Wesizwe buffeted by market

"We are not raising the R5.6bn in a single fell swoop. There will be gearing and a blend between debt and equity and within the debt there are various structures we are considering," Solomon said.

"The debt structuring is a lengthy and complicated process, which typically takes six to eight months. We hope to conclude the debt structuring by the end of the year," he said.

"You can't do the major capital raising until the debt structuring is in place. Those putting in significant amounts of capital in would like to know what the debt component looks like for them to make decisions," he added, declining to say yet what the split between debt and equity will be.

Credit crunch The financial markets have become increasingly more difficult for resources companies, particularly juniors, to raise capital towards exploration and project development. The banks are finding reasons to say no rather than finding reasons to extend loans, some mining executives have said of the current environment.

The difficulty stems in part from the billions banks have lost in exposure to sub-prime mortgages in the United States, which have turned sour. There is also a call that the commodity cycle might have peaked after years of almost unrelenting rises.

The platinum price, for one, has fallen strongly from its record high around $2 300/oz in March over concerns that an economic slowdown in the US and elsewhere could lead to lower car sales and by extension a decline in demand for platinum to make autocatalysts for vehicle exhaust systems.

Wesizwe's shares have fallen by more than half from the year-high of R12.30 at the end of March this year to R5.35 by midday South African time.

Solomon said the weakness in the markets would shake out the weaker projects, arguing that Wesizwe's 350 000 PGM oz/year venture was not one of those because of the painstaking work that had gone into it to advance it to the point where construction is due to start in September.

But there's no denying despite the quality of the asset market circumstances have made the ride for Wesizwe securing debt and equity financing a little rockier than would have been the case earlier this year.

"I'm very cognisant of what the markets are doing and that is going to impact on how we are going to schedule the capital raising on both the debt and equity side," Solomon said.

Ideally, Wesizwe would like to raise funds through equity first to reduce the interest impact on repaying debt over a longer period.

"With the decline in the markets we are re-looking at our original schedule and re-schedule the entire process according to what is going to be best in terms of the average cost of capital," Solomon said.

Wesizwe has cash of R377m to see itself through to the end of its current financial year ending in December, he said.

The company has secured the services of Deutsche Bank, ABSA and the Development Bank of South Africa as the syndicate to act as the lead debt and equity arrangers. The inclusion of Deutsche means Wesizwe is looking offshore for a component of equity funding.

The capital will be drawn over eight years until 2016, which is when the mine will reach steady state production. The first run of mine ore from the 650 metre deep mine will come in 2011.

- MiningMX.com

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