PGMs miner focused on Waterberg mine project

11th December 2020

PGMs miner focused on Waterberg mine project

R. MICHAEL JONES Platinum Group Metals’ near-term objectives are to achieve the grant of a mining right for the palladium dominant Waterberg Project and complete construction

As reported by Mining Weekly last month, platinum group metals (PGMs) miner Platinum Group Metals is focused on advancing the palladium dominant Waterberg project, located on the northern limb of the Bushveld Complex, in South Africa.

The project is planned as a fully mechanised, shallow, decline access palladium, platinum, gold and rhodium mine, and is projected to be one of the largest and lowest cost underground PGM mines globally.

The mine has a projected steady production rate of 420 000 oz/y, and a 45-year life-of-mine on current reserves.

The company’s near-term objectives are to obtain a mining right for the Waterberg project, advance the project to a development and construction decision, and complete the construction funding and concentrate offtake arrangements.

The long-term market outlook for the metals to be produced at Waterberg remains positive, according to Platinum Group Metals, which is headed by Michael Jones.

The positive results of the Waterberg definitive feasibility study (DFS), released in September last year, provided a solid value assessment for the project.

The Implementation Work programme completed on September 15 this year, and paid for substantially by South African platinum miner Impala Platinum (Implats), focused on project optimisation, operational readiness and risk mitigation.

The programme confirmed important aspects of the DFS, established mitigation approaches for certain possible risks, and identified several upside opportunities.

The programme was budgeted at up to R55-million. However, a planned geotechnical drill programme could not be completed before the awarding of a mining right, and consequently, final costs amounted to about R24.7-million.

The Waterberg Joint Venture (JV) company applied for a mining right in August 2018 and an environmental authorisation in July last year. Detailed consultations with communities, local municipalities, the Limpopo provincial government and South African national authorities were completed ahead of the mining right application.

An environmental authorisation was granted on August 12 this year, subject to a public notice period and finalisation of issues raised by affected parties, with the process completed last month, on November 10.

In addition to discussions with Implats, Platinum Group Metals and the JV have begun a process to assess commercial alternatives for mine development financing and concentrate offtake, subject to Implats’ right to match offtake proposals.

Several parties are currently in discussions with Platinum Group Metals.

Financial Results

During the 2020 financial year (FY) ended August 31, 2020, Platinum Group Metals incurred a net loss of $7.1-million, an improvement on the FY ending August 31, 2019, when the company incurred a net loss of $16.8-million. This improvement was owed primarily to the company’s continued efforts to lower costs during the 2020 FY.

General and administrative expenses amounted to $3.7-million, while gains on foreign exchange totalled $700 000, owing to the US dollar decreasing in value relative to Platinum Group Metals’ functional currency, the Canadian dollar. Meanwhile stock-based compensation expenses, a non-cash item, totalled $1.6-million.

Interest costs of $5.5-million were lower in 2020 FY owing to lower debt levels. A gain on fair value of financial instruments of $3.2-million was recognised in the current year, mainly owing to the expiry of warrants.

As of August 31, finance income consisting of interest earned and property rental fees in the year amounted to $200 000. Loss a share amounted to $0.11, compared to a loss a share of $0.52 in 2019 FY.

Accounts receivable totalled $200 000, while accounts payable and accrued liabilities amounted to $1.4-million. The former mainly comprised amounts receivable for value-added taxes repayable to the company in South Africa. Accounts payable consisted primarily of Waterberg DFS engineering fees, accrued professional fees and regular trade payables.

Total expenditure on the Waterberg project, before partner reimbursements, for the year was about $3-million. At 2020 FY end, $34.9-million in accumulated net costs had been capitalised to the Waterberg project.

Total expenditure on the property since inception to August 31, 2020, is about $75.2-million.