Eastern Platinum gears up to re-enter PGM sector
The Canadian firm is eyeing a full-blown return to platinum group metal mining in SA as it offers a discounted R375m rights issue
Eastern Platinum (Eastplats) delivered its first platinum group metal (PGM) concentrate for sale in December, as the company slowly re-emerges as a player in the sector after a hiatus of more than seven years.
Eastplats, a Vancouver, Canada-based company with mothballed PGM mining assets in SA, has gradually restarted mineral production, extracting chrome from its tailings dumps in 2018 and now PGMs from the same processing circuit.
Eastplats sells its concentrate to Impala Platinum. During 2020, it delivered 32.2 tonnes of material for processing, but the company did not say how much PGM was contained in those deliveries nor the revenue it realised.
The company plans to refurbish and restart its main PGM processing plant to generate concentrate containing the metals and take advantage of the high prices these metals are fetching.
Eastplats stopped operations at its Crocodile River mine near Brits in North West in July 2013 because of ongoing weakness in PGM prices at the time. The company also has partially developed mines and exploration prospects at Kennedy’s Vale and Mareesburg near Steelpoort in Limpopo.
The company is undertaking a rights issue for up to 31.9-million Canadian dollars, or R375m, in a scheme that closes on January 22. If the entire amount is raised, Eastplats will spend it all on restarting the Crocodile River complex of the Zandfontein mine and concentrator plant as well as bringing Mareesburg into production.
The projects will start delivering PGMs from 2021.
The rights offer, which is priced at R3.77136 a share on a one-for-one basis for existing shareholders, will double the number of Eastplats shares in issue.
When the rights offer was made on December 11, the issue was at a substantial discount to the R5.15 close for Eastplats the day before.
The successes in extracting chrome and more recently PGMs from tailing and the strategy underpinning the rights issue would return Eastplats to an operational, revenue-generating company again, said CEO Diana Hu.
By the JSE’s close on Wednesday, Eastern Platinum’s share price was unchanged at R4.79. Its shares are up 277% over the past 12 months.
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