PTM ‘pounding on doors’ for offtake deal ahead of financing $617m Waterberg

PLATINUM Group Metals CEO Frank Hallam said the company was “pounding on the doors” of four mining companies in search of a concentrate offtake agreement ahead of financing the firm’s proposed Waterberg Project.

The company is hoping to build a 420,000 ounce a year platinum group metals (PGM) mine requiring peak funding of $617m. Financing the project turns on securing offtake for concentrate produced at the mine. Impala Platinum, a 15% shareholder in the Waterberg Project, has first right of refusal on an offtake agreement but the sides are yet to agree.

Processing capacity in South Africa is expected to become more constrained once the IvanPlats mine is built. Tharisa, a Johannesburg-listed chrome and PGM producer has targeted new PGM production from Karo Platinum in Zimbabwe that could be processed in South Africa.

There’s also uncertainty on how Impala Platinum (Implats) will treat production from Royal Bafokeng Platinum (RBPlat) over time once it has completed the takeover of RBPlat. “There are many moving parts to this,” said Hallam in an interview on June 8.

“The first thing we need to do is to get an updated feasibility study first, then we can get an agreement on concentrate,” he said. Implats is thought to want additional equity in the Waterberg Project as part of the consideration for an offtake agreement.

Speaking at the Junior Indaba conference earlier this week, Hallam disclosed that PTM was in discussions to secure a $300m gold streaming agreement. This would be in addition to equity finance although it’s uncertain if Implats would follow its rights.

Said Hallam: “There’s no reason why Implats wouldn’t. It has invested a considerable sum so far in Waterberg”. In October, PTM struck an “in-principle” agreement with its partners to spend R380m preparing the Waterberg Project.

Implats CEO Nico Muller says PTM has fallen down its list of priorities given the successful taking of RBPlat and an interest in building out production in Zimbabwe. The diversification into battery metals production is also on the firm’s radar as a medium term ambition.

In addition to Implats, Japan’s Hanwa Company and JOGMEC hold 9.76% and 12.19% interests respectively in the Waterberg Project. PTM has 50.02% control of the project of which 37.05% is held directly.

Of some 19.5 million 4E ounces in probable and proven resources, about 63% consist of palladium, a metal that has fallen 30% in value over the last 12 months. Hallam said however the Waterberg Project’s feasibility was based on its low cost structure. “Bulk mining always wins out in the end,” he said.