JJOHANNESBURG (miningweekly.com) – Notwithstanding difficult global and regional market conditions, platinum-group-metals company Wesizwe Platinum recorded a consolidated profit of R9.7-million for 2012, a marked improvement from a loss of R3.6-million in the previous year.

The JSE-listed company attributed the turnaround to an increase in interest income of R56.6-million earned on cash balances that, in turn, contributed to the basic earnings a share of 60c, compared with a loss a share of R26.58 in 2011.

Wesizwe’s cash balance at the end of the financial year was R1.4-billion.

The company reported that the first blasts on the ventilation and main shafts at its flagship Bakubung platinum mine, in the North West province, took place on schedule. The company had awarded Aveng Grinaker-LTA Mining the R1.64-billion shaft-sinking contract last year.

The ventilation and main shafts were sunk to depths below surface of 117.5 m and 63.6 m respectively.

Further, the water supply feasibility study that Wesiswe conducted jointly with Maseve Investments 11 at Bakubung was concluded during the year under review and the water supply project remained on time and within budget.

State utility Eskom had also delivered the Phase 1 permanent power supply of 8 MVA to the project site.

Wesizwe had spent R779.1-million in project costs during 2012, with R1.4-billion committed as at the end of the financial year.

Meanwhile, China Development Bank (CDB) approved a $650-million loan for the Bakubung mine. Wesizwe indicated that the finalisation of the project funding documentation was currently in progress and that the CDB, as part of the project funding, had approved two bridging loans of $100-million each.

The first loan was drawn down in December and is included in the cash balance of R1.4-billion at year-end, while the second loan facility would be drawn during this year, as and when required. These short-term loans would be refunded in part by the $650-million long-term loan also approved by the credit committee of the CDB during the year under review.

“The confirmation of our funding arrangements for our flagship project represented just one of several important milestones reached during the year under review and served to demonstrate the level of confidence in the project, the future and the perspectives held by our Chinese shareholders on the South African mining industry…Our Bakubung platinum mine project continues to make significant progress, on schedule and within budget, with several major milestones scheduled to be reached in the year ahead,” CEO Jianke Gao said.

Looking ahead, Wesizwe COO Paul Smith told Mining Weekly Online he expected platinum prices to strengthen towards the end of this year, driven by sustained disappointment in terms of production, slow recovery in Europe and China, as well as the weakening rand.

However, he added that persisting challenging market conditions into 2013 were likely to result in company consolidations and larger industry players shedding assets at lower prices.

Labour and government issues weighed heavily on the local platinum sector in 2012 and Smith said tackling this in the year ahead could prove difficult.

“Trying to get government, labour and employers on the same page is challenging,” he noted.