Wesizwe Platinum Ltd., a South African explorer of the metal, rose the most in 1 1/2 years in Johannesburg trading after agreeing on takeover terms with Jinchuan Group Ltd., China’s largest platinum producer.
Wesizwe climbed 12 percent to 2.20 rand at the 5 p.m. close of trade, the biggest one-day gain since June 24, 2009.
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 in a statement. 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 ($960 million) 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.
China-Africa Development Fund was set up 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.