Wesizwe - changes in mine operational plan
15 March 2019 17:05
The Wesizwe Bakubung Mine project commenced in 2011 after securing project funding and an equity injection from a major Chinese consortium, CAJIL. The scope of mine development comprises of: all mine surface installations, a main shaft, service shaft and multiple ventilation shafts system, underground flat development around station, all shaft infrastructure, waste development, capital footprint establishment, mine production equipment, process plant, a tailings holding facility and a housing complex amongst others.

The prevailing low PGMs market caused by reduced demand has created negative environment for the mining industry including Wesizwe, which has negatively impacted the Company's ability to raise the required additional funding to commission a 3 million tons per annum mine and a processing facility. The current Pt pricing level of below $ 1000/oz is also adding to cash flow pressure of mines making it difficult to be sustainable. As a result, many mines are closing totally, or closing all loss making shafts. The focus for some major producers has shifted to lower cost shallow, mechanized operations which are in the lowest quartile of the cost curve.

The Company has continually embarked on an operational review and option analysis exercises since 2013. The key objective of this analysis is to continuously review the overall operational outlook in response to the general business environment, defer and or reduce expenditure whilst continuing to commission a production facility to produce early revenues to cover cash costs.

As a result of the above, the Board of Wesizwe has decided to reprioritize
expenditure through curtailing all non –production expense to the extent possible and to allocate all resources to complete the development of the mine to a producing mine system in-order to enable business sustenance. The threshold for operating costs is based on the prevailing Pt and PGM basket prices. All measures of austerity are aimed to keep the company afloat within the current market challenges whilst continuing to develop an asset that will be maximally exploited when the market turns.

Shareholders are notified with immediate effect, the Board of the company resolved to change the current mine plan to implement a new plan which will entail the development of a 1mtpa (one million tons per annum) mine with an equivalent 1mtpa Processing plant (MF2) to treat the ore. The smaller mine will be operated for a period of 5 years from 2021 until 2026. Thereafter and subject to market conditions the Board hopes it will be able to approve a plan to scale up the mine back to the base case 3mtpa operation.

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