Offers turned down. Criticisms of 'unrealistic expectations'. It reads like a soap opera.

Looks like the Platinum fraternity is low-balling Jones and daring him to go ahead and build a mine. He's calling their bluff. Good on him.

PTM still wheeling and dealing

MiningMx
Brendan Ryan | Tue, 08 Feb 2011 10:04

SOME $4bn in total was now being pumped into theconstruction of four new platinum mines in a 10 square kilometre areawhich continues to be the subject of market speculation over possibleconsolidation.

Interviewed on the sidelines of the Mining Indaba, Platinum Group Metals (PTM) CEO Mike Jones said: "Right now everybody is in construction mode, and the engineers are talking to each other about how to grab synergies.”

The four projects are Impala Platinum’s (Implats')20 shaft costing about $1bn; Royal Bafokeng Platinum’s (RB Plat's)Styldrift development ($1.6bn); the Wesizwe Platinum/Jinchuan Miningdevelopment ($1bn) and PTM’s own development costing about $443m.

The past year has seen the failed bid by Implats tobuy the Bafokeng Rasimone mine before it was listed as RB Plat (whichwas vetoed by Anglo Platinum), and the takeover of Wesizwe by theChinese consortium headed by Jinchuan.
Asked whether the construction decisions had put to an end to furtherpotential consolidation in the region, Jones said: "Lots of things canstill happen. As I have said before - our business plan is open forreview every morning.

“This not about philosophy, it’s about money. We areprepared to take the project all the way to becoming a producing minebut, if someone came along and offered the right price, then thecompany is gone.”

Jones said PTM last year had greatly increased itssurface rights ownership in the region, buying the Sundown Hotel andRanch for C$17m. This extended PTM's ground ownership to the boundaryof the Styldrift mine and provided infrastructure which could be usedfor accommodation, training and local community development.

Jones has previously described PTM’s approach as looking at three strategies - build it, hedge it or sell it.

It’s understood there have been several seriousplays to take over PTM, and Jones confirmed that one proposal to “hedgeit” - do a platinum metal stream deal along the lines of a “SilverWheaton” transaction – came very close to finalisation.

According to platinum sector sources, the mainreason a deal has not been done is because of they term “unrealisticexpectations” by Jones on the value of PTM.

Not surprisingly, that’s flatly rejected by Jones and PTM chief financial officer Frank Hallam.

Jones said: "Our view on value is determined byfactors such as the bankable feasibility study we have carried out, andour view on the platinum market which is positive. As long as peoplewant to drive and breathe, they are going to need platinum.

“Our feasibility study was done at a platinum priceof $1,343 per ounce so, if Goldman Sachs is correct in its predictionthat platinum could reach $2,800/oz by 2014, then maybe we are beingtoo conservative.

“We also think our view on value is more thanreasonable if you look at previous deals such as the $1bn that Xstratapaid for Eland Platinum."

Hallam said: "We might have been born at night but it was certainly not last night.”

Asked about the essential infrastructure requiredfor the PTM development, Jones said the project had been allocated therequired amounts of water and power for the construction phase.

“We have also been allocated the required power andwater needed when we come into production from 2014 and we believeEskom will be successful in meeting power demands in the country.

“But, in the event that Eskom fails, we are betterplaced to cope than much of the platinum mining industry. We are at theshallow end of all this activity and can afford to run the mine ondiesel power.

“Deeper mines will be far more badly affected because of cost and mine safety issues.”