Wesizwe Platinum has moved to reassure investors about the development of its flagship Bakubung Platinum Mine (BPM) after the mining house’s auditors raised questions about a delay in funding for the project from its main shareholder, Chinese firm Jinchuan Resources.
China’s National Development and Reform Committee (NDRC) has yet to approve the platinum group metal (PGM) miner’s application for increased funding from Jinchuan over and above the approved cap of $1.52bn (about R26.8bn).
Wesizwe, which on Monday released it financial statements for the six months to end-June, said its auditor, SNG Grant Thornton, was unable to determine the group’s going concern status, and instead “expressed a disclaimer of review conclusion”.
Wesizwe said its available cash reserves of R105.6m at the reporting date were “insufficient, based on current budgets, to conduct operations and complete the development of the BPM project until the commencement of production in the third quarter of 2025”.
That and the group’s net current liabilities of R2.78bn at the reporting date “create a material uncertainty that may cast significant doubt on the group’s ability to continue as a going concern, in that it may be unable to realise its assets and discharge its liabilities in the normal course of business”, SNG said.
Still, Wesizwe is confident that Jinchuan will approve the required funding to get the mine up and running, saying: “At this point, the majority shareholder has invested significant capital in the Bakubung project and is unlikely to abandon it.”
SNG added that Wesizwe’s ability to remain a going concern hinged on Jinchuan covering the group’s future development costs, commitments and loan repayments to the China Development Bank and relied on the majority stakeholder not calling in Wesizwe’s existing loans to shareholders, which amounted to R2.94bn.
But the mining company noted that in its subscription agreement with Jinchuan the Chinese firm “undertook to provide all additional funding as may be necessary to achieve operational completion”.
Since the reporting period, Jinchuan has made further loan advances of $27.9m to help the miner meet its operational cash requirements and has also undertaken to extend the expiry date of $156m in outstanding loans from the end of this year to December 2027.
Wesizwe said its majority stakeholder was reviewing the miner’s updated funding application report — a process which is expected to be completed before the end of 2024 — and, subject to NDRC approval, will determine the excess funding required for BPM to achieve operational completion.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.