[miningmx.com] – SABLE Platinum, a platinum group metals (PGM) exploration company that bet on a recovery in the platinum price when it listed 12 months ago, said it had roughly three months of cash left, and may issue as much as 15% of its share capital – enough to raise between R18m and R20m, depending on the discount applied.
In the shorter term, the company’s cash position will ease considerably if it is able to recover R3.2m from the South African Revenue Services which would provide it with breathing space until July.
Cash burn is estimated to be about R550,000 per month against cash-on-hand of R1.68m (excluding a major debtor of R550,904) as of November 22, the company said today in its interim results announcement.
James Allan, CEO of Sable Platinum, also rang in the changes, saying the company would switch to the general mining sector of the JSE, and change its name to Sable Metals pending approval at the company’s annual general meeting.
This was in line with a strategy that has been unfolding for most of the year in which the company has been diversifying its exploration portfolio to minerals such as pig iron and iron ore, as well as vanadium (although the latter has been part of the business when it listed).
The company also lifted the curtain on difficulties experienced by mining entrepreneurs in the exploration sector, especially before any of the assets generate cash flow.
Allan sacrificed half his salary in December 2012 and January 2013, and has not drawn a salary since. He also loaned R1m to the company that may be converted to shares at some future point.
Meanwhile, directors Rene Hochreiter, David Levithan and Marietjie van Tonder sacrificed fees and retainers of between 20% and 50% for most of the calendar year. The total amount forfeited in the nine months from December 2012 totalled R2.8m. “The board will reconsider the reimbursement of the amount forfeited if sufficient capital is raised,’ it said.
There had also been a company restructuring that reflected the underlying projects, including the slag retreatment business in Selebi Phikwe in Botswana which is the subject of a due diligence. Some 100 million tonnes of mine tailings and 25 million tonnes of smelter slag from the former base metals mine were to be retreated yielding 150,000 tonnes of nickel, copper and cobalt, according to previous reports on the mine.
As a result, Selebi Phikwe is intended to become a short-term (and much-needed) cash generator for Sable. Speaking to Miningmx in April, Allan said that the asset would add cash flow of between $100m to $120m a year. The due diligence will be complete by year-end, Allan said.
In the meantime, the company was keen to conclude a share issue. “The group is currently raising capital in order to cover all general and administration costs. The company’s future prospects and stability relies on its ability to raise capital for the ensuing year,’ it said.
Some 4.94 million shares were issued in the interim period at 60c/share to Flagship Asset Management raising R3m and taking the investor’s stake in Sable Platinum to just in excess of 6% including shares held in discretionary mandate (without the consent of the firm’s clients) and those that are not fully discretionary.
All in all, the company has an accumulated loss of R79.4m. The extent of its attempts to put the brakes on cash outflow is demonstrated in that it suffered a net loss of only R4.5m in the interim period against a R20.9m loss in the corresponding period of the previous financial year.
Allan said at the company’s debut on the JSE in November last year that the platinum market had probably bottomed out. Whilst labour problems have eased somewhat, and restructuring announced, the platinum price has not responded readily suggesting that the pricing power of South Africa’s platinum mines, and its influence in the industry, is diminishing.
