[miningmx.com] — In a deal which could become a useful case study for the merits of consolidation in South Africa’s platinum industry, Brian Gilbertson’sPlatmin has acquired the property adjacent to its Tuschenkomst operating pit on the western limb of the Bushveld Complex.
Gilbertson, who is the chairperson of Platmin, announced on Wednesday that the company had bought the western portion of the Sedibelo platinum group metals (pgm) project (Sedibelo West) from its empowerment partner, the Bakgatla-Ba-Kgafela tribe, for $75m.
In essence, the deal would allow Platmin to expand its mining pit across the farm boundary separating Tuschenkomst and the Sedibelo project on Wilgespruit.
“We’ll just mine through the farm boundary into the new area; this is what makes this deal such good sense,’ said Platmin CEO Tom Dale.
The deal would be paid for in cash.
Sedibelo West has an inferred resource of 5.99 million ounces of pgm. Barrick Platinum, which previously owned 10% of Sedibelo, had sold this stake to the Bakgatla who already had the remaining 90%. Barrick previously concluded a banking feasibility study on the project.
According to Dale, the deal would allow for further consolidation as the farm adjacent to the east of the Sedibelo project, Magazynskraal, is jointly owned by Pallinghurst (40%; Platmin’s major shareholder), the Bakgatla and Anglo Platinum.
Platmin has also bought an effective 50% stake in an infrastructure vehicle, which has acquired all of Barrick’s strategically important infrastructure rights and assets, including power and water rights.
The Bakgatla and Ivy Lane Capital (a Pallinghurst-related entity) would own the other 50% of the vehicle.
“In mining efficiency comes from consolidation, not fragmentation,’ said Gilbertson. “Where nature created one ore body, there should only be one mine.
“The acquisition of Sedibelo West will create mining flexibility and extend the life of our mine. Importantly, Platmin’s concentrator and other infrastructure will be used to process more pgm-bearing reef, making this one of the most productive acquisitions in the industry.’
FIRST PRIORITIES
Regardless of the new mining opportunities presented by the acquisition, Platmin has not yet achieved break-even at the existing operations of the Tuschenkomst pit.
When Platmin reported quarterly figures to end-September in November, Dale said annual output would be between 60,000oz and 65,000oz. The pit – designed for annual output of 250,000oz – was still in ramp-up mode, with output of 125,000oz predicted for 2011.
Dale said Platmin had made half a dozen drastic interventions since the beginning of 2010 to speed up production, which included a new management team for the mining contractor as well as achieving three month’s ore on the run-of-mine stockpiles.
“The principal production challenge remaining is to strip adequate volumes of waste in the right areas and sequence in order to expose healthy volumes of the silicate reefs and the high grade UG2 reef which lies at the bottom of the reef succession,’ Dale said in November.
Discussions with the department of mineral resources to amend the environmental management plan was also continuing, said Dale.
Dale would like to see the pit turned into a dam once mining activities ceased. According to the existing EMP, the pit would be backfilled.
