Southern Palladium has announced the completion of a pre-feasibility study for its 70% owned Bengwenyama platinum group metals (PGM) project and has outlined its viability centred on an estimated 29 years life of mine and total mine production of 45 million tons.
As at the end of last month, Southern Palladium - which appointed Roger Baxter as executive chairman - had about A$5.43 million (R63.6 million) in cash, excluding funds held by its other 70% subsidiary, Miracle Upon Miracle Investments.
Yesterday, Southern Palladium said pre-feasibility studies for Bengwenyama “indicate very attractive economics justifying development” of the project.
“The life of mine from the UG2 reef alone is estimated at 29 years with a total of approximately 45 million tons mined for an average annual steady state saleable product of 400 000 ounces 6E PGM with cash costs firmly at the low end of the global cost curve a result of high delivered grade and shallow mining depths,” said the company.
Southern Palladium views the Bengwenyama project as strategically situated amongst other Tier 1 operations along South Africa’s mineral plus Bushveld Eastern Limb. This location boasts of all the necessary infrastructure connectivity such as water, power, roads, with services such as skilled labour force already in place.
The pre-feasibility study for Bengwenyama has now detailed financial indicators that include a net lifetime value of $1 billion based on conservative long term commodity price assumptions of about $1 200 per ounce for platinum, $1 100 per ounce for palladium and $6 200 per ounce for rhodium.
The study also shows the project having a post-tax capital payback of 3.5 years from first concentrate production and a life of mine earnings before interest, tax, depreciation and amortisation of $5.6bn.
Other indicators for the project include viable development of a 2.4m tons per year UG2 reef two decline underground mining operation with mill feed head grade of 6.10 grams per ton and a conventional flotation, and spiral plant to deliver a marketable PGM concentrate with an 85% recovery for PGM and 42% chrome concentrate for sale to export markets.
The company estimates that the initial capital requirement for Bengwenyama amounts to $385m, including a 15% contingency, yielding a low life of mine cash cost operation of about $644 per 6E ounce.
It also said Bengwenyama would have a life of mine all in-sustaining cost of $800 per 6E ounce and high life of mine Ebitda margins of around 50%.
“Mine scheduling has targeted high grades initially from the shallow area of the UG2 reef with run of mine (RoM) at an average feed grade over the first 10 years of 6.3 grammes per tonne. Average processing recovery of 85% over the life of mine from testwork demonstrates amenability to conventional processing technology adopted in the South African platinum industry,” said the company.
BUSINESS REPORT