JOHANNESBURG (miningweekly.com) – The one-time Cinderella of South Africa's array of top-notch platinum-mining companies - the JSE-listed Northam - on Thursday put itself in pole position for the greatest spurt of platinum growth by giving the thumbs up to a carefully phased exploitation of the whopping 100-million-ounce Booysendal resource north of Lydenburg.

Mvelaphanda Resources (Mvela) executive manager commercial James Wellsted observed to Mining Weekly Online that the formerly lease-bound and zero-growth Northam had become a star turn.

"In the last upcycle, the most aggressive production growth was coming from Aquarius Platinum, which tended to outperform the other platinum producers through that phase.

"But now, although Aquarius has some growth through its deal with Ridge Mining, all Aquarius' other mines are nearing the end of their lives, so Aquarius no longer has the growth profile that it once had.

"At the same time, Impala Platinum, Anglo Platinum and Lonmin Platinum have pulled back on their capital projects and, of the platinum companies in which it is feasible for the average investor to invest, Northam is going to be the one that will show the most growth, by almost doubling its production in the next eight years," Wellsted said.

Northam empowerment partner Mvela intends unbundling and using the proceeds to cofund the development of the long-awaited Booysendal project, which requires a first-phase investment of R3-billion.

While other platinum projects were stalled in the wake of the global economic meltdown, Booysendal's outcropping over 14,5 km provided the flexibility for a modular approach, with the initial declines matching the availability of electricity and water.

"If there is significant economic improvement and Eskom does have capacity to supply more electricity, the third and fourth declines can then be brought into production quite fast," said Wellsted.

Northam CEO Glyn Lewis said that construction would begin in the first half of 2010, with the initial Booysendal production in 2013.

"It's quite a fast production build-up to 130 000oz/y in 2015, from the first decline. Electricity permitting, the second will start in 2013, and, by 2018, the second decline will be in full production.

"Over the next eight years, there will thus be a potential 85% increase from Northam, which no other platinum producer of stature is currently showing.

"We think that Northam is still not reflecting its net present value (NPV) and the average consensus is an NPV of R45 and upwards for Northam, which is trading at below R35," Wellsted added.

A highly regarded analyst who spoke to Mining Weekly Online on condition of anonymity, said that Booysendal's coming in at an operating cost of R410/t of ore mined was "a downgrade to my expectations".

Lewis told Mining Weekly Online that the R410/t was roughly half the cost of Northam's Zondereinde mine.

The analyst said that he had expected a greater volume than the 120 000 t milled a month in the first module, which would be repeated in the second.

"The costs also look like they are coming into the third quartile on the cost curve. My concern is that the expectations have been too high, given that this is an Anglo Platinum discard in a fairly difficult area. It was always going to be tougher than it was made out. Very few greenfield mining projects deliver according to expectations and grade is the one issue at Booysendal, and essential infrastructure like roads the other," he told Mining Weekly Online.

Mvela deputy chairperson Bernard van Rooyen countered, however, that Booysendal was the best project on the eastern limb of the Bushveld Complex and pointed out that Booysendal had also acquired 1,3 km of Anglo Platinum's adjoining Der Brochen.

Van Rooyen pointed out to Mining Weekly Online that this cross-boundary acquisition heightened the potential for an eventual pool-and-share arrangement between Booysendal and Der Brochen, south of the Helena fault.

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