Eastern Platinum raises $348 million

With platinum prices expected to climb further in 2011, Canada’s biggest platinum producer had little trouble raising $348 million to help pay for Phase 1 of its Eastern Limb development plan in South Africa. 

In an equity financing completed today, a syndicate of underwriters led by Canaccord Genuity and UBS Securities acquired 224.3 million shares of Eastern Platinum (ELR-T, ELR-L) at a price of $1.55 per share.

The Vancouver-based company has traded in a range of 87¢-$1.98 per share over the last year in Toronto. At presstime Eastern Platinum’s shares were trading at $1.80 apiece. Following the financing, Eastern Platinum has 907.6 million shares outstanding.

The company’s properties are on the western and eastern limbs of the Bushveld Complex, a geological area of South Africa that produces over 70% of the world’s platinum group metals.

In Phase I of its Eastern Limb development plan, Eastern Platinum plans to develop the Mareesburg open-pit mine and build a new 90,000 tonne per month concentrator at its Kennedy’s Vale site.

As the Mareesburg open pit is depleted, production from the eastern limb will be supplemented with the development of the Spitzkop underground mine in Phase II.

Additional future production also will be available by developing the Mareesburg underground mine and the De Goedegevagting underground mine in Phase III. In Phase IV, Kennedy’s Vale mine has the potential to produce additional PGMs. Two 1,000-metre vertical shafts are already in place at Kennedy’s Vale.

Platinum, a silvery-white metal, is resistant to chemical attack, has excellent high-temperature characteristics and stable electrical properties, all of which are ideal for the production of industrial applications.

Prices for the metal are forecast to rise further in 2011. In the month of November prices swung between a high of US$1,780.00 per oz. to a low of US$1,639.50 per oz, averaging US$1,696.25. In December the average platinum price rose to US$1,713.12 per oz., according to figures from Platinum Matthey.

Jeffrey Christian of the CPM Group in New York forecasts the quarterly average price for platinum could rise another 10% to about US$1,800 per oz. between now and the second quarter of 2011, before coming off in the second half of the year due to seasonal weakness typical in the spring months. (The auto industry tends to scale back production in the third quarter while it moves to the next model year so it requires less PGM metals.)

“In the precious metals complex, we like silver more than gold and we like platinum more than silver and palladium more than platinum,” Christian said in a telephone interview in late December. “We expect platinum and palladium to remain strong for the full year.”