Northam in R450m swoop on Everest mine

[miningmx.com] – NORTHAM Platinum is to buy the mothballed Everest mine from Aquarius Platinum (Aquarius) for R450m in a deal which will significantly increase Northam’s exposure to mechanised, shallow mining operations.

Once it has ramped up to expected full output of around 250,000 ounces a year of platinum group metals (pgm), within about four years, the Everest operation will add 50% to Northam’s current annual production and will “grow the group’s operations down the all-in cost curve” according to Northam CEO, Paul Dunne.

The Everest mine is contiguous with Northam’s Booysendal property in Mpumalanga province where Northam has so far developed a mine at Booysendal North which is currently ramping up to expected full production of 160,000 oz/year of pgm.

Everest has already developed a decline shaft system extending down to the boundary with Booysendal at point midway between what Northam now terms the Booysendal South and Booysendal Central sections of the overall Booysendal deposit. Those two sections contain an estimated pgm resource totalling 60 million ounces.

Aquarius had previously hoped to conclude a deal to buy the Booysendal South section from Northam and mine it from Everest, but the deal fell through because of the collapse in the platinum market and the Everest mine was mothballed.

Dunne told Miningmx that: “We have carried out a due diligence at the Everest mine and we are satisfied that the concentrator plant is in good condition and has been well-maintained. We estimate the replacement cost of that plant at between R1.5bn and R1.75bn.”

Dunne added: “Our strategy is to move as far as possible into shallow orebodies that can be mined using mechanised methods. There are not many of those around. This opportunity arose because the platinum mining industry is under intense stress but, in bad times good things can happen.

“Northam finds itself in a position to be able to take advantage of this because of the solid foundation built by my predecessor – Glyn Lewis – who successfully established the Booysendal North operation.”

Dunne took over from Lewis a year ago after what industry sources described as a “major bust-up ” with Terence Goodlace – the CEO of his former employer, Impala Platinum. Some industry insiders have described Dunne as an executive “with something to prove” because of this.

Dunne replied that: “I have nothing to prove. I am working for Northam shareholders and feel privileged to be running a company with good assets and great people.”

Northam currently produces 300,000 oz of pgm from its deep-level Zondereinde mine and should ramp-up to a steady-state annual rate of 160,000oz pgm from the Booysendal North mine from the end of this year. The Everest mine will add 250,000 oz/year to that annually once it reaches full output in about four to five years.

That means Northam will be producing around 710,000 oz of pgm annually but Dunne last year set an “aspirational target” for Northam to produce around 1 million oz of pgm annually by about 2020.

That would imply more deals to come, but Dunne will not be drawn on further developments “at this stage.”

He commented: “We now have to concentrate on completing this deal and putting the development from Everest into Booysendal South and Central in place.”