Northam’s Booysendal hits stride with 160,000 oz/year run rate

Northam Platinum, CEO, Paul Dunne. Pic: Martin Rhodes

NORTHAM Platinum is expected to report a run-rate of about 160,000 ounces of platinum group metals (PGMs) from its Booysendal North UG2 project when it posts its full-year figures, scheduled for August 26.

The completion of the project’s ramp-up – started about two-and-a-half years ago – will take full-year group production capacity to roughly 460,000 oz which includes 300,000 oz from Zondereinde, the Western Bushveld mine Northam commissioned in the Nineties.

Paul Dunne, CEO of Northam Platinum, said it was “highly unusual” for a new mine to have been commissioned so quickly, but the bord and pillar mining method at Booysendal was “very conducive” to a quick ramp-up.

Northam’s long-term plan was to take production up to 800,000 oz/year of PGM production.

It plans to reach about 515,000 oz in two years with the development of the Booysendal North Merensky and deepening projects, but the additional 275,000 oz of output has only just been approved by Northam’s board.

This is the Booysendal Central and South development shafts, as well as an innovative overland conveyor system called Ropecon, which Dunne said ought to be finished in Northam’s 2021 financial year – a schedule that allows significant headroom to permit the project.

The total cost of building the ounces will be about R6bn to R7bn including additional processing capacity. This capital amount excludes the cost of buying the Everest South mine from Aquarius Platinum for R450m, which has been consolidated with Northam’s Booysendal property.

Northam had some R2.9bn in cash as of end-December and intended to fund the rest of the production expansion from cash flow. “So we still have that same money and a little bit – not much more – but a little bit, to give you an idea of where we are,” said Dunne.

Northam’s organic expansion means it doesn’t have to participate in any merger and acquisition activity in South Africa’s PGM industry, the structure of which has been changing by dint of the decline in the price of the rand basket of PGMs.

In addition to production cut-backs, lower prices have also encouraged Sibanye Gold to successfully bid for Aquarius Platinum and Rustenburg Platinum Mines, a business it is buying from Anglo American Platinum.

“Obviously, it [Sibanye] has changed the structure of the industry, there’s no question,” said Dunne. “You have got quite a heavyweight there coming to the table which was not there before; heavyweight in terms of a gold company printing a lot of money at the moment,” he said.

“I think the type of asset that they have targeted is not the type of asset that we are interested in frankly,” he said. “We made it clear even before the Sibanye entry that we’re not interested in the older UG2 dominated Western limb assets …. they’ve been extensively mined, they’ve become under-capitalised because of the nature of the last 10 years in the industry,” said Dunne.

“There’s no incentive price for replacement shafts and they’ve become also UG2 dominated which is a lower qualitative aspect to those assets,” said Dunne. The Booysendal project – which will comprise about 60% of Northam’s 800,000 oz/year production – is on the Eastern Limb of the Bushveld.