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PTM enters into $195m finance agreement for WBJV project

11th November 2013

By: Leandi Kolver

Creamer Media Deputy Editor

  

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JOHANNESBURG (miningweekly.com) – TSX- and NYSE-listed Platinum Group Metals (PTM) on Monday announced that it had entered into a new mandate letter through which it would be provided with up to $195-million in project finance to develop the Western Bushveld joint venture (WBJV) Project 1 platinum mine.

Barclays Bank, Absa Corporate and Investment Bank, Caterpillar Financial and Societe Generale Corporate & Investment Banking would arrange the financing.

PTM had to restructure its banking mandate and loan structure after Wesizwe Platinum subsidiary Africa Wide Mineral Prospecting and Exploration last month announced that it would not fund a R213-million, or $21.8-million, cash call for its 26% share of a six-month forward budget for the WBJV Project 1.

“We are pleased to move forward with an experienced global set of financial institutions in a structure for the WBJV Project 1 that does not require the direct participation of Wesizwe Platinum,” PTM president and CEO Michael Jones said, adding that the company’s near-term objectives were to complete the financing plan for the WBJV Project 1 and to continue to explore the scope and scale of the Waterberg platinum discovery.

PTM estimated that Africa Wide’s share in the operating company Maseve Investment would be diluted by 5% based on a formula in the shareholders’ agreement, which would leave it with a 21% interest.

“PTM plans to sell the diluted points in the WBJV Project 1 mine to a fully qualified black economic-empowerment company to satisfy the empowerment aspects of the Mining Charter in South Africa,” the company stated.

Further, the new loan mandate required certain restrictions over the company's ability to transfer any of its interests in the Waterberg deposit and the Waterberg extension permits.

“The loan facility agreement will also require a cost overrun facility, metal and currency hedging, as well as normal conditions precedent,” PTM said.

Further, the company also had a right to terminate the mandate prior to the completion of the final loan agreement for the payment of a fixed fee.

“As the transaction is subject to a number of conditions precedent, financial and continued technical due diligence, as well as the finalisation of a facility agreement, there can be no assurance that the transaction will [be] completed,” the company said, adding that additional financing from other sources would also be required to complete construction at the mine. 

Meanwhile, PTM reported that construction on the WBJV Project 1 site continued at a moderated pace, with a freeze on new procurement contracts.

“The delay in the finalisation of project finance arrangements from plans announced and proposed earlier in 2013, including the project loan and delays in other funding will likely cause a delay in the current target date of mid-2015 for the start of concentrate sales from the mine,” the company said.

Further, drilling continued as planned at PTM’s 87%-owned Waterberg extension permits, with assays expected shortly from the initial intercepts reported.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

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