JOHANNESBURG (miningweekly.com) – Metals producer Northam Platinum is keeping its ear to the ground in the hopes of acquiring low-cost, shallow, mechanised mining operations that will support its overarching strategic aim of descending the operational cost curve.

“Some clear opportunities [are] emerging in the platinum sector, which [we] are exploring and progressing in terms of [our] strategic review process.

“By diversifying [our] production assets, [we] should be in a position to reduce [our] operating risk, a welcome feature for the group, which has been a ‘single asset’ operator for many years,” CEO Paul Dunne told a shareholder briefing in Johannesburg on Friday.

Through this acquisitive process, the JSE-listed miner believed it could, over time, reduce its risk exposure by focusing future growth on mechanised bord-and-pillar mining methods.

This approach, it argued, was neither labour- nor capital-intensive and had historically delivered materially better safety statistics.

“We will continue to assess opportunities that move us down the cost curve,” commented Dunne.

Northam announced earlier this month that it had bought Aquarius Platinum’s idled Everest platinum mine in a R450-million deal that could potentially unlock roughly 60-million platinum group metal ounces that lay adjacent to its existing Booysendal North mine.

Noting on Friday that the company would rename the acquired operation Booysendal South, Dunne outlined that the deal, which would be funded from current facilities, saw the company securing a 250 000 t/m on-site concentrator, power and water allocations, as well as a tailings facility.

He emphasised that the operation would allow significant capital efficiencies that tied in strongly with its cost reduction objective.

“We expect to spend around R2-billion over the next four to five years at Booysendal South in the development of a 250 000 oz/y producing asset.

“To give you a feel of capital efficiency offered by this project, at Booysendal North, we will have spent R4.5-billion by the end of the year to develop a 60 000 oz/y operation. One must also remember the speed at which we plan to develop the mine; it’s going to be done in a very short time,” he noted.

Dunne added that the project’s R2-billion development pricetag would largely be funded on a “pay-as-you-go” basis, as all development was on-reef and the remaining orebody could be simultaneously extracted from “easy “ access areas.

Northam expected to complete the project’s bankable feasibility study in August.

Meanwhile, Dunne stated that less focus on the nearby Zondereinde mine’s geologically complex reserves of Merensky and upper group two (UG2) reefs would enable Northam to become more competitive.

He believed the mine was relatively well placed by virtue of having predeveloped, destressed, relatively high-grade UG2 reef and underexploited, more conformable Merensky reef accessible from its developing sub-decline shaft system.

“Steady” progress continued to be made with extending the decline section of the mine, with the completion of Level 18 to extend its life to over 20 years.

“Management estimates that the operation should be able to deliver around 300 000 oz of platinum-group metals a year over this period,” he noted, adding, however, that metal prices were likely to remain subdued in the near-term.

Looking to labour relations, Northam’s two-year wage agreement with the National Union of Mineworkers would expire at the end of June and negotiations were expected to start before the end of the financial year.

Northam swung to a profit attributable to shareholders of R354.1-million for the six months ended December 31, after posting a loss of R92.7-million in the first half of the prior year.