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PTM retains focus on developing Waterberg project

13th April 2023

By: Darren Parker

Creamer Media Contributing Editor Online

     

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In TSX- and NYSE American-listed Platinum Group Metals’ (PTM’s) financial results for the six-month period ended February 28, released on April 13, the company has reiterated its focus on advancing the Waterberg project on the northern limb of the Bushveld Complex, in South Africa.

The Waterberg project is planned as a fully mechanised, shallow, decline access palladium, platinum, gold and rhodium (4E) mine. PTM believes it will be one of the largest and lowest cost underground platinum group metals (PGMs) mines globally.

The company's near-term objectives include the advancement of the Waterberg project to a development and construction decision, including the arrangement of construction financing and concentrate offtake agreements.

The project is a joint venture (JV) between PTM, which is also the operator of the project; Impala Platinum; Japan Oil, Gas and Metals National Corporation; Hanwa; and Mnombo Wethu Consultants.

PTM is also advancing an initiative through its subsidiary Lion Battery Technologies using platinum and palladium in lithium battery technologies in collaboration with platinum miner Anglo American Platinum (Amplats) and educational institution Florida International University (FIU).

WATERBERG PLANS

Before project financing and a construction decision can be undertaken at Waterberg, project concentrate offtake or processing will need to be made.

On October 18 last year, the Waterberg JV approved, in principle, the preconstruction work programme of about $21-million over a 23-month period ending August 31, 2024.

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

An update to the 2019 Waterberg definitive feasibility study (DFS) is also planned, including a review of 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 of about $2.5-million was approved for expenditure by March 31. The initial budget included 32 infill boreholes and several geotechnical holes.

Meanwhile, the Stage 2 budget for $3.6-million in work was approved for expenditure on March 24. The Stage 2 budget includes DFS update engineering, preconstruction engineering, electrical power supply engineering and the permitting and licensing of construction aggregate borrow pits identified near the Waterberg mine site.

PTM says the initial budget and the Stage 2 budget are being funded pro rata by the JV partners. Subsequent expenditures in accordance with the work programme are subject to expected approvals for the next sequential time period beginning September 1.

The company says it continues to work closely with regional and local communities and their leadership on mine development plans to achieve optimal outcomes and value for stakeholders.

The company also says that it is considering commercial alternatives for mine development, financing and concentrate offtake.

Obtaining reasonable terms for Waterberg concentrate offtake from an existing smelter or refiner in South Africa is considered the preferred option and discussions with such parties are ongoing, PTM says.

As an alternative to a traditional concentrate offtake arrangement, the company says it is assessing the economic feasibility of building a matte furnace and base metal refinery, either with or without partners, to process Waterberg concentrate.

A previous DFS technical report for the Waterberg project in 2019 stated that additional smelting capacity may need to be built in the industry to be able to treat the flotation concentrate from Waterberg and the other potential Platreef miners.

A matte furnace and base metals refinery, therefore, is envisioned by PTM as a separate business from the Waterberg JV, which could provide fair market concentrate offtake terms to Waterberg JV and possibly to other PGM miners.

The company says discussions with potential participating partners and investors are ongoing.

“As the world seeks to decarbonise and look for solutions to climate change, the adoption of battery electric vehicles is forecast to reduce the future demand for PGMs used in autocatalysis.

“The unique properties of PGMs as powerful catalysts are being applied to various technologies as possible solutions for more efficient energy generation and storage, which may create new demand for PGMs,” the company states.

PTM sees its battery technology initiative through Lion, with partner Amplats, as a new opportunity in the high-profile lithium battery research and innovation field.

“The investment in Lion creates a potential vertical integration with a broader industrial market development strategy to bring new technologies to market which use palladium and platinum,” the company says.

Research and development efforts by FIU on behalf of Lion are ongoing.

PTM believes the technical results from Lion's research may have application to most lithium-ion battery chemistries and the scope of Lion's research work is being expanded.

FINANCIAL RESULTS

For the period under review, the company incurred a net loss of $2.81-million, down from $5.95-million a year ago. Cash-based expenses for the six-month period were 54% lower than for the same period in the prior year.

General and administrative expenses during the current period were lower at $2.03-million, compared with $2.44-million as at February 28, 2022, with the previous higher expense being primarily the result of legal expenses related to PTM’s successful defence at trial against claims by consulting firm Africa Wide, which took place during October 2021 and February 2022.

There was no interest expense in the current period, compared with $1.65-million in the comparable six-month period last year. The company repaid all its remaining debt in February last year, thereby eliminating related future interest expense.

The foreign exchange gain recognised in the current period was $300 000, compared with a $60 000 loss last year owing to the dollar having increased in value relative to the Canadian dollar during the current period, the company said.

PTM said JV expenses related to battery research and development work by Lion amounted to $290 000 during the six-month period, while stock compensation was $1.11-million during the period.

The loss a share for the current period amounted to $0.03, compared with a loss of $0.07 a share of the prior comparable period.

Total expenditures on the Waterberg project, before partner reimbursements, for the period came to about $2-million.

After accounting for foreign exchange gains or losses related to the dollar, $39.9-million in accumulated net costs were capitalised to the Waterberg project.

The total expenditure on the property since inception from all investor sources to now amounts to about $82.9-million.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

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