Ridge Mining has unlocked pgm hedges to the tune of $54 million, which will be put towards its Blue Ridge platinum mine operations, it was revealed yesterday (25th February).

The company, which is currently under offer from Aquarius Platinum, has realised the surpluses in order to reduce the project's borrowings and to offer additional working capital.

The strategy is key to the ramping up of production at the mine, which is expected to be 75,000 oz pgm in concentrate this year and 150,000 oz pgm per year by 2011, with 50 per cent attributable to Ridge in both cases.

CEO Terence Wilkinson said in a statement to shareholders: "We put our hedging in place at a time when metal prices were close to their historic high and feel that in the present market for bank lending it is wise to use the value in our hedge to reduce significantly project borrowings and to fund working capital in the short term."

The project, which is a joint venture between Ridge and Imbani Platinum, has been affected by delays in the commissioning of its concentrator plant, which have played a major part in the company's decision to close the hedge position.

As part of the strategy, Ridge subsidiary Blue Ridge Platinum intends to repay its 'senior facility' of $49 million, although its mezzanine debt of $13.7 million will remain in place.

However, Mr Wilkinson also warned that a further $40 million worth of working capital may be necessary "until the project reaches steady state and generates positive cashflow".

This figure will be met by "a combination of debt and equity from the project partners", the statement added.

Sources:

Ridge Mining says Blue Ridge closed out hedge (25/02/09)
http://www.miningweekly.com/article/ridge-mining-says-blue-ridge-closed-out-hedge-2009-02-25

Ridge unlocks USD 54m from pgm hedges (25/02/09)
http://www.mineweb.co.za/mineweb/view/mineweb/en/page35?oid=79136&sn=Detail

PLATTS: Blue Ridge Platinum closes out PGMs hedge position to raise funds (25/02/09)