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October 24, 2008By Justin Brown

Johannesburg – Junior platinum mining firms such as Wesizwe Platinum and Anooraq Resources are expected to have to shelve development projects or at least slow them down due to the sharp fall in the prices of platinum group metals (PGMs).

But the price plunge has not yet forced any platinum junior to abandon a project.

An analyst, who wished to remain anonymous, said several of the projects would not be viable at current PGM prices.

“About 60 percent to 70 percent of the projects will not be able to go ahead,” said the analyst, adding: “The biggest problem that the juniors face is funding.”

Philip Kotze, the chief executive of Anooraq Resources, agreed that his firm’s projects would be less viable and debt harder to repay because of falling prices.

He said the company’s three projects, Ga-Phasha, Boikganthso and Kwanda, were all in early stages of development and no decisions had been made about proceeding with construction.

At least four JSE-listed platinum juniors have crashed to record lows this month as PGM prices declined, making it more difficult for these companies to raise money by issuing shares.

Yesterday Eastern Platinum, Wesizwe, Anooraq and Jubilee Platinum had a total market value of R4.6 billion, down from their collective high of R30.7 billion earlier this year.

Michael Solomon, the chief executive of Wesizwe, said: “Wesizwe takes a long-term view on the markets, and while the company notes the current fall in platinum prices, we believe [that] the underlying fundamentals of the industry remain strong and that prices will recover, especially during the ramp-up stage of the project, which is planned between 2011 and 2016.”

He said the firm remained committed to its R5.6 billion capital construction plan for the Pilanesberg platinum project near Sun City.

“The debt markets are difficult at the moment,” Solomon said. “While Wesizwe is planning to finalise the terms of the debt funding by the end of the year, the plan is to start drawing down on the facility only when we get closer to production.”

Colin Bird, the chief executive of Jubilee Platinum, was not available for comment on the effect of the fall in the prices for PGMs on the company’s $470 million (R5.4 billion) Tjate platinum project in Limpopo.

Wayne Robinson, Eastern Platinum’s chief operating officer, was also unavailable to comment on the company’s Mareesburg and Spitzkop-Kennedy’s Vale projects in light of the PGM prices.