PTM aims at positive Maseve cash flow by midyear; looking at interim financing options

VANCOUVER (miningweekly.com) – To achieve positive cash flow and to maintain its working capital covenants under existing loan facilities, Vancouver-based Platinum Group Metals (PTM) estimates that it needs to source between C$5-million and C$15-million of additional funding.

The company would weigh options, including refinancing its existing debt, issuing new debt, private or public offerings of equity, or the sale of project or property interests, it said Friday.

PTM stated that its objective would be to turn the Maseve mine, near Rustenburg in South Africa's North West province, to positive cash flow in the first half of 2017. At November 30, PTM held $27.51-million in cash.

The production ramp-up at the cornerstone Maseve platinum/palladium/rhodium/gold (4E) mine has been behind plan since commissioning in April 2016, owing to poor mining contractor performance and delayed infrastructure completion.

A safety drive by the North West inspectorate branch of the Department of Mineral Resources (DMR) during the latter part of the company's first quarter, ended November, resulted in intermittent work stoppages at the Maseve mine, also causing a loss of some development and production.

Production in September, October, November and December was 1 823 oz platinum, 907 oz palladium, 1 237 oz rhodium and 1 509 gold. Contractor issues, the changeover of contractors and concerns raised by the DMR have been addressed and PTM said it was once more focused on increasing mined tonnage at grade from planned blocks, while at the same time reducing costs in 2017.

PTM said development in other blocks near the initial high-grade Block 11, with good grade thickness, was scheduled to continue during the year. The company has forecast the 12-month total output guidance for 2017 at 100 000 oz to 120 000 oz 4E.

In return for issuing 568 819 common shares, the Sprott Resource Lending Partnership and Liberty Metals & Mining Holdings have agreed to provide a waiver and amendments to their existing loan facilities to PTM, in order to accommodate the company for the delayed production ramp-up at Maseve. The total debt owed to the two lenders amounts to C$1.15-million.

The other key business objective for the 2017 financial year will be to advance the Waterberg project, in Limpopo, through feasibility and into preparations for a mining right application.