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Wesizwe Platinum Advances to Six-Month High After Agreeing Takeover Terms
Wesizwe Platinum Ltd., a South African explorer of the metal, rose to a six-month high in Johannesburg trading after agreeing on takeover terms with Jinchuan Group Ltd., China’s largest platinum producer.
Wesizwe climbed as much as 7.6 percent to 2.12 rand, the highest price since June 18, and traded at 2.05 rand as of 11:42 a.m. local time for a value of 1.6 billion rand ($235 million).
Jinchuan, together with China-Africa Development Fund and black investors group Micawber 809 Ltd., will buy new shares for $227 million, or about 1.86 rand each, Wesizwe said. The deal includes a debt commitment, giving the Johannesburg-based company $877 million to build its first mine in South Africa, the world’s largest supplier of platinum.
State-owned Jinchuan’s takeover boosts China’s access to global resources to feed the world’s fastest-growing major economy. Jinchuan also agreed in September to buy Continental Minerals Corp. to gain gold and copper projects. It may hold an initial public offering next year, China Securities Journal reported in July, citing unidentified company officials.
Jinchuan and China-Africa Development Fund, which will own about 45 percent of Wesizwe after the transaction, agreed to secure $650 million in project finance and any additional funding to complete the Frischgewaagd-Ledig mine, Wesizwe said. Micawber will own a 6 percent stake in the company.
The estimated cost to dig the mine northwest of Johannesburg is “similar” to a 2009 estimate of 6.6 billion rand and it could start production around 2013, Arthur Mashiatshidi, Wesizwe’s chief executive officer, said in a telephone interview from the city today.
The deal, subject to shareholder approval, provides a “total financing solution” for the project, Wesizwe said. The company struggled to get funds to build the mine after platinum prices plummeted in 2008. The mine may produce 350,000 ounces of platinum and related metals a year, according to the statement.
“This is a very significant investment, the largest Chinese investment in mining in South Africa,” Mike Solomon, a director at Wesizwe said by mobile phone.
Platinum prices, which fell as much as two-thirds in London trading in 2008 as a six-year commodity boom ended, have doubled in the past two years to trade at $1,705 an ounce today.
China-Africa Development Fund was set in 2007 to implement President Hu Jintao’s cooperation initiatives between China and Africa. The size of the fund is $5 billion, according to Wesizwe’s statement.
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