Junior miner Pan African Resources – until now only a gold producer – has broken ground at its Phoenix platinum project, beginning its adventure into the plati- num market.

The construction of the chrome tailings retreatment plant (CTRP) at Phoenix, in the North West, is on schedule and the procurement of major equipment has been completed.

Plant construction is scheduled to start in mid-May, with plant commissioning planned for October. The CTRP full production rate of 20 000 t/m is expected to be achieved in the first quarter of 2012.
Pan African CEO Jan Nelson reports that this is another key milestone in the process of Pan African becoming a platinum producer, in addition to the company already producing an estimated 100 000 oz of gold a year. “The company is satisfied with the progress on site, which is on schedule and within budget, and looks forward to reporting first production later this year,” says Nelson.

He adds that, initially, the project will be producing 20 000 t/m but, within 18 months of ramping the project up to full capacity, Pan African hopes to increase its production to 40 000 t/m.

“The aspect that attracted Pan African to this project is that it is a high-profit- ability project with low mining costs. At the moment, the company expects to be mining at a cost of $370/oz with a $30 reserve for contingencies; based on a basket platinum price of $1 600/oz, the project will show a profit margin of $1 100/oz,” says Nelson.

This is not the be-all and end-all of the company’s platinum ambitions.

Nelson reports that, once the company masters the extraction of platinum from chrome tailings, and increases the plant’s capacity, Pan African will look to double the resource at Phoenix to one-million tons within two years of ramping the project up into full production.

“In addition, the company is looking at a number of hard rock-based platinum projects, which are close to prefeasibility study stage and [have progressed beyond that stage]. So Phoenix definitely marks the entrance of the company into the platinum market and, with the expansion at Phoenix as well as other projects the company is considering, Pan African still has plans to grow its platinum portfolio significantly over the next five years,” concludes Nelson.

Nelson tells Mining Weekly that this marks the start of the company’s medium-term, midtier expansion strategy.

Asked to set out the company’s strategy in more detail, Nelson states that compa- nies can approach such expansion in two ways.

The first is through increasing the company’s overall production output; the second and most cost-effective method is by increasing the company’s profitability.

“The reason why the second option is attractive to a junior miner is that it is not necessarily laying out the capital for a new project and it provides the company with an opportunity to go back to the core function of the industry: mining at low cost with high profits,” says Nelson.

There is every indication that Pan African plans to follow this strategy in the medium term.

“It is important for the company to make the move up to midtier because then it is able to attract more investors to fund projects. However, Pan African will not grow its production base at the cost of profitability,” concludes Nelson.

To watch a video in which Pan African CEO Jan Nelson discussing the Phoenix platinum project, click here.

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