London - South Africa's Wesizwe Platinum has been scouting for financiers in the Middle East and China for its $600 million mine project after the freezing up of Western capital markets.
Wesizwe hopes to go ahead with initial work on its Frisch-Ledig project before the end of 2008 with $34m in cash it has in hand while it seeks additional money to build the mine, Chief Executive Michael Solomon told Reuters on Wednesday.
"We're having to look at non-conventional markets, we're having to look at other markets where there are different value propositions and there's appetite," he said in an interview on the sidelines of the Platinum Congress in London.
"The value proposition to investors in the Middle East would be very different to the value proposition to somebody in China. We're tailor-making value propositions. We're having to be very creative."
Wesizwe were looking at all possibilities, including sovereign wealth funds and private equity investors, he added.
The firm had been planning to raise $300m of equity on Western markets for the first phases of its mine until the credit crunch hammered platinum prices and mining stocks.
Wesizwe shares have lost 72% of their value since June while platinum prices have has slid 65 percent to slightly over $800 per ounce since hitting a record over $2 000 in March.
The company has sliced up the project into smaller modules and will only raise small amounts at a time to avoid too much dilution to shareholders, he said.
"If I could raise $50m, I would do that, but I don't think it's practical. I think realistically we'll have to split the first $200m into $100m tranches and that would take us to the completion of shaft sinking," Solomon said.
The firm will launch earthworks with existing cash either late this year or early in 2009 to keep momentum going on the project while the first tranche of funds from alternate investors is finalised.
"The first two phases of the earthworks are relatively low-cost and time-consuming phases and that would bring us the breathing space."
The other half of capex had been envisaged as project finance to be drawn down in three or four years.
Wesizwe had been discussing project finance with South Africa's Absa Capital, majority owned by Britain's Barclays, but those talks have been put on hold due to market conditions.
The sharp fall in markets has not dimmed the viability of the project, only made the mechanics of raising capital more difficult, Solomon said.
With much of the world's platinum production loss making at current prices, Wesizwe points to analysts' estimates of platinum bouncing back to $1 200-$1 300 per ounce by 2010-2011, perfect timing for the start of its mine.
First production is due in 2011 with steady state output hitting 350 000 ounces of platinum group metals by 2015.