JOHANNESBURG (miningweekly.com) – Platinum producer Northam Platinum has agreed terms to extend a cooperation agreement with offtake partner Heraeus Deutschland and Heraeus South Africa (HSA), the terms of which will see Heraeus contributing some R300-million to expand the capacity of Northam’s existing smelter.

The R750-million expansion project entailed the construction of a 20 MW second furnace at the Zondereinde metallurgical complex, in Limpopo, by the end of 2017, which Northam CEO Paul Dunne said was critical to the producer’s growth strategy.

“The addition of a second furnace at the Zondereinde division is a critical element of Northam’s strategic growth, as it supports the expansion programme at Booysendal and the increased upper group two mining at Zondereinde.

“It will immediately raise the group’s processing capacity to more than one-million platinum group metal (PGM) ounces. In addition, it reduces operational risk, while providing headroom for third-party concentrate purchases and toll treatment arrangements,” he commented.

The extended agreement between Northam and Heraeus also provided for the renewal of the current offtake and toll refining agreements and represented a “landmark” initiative in which both parties would also support product development and optimisation.

Heraeus’s capital contribution would be fixed according to a progress schedule and paid in tranches.

In return, Northam would renew its toll refining agreement with Heraeus and HSA for a period of 20 years and undertook to sell up to 40% of its production
to Heraeus or HSA at market prices.

Dunne believed the various elements of the agreement underscored Northam’s plans for growth and expansion, underpinned by a conservative approach to capital expenditure, particularly in the current climate of metal price weakness.

“This development is significant, not only in that it further cements our company's already long-standing business partnership, but is an expression of confidence in PGMs and their markets, Northam’s performance to date, and our expansion strategy,” he remarked.