WeSizwe, an advanced stage South African platinum group metals (PGMs) stock, has announced a ZAR 550m three year equity standby distribution facility with a division of Jersey City, NJ, Yorkville Advisors. The dilemma for WeSizwe is largely told by its stock pricing: 90% or so off its highs, and a market value of just USD 74m, in the face of PGM prices that plunged from record levels early in 2008. A rand is currently worth 10.5 US cents.PGM prices, which are heavily linked to the fortunes and misfortunes of the global auto sector, have recovered sharply lately, but investors are yet to convincingly buy into the story. Platmin, another South African PGM entity, but within sight of producing its first physical PGMs after investing hundreds of millions of dollars in building a new mine, is also trading 90% off its high stock prices, with a market value of just USD 229m.WeSizwe, which announced annual results on Tuesday, has current cash reserves of ZAR 244m, and has negotiated and signed a term sheet with YA Global Investments, L.P. for a three year standby equity distribution facility for ZAR 550m. At current stock prices, the commitment in full is equal to nearly 80% of WeSizwe's market value.In terms of the facility YA Global Investments, L.P. will subscribe for up to ZAR 550m, in minimum tranches of about ZAR 50m, in respect of ordinary shares of WeSizwe. The bankable feasibility study on WeSizwe's core Frischgewaagd-Ledig project was successfully completed in March 2008m well ahead of initial schedule. WeSizwe needs about ZAR 6bn to build a mine, including a concentrator.WeSizwe's strategy prior to the economic downturn had been to negotiate the terms of the required project finance by the end of 2008 and then to undertake equity capital raising during 2009. This sequencing was upset by the sudden crash in the capital markets in September 2008, and the approach had to be revised; an equity raising could amount to a ten-for-one rights issue, given current stock pricing. Dilution of that magnitude is unlikely to work in current markets.   Given the company's project-ready situation, states WeSizwe, the board of directors of the company elected to proceed with the project on a phased approach whereby the capital project will be modularised into a series of smaller project components each with separate budgets and contracts. The company will then raise the respective amounts of capital required on an incremental basis until such time as the capital markets normalise.WeSizwe's approach has always been aggressive and continues to be so. The fact that we are progressing carefully in this uncertain environment is not a sign of this world-class project being in distress or coming to a halt, but rather that necessary caution is being taken in the interests of protecting shareholder value.  These measures are being taken to navigate the company through the storm by making sensible decisions and weighing options to this end.During the past year WeSizwe negotiated a highly value accretive deal with    Anglo Platinum and PGM, giving WeSizwe 100% control of and benefit from its core project, while maintaining its 26% stake in the Western Bushveld Joint Venture. As a result of this transaction, Anglo Platinum becomes the largest single shareholder in the Company.     WeSizwe's new partner in New Jersey is no stranger to the mining arena, having previously invested in names such as Admiralty Resources, EMED Mining, Fortescue, and Petra Diamonds.

Selected platinum stocks

Stock

From

From

Value

Tier I platinum

price

high*

low*

USD bn

Anglo Platinum

ZAR 476.00

-67.8%

36.0%

11.916

Impala Platinum

ZAR 158.25

-56.6%

82.8%

10.067

Lonmin

GBP 14.23

-60.6%

165.2%

3.218

Averages/total

 

-61.7%

94.7%

25.201

Weighted averages

 

-63.2%

62.8%

Diversified

Anglo American

GBP 11.86

-67.8%

30.9%

22.823

Mvela Resources

ZAR 28.98

-58.0%

87.0%

0.652

Norilsk

USD 6.00

-81.0%

70.9%

11.438

ARM

ZAR 138.49

-54.9%

82.2%

3.082

Averages/total

 

-65.4%

67.8%

37.995

Weighted averages

 

-72.8%

45.2%

Tier II platinum

Stillwater

USD 3.79

-80.0%

115.3%

0.356

Aquarius

GBP 2.05

-77.9%

155.1%

0.960

Northam

ZAR 25.70

-66.6%

55.8%

0.972

NA Palladium

CAD 1.78

-74.0%

56.1%

0.123

Zimplats

AUD 4.70

-70.6%

34.3%

0.351

Eastplats

CAD 0.41

-88.0%

118.9%

0.276

Anooraq

CAD 0.82

-79.3%

272.7%

0.121

Averages/total

 

-76.6%

115.5%

3.159

Weighted averages

 

-76.7%

89.8%

Developers and explorers

Platmin

CAD 0.78

-90.3%

143.8%

0.229

WeSizwe

ZAR 1.20

-90.2%

18.8%

0.074

Noront Resources

CAD 0.73

-87.1%

67.8%

0.089

Pt Australia

AUD 0.72

-77.3%

98.6%

0.123

Sylvania

GBP 0.43

-67.2%

77.1%

0.108

Starfield

CAD 0.15

-89.1%

114.3%

0.039

Ridge

GBP 0.63

-56.3%

198.8%

0.083

PGM

CAD 1.46

-55.5%

105.6%

0.079

Solitario

CAD 1.56

-73.1%

14.7%

0.037

Colossus Minerals

CAD 2.15

-46.3%

400.0%

0.093

Jubilee

GBP 0.08

-90.8%

14.0%

0.012

Nkwe

AUD 0.17

-84.4%

65.0%

0.058

Braemore

GBP 0.02

-80.5%

110.0%

0.024

Marathon

CAD 0.40

-90.8%

60.0%

0.009

Caledonia

CAD 0.06

-68.4%

140.0%

0.024

Freegold Venture

CAD 0.14

-90.4%

33.3%

0.007

Magma Metals

AUD 0.27

-57.1%

28.6%

0.021

Franconia

CAD 0.16

-91.6%

60.0%

0.008

Cons. Puma

CAD 0.05

-97.2%

28.6%

0.002

Avalon Ventures

CAD 0.59

-69.7%

100.0%

0.032

Rusina

AUD 0.05

-85.9%

36.4%

0.008

Largo Resources

CAD 0.08

-95.3%

66.7%

0.012

Macdonald Mines

CAD 0.05

-89.0%

100.0%

0.006

Hard Creek

CAD 0.20

-76.2%

150.0%

0.010

Polymet Mining

CAD 0.98

-78.2%

63.3%

0.107

MetalCORP

CAD 0.12

-87.4%

100.0%

0.005

Wallbridge

CAD 0.11

-79.4%

200.0%

0.008

Benton

CAD 0.25

-60.3%

127.3%

0.014

Mustang Minerals

CAD 0.07

-89.4%

40.0%

0.005

Northern Shield

CAD 0.07

-91.3%

18.2%

0.003

Platina

AUD 0.22

-71.6%

57.1%

0.009

Darnley Bay

CAD 0.09

-85.0%

80.0%

0.004

Pacific NW Cap.

CAD 0.10

-76.3%

90.0%

0.005

Niplats

AUD 0.15

-74.1%

150.0%

0.008

Starcore

CAD 0.09

-71.9%

80.0%

0.004

Huston Lake

CAD 0.32

-56.8%

52.4%

0.009

Goldplat

GBP 0.12

-16.9%

50.8%

0.020

Hinterland Metals

CAD 0.04

-86.7%

300.0%

0.002

Pan Palladium

AUD 0.04

-64.1%

362.5%

0.008

Premium Exp.

CAD 0.11

-73.8%

133.3%

0.003

Eurasia Mining

GBP 0.01

-70.0%

12.5%

0.002

Silvermet

CAD 0.05

-75.0%

233.3%

0.004

Developer averages/total

-80.2%

109.6%

1.401

Weighted averages

 

-82.9%

92.9%

Overall averages/total

 

-73.8%

102.5%

29.761

Overall weighted averages

-67.0%

66.5%

* 12-month

Source: market data; table compiled by Barry Sergeant