SHARES in Southern Palladium raced up 30% on its debut in Australia today and was last trading at 64 Australian cents a share.
It had raised A$19m as part of an IPO which was over-subscribed at a price of 50 Australian cents per share. The company is also due to debut on the Johannesburg Stock Exchange in an inward secondary listing.
“With the funding from its IPO, Southern Palladium will now embark on an extensive drill program, moving towards further resource definition and a pre-feasibility study,” said Johan Odendaal, MD of Southern Palladium in a statement.
“Longer-term, the near-surface geology of the site combined with surrounding infrastructure support our view that Bengwenyama has the potential to develop into a world class PGM asset,” he said.
Southern Palladium’s asset is the Bengwenyama deposit which is rich in palladium and rhodium and is located south of the Modikwa PGM mine 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.
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 last month.
Goodlace, who was previously CEO of Impala Platinum and currently sits on the boards of Gold Fields and Kumba Iron Ore (as chairman).
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.