Southern Palladium raises A$19m in over-subscribed IPO ahead of JSE secondary listing

SOUTHERN Palladium, a platinum group metal (PGM) exploration company, raised A$19m (R212m) in an initial public offering which it will put towards its Bengwenyama project on the eastern limb of South Africa’s Bushveld Complex.

The company, which is to take a primary listing on the Australian Stock Exchange, will also have a secondary listing in Johannesburg. Some 38 million shares in the company are to be issued at a price of 50 Australian cents per share valuing the company at A$45m (R504m). The IPO was “heavily over-subscribed”, the company said.

Bengwenyama is rich in palladium and rhodium and is located south of the Modikwa PGM mine which is jointly owned by African Rainbow Minerals and Anglo American Platinum. Southern Palladium has a 70% stake in the Bengwenyama project with the balance held by Bengwenyama-ya-Maswazi, the local community.

According to a Southern Palladium announcement today, the company’s near term operational target is to convert the 15 million to 34 million ounce exploration target from an inferred resource to an indicated resource.

Once achieved, Southern Palladium plans to run a prefeasibility study over a two million oz reserve. It intends to apply for a mining licence about two years of the IPO.

“Along with its proximity to the world’s largest PGM mineral systems, the contiguous and near surface Bengwenyama project has the potential for future mine and processing development with favourable economics,” said Terence Goodlace, non-executive chairman of Southern Palladium.

Goodlace, who was previously CEO of Impala Platinum and currently sits on the boards of Gold Fields and Kumba Iron Ore (as chairman), is joined by former mining analyst Johan Odendaal. Prior to joining Southern Palladium, Odendaal co-founded Minxcon, a mining consulting company.

Odendaal said that a distinct advantage of Bengwenyama is that it was relatively shallow. “The characteristics of both UG2 and Merensky Reefs are likely to be typical of other Tier 1 PGM orebodies in the area,” he said in today’s announcement.

“In addition, we are excited by the fact that both reefs are near-surface which provides us with a distinct operational advantage compared to regional peers,” he said. Capital development and operating costs stood to be “… relatively low compared with many of the deeper underground mines within the Bushveld Complex,” it said.

Southern Palladium estimates a metal basket price for sales for the UG2 site is about $3,331 per oz while metal mined from the Merensky reef in the orebody would be about $1,994/oz, based on current prices. The UG2 has a resource grade of 7.7 grams/ton “which is comparatively high for the Eastern Limb,” the company said.