[miningmx.com] — MARKET reality caught up with platinum exploration junior Platfields Limited, when stocks were heavily marked down in trade after its JSE debut on Tuesday morning.
After opening at 140c, the shares swiftly plunged to levels of around 70c. That compares with price levels of between 100c and 125c, at which Platfields has placed shares privately over the past couple of years.
In March 2009, CEO Bongani Mbindwane also told a media briefing that Platfields stock was trading at around 280c over the counter.
The negative market reaction is bad news for Platfields’ plans to raise R200m during the first quarter of next year, which Mbindwane says is management’s top priority. The money is required to continue with exploration drilling programmes.
It also doesn’t gel with his comments in an interview on CNBC that “the appetite for Platfields shares is huge, and we are being inundated by investors across the board”.
Platfields at this stage controls two platinum projects – Liger and Berg – and one gold project – Grootfonteinberg – over which Mbindwane says it holds new order prospecting rights. However, the pre-listing statement indicates legal complications regarding two of the projects.
The key project is Liger, which is a shallow resource with open pit potential and high grade platinum group metal (PGM) resources.
According to the pre-listing statement, Liger “presents the most attractive opportunity to significantly increase value for the company and its shareholders”.
The statement described the Berg project as lower grade and more structurally complex, while Grootfonteinberg is said to have “reasonable grade gold resources” but a “mineralogically complex orebody and high capital requirements”.
Liger consists of two key farms – Leeuwkop and Tigerpoort – with the most important being Leeuwkop, over which Platfields holds a new order prospecting right.
There is a land claim lodged over Leeuwkop by the Mathabatha community, about which the pre-listing statement says: “The presence of a land claim on farm Leeuwkop 425KS should not pose a risk on the prospecting operations of Platfields, as the land claim is in respect of surface rights”.
That may or may not still be the case, following the recent landmark judgment by the Constitutional Court against Genorah in favour of the Bengwenyama community.
The grant of the prospecting right over Tigerpoort to Platfields has been held up because of an appeal against it by Anglo Platinum, which has also launched a High Court review application to set the grant aside.
According to Mbindwane, Platfields is negotiating with Anglo Platinum to resolve the dispute. He reckons time is on his side, given that mining operations would begin on Leeuwpoort.
But the pre-listing statement also notes that “a third party may have the right to claim an interest in the Leeuwkop prospecting right, or to challenge its issue on the basis that it was a joint holder of the unused old order right”.
The statement adds Platfields thinks the chances of this happening are minimal and that, even it did, “the company should have some success in procuring a right in relation to at least 50% of the resources on the Leeuwkop property”.
There are no prospecting right challenges to the Berg project, but this covers 6,200ha of ground about midway between the towns of Roossenekal and Dullstroom.
That puts it in the environmentally sensitive Steenkampsberg region – noted for its endemic wild flowers and population of endangered cranes – which means Platfields is bound to face serious environmental opposition when it eventually looks to turn this to account.
It’s also in the trout fishing belt. The wealthy owners of those farms have the clout to stir up plenty of opposition, as Simmer and Jack Mines (Simmers) found out when it tried to set up heap leaching operations to recover gold near Pilgrim’s Rest.
That’s where the Grootfonteinberg gold project is situated, but the pre-listing statement says Platfields has not been able to register its prospecting rights over this project.
According to the pre-listing statement, this is because Simmers has “executed and registered rights over Grootfonteinberg 561KT, which is included in this right and this is the reason for the delay in the registration of the prospecting right.
“The company is pursuing its rights in this regard, but can give no guarantee that it will be successful in having this right registered.’
Even if it does, investors should note Simmers has given up on gold mining around Pilgrim’s Rest.
In September, Simmers sold its mothballed Transvaal Gold Mining Estates division for R25m to an unlisted company called Stonewall Mining.
This is because Simmers – like many operators before it – had lost heavily trying to mine the difficult greenstone gold deposits found around Pilgrim’s Rest and Sabie.
