TRANSCRIPTION OF FINANCE NEWS NETWORK INTERVIEW WITH PLANTINUM AUSTRALIA LIMITED (ASX:PLA) MANAGING DIRECTOR, JOHN LEWINSClive Tompkins: Hello Clive Tompkins reporting for the Finance News Network. Joining me from Platinum Group Metals explorer and developer Platinum Australia Limited
(ASX:PLA) is Managing Director, John Lewins.
John welcome to FNN. Can you start by introducing the company?
John Lewins: Well the company is Platinum Australia. As the name suggests, we’ve got a focus on platinum and we were established in 2000, listed on the Australian Stock Exchange. Our projects are in Africa and in Australia.
Clive Tompkins: Thanks John, so who’s backed the company to this point?
John Lewins: Well as I said we’re an ASX listed company, so shareholders, the majority of our shareholders are Australian - a lot of institutional shareholders. About fifty percent of our register would be the top twelve shareholders which would be mainly Australian. We’ve also got some European shareholders and some out of North America and Asia as well.
Clive Tompkins: So how many shares are on issue and what’s your market cap?
John Lewins: The company has 420 million shares on issue; market capitalisation is about $100 million.
Clive Tompkins: Thanks John. Turning to your projects now, you have an operating mine Smokey Hills northeast of Johannesburg, South Africa. What is the size of the resource and current production?
John Lewins: Okay well Smokey Hills as of the 1
st July when we just updated the resource, is just over 820,000 ounces of 4E PGM. So that’s platinum, palladium, rhodium and gold. Production this year we’re looking for about 70,000 ounces and the following year, about 90,000 ounces and continuing about 90,000 ounces for life of mine. Based on the current resource as it stands, that’s about five and a half to six years of life.
Clive Tompkins: And is there potential for an upgrade at Smokey Hills?
John Lewins: Well Smokey Hills we’ve fairly much drilled out our lease area, so our focus really at Smokey Hills is looking for additional resources from adjacent properties. So we’ve entered into discussions with a couple of players who are adjacent to us to look to add to our resources from adjacent properties.
Clive Tompkins: So John what’s your stake in the project?
John Lewins: Platinum Australia has a direct 69.75% interest in the project, the balance is held by South African parties, what’s referred to as Black Economic Empowerment partners. In terms of our financial interest, that really is running at about 85% and that really relates to the fact that Platinum Australia funded the entire development of the project.
It has no external debt but the project has debt to Platinum Australia and we contributed on behalf of our partners, their funds for the project. And in fact for the majority of the Black Economic Empowerment partners in buying into the project, we effectively financed the buy into the project.
Clive Tompkins: John you have a number of other projects in South Africa. Can you introduce each starting with your Kalahari project?
John Lewins: Okay well Kalahari Platinum is in three parts, there’s the main Kalahari or Kalplats project. There is the area immediately around it which is about a thirty-eight kilometre strike length and then we have a third part of that, which is Stellex North. So the main Kalplats project where most of our work is being done, it’s a twelve kilometre strike length; we’ve had DFS - definitive feasibility study completed on it, a 6.7 million oz. resource. We are looking to develop an open pit operation about 1.5 million tonnes per annum producing 110,000 to 120,000 ounces platinum, palladium plus gold.
At this point in time, we’re looking to develop around 2014 which is when power will be available from the Eskom grid. The immediate area around it and the area of influence, we’ve carried out some drilling in that area, we’ve intersected ore grade material over two-three kilometres strike length that we did in our initial drilling. And we’ve got further work planned on that this year, further drilling.
Stellex North that is in joint venture now with JOGMEC, the Japanese Government entity and they’re funding up to $5 million of work to earn their interest in the project.
Clive Tompkins: Good and can you tell us about Rooderand?
John Lewins: Rooderand is our other project also in South Africa. We completed a prefeasibility study on the project earlier this year, defined the resource at 4.2 million ounces, about 29 million tonnes running at about 4.5 grams per tonne. PFS area is looking initially at an open pit, about 1.2 million tonnes per annum producing around 120,000 ounces. Open pit for about ten years and then a further six to seven years of underground.
The project is extremely attractive, it’s low cost, less than $700 an ounce which puts it well in the lowest quartile of producers. Open pit initially, it’s a lower capital cost, we’re currently in the process of putting a mining right application in on that project and as soon as we get the mining right, our view is that’s a project that we would build next.
Clive Tompkins: You also have a project in the Kimberley. What do you have at this stage and what are your plans?
John Lewins: Well the project in the Kimberley, the Panton project is the project that the Company initially started on or listed on. We completed a bankable feasibility study on that in late 2003. At the time that we completed the project on the study, we had a resource of 2.4 million ounces running over 5.0 grams per tonne. So relatively high-grade by world standards but it wasn’t economically viable at the metal prices at that time.
We have started a review of that as basically since we completed that study, the metal prices have gone up between 300% and 600%. So platinum for instance was less than $600 an ounce when we completed the study, it’s now over $1,800 an ounce. Palladium was $130 an ounce; it’s now $780 an ounce.
So we believe that the project now could be commercially viable and the first step of realising that is to undertake a review. Initial review results are indicating an open pit of about three years life at 600,000 tonnes per annum and then going underground for another ten years plus life.
Clive Tompkins: John now to corporate matters. Are you funded for the rest of the year?
John Lewins: Yes we are we’ve just completed a raising of about $5 million and the projections are that Smokey Hills in its ramp up, will be cash positive the coming quarter. And in fact the company will be cash positive the coming quarter.
Clive Tompkins: And John what is the company’s strategy to maximise value from its projects?
John Lewins: Well first and foremost it’s bringing Smokey Hills up to its main plate capacity. This year as I mentioned we’re looking at about 70,000 ounces coming out of the project. That generates about 20 million in cash flow from the project and then the following year 90,000, we get up to about 40 to 50 million in cash flow.
Next project off the rank is Rooderand; we’re in the process of putting that mine right application in. So we’re looking to start development of that project the second half of next year at $150 million capital and about a fifteen month construction period. So we’re looking for Rooderand to come into production towards the end of 2013.
And then our third project, the Kalahari Platinum or Kalplats project, we’re looking to start development of that late 2013, early 2014. And again about a fifteen month construction period, similar sort of capital cost of about 150 million, and coming into production in early 2015.
Clive Tompkins: Last question John. Where would you like to see Platinum Australia in two to three years’ time?
John Lewins: Well the story is very much one of building from our existing production position and moving ourselves into a sort of mid-tier type producer with low production cost assets. Smokey Hills would be well below industry average in terms of its operating costs, producing 90,000 ounces. Rooderand lowest quartile, less than $700 an ounce production costs. Kalplats coming in at similar production costs to Rooderand.
So we see ourselves there with a 250,000/300,000 ounces a year producer, and probably the lowest cost producer in the industry. So that generates a lot of cash and obviously enables us then to look at further pipeline producing from Panton, which would be the first PGM or platinum project in Australia.
Clive Tompkins: John Lewins thanks for introducing Platinum Australia.
ENDS
