While focusing on the development of its Waterberg project, located on the Northern Limb of the Bushveld Complex in South Africa, mining company Platinum Group Metals is advancing discussions and related agreements concerning the possible offtake of mineral products.

Before project financing and a construction decision can be undertaken, arrangements will be required for project concentrate offtake or processing.

Platinum Group Metals reports that obtaining reasonable terms for offtake of Waterberg project concentrate from an existing smelter or refinery in South Africa is considered the preferred option and that discussions with such parties are ongoing.

In addition to seeking reasonable terms for Waterberg concentrate offtake from an existing smelter or refinery in South Africa, the company notes that it is considering alternative offtake options.

Platinum Group Metals intends for the Waterberg project to be a fully mechanised, shallow, decline accessed palladium, platinum, gold and rhodium- (4E-) producing mine, with ambitions for the mine to be one of the larger and lower cost underground platinum group metal (PGM) mines, globally.

The Waterberg project was discovered by Platinum Group Metals and is being jointly developed under the Waterberg Joint Venture (JV) with PGMs major Impala Platinum, black economic-empowerment partner Mnombo Wethu Consultants, Japanese government organisation Japan Organisation for Metals and Energy Security (Jogmec) and Japan-based global trading company Hanwa.

Thus far, the Waterberg JV has approved, in principle, the pre-construction work programme for the project, which includes about $21-million to be invested into the project over a 23-month period that culminates in August 2024.

The work programme is focussed on project infrastructure, including establishing initial road access, water supply, essential site facilities, a first phase accommodation lodge, a site construction power supply from State utility Eskom and the advancement of the Waterberg social and labour plan.

The Waterberg JV is also conducting work to update a 2019 version of the definitive feasibility study (DFS), which includes a review of the project’s cut-off grades, mining methods, infrastructure plans, scheduling, concentrate offtake, dry stack tailings, costing and other potential revisions to the project's financial model.

From the work programme, an initial budget – which has been completed as planned – of about $2.5-million was approved for expenditure by March 31, including for items such as 32 infill boreholes, several geotechnical boreholes and an exploration borehole.

Going forward, a Stage 2 work budget of $3.6-million was approved on March 24.

The Stage 2 budget programme, currently underway, includes updating the DFS’s engineering, pre-construction engineering, and electrical power supply engineering and the permitting and licensing of construction aggregate borrow pits identified near the Waterberg mine site.

The initial budget and the Stage 2 budget are being funded pro rata by the JV partners, while subsequent expenditures in accordance with the work programme, are subject to expected approvals for the next sequential time period starting September 1.

Platinum Group Metals continues to work closely with regional and local communities and their leadership on mine development plans to achieve the best outcomes and value to all stakeholders.

Meanwhile, the 2019 DFS states that additional smelting capacity may need to be constructed in the local PGMs industry to be able to treat the flotation concentrate from Waterberg and the other potential platinum reef miners.

As such, Platinum Group Metals is assessing the economic feasibility of constructing a matte furnace and base metal refinery in South Africa, either with or without partners, to process concentrate from the Waterberg project.

A matte furnace and base metal refinery are envisioned as a separate business from Waterberg JV that could provide fair market concentrate offtake terms to the Waterberg JV and possibly to other local PGM miners.

In this regard, Platinum Group Metals notes that discussions with potential participating partners and investors are ongoing.

Further, Platinum Group Metals is also assessing the economic feasibility of constructing a matte furnace and base metal refinery outside of South Africa to process Waterberg concentrate.

Working with a potential partner in a jurisdiction with less expensive grid electricity and water, Platinum Group Metals has completed a trade-off study which indicates that savings on electricity and water substantially offset the cost of additional concentrate transportation to outside South Africa.

However, before concentrate could be exported from South Africa, a formal government approval would be required, with Platinum Group Metals undertaking the relevant studies to look further into this option.