Platinum producer Northam Platinum has agreed 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 entails 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 says is critical to the producer’s growth strategy.
Critical Element“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 comments.
The extended agreement between Northam and Heraeus also provides for the renewal of the current offtake and toll refining agreements and represents a “landmark” initiative in which both parties will also support product development and optimisation.
Heraeus’s capital contribution will be fixed according to a progress schedule and will be paid in tranches.
In return, Northam will renew its toll refining agreement with Heraeus and HSA for a period of 20 years as well as sell up to 40% of its production
to Heraeus or HSA at market prices.
Dunne believes the various elements of the agreement underscore Northam’s plans for growth and expansion, will be underpinned by a conservative approach to capital expenditure, particularly in the current climate of metal price weakness.