Johannesburg - Patrice Motsepe had "lost R500 million" on the Modikwa platinum mine, the mining magnate said on Friday.
Commenting on the mine, which appeared to be a R688 million windfall for Motsepe following the merger of his African Rainbow Minerals (ARM) with Avmin in April, Motsepe said: "We lost R500 million there; speak to André."
André Wilkens, the chief executive of ARM Platinum, said the current mine plan did not factor in paying back Motsepe's personal loans to the company.
ARM Platinum operates the 50:50 joint venture between Anglo American Platinum (Angloplat) and the ARM Consortium. ARM holds 83 percent of this empowerment consortium while two section 21 companies hold 17 percent on behalf of the Maandagshoek farm communities in Limpopo.
It took two years to get the contract between Angloplat and ARM signed, Wilkens explained, and without an agreement, the banks would not advance the project any money.
Motsepe therefore put in R300 million initially after selling ARMgold shares and then a further R200 million to give the banks comfort for the R700 million loan needed for the empowerment partners' contribution to the capital expenditure for the project.
Under the 2001 deal between Motsepe and Angloplat, the two would share the expenses of developing the mine, estimated at the time to be R1.6 billion.
Motsepe was only supposed to put in R100 million and the other R650 million would be arranged through BoE Merchant Bank.
By the time ARM merged with Avmin the venture was valued at R3.975 billion. A 41.5 percent slice of this is R1.65 billion, worked out by adding the 17 million Avmin shares at R50 a share plus the R800 million in debt that Modikwa was carrying.
According to an analyst's report at the time of the Avmin merger, R2.08 billion in 2003 terms had been spent on the project.
The Motsepe Family Trust holds 43 percent of ARM.
Interest payments still outstanding on the loan before the capital amount would start to be paid off were about R600 million.
Wilkens said Motsepe had said he had lost the money because he might never recover it.
But the mine was looking better after poor productivity from unskilled labour and unanticipated geological complexities slowed ramp-up to full production by more than a year.
Wilkens said the ARM team might have thought better of it if they had known beforehand what they were getting into.
ARM shares dipped 73c to close at R36.52 on Friday.