemicals, glass and electrical sectors remained suppressed.