LESEGO PLATINUMUNEARTHING VALUE

Lesego Platinum

Perhaps the defining characteristic of the Lesego Platinum Project is their quest to find value where other people have missed it. This can be seen in everything they do, starting with the very selection of the mining site.

The Lesego Platinum Project will be exploiting a 40 million ounce deposit, or 204 million tons of platinum group metals at a grade of 5.95 grams per ton. Once the project goes into full operation CEO Dorian Wrigley expects the site to turn over 250,000 to 300,000 tons a month.

That’s 250,000 to 300,000 tons a month of ore containing

a metal rarer than gold and, many would argue, more useful, with platinum being used extensively in the electronics, chemical, pharmaceutical, automobile and petroleum refining industries.

Yet initially the mining site was seen as not worth the effort. The Lesego Platinum Project and its backers, such as niche investment group Umbono Capital

and Village Main Reef, were able to initiate the project due to the government’s introduction of “use it or lose it” legislation, that required mining companies to begin actually exploiting the resources on land they held if they wanted to maintain the mining rights.

“We were in the right place at the right time to take

Lesego Platinum

advantage,” Wrigley admits. “Back then we thought the site had high grade ore but it was deep. Estimates suggested the platinum was at around 2,000 metres below surface, and even today that’s considered a long way down.”

However, further research revealed that the site was a much better prospect than previously thought.

“We spent $5 million running seismic tests and drilling holes and realised that this was actually a 1,200 metre project, so it started looking a lot more attractive,” Wrigley explains. “Then on the back of that we started a full feasibility study in 2008.”

Of course these days saying “We began our enterprise in 2008” will cause anyone listening to physically wince, as it was perfectly timed to see the global economy take a severe

beating. But the Lesego Project didn’t back down.“Back then people weren’t funding existing platinum

producers, let alone new projects,” Wrigley remembers. “So we pitched the project to the Industrial Development Corporation of Southern Africa (“IDC”). In exchange for 150 million Rand the IDC earned a 22% stake in the project to fund the feasibility study. We’re at the tail end of that feasibility period now and we’ve been able to prove the resource starts at a very shallow 350 metres!”

For those who are counting – that’s almost 6 times shallower than the original estimates of the project’s depth. And while starting out in 2008 might seem like the worst possible luck, in actual fact the project’s timing seems to have helped it dodge a bullet.

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“We were in the right place at the right time to take advantage.” CEO Dorian Wrigley

Lesego Platinum

Playing the Long Game“Because we’re not a producer yet we haven’t gone

through the turmoil and ups and downs that our colleagues have been going through in the market,” Wrigley says. “We plan to go into production at a time when electricity supplies aren’t a problem and Pt prices have recovered. So we haven’t suffered any of the market force conditions our peers have suffered.”

The biggest challenge the project is likely to face is timing on raising the capital to bring it into production.

“Our dilemma is whether to look for funders now who are prepared to invest a billion dollars into a very exciting Pt mine, that will be producing when the world needs platinum, or to wait until the demand for platinum increases before doing so. We don’t need the whole billion in equity, but that’s the level of financing we need to bring the project into production.”

The long term nature of the project brings new challenges with it, but also new opportunities. This brings us back to the main characteristic of the Lesego Platinum Project: Its ability to see value where others haven’t.

“A large part of what motivated us to get into this business was to see if we could do mining differently in South Africa. The heritage of the mining industry here isn’t one we’re proud of,” Wrigley admits. “Migrant labour, led to the destruction of family units as fathers were taken from their homes. Working that way doesn’t create a healthy community.”

It’s not a problem that’s unique to South Africa. Across the world mines have been set up to take whatever value possible from the land, then abandoned the local community once the resources run out.

“We saw this and thought, ‘There must be a way of doing this differently.’ So when we started out we made it our aim to build the community around the mine, not just have this big operation on their doorstep without them seeing any benefits from it,” Wrigley says.

With it still being some time before the Lesego Project goes into production, the company has a unique opportunity. Skill shortages are a problem for much of the mining industry, in South Africa as much as anywhere else. Often this problem is solved by bringing in migrant workers from elsewhere in the country or further afield, but Lesego has a unique opportunity to help build a skill base, beyond its own requirements, of potential employees from school level onwards.

“Right now we’re working with schools in the local community,” Wrigley tells us. “We have an incredible opportunity to encourage the students. We’re directing them towards the right kind of skills, engineering, geology, as well as practical hands-on artisan training. We have an opportunity to help the community develop the very skills that will be needed to build the workforce we’ll be using for the next 50 years.”

Doing It DifferentlyIt’s an approach that means that the most cost-effective,

best practice decision also happens to be the ethical one.“If you arrange it so that local labour is also the most

skilled, then it makes sense to use them. So we’re giving youth a vision that will help them over the next 45 years,” Wrigley points out.

Lesego Platinum

Their efforts go further than simply teaching local people the skills needed to work in a platinum mine however. The project is working closely with three of the closest local communities, partnering with schools and putting in place sustainable measures that hopefully will keep the area growing long after the last ounce of platinum has been taken out of the mine.

“Our social and labour plan focuses on business development and enterprise development in a way that is not focused on the mine,” Wrigley explains. “Because eventually the mine will shut down we want to create an environment and an economy that will last a lot longer than that.”

This is an approach that goes back to the very beginning of the Lesego Platinum Project. Umbono opened the project up with two Broad Based Empowerment trusts - a leadership development trust and an educational trust. Ultimately, the project will help find a resource far more valuable even than platinum.

“Our trusts focus on taking kids out of the most obscure township schools. We’re looking for the really brilliant ones who will flourish if they get a world class education. We’re looking for the Einsteins in small rural schools. Schools that are trying their best but are unable to provide the degree of stimulation to truly stretch some of these brilliant kids.” Wrigley says. “We mentor them and we’ve seen them go into top universities like Harvard as well as many of the local universities in South Africa. So that’s the ethos with which we started this whole thing and we’d like to see it continue within the communities we’ve been influencing.”

Lesego Platinumwww.umbono.co.zawww.villagemainreef.co.za+27 11 484 5005

Written by Chris Farnell

www.littlegatepublishing.