Platinum Group secures US$260 million loan

Vancouver – Platinum Group Metals (PTM-T) has answered one of the big questions remaining on its South African platinum project by securing a US$260-million loan.

Having already brought in $125-million in an equity raise last fall, securing the remaining funds through debt was one of the main barriers to fully proceeding with development of the Western Bushveld joint venture Project 1.

The senior loan has a nine-year term and provides an additional working capital facility of up to US$25-million and a standby subordinate loan facility for potential cost overruns. Platinum Group entered into a mandate letter for the loan with Barclays Capital, the Standard Bank of South Africa, West LB AG and Caterpillar Financial SARL. The loan is still subject to due diligence, final credit approval and execution of a loan agreement.

Platinum Group is advancing its 74%-owned Project 1 on budget and as of early July was within three weeks of project schedule. The company reports that so far 30,000 man-hours have been put into the project with no time-loss incidents. The company recently contracted JIC Mining Services of Johannesburg to develop two 1,200-metre declines into the centre of the project.

The company is progressing on the excavation of a box cut for later underground tunnelling and public environmental consultations and has completed road construction linking the decline area to the highway, temporary power lines and waterlines and an updated mine plan.

Going forward into the rest of 2011 and 2012, Platinum Group is looking to start underground tunnelling, complete offtake agreements, progress on the mining right application, provide updates on other exploration projects and continue to find synergies with other mine construction projects near the Project 1.

A 2009 feasibility study update outlined a steady state production rate of 275,000 ounces of platinum, palladium, rhodium and gold (4E) per year at a capital cost of US$443-million. The company will be tapping into proven and probable reserves on the Merensky Reef of 18 million tonnes grading 5.51 grams 4E per tonne for 3.2 million contained oz., plus 13.5 million proven and probable tonnes grading 3.4 grams 4E on the lower-grade UG2 Reef for 1.5 million contained oz. 4E. 

As of June the company still needed to raise its 74% share of about US$77 million in equity for the project.

Platinum Group’s share price ended up 4¢ the day after the news was released at $1.72 on 126,000 shares traded. The company has a 52-week share price range between $1.62 and $2.79 and 177.6 million shares outstanding.