JOHANNESBURG (miningweekly.com) – South African platinum junior Wesizwe on Monday announced that it had signed a deal with a Chinese consortium to provide it with a R6,6-billion, or $877-million, debt and equity financing package that would fund the development of its flagship Frischgewaagd-Ledig project.

The company announced in September that it would delay the construction of its 350 000-oz/y Frischgewaagd-Ledig platinum-group metal (PGM) project until it could obtain financing for the project.

Prior to that, it had been in negotiations with local funders, but the onset of the global economic crisis had seen the project finance deals fall through.

However, in March, the company said it wanted to build the mine in order to take advantage of the global economic recovery.

The consortium, which comprised the Chinese State-owned base-metals and PGM miner Jinchuan Group (JNMC) and the China–Africa Development Fund (CADFund), would subscribe for 51% of the enlarged share capital of Wesizwe for about $227-million.

Further, JNMC and the CADFund had secured a letter of commitment from the China Development Bank for the provision of a $650-million project finance facility, which would be conditional on the equity component of the deal being finalised.

JNMC had also assured that existing Wesizwe shareholders would not be called on for further funding of the project until it has reached full production.

It would also purchase all the platinum-group metals (PGM) concentrate from the project through a long-term off-take agreement.

Wesizwe CEO Michael Solomon said that this was an attractive transaction for shareholders, with the deal bringing in mining expertise, as well as cost-effective financing.

Wesizwe and the consortium would now negotiate and formalise a set of definitive transaction agreements.

Solomon expected to be able to present the final details to Wesizwe shareholders for approval in about three months time.

He added that mining at the project could be mobilised quickly and that the company would speed up the implementation of the project as the investment came in.

Wesizwe had already spent just under R700-million on the Frischewaagd-Ledig project.