JOHANNESBURG (miningweekly.com) – Having received positive results from an independent prefeasibility study (PFS) on the Waterberg platinum group metals (PGM) project, in Limpopo, TSX- and NYSE-listed Platinum Group Metals (PTM) plans to advance the project to the completion of a feasibility study (FS) and a construction decision.

Under the PFS model, first production at the PGM project is estimated to be in mid-2021, if the FS is completed at the end of 2017 and a mining right and other permits are granted as planned.

PTM holds a 58.62% effective interest in the Waterberg project, while the Japan Oil, Gas and Metals National Corporation (Jogmec) holds a 28.35% interest. Empowerment partner Mnombo Wethu Consultants owns the balance.

“With full support of the company’s joint venture partners, Jogmec and Mnombo, PTM looks forward to advancing Waterberg during the remainder of 2016 and 2017 with more drilling, a FS on the initial complex and the submission of a mining right application,” PTM CEO R Michael Jones said in a statement published on Wednesday.

KEY PFS RESULTS
The PFS was completed by international and South African engineering firm WorleyParsons RSA. Highlights of the study include the validation of the 2014 Waterberg preliminary economic assessment results for a large-scale, shallow, decline-accessible, mechanised platinum, palladium, rhodium and gold (4E) mine.

Key results also include a 3.5-year construction period, as well as a yearly steady state production rate of 744 000 oz of 4E in concentrate. With production estimated at about 744 000 4E oz/y, Waterberg would be one of the largest PGM mine complexes in South Africa, based on 2015 production numbers.

Further, the fully mechanised underground mine, planned for 600 000 t/m, would be one of the larger and lowest cash cost PGM mines globally, according to PTM.

The on-site life-of-mine average cash cost would be $248 for each 4E ounce including by-product credits and exclusive of smelter discounts. The after-tax net present value (NPV) is estimated at $320-million, at an 8% discount rate, using three-year trailing average metal prices, while the after-tax NPV is estimated at $507-million, at an 8% discount rate, using investment bank consensus average metal prices.

The estimated capital to full production would be about $1.06-billion, including $67-million in contingencies. Peak project funding is estimated at $914-million.

Probable reserves are estimated at 12.3-million ounces of 4E, while indicated resources have been updated to 24.9-million 4E ounces, at 2.5 g/t 4E cutoff. The deposit remains open on strike to the north and below a 1 250 m arbitrary depth cutoff.

Jones noted that the completion of the PFS significantly increases the company’s attributable 4E reserves and is an important milestone for the project and the company.

“Waterberg is designed to be a low-cost, multidecline, fully mechanised, mining complex along an initial 13 km deposit strike length with two 300 000 t/m mills built in close sequence.

“At . . .  a modelled 18-year mine life, Waterberg is very large and offers excellent exposure to the essential platinum, palladium, rhodium and gold [metals]. Amazingly, the deposit is still open. The PFS covers only the first 218-million tonnes in indicated resources to date,” Jones highlighted.

Of the original $20-million funding committed by Jogmec in 2015, about $8-million of further project funding remains to be spent.

PTM also plans to optimise the mine plan, as well as the development plan and waste development plan for ventilation with the objective of reducing sustaining capital in the FS stage.

Additional drilling will be completed with the objective of upgrading some of the resources.

“We look forward to growing and advancing Waterberg so that we may fully understand this new part of the Bushveld complex that we and our joint venture partners have discovered. We will work hard to maximise the value of the resource for all stakeholders including shareholders, employees, the government of South Africa and the local communities,” Jones said.