JOHANNESBURG (miningweekly.com) – JSE-listed Platfields said on Monday its share price decline since listing on the main board last year was undermining its fund-raising strategy.

The platinum junior’s share price went into freefall after its 140c-a-share JSE debut on December 14 last year, changing hands at 6c a share on Monday.

Platfields believed its shares were at a level “well below its intrinsic value”. “The current share price levels are not representative of the value in Platfields and management is hopeful that as the markets improve, so will the market valuation of the company.”

The decline was in line with sector sentiment and the performance of most platinum stocks in the wake of the financial turmoil in the European Union, the volatility of metal prices and the Japanese earthquake and its effects on autocatalytic converter demand.

“While the Platfields share price decline is not unique for the sector, it is particularly challenging for the Platfields fund-raising strategy due to its dilutive potential,” it added.

Platfields was not yet in a cash-generating position, and its exploration programme was still funded by equity. The group is currently raising capital in order to complete its exploration programme on the Leeuwkop project.

“The company’s future prospects and stability relies on its ability to raise capital for next year,” it said.

Platfields has commissioned Minxcon to carry out a desktop mine design and life-of-mine plan for its Leeuwkop project, located in Limpopo. The project is expected to deliver 34 722 kg of Merensky content and 47 398 kg of UG2 reef content at an average of 3.73 g/t, which would be processed at adjacent mines’ platinum processing plants.

Meanwhile, owing to the stronger rand/US dollar exchange rate, the rand basket price remained subdued, influencing the updated valuation estimates of Platfields' prospects. Its Liger project value is currently estimated at R88-million, compared with R112-million in the previous reported period. The Berg project value is currently estimated at R101-million, compared with R116-million in the previous reported period.

“The current understanding of the nature and extent of the Berg project poses development uncertainty at current economic studies, while Liger remains a viable prospect," the company said.

Platfields narrowed its loss to R6-million during the six months ended August 31, compared with a loss of R78-million for the same period in 2010. The significant reduction in the reported loss is due to no further material impairments being made to the Platmile portion of the company’s Berg project.

Platfields and Anglo American Platinum also settled the pending litigation over a “competing” prospecting right on the basis that the Department of Mineral Resources will execute a prospecting right in favour of Platfields over a portion of the farm Tigerpoort, which excludes the competing area.
 

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