PLATINUM Group Metals (PTM) has signed a cooperation agreement with Saudi Arabia that will explore construction of platinum group metals smelter and base metals refinery.
Should the parties agree to the venture it will provide concentrate offtake for PTM’s proposed Waterberg Project, a large palladium-dominant PGM mining prospect situated in South Africa’s Limpopo province.
The cooperation agreement is with Ajlan & Bros Mining and Metals which represents the interests of the Kingdom of Saudi Arabia. PTM said the cost of shipping the concentrate from South Africa to Saudi Arabia, where the smelter and refinery would be located, would be offset by lower taxation and infrastructural costs in the Kingdom compared to South Africa.
In terms of the agreement, PTM and Ajlan & Bros Mining and Metals will conduct a PGM concentrate market study and then a $4m definitive feasibility study. If successfully completed, the parties would then consider an option to form an unincorporated 50:50 joint venture.
Upon formation, the unincorporated joint venture would then be in a position to offer concentrate offtake terms to Waterberg JV Resources Ltd, the owner and operator of the Waterberg Project.
In addition to sourcing concentrate from Waterberg, the joint venture partners will also seek concentrate supply from other PGM projects globally that could be developed. PTM said there were many miners seeking smelting and refining capacity.
Frank Hallam, president and CEO of PTM said that the largest impediment to the development of the Waterberg Project was a concentrate offtake agreement among the existing South African based PGM smelters.
“We are pleased to work together with Ajlan to explore a smelting and refining facility in Saudi Arabia as a strategic alternative that may create an exciting path forward,” Hallam said. “Saudi Arabia offers an attractive investment climate that includes highly competitive energy costs, a lower taxation rate, and significant government financing incentives.”
PTM is required to secure a long-term permit from South Africa for the export of unrefined precious metals in concentrate. It was working with the South African government to “identify local beneficiation opportunities and to analyse the possible impact of exporting concentrate on the value chain”.
Said PTM: The company believes that construction and operation of the Waterberg Project mine represents a significant foreign direct investment into South Africa with benefits including the creation of over 1,300 direct jobs, infrastructure development, and foreign exchange earnings”.
The cooperation agreement with Saudi Arabia makes good on efforts Hallam undertook this year to find a potential alternative offtaker to Impala Platinum (Implats). Implats is building refining and smelting capacity and had taken a 15% stake in Waterberg in order to strategically influence concentrate sales from the project.
But it later said the construction of a new PGM miner, especially dominant in under pressure palladium, was far down on its list of priorities. Implats also passed up its option to take full control of the Waterberg Project.
In terms of an earlier feasibility study, now under review, Waterberg Project was to produce about 420,000 ounces of PGMs a year at a capital cost of just over $600m.