http://www.advfn.com/cmn/fbb/thread.php3?id=13824057"The most...

http://www.advfn.com/cmn/fbb/thread.php3?id=13824057

"The most likely bidder for Sylvania could be Aquarius Platinum!"

http://www.miningmx.com/platinum/766927.htm



Platinum production starts in June, with just 690 ounces a month. It will build up to almost 6,700 ounces/month 18 months later when all four planned platinum recovery plants are in operation. Cash costs are predicted to be roughly half those of the platinum miners.

“We are looking for acquisitions of other potential operations in tailing dump retreatment,” McConnachie told Miningmx in an interview.

“We see ourselves becoming the Ergo of the platinum sector,” he said, referring to the profitable and successful AngloGold Ashanti tailings treatment operation that recently reached the end of its life.

The margins would be good on the chrome dumps project where platinum hadn’t been targeted in initial processing, margins were likely to drop off quite sharply when dealing with platinum tailings where companies were quite efficient in extracting the metal, a South Africa-based analyst said.

“Those dumps are really not like those in the gold industry where the processes were gradually made more efficient over a century. The platinum guys are pretty efficient and I’m not so sure about platinum recoveries from those dumps,” the analyst said.

“I’m not sure why they’d mess around with old platinum dumps when there are better margins to be had from mining the stuff out of the ground,” the analyst added.

Sylvania is not restricting itself to retreatment operations. “We are also on the acquisition trail for virgin platinum deposits. We are not shy about exploration,” McConnachie said.

There are at least two private companies involved in retreating platinum tailings, which have low grades of 0.5 to 0.7 grams/tonne, making it a high volume game. Sydney- and AIM-listed Sylvania is likely to focus attention on these companies.

It has also informally begun tentative overtures towards the major companies like Anglo Platinum, Impala Platinum and Lonmin to retreat dumps of many million tonnes, but it’s very early in the process, McConnachie said.

Anglo Platinum has its Western Limb Tailing Retreatment operation near Rustenburg that produced 50,000 oz of platinum group metals in 2005.

ASX- and AIM-listed Sylvania is highly likely to become a takeover target once it starts generating cash flows, McConnachie said, adding there was no strategy within the group to court suitors.

The most likely bidder for Sylvania could be Aquarius Platinum, with which Sylvania already has a relationship in treating two Xstrata chrome dumps for platinum.

Aquarius owns 50% of the profitable Chrome Tailings Treatment Project in which Sylvania holds 25%.

Aquarius is will run short of ounces in the near future and with large cash pile it is widely seen as a future buyer of assets as part of a much-anticipated consolidation of the junior platinum sector in South Africa.

Sylvania antcipates listing in Johannesburg for the sake of its black empowerment partner Ehlobo Holdings, which has 26% stake in the business at a cost of R40m. “We’re not investigating that just yet. We want to be producing and profitable first,” McConnachie said.

Sylvania wants to grow far beyond being just an 80,400 oz/year platinum producer from its retreatment operations. It wants to bring its portion of the bowl-shaped UG2 Everest North deposit to account.

The R500m project planned to be shared with Toronto-listed Eastern Platinum, which owns the major part of the deposit. The split in the project is yet to be determined. Based on resources, it is currently in Eastplats favour, but McConnachie hopes that this may swing a bit as more drilling results come in.

A bankable feasibility study due for completion in August is underway at the shallow deposit, which could sustain a 90,000 tonnes/month mine. At grades similar to those at Aquarius Platinum’s Everest South mine, this could be a 156,250 oz/year mine.

The project will be funded from internal cash flows and Sylvania is unlikely to come to the market again.

“We are a growth story rather than a dividend story. We want to double in size every year for the foreseeable future, which is entirely possible because we are coming off a small base,” McConnachie said.