JOHANNESBURG (miningweekly.com) – TSX- and NYSE-listed Platinum Group Metals (PTM) has reiterated that it expects the South African Department of Mineral Resources and Energy to grant its Waterberg platinum/palladium joint venture (JV) project a mining right during June, as lockdown measures start to ease in the country.
PTM president Michael Jones on May 15 presented an update on the project’s development, which is currently being led by JV partner, platinum miner Impala Platinum (Implats).
He reiterated that it was possible for production to start in the first quarter of 2024, following decline establishment in the first quarter of 2021.
Steady-state production of 420 000 oz/y can be achieved from 2027.
As it stands, PTM owns 50% of the Waterberg JV, while Implats owns 15%; Hanwa 9.7%; Japan, Oil, Gas & Metals National Corporation (Jogmec) 12%; and Mnombo Wethu Consultants the balance.
The JV partners earlier in April executed a formal amended purchase and development option agreement with Implats, which entails Implats funding 100% of an implementation budget and work programme valued at about R55-million.
Implats still has a few months to decide whether it wants to increase its shareholding in the project to 50.01% and contribute a total $165-million to the project’s development, including work programme spend.
Jones expects Implats to make a construction decision during the third quarter of this year.
He explained that, under the purchase and development option, Implats may elect to increase its stake in the Waterberg JV from 15% to 50.01% by buying an additional 12.195% equity interest from Jogmec for $34.8-million and earning a further 22.8% interest by making a firm commitment to spend $130-million on development work.
The current work programme being executed on the project is aimed at further increasing confidence in the project and de-risking future ramp-up. Jones says this work is continuing remotely, in accordance with government restrictions to curb the spread of Covid-19.
The JV shareholders in December last year approved the project’s definitive feasibility study (DFS), which found that the project will be one of the largest and lowest cash cost underground platinum group metals mines globally.
The Waterberg mine, in the Bushveld Complex stretching between South Africa’s Limpopo and North West provinces, can be a fully mechanised, shallow, decline access mine.
The DFS envisions a steady-state production rate of 420 000 oz/y of platinum, palladium, rhodium and gold (4E), and a 45-year mine life based on the current reserves. The proven and probable reserves are currently defined as 19.5-million ounces of 4E.
In extended terms, the project has proven and probable mineral reserves of 187-million tonnes, grading 3.24 g/t 4E for 19.5-million 4E ounces, using a 2.5 g/t 4E cutoff grade.
To date, PTM has spent $72-million on the project’s development that started in 2015. The length of the deposit area that will be mined is 8 km long. Jones says that ore will be conveyed to surface and sent to a central processing plant in the middle of three zones that will be mined.
MARKET PROSPECTS
The long-term market outlook for strong palladium demand and the potential for continued palladium supply deficits indicates a bright future for the Waterberg project, especially since the project will produce predominantly palladium.
The Waterberg basket consists of 63% palladium, 20% platinum, 6% gold and 2% rhodium.
Jones said the palladium market remains strong at a price of $1 800/oz.
South African platinum group metal mines are in the process of restarting operations following South Africa’s Level 5 lockdown, with production losses for the year estimated at 15% to 20% of yearly production.
In 2019, South Africa produced 2.65-million ounces of palladium. This while the palladium market globally experienced a 1.1-million-ounce deficit.
A balanced market to slight deficit for palladium is expected for 2020, with deficits expected to continue in the long term.
The automotive sector consumed 9.6-million ounces of palladium last year, representing 84% of total demand.