PLATINUM Group Metals (PTM) today published an updated definitive feasibility study for its 50.02% controlled Waterberg Joint Venture, a project that will produce PGMs, including palladium, as well as base metals.
The Canadian mineral developer said the updated study increased the project’s mineral reserves and ‘minimised’ its capital cost to $946m. A DFS in 2019 put a price tag of $874m on the project. Costs were also lowered while orebody continuity was improved.
The project, situated in South Africa’s Limpopo province, is scoped for annual steady state average concentrate production of 353,208 ounces and peak annual production of 432,950 oz. The life of mine has been increased to 54 years from 45 years previously in line with updated proven and inferred mineral reserves of 23.4 million oz at an average grade of 2.96 grams per ton of 4E.
“The primary objectives of the 2024 DFS were to update and minimise capital and operating costs, and to simplify the construction, ramp up and operating profile of the Waterberg Mine,” said Frank Hallam, President and CEO of PTM.
An agreement to smelt and refine concentrate from the proposed project, which PTM said today it preferred to sign with a South African partner, remains a material obstacle. Impala Platinum (Implats), which is a 15% shareholder in the Waterberg JV, has the right of first refusal over such an agreement but it has been reticent to progress it.
Nico Muller, CEO of Implats, said last month he doubted whether a new PGM mine would be developed in South African owing to the uncertain demand outlook for the metals. The view was echoed by Paul Dunne, CEO of Northam Holdings.
“Current prices remove the incentive price for new mines which will see a depletion of South Africa’s resource base. The damage has been done and depletion is inevitable,” said Dunne at his firm’s full year results announcement in August.
Clearly undeterred PTM said: “The company is in discussion with several South African smelter operators, including Implats, with a view to establishing formal concentrate offtake arrangements for the Waterberg Project. Although discussions continue, to date, binding concentrate offtake terms have not been agreed”.
Another option for PTM is to sign a supply agreement with Saudi Arabia’s Ajlan & Bros Mining and Metals with which PTM signed a cooperation agreement in December last year.
In terms of the agreement, PTM would ship the concentrate to smelting and refining facilities in Saudi Arabia with the freight cost offset by lower taxation and infrastructural costs in the Kingdom compared to South Africa.
First, however, PTM would have to secure an export licence from the South African government to ship the concentrate. In the past, the Government has been anxious to process metals within the country’s borders.
The PGM sector has been under enormous pressure this year but a jump in metal prices, especially palladium has given equities a lift. Shares in Implats are 20% higher while Sibanye-Stillwater has posted a 17% share price gain since last week.
“I think we are very close to a turn in the palladium market,” said Neal Froneman, CEO of Sibanye-Stillwater last week. Palladium gained another 1.78% on Monday to trade at $1,076.80/oz – a gain of 20% in the last three months.
