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Smokey Hills operations temporarily suspended

6th May 2016

  

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South African platinum producer African Thunder Platinum (ATP), owned by global resource investment corporation Aberdeen International, has temporarily suspended mining operations at the Smokey Hills platinum/palladium mine, in Limpopo, to focus on the planning and permitting required to optimise production and costs in the future.

The company said in April that, among the expected future improvements at Smokey Hills, it had started the permitting process for opencast production at the mine to add to low-cost tonnage to be mined on restarting. The opencast operation is a critical devel-opment to the overall optimisation plan, as it should provide additional tonnage and improve operating flexibility. Facilitation of the openpit is expected to be ongoing for the remainder of 2016.

As disclosed in February, ATP is engaged in a process to review mine activities for 2016, including consultation with its workforce. ATP concluded that the best way to enhance the long-term value of the Smokey Hills mine and the 2 000 t/d plant facility was to suspend operations.

Since ATP hired new management led by ATP COO Rodney O'Reilly, in December, the mine’s production rates and efficiency have increased, equipment availability improved, costs decreased and Smokey Hills’ safety record improved. However, the weak platinum and palladium prices have continued to drain cash flow. With several more months of underground development required to achieve full production, ATP decided it would be best to defer this expenditure until metal prices improved, and other optimisation plans could be implemented.

Aberdeen president and CEO David Stein says: “We know the decision to suspend the mine is never an easy one; however, we commend ATP for taking a disciplined approach to preserving the long-term value of the Smokey Hills operation.” He adds that, despite achieving many operational successes over the past few months, producing metal in this environment of low prices appears to be wasteful and unnecessary. By combining the mine optimisation plan with an improved financial structure, Aberdeen expects that ATP will be able to return to operations once it sees positive movement in the platinum and palladium pricing.

In addition to the operational improve-ments currently being addressed, the major shareholders of ATP, Aberdeen and private-equity and a venture capital firm Pala Investments, are reviewing options to restructure the financial position of ATP to provide greater financial flexibility and less risk when operations restart.

Smokey Hills
Smokey Hills is located on the eastern limb of the Bushveld Complex. The mine was on care and maintenance from September 2012 to September 2014 and, in October 2015, preparations began to restart operations at the mine.

Yearly production (on a recovered basis) is expected to range between 52 000 oz and 64 000 oz 4E platinum, palladium, rhodium and gold (4E) over six years of full production, based on current mine plans.

ATP notes that cash costs are expected to be low-relative to other South African platinum producers. Smokey Hills is a shallow underground mine with access achieved through six portals developed prior to closure in 2012.

The existing Smokey Hills plant comprises a standard upper group two milling and flotation circuit with a 60 000 t/m nameplate capacity. The site is well serviced by local infrastructure. Smokey Hills is easily accessible by paved road, with access to water and grid power, and has additional standby diesel generating capacity to provide backup power as needed.

Based on a National Instrument 43-101-compliant independent mineral resource and reserve estimate, completed on the property by South Africa-based metallurgical project designer Minxcon Projects, Smokey Hills has an estimated measured and indicated mineral resource of 4.18-million tons at 5.62 g/t of 4E, equating to 755 000 oz of 4E.

About Aberdeen International

Aberdeen is a publicly traded global investment and merchant banking company focused on small-cap companies in the resource sector. Aberdeen seeks to acquire significant equity participation in early-stage public resource companies with undeveloped or undervalued high-quality resources.

The company will focus on companies that are in need of managerial, technical and financial resources to realise their full potential, are undervalued in foreign capital markets and/or operate in jurisdictions with low to moderate local political risk.

Edited by Tracy Hancock
Creamer Media Contributing Editor

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