Canadian-listed Platinum Group Metals announced that it has received a favourable award in a binding arbitration matter with Wesizwe Platinum in the operating company of the WBJV Project 1 Platinum Mine.

The arbitrator ruled in favour of Platinum Group on all matters in contention and has ordered that costs are to be paid by Wesizwe, said Platinum Group in a statement.

Failure to fund

The favourable award has determined that Africa Wide’s shareholding in the operating company Maseve Investments 11 to be reduced to 21.2766% as a result of Africa Wide’s failure to fund its $19.89 million (R213.14 million) share of an approved cash call in October 2013.

Based on the dilution formulae in the Maseve shareholders’ agreement, as confirmed in the arbitration, the company calculates that Wesizwe’s ownership in Maseve will be further diluted to 17.0985%.

This is as a result of Africa Wide’s failure to fund its $21.84 million (R234.6 million) share of a second approved cash call in February 2014, states Platinum Group.

Increase in shareholding

Platinum Group expects its shareholding, through its wholly owned subsidiary Platinum Group Metals RSA (PGM RSA) in Maseve, will increase to approximately 82.90% based on the two missed cash calls by Africa Wide.

Platinum Group is now able to move forward with plans for transferring diluted project points to a qualified black economic empowerment company and to move forward with its final project finance plans for the ongoing mine build at the WBJV Project 1 Platinum Mine.

“The arbitration in South Africa was handled in a very professional manner and in accordance with established legal rules. We are pleased that a strong and reliable framework for the resolution of commercial disputes is available to companies such as ours who are operating in South Africa,” commented Platinum Group CFO Frank Hallam in a company statement.

Cost recovery

Platinum Group said it will recover its costs from Africa Wide in accordance with the arbitration award.

PGM RSA will now move forward to implement the arbitration award and will utilise the ruling to effect the further dilution of Africa Wide to a 17.10% shareholding in Maseve based on the second cash call missed by Africa Wide in February 2014.

Platinum Group, based in Johannesburg and in Canada, is currently focused on the construction of the Project 1 Platinum Mine and the exploration and initial engineering on the newly discovered Waterberg platinum deposit in South Africa.