JSE- and ASX-listed Southern Palladium will be undertaking a near-term exploration programme at its 70%-owned Bengwenyama palladium/rhodium-dominated platinum group metals (PGMs) project, on the eastern limb of the Bushveld Complex, in South Africa, following a successful capital raise and dual-listing on the ASX and JSE this month.
MD Johan Odendaal, speaking during an investor briefing and webinar on June 15, said that the company would be undertaking a two-year programme aimed at delivering a prefeasibility study (PFS) for a significant new PGMs mine.
The PFS would be followed by the submission of a mining right application.
He noted that, at the share price of June 14, the company had market capitalisation of A$56-million and an enterprise value of A$37-million.
The company has raised A$90-million and about 70% of the funding would go into the ground for exploration.
INVESTMENT CASE
Odendaal outlined that the project is in the right address with top-tier potential and with a single local community that is strongly supportive of development.
He elaborated that the project is in the heart of the eastern limb of the Bushveld Complex, which contains about 72% of the world’s PMG resources; and is adjacent to other tier-one PGM and chrome operations.
Odendaal said the project has a favourable split, with the prill split currently weighted to palladium and rhodium revenue.
He also mentioned that the project is geologically straightforward, with consistent grades, and structurally simple.
He pointed out the project also contained a shallower, wide, but lower-grade Merensky reef, which could be mined on a mechanised basis.
Odendaal said that, therefore, the project presented a large, shallow advanced exploration or pre-development PGMs opportunity. He noted that shallow access allows for rapid development of a project.
Odendaal said this was one of the last remaining underdeveloped PGM projects to be developed from near to outcrop.
The project has an inferred Joint Ore Reserves Committee-compliant resource of 19-million ounces.
Moreover, Odendaal said that, with the exploration programme and PFS, there was the potential to increase this, with a total exploration target of 15-million to 34-million ounces.
The green economy presents considerable opportunities for the company with this project, Odendaal outlined, noting that global carbon reduction and internal combustion engine emission control has stimulated renewed interest in PGMs, with demand fuelling PGM prices over the past two years.
He added that PGMs have various applications in green hydrogen production.
In the immediate future, the company believes there is still a strong demand for internal combustion engine vehicles, after which it does anticipate a decline, but that decline in terms of vehicle demand will be taken up by the higher use of platinum and rhodium, Odendaal outlined.
Moreover, hybrid vehicles would also come into play.
“So all in all, we still see a strong platinum basket price going forward,” Odendaal said.
He also mentioned that the company had a management team with an “outstanding” record in PGMs, South Africa, mining project development and mining experience in place.
POSITIVE SURVEY RESULTS
Odendaal said the company had recorded positive results from geophysical survey and drilling at the project and had appointed a contractor.
A high-definition helicopter-borne total magnetic field gradient and gamma-ray spectrometry survey was completed at Bengwenyama, with data from this confirming a previous structural model of the upper group two and Merensky reefs, which forms the framework of the inferred mineral resource of 18.8-million ounces.
Moreover, imaging has confirmed the absence of anomalous (loss of reef) features in the target area for the Phase 1 drill programme.
The company said the confirmation underpinned confidence in the existing geological structure of the reef upon which the Phase 1 drilling programme had been planned.
A contract has been signed with Geomech Africa for the Phase 1 drilling programme, which is scheduled to begin in early July.
Following the completion of the flyover, Odendaal said, the company would begin with the drilling programme, which would run for about 10 months, allowing the company to state an indicated resource when complete.
Odendaal said the company would also complete a concept study in the meantime, with the intention to move the company forward as well to give an indication of what the potential of this orebody is.
The mining right application will be lodged about 12 months or more from now, with the intention to complete this within 20 months.