TORONTO-listed Platinum Group Metals (PTM) said it was considering building smelting and refining facilities for the metal outside South Africa.
In a third quarter update, CEO Frank Hallam said less expensive electricity and water may offset the cost of transporting metal concentrate from its proposed Waterberg mine.
The firm’s preferred option is to agree a concentrate offtake agreement with a company that had processing facilities, such as Impala Platinum which has a minority stake in the Waterberg project. It is also considering building smelting and refining in South Africa.
A ‘trade-off’ study indicated “savings on power and water substantially offset the cost of additional concentrate transportation,” said Hallam in the update. However, PTM would have to secure a formal government approval. “Further studies are underway,” he said.
Hallam said at the Joburg Indaba conference last month his company was “pounding on the doors” of four mining companies in search of a concentrate offtake agreement.
PTM envisages Waterberg producing 420,000 ounces a year in PGMs mine requiring peak funding of $617m. Financing the project turns on securing offtake for concentrate. Implats, a 15% shareholder in the Waterberg Project, has first right of refusal on an offtake agreement but the sides are yet to agree.
Nico Muller, CEO of Implats, told Miningmx in a recent interview that building new processing facilities was expensive.
“I caution that the economics of developing your own processing capacity is pretty significant. I do think it’s healthy that the companies are looking at different ways, it’s useful for the industry, but I see tough economic hurdles,” he said.
“Access to processing capacity is becoming a major barrier. We see it with Waterberg, with IvanPlats. The investment required in beneficiating the concentrate to final metal is a big issue.”
