JOHANNESBURG (miningweekly.com) – Dual-listed Platinum Group Metals (PTM) is considering a transition to a hybrid mining method at its Maseve mine, in the North West province, as it embarks on a restructure to create a more sustainable operating future.
The proposed change in the primary mining method will result in a move away from the current higher-volume, mechanised bord-and-pillar mining method to a process involving mechanised access drives using the mine's current equipment, as well as conventional manual methods for stoping.
“The Maseve mine has good potential in terms of grades, underground developed access, completed infrastructure and a mill that operates in accordance with design criteria,” said PTM CEO R Michael Jones.
However, in recent months, the precious metals miner had reported delays in production ramp-up, underground development, stoping rates and planned tonnages, and a subsequent downward adjustment in the full-year production guidance.
The delays had and will have a negative impact on working capital requirements until sufficient mined stoped material is produced to allow mine operations to generate positive cash flow.
A new production guidance will be assessed as PTM develops and implements the new hybrid mining ramp-up plan and restructure.
The operationally driven restructure aims to align costs with a more gradual ramp-up of production using more selective mining methods and to reduce ongoing costs while working to achieve positive, sustainable cash flows “as soon as possible”, using already established infrastructure, Jones said.
“Face grades at the Maseve mine have generally met estimates, but the fully mechanised mining method has resulted in excess dilution and, therefore, lower grades to the plant,” he said, adding that the Maseve concentrator plant has performed in excess of design criteria.
“Completed underground conveyor infrastructure will help reduce the trucking fleet required for mining from Block 11, the target for immediate mining.”
Both bord-and-pillar and hybrid methods were included in the mine's feasibility study.
The transition could, in the long term, make up for the short-term restructuring and potential job cut pain, as new opportunities for contractors and employees will be created as the newly planned mining method ramps up.
The restructuring process is expected to affect a large number of employees and independent contractors.
“In the long term, the hybrid method is more labour intensive, offset with better planned grade compared with bord-and-pillar mining,” Jones noted.
He added that PTM would work closely with organised labour and all its contractors to minimise job losses, while making the operation self-sustainable, with its largest on-site contractor Redpath Mining South Africa likely to remain the main contractor at the mine.
“Contractors will be paid in the normal course and the company will honour obligations to its employees. Severance, job planning and other support will be provided,” he assured.
Meanwhile, PTM has received waivers from its lenders related to working capital and production covenants to October 31, 2017.
The company, which may require further financing in debt, equity or from asset sales, will assess the new plan's ability to meet the lending covenants and loan requirements in the months ahead.
PTM continues to work with BMO Capital Markets and Macquarie Capital to review and assess corporate and asset-level strategic alternatives.