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SA power woes add $40m to Jubilee's capex
Allan Seccombe
Posted: Tue, 05 Feb 2008
[miningmx.com] -- JUBILEE Platinum will install power generators at its Tjate project in South Africa to deal with the electricity shortage in the country, adding up to $40m to the capital costs but leaving forecast production unchanged at 335,000 oz of PGMs, said CEO Colin Bird.
Power utility Eskom has been unable to keep an uninterrupted supply of power to the country, causing mines to halt production on 25 January. The mining sector has committed to reducing power consumption by 10%.
Development companies are concerned about the potential impact on their projects, with onsite power generation now included in bankable studies and tweaks made to mining plans.
The decision to install an estimated 25 megawatts of generating capacity will lift the capital bill on developing at mine at Tjate from $470m to about $510m and add about $10 to operating costs that had been
forecast at $45/tonne. The net present value of the project will drop to about $750m from $830m.
“It’s not a train smash. It’s just bloody unfortunate,” Bird told Miningmx. “We will still produce the same amount of platinum, but we could just not possibly depend on Eskom. If your project can’t stand own-power generation then you shouldn’t be doing it.”
Bird said that in most developing
countries or very large countries like Australia mines had to provide their own power anyway. “Most of the countries you go to now there’s no hope of reticulation or getting onto the national grids.”
Jubilee has already upped the costing on the project by 17.5% from its June 6 scoping study to accomodate a larger shaft to haul 200,000 tonnes of ore a months, 50,000 tonnes more than in the early study.
Bird argued the project wasn’t sensitive to capex fluctuations but the price of platinum, which has shot to record highs near $1,800/oz because of supply concerns in a market tipping into deficit because of production issues in South Africa, the world’s largest platinum producer.
“The margin is there to stand it. If we were in an over supply of platinum we’d be in big trouble,” Bird said.
The platinum market is expected to record a deficit of 215,000 oz this year. “We are in serious undersupply in this industry,” he said.
The Tjate
property lies down dip of Impala Platinum’s Marula mine and Anglo Platinum’s Twickenham. Jubilee is conducting a $20m bankable study into the project and will complete the exercise by October or November this year.
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