JSE-listed platinum exploration and development company, Wesizwe Platinum mine, has given the go-ahead for the construction of a new R5,6-billion mine on the Frischgewaagd-Ledig complex, following positive results from a bankable feasibility study (BFS) that was delivered on time and within budget.

The project, which was to be sited on the western limb of South Africa's famous platinum-bearing Bushveld Igneous Complex, should take 58 month to build, with construction due to begin in the third quarter of 2008 - the first production being scheduled for 2011.

"The BFS confirms that our core asset, the Frischgewaagd-Ledig complex is commercially viable with an internal rate of return of 18%, producing an average of 350 000 of platinum oz during a steady state production," Wesizwe CEO Mike Solomon said at a presentation in Rosebank, Johannesburg.

The project would consist of an underground mine and a surface concentrator plant.

"In terms of Wesizwe, this marks a significant milestone in the short history of the project, as we are now undergoing the critical transition from a pure exploration play to being a fully fledged platinum producer, over the next five years."

The company said on Monday that the current mine infrastructural designs were conducted through a process of exacting iterations in parallel with the updating of the geological studies. To that extent, the proposed design was considered to represent the most appropriate method to exploit the mining block, as it allowed flexibility to address the structural geology.

Solomon said that the results show a net present value of R9,5-billion with a life-of-mine of 35 years, which would yield of ten-million ounces over that period.

"Owing to the fact that geology is getting better and better over the period of the project, we have five mining scenarios that we looked at for the prefeasibility study. We decided to optimise at a 230 000-t/m operation and at the moment we are a full year ahead of schedule from our original target."

The 230 000-t/m production rate was an improvement on the 180 000 t/m initially envisaged during the prefeasibility study, and reflected the underlying quality and size of the orebody, the group said.

Solomon pointed out that Wesizwe's resource size inventory had doubled from its original target of 6,7-million ounces to a project resource of 13,4-million ounces.

Since Wesizwe was not yet a cash generating entity and its exploration programme up to the BFS had been funded by equity, the construction phase of the project was expected to be funded by way of a combination of equity and debt finance.

A consortium of South African banks, including Deutsche Securities (South Africa), Absa Capital, and the Development Bank of Southern Africa, had been mandated to arrange this finance.

The banks will provide a project debt and equity package and will assist with the equity offering for the equity portion of the financing.

To subscribe to Mining Weekly's print magazine email subscriptions@creamermedia.co.za or buy now.