Despite raising R1.5 billion in loans from shareholders this year and swinging into a profit for the half-year period to June, Wesizwe Platinum is battling uncertainty emanating from a delay in securing a letter of support for additional funding, casting doubt on the company’s going concern status.
Wesizwe Platinum has swung from a 59.63 cents headline loss per share in its 2023 half-year period to a 7.36 cents headline earnings per share profitability this year.
Despite having commitments amounting to R237.5 million in total commitments as at the end of the period under review compared to R417m last year, including capital commitments amounting to R237.3m, Wesizwe’s total comprehensive earnings for the six months under review amounted to R119.7m.
This compares to the company’s comprehensive loss of R981.5m a year earlier.
However, Wesizwe is battling uncertainty regarding its going concern status. It said there was “currently a delay in the approval of the letter of support” above its present-day approved funding cap of $1.5bn
“Approval beyond the current cap limit of $1.5bn requires approvals from the China National Development and Reform Committee,” said Wesizwe.
“The extent of further funding is dependent on the current updated funding application report for Bakubung Project to achieve Operational Completion as well as approval by the China National Development Reform Committee (NDRC) for JHK, the major shareholder in the company, to provide such further funding.”
The company opted not to declare a half-year dividend for the period to June 2024. Shares in Wesizwe Platinum slumped by 5.66% to R0.50 in afternoon trade on the JSE yesterday, negating its positive run in the past six months..
Wesizwe has attributed the delay in securing a letter of support for additional funding has been attributed to ongoing processes by JHK and Jinchuan Group to review the company’s application for additional funding.
JHK had however indicated its commitment to continue to fund the financial requirements of Wesizwe Platinum. The South African miner had already received further funding from JHK amounting to $27.9m “to meet its operational cash” requirements.
“JHK has undertaken to extend the settlement dates of loans amounting to $156m currently due on 31 December 2024, with a further three years to 31 December 2027. To date, the majority shareholder has invested significant capital in the (Wesizwe) BPM Project and has provided all funding necessary to achieve operational completion per the shareholder subscription agreement,” noted Wesizwe.
This year, Wesizwe has incurred R974m in finance expenses while available cash resources in the company as of the reporting date amounted to R105.6m compared to R126.8m in June last year.
The currently available cash resources are thus “insufficient, based on current budgets, to conduct operations and complete the development of the BPM Project until the commencement of production” in the third quarter of next year.
Wesizwe’s net current liabilities stand at R2.7bn.
All this created “material uncertainty that may cast significant doubt on the Group’s ability to continue as a going concern” as Wesizwe may be unable “to realise its assets and discharge” its liabilities.
“The ability of the Group to continue as a going concern is dependent on the support of the majority shareholder Jinchuan (Hong Kong) Resources Limited (JHK) covering future development costs, commitments, CDB loan repayments and the majority shareholder not calling on the current shareholder's loans,” it said.
Nonetheless, the directors of Wesizwe are positive that there are reasonable grounds to believe that the company will successfully obtain the required funding and that the Group will have sufficient funds to meet its obligations as and when they fall due.
BUSINESS REPORT