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Chinese take over Wesizwe

Wesizwe CEO
Arthur Mashiatshidi
Johannesburg, South Africa — MININGREVIEW.COM — 20 December 2010 – Shares in South African PGM explorer Wesizwe Platinum Limitedrose to a six-month high in Johannesburg trading, in the wake of an agreement on takeover terms with China’s largest platinum producer, Jinchuan Group Limited.

Bloomberg News reports that Wesizwe climbed as much as 7.6% to R2.12 “’ the highest price since 18 June “’ and traded at R2.05 as of 11h42 on Friday for a value of R1.6 billion (US$235 million).

“Jinchuan “’ together with China-Africa Development Fund and black investors group Micawber 809 Limited “’ will buy new shares for US$227 million, or about R1.86 each,” Wesizwe said. The deal includes a debt commitment, giving the Johannesburg-based company US$877 million (R6 billion) to build its first mine in South Africa.

State-owned Jinchuan’s takeover boosts China’s access to global resources to feed the world’s fastest-growing major economy, says Bloomberg News. Jinchuan also agreed in September to buy Continental Minerals Corporation to gain gold and copper projects. It may hold a public offering next year, China Securities Journal reported, citing unidentified company officials.

“Jinchuan and China-Africa Development Fund, which will own about 45% of Wesizwe after the transaction, agreed to secure US$650 million (R4.4 billion) in project finance and any additional funding to complete the Frischgewaagd-Ledig mine,” Wesizwe said. “Micawber will own a 6% stake in the company.”

In a telephone interview from here, Wesizwe CEO Arthur Mashiatshidi said the estimated cost to dig the mine northwest of Johannesburg was similar to a 2009 estimate of R6.6 billion, and it could start production around 2013.

“The deal, subject to shareholder approval, provides a total financing solution for the project,” Wesizwe said. 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,” said Wesizwe director Mike Solomon.