ASX- and JSE-listed platinum group metals (PGMs) exploration and development company Southern Palladium has completed 12 000 m of drilling on the Bengwenyama palladium/rhodium-dominated PGMs project, in Limpopo, South Africa. This has enabled it to convert 2.56-million ounces of platinum, palladium, rhodium and gold from the inferred to the indicated category.

The company is undertaking a two-year exploration programme targeting the delivery of a prefeasibility study (PFS) for a significant new mine, MD Johan Odendaal said in a June 8 briefing with investors.

Additionally, the exploration programme also increased the inferred resources from the Upper Group 2 (UG2) reef by 39% to 11.65-million ounces, compared with the previous 8.38-million ounces.

Much of the resource addition has come from the newly discovered shallow Far East block, which has enabled the company to extend its UG2 resource to the east, he said.

The exploration programme also found that the major north-south faults and dykes in the north-eastern portion were not as large as initially modelled and that the orebody was much smoother than initially modelled.

Further, the company also updated the prill splits for the UG2 resources to 46.2% platinum, 42.6% palladium, 9.9% rhodium and 1.4% gold. The grade of the UG2 orebody was about 7.7 g/t and the roughly 70-cm-wide orebody was mineable using well-known and established techniques.

The company would move to more mechanised mining techniques as it moved into western reserves, Odendaal pointed out.

"UG2 is our focus reef at the moment and, in total with the Merensky reef, gives us 22.04-million ounces in resources. Further, the Merensky reef was intersected by several boreholes to the west of the project, and we will be updating the resource specifications for that reef and releasing the results fairly soon," he said.

Southern Palladium excluded a domed area near the centre of the Bengwenyama site from its exploration, as it was more structurally complex and the company decided to move the drilling allocated for that area further east, which made more economic sense and added significant ounces, he noted.

"Now that we have a good understanding of the orebody, we are focusing on improving the value matrix of the project. This is based on two areas. One is the payback area, which will provide enough ounces to cover the capital expenditure of the project. It is on the eastern block. We will further drill in this eastern block to secure a larger indicated resource area for the payback area.

"Secondly, in the Southern Horst block, the area is lifted up and we want to establish, through scoping studies, whether we can create a second access point to the orebody. This will allow us to ramp up production much faster and improves the value matrix of this orebody.

"We had completed our initial scoping study at the end of last year. It was not released because it was based on inferred resources, but gave us a good idea of what we should do in terms of mining the Merensky and UG2 reefs and which sequence would be best," he said.

However, the company planned to update the scoping study using the results from this exploration programme and aimed to provide a second resource update towards the end of this year, Odendaal said.

Southern Palladium is also on track to complete the PFS and issue the maiden ore reserve during the fourth quarter of this year.

"We are now getting into a position where we will have a sufficient ratio of indicated resources relative to inferred resources to announce to the market," he added.

Southern Palladium's goals over the next 36 months are to continue drilling and it intends to increase the number of drill rigs from five to eight to finish the scoping study towards the end of October. It aims to do the second interim resource update during November or December and update its scoping study at the same time.

"This will give us a good indication in terms of the value and returns for the second entry to the orebody. Depending on what we find in the Horst block, we will then focus on the area where we want to have the second access. This will take us into the first quarter of 2024 and lead to finalising the PFS and setting up the first maiden ore reserves.

"We are moving into a new phase of the project. We are fully funded for the next year as we move to the definitive feasibility study and final investment decision towards the end of 2024. We aim to start construction in 2025," he said.

Further, the project is among other tier one operations in the Bushveld Complex. Southern Palladium is now focusing on improving its knowledge of the larger areas to optimise the value of these areas. The project has solid technical metrics, he averred.

The project is also well positioned to take advantage of the global green drive.

Further, during the exploration programme and assaying of the East block, Southern Palladium also found three additional PGMs in the orebody, namely iridium, ruthenium and osmium. Iridium was an important mineral for the production of hydrogen, he said.

Southern Palladium has modelled the Bengwenyama project's financial feasibility in line with an expected decline in automotive catalytic converters reducing the demand for platinum. However, demand for platinum and palladium is expected to remain steady as other applications and uses grow, while demand for the other PGMs is also expected to remain firm.

The UG2 reef also has high chromitite content, of about 30%, and this chrome will be a significant contributor to the mine's potential revenue stream.

"If you look at the geology and the reefs we have access to and the general metrics of the project, we can have a big project that can become a tier one producer in the future," said Odendaal.