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Implats’ R4bn for shafts, another platinum bid, equity raise for coal

16th October 2015

By: Martin Creamer

Creamer Media Editor

  

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The R4-bilLion equity capital that mining company Impala Platinum (Implats) is raising will provide it with the wherewithal to complete the large 16 Shaft and 20 Shaft replacement projects. Implats has already invested R14-billion in these two projects, as can be read on page 7 of this edition of Mining Weekly, and the equity raise has been given a strong thumbs up by the likes of Coronation Fund Managers, Royal Bafokeng Holdings and the State-owned Public Investment Corporation. Implats believes that the placing will allow it to operate profitably in both the short and the long term. Even at this early stage, 20 Shaft is the fourth cheapest cost producer within Implats’ Rustenburg lease, with the new shafts offering the advantage of concentrated mining and short travel distances. The company wants its cost per platinum ounce to fall to R19 000/oz from R22 000/oz now. The new shafts will also mean more Merensky ore being brought to the fore and the benefit of operating ten rather than the current 14 shafts. Praiseworthily, the company is refusing point blank to skimp on this year’s social and labour plan commitment of R200-million to build new employee houses. The 557-house first phase has been completed and the next 550-house phase has already won board approval.

Sibanye Gold has made its second R4-billion bid for platinum assets in as many months. Read on page 9 of this edition of Mining Weekly of the market on both occasions signalling its approval by sending Sibanye’s share price higher and higher. With the acquisition of the triple-listed Aquarius Platinum on top of last month’s purchase of Rustenburg Platinum, Sibanye is confident of unlocking synergies of R800-million a year for three years, thanks to Aquarius’ Kroondal mine abutting Anglo American Platinum’s Rustenburg operations. Already in gold and uranium and going into platinum and coal, Sibanye clearly wants to be a diversified major of scale, which is just what South Africa needs.

Coal mining and trading company Wescoal has let it be known that it intends raising R81-million equity capital to further develop its flagship Elandspruit colliery, in what is a departure from its normal practice of funding growth projects from its own operational cash flow. Wescoal has found self-funding to be all well and good until it inhibits further growth opportunities, which it wants to prevent by selling 58 890 389 of its shares at 132 c a share. Eighty per cent of Wescoal’s reserves are of the resource-type that Eskom wants, which is why Wescoal is building its business around the State utility’s demands. A point of concern, however, is the extent to which Wescoal has been let down by Eskom so far, which has not afforded it the long-term coal- supply contracts anticipated.

Glencore has announced a 500 000 t/y reduction on its zinc production, with Australia, South America and Kazakhstan feeling the sharpness of Glencore’s knife. The slicing and dicing makes up nearly a third of Glencore’s yearly zinc production, which will reduce the fourth-quarter production from the company’s mines by 100 000 t of contained zinc metal – quite a slice.

Edited by Martin Zhuwakinyu
Creamer Media Senior Deputy Editor

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