HomeNewsPlatinum Australia raises stake in Smokey Hills

Platinum Australia raises stake in Smokey Hills

Diamond drill rig
at Smokey Hills, with
helicopter flying
airborne magnetic
survey overhead
Perth, Australia — MININGREVIEW.COM — 02 June 2008 – Australian-based mining company Platinum Australia Limited (PLA) – listed on the Australian Stock Exchange and the London AIM – has signed binding agreements to acquire a further 10.75% of the Smokey Hills platinum project, on the eastern limb of the Bushveld Complex, taking its stake to 69.75%.

A news release issued here explains that in the first of two transactions PLA is acquiring an additional 6.75% for a cash consideration of approximately AUS$5.5 Million (R41 Million), and in the second it is acquiring a further 4% in exchange for one million ordinary shares in PLA.

As a result of these transactions, PLA will have a 69.75% stake in Smokey Hills, with the balance being held by various Black Economic Empowerment (BEE) entities. Importantly –  due to the nature of the BEE transactions which PLA has undertaken – the company will now retain approximately 85% of the cash flow from the project.

PLA managing director John Lewins commented: “We are extremely pleased to have completed these transactions that significantly increase our stake in the Smokey Hills platinum mine, which is projected to be one of the lowest cost producers in the industry. With construction now well underway and commissioning due to commence in July, we believe we will see a very rapid payback on our investment, as at current metal prices the mine is projected to generate cash flow in excess of US$120 million (more than R900 million) per annum before interest and tax at full production,” he added.

Operations at Smokey Hills will commence initially as an open cut, progressing to a shallow underground mine during the first year of operations. This is possible because the company committed to the ordering of long lead items in early 2007, and commenced detailed design with the award of the EPCM contract for the plant a year ago.

The plant has a design capacity of 720 000 tpa and will produce approximately 95 000 ozs 4E PGM (Platinum + Palladium + Rhodium + Gold) in a flotation concentrate. The concentrate will be delivered to Impala Refining Services under a life of mine off-take agreement.