Companies: RDG   

Platinum and nickel play Ridge Mining turned £590,000 annual losses into an £8.9 million profit after £7.4 million disposal profits.

The AIM-quoted company, which is focused on projects in South Africa’s Bushveld, also made £1.4 million profit on ‘finance income in 2007'. Steered by redoubtable platinum miner Terence Wilkinson, London-headquartered Ridge says the disposals were of ‘non-core’ assets, such as Fountain’s Ridge, and the company now awaits an imminent independent feasibility study on its key Sheba’s Ridge project, which boasts a potential resource of up to 1.4 million tonnes of low-grade nickel and 534,000 tonnes of copper.

Meanwhile, Ridge expects its 50 per cent-owned Blue Ridge project to start producing at an annual rate of 125,000 oz of platinum, palladium, rhodium and gold in the fourth quarter of this year. The company, which raised some £15 million in share placings last year and still had almost that much in cash at the end of December, suggests Blue Ridge, with a likely capital cost of £100 million, will have cash costs of $558 per ounce.

That is little more than a third of the current value of expected output (some of it hedged). The company says that implies net annual cash flow of £60 million, with pay back in less than two years and a net present value of £340 million, against a stock market tag of £108 million.

This, of course, is before putting a value on the much larger Sheba’s Ridge, which Ridge argues could produce 24,000 tonnes of nickel, 11,000 tonnes of copper and 390,000 oz of platinum group metals every year for 20 years. The company expects consultant SRK to deliver the feasibility report within two to three weeks and reckons the capital cost of Sheba’s Ridge, where development finance group IDC has 26 per cent and industry player Amplats holds 35 per cent, could be in the region of £500 million.

Ridge, where Chinese mining giant Zijin has a 20 per cent stake, hopes to sort out the Sheba funding next year. The company is still looking for a Black Economic Empowerment partner for Sheba’s Ridge and maintains that South Africa expects its present drastic cutbacks on electric power for industry to be over by 2012/13, roughly when it says Sheba’s Ridge should be ready to produce.

Ridge hopes soon to list in Johannesburg and Toronto, now seen as livelier than AIM. Its shares, at 118p, down from 162.5p last May, offer speculative attrtactions.

Save 50% off your first year’s subscription to Growth Company Investor magazine, and gain immediate access to all the recommendations online. Click here.

Ridge Mining	AIM	£29m	31.50p	-0.50p
Click here for interactive charting
Other company articles:
Ridge poised for production			22/09/2008
Reserve hike at Ridge			20/06/2008
Miners wait for the call			31/03/2008
Disposals lift Ridge Mining			17/03/2008
Disposals lift Ridge Mining			28/09/2007