Toronto and Johannesburg-listed platinum junior Anooraq is confident of hitting its November 30 Lebowa Platinum financing target despite resources markets being “in liquidation mode”, says Anooraq Resources business development head Joel Kesler.

Kesler says Anooraq’s strategy is “to raise the right amount of equity, at the right price, with the right people, who appreciate the value of our company”.

“We always had in our mind that the correct approach would be effected in the circumstances of whatever market we found ourselves in,” he tells Mining Weekly Online.

The total acquisition price for the Lebowa operation is R3,6-billion, for which Standard Chartered Bank has provided a sole underwritten debt facility of R2,2-billion.

A further R200-million cash commitment from the employee share trust and the community trust takes the commitment to R2,4-billion.

“All of those commitments remain in place,” Kesler says, which leaves the equity component.

“Given the current market situation whereby markets, specifically in the resources sector, are in liquidation mode as opposed to valuation mode, we will implement the most appropriate equity financing strategy for the company under the current circumstances, and we remain confident that we will hit our target date of November 30, 2008,” Kesler says.

The market mood, he says, remains “very positively disposed towards platinum, predominantly in so far as you have production and cash flow”.

Lebowa has been in operation since 1976 and is a near-surface 110-million ounce resource.

It will descend to 650 m in the first 34-year phase, mining both Merensky and upper group two reefs.

Anooraq CEO Philip Kotze says Lebowa is currently producing in the region of 170 000 oz/y to 180 000 oz/y.

“With the commodity price coming down so significantly, it’s important for us to make sure that we maintain a profit margin that can assist us to grow Anooraq and expand further,” says Kotze.

Lebowa Platinum’s Middelpunt Hill and Brakfontein projects will take production up from 110 000 t/m firstly to about 240 000 t/m by 2013, and thereafter to about 375 000 t a month, Kotze adds.

Production ounces will then increase the current 180 000 oz/y to about 430 000 oz/y and, in the second phase, to about 580 000 oz/y, from the existing mine.

“We have a long date set for November 30. We would obviously like to conclude it before then. Right now, with the markets having turned, it has impacted on the financing structure of this transaction, and that is what we are busy dealing with it now,” says Kotze.

On September 4, 2007, Anglo Platinum agreed to sell Anooraq an effective 51% of Lebowa and an effective 1% controlling interest in the Ga-Phasha platinum for R3,6-billion.

The parties have also reached an agreement for the sale of an additional effective 1% controlling interest in both the Boikgantsho and Kwanda projects to Anooraq. This means that Anooraq will own and control Lebowa Platinum Mines as well as the Ga-Phasha, Boikgantsho and Kwanda exploration and development platinum projects through its 51% control interest, with 49% held by Anglo Platinum.

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