News Today
Nine new contenders staking their claims in growing platinum-group metals market
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The South African platinum-group metals (PGM) sector is currently dominated by Anglo Platinum, Impala Platinum and Lonmin Platinum, which, collectively, hold the title crown as the world’s largest PGM producers.
Although this crown remains firmly in their grasp, there is an emerging trend of PGM exploration and development companies aiming to acquire a stake in this royal title.
This is evident in that, in recent years, more than a dozen junior PGM mining companies have been created to exploit opportunities in South Africa’s Bushveld Complex, which is host to 80% of the world’s known platinum resources and accounts for over 60% of global PGM production.
This strong emergence of a junior mining sector has also been subject to consolidation through a number of mergers and acquisitions, which has resulted in the prevalence of nine PGM juniors operating in South Africa.
These include, in alphabetical order, African Platinum, Anooraq, Barplats, Eastern Platinum, Eland Platinum, Nkwe Platinum, Platinum Group Metals (PTM), Ridge Mining and Wesizwe.
While most of these companies are not South Africa-based and have offshore listings and shareholders, all of their flagship projects are located on both the eastern and western limbs of the Bushveld Complex and seek to exploit the favourable infrastructure developed by the country’s blue-chip platinum-mining giants.
In addition, most of these projects are brownfield operations, originally abandoned by the established companies owing to the unfavourable economic climate at the time of exploration.
However, with market fundamentals indicating that platinum demand has been outstripping supply for the last seven years, there has been a subsequent surge in the platinum trading price in recent months, making many brownfields more economically viable for junior miners.
In particular, the platinum trading price has jumped by 58% in the last 12 months, reaching a record high of $1 333/oz in early May.
This has primarily been the result of sustained growth of the autocatalyst sector in Europe, which pushed demand for platinum by 330 000 oz to a new high of 3,82-million oz, according to the Johnson Matthey Platinum 2006 report released in May.
With the growth of the autocatalyst sector predicted to continue, demand for platinum will remain strong, sustaining the higher trading prices that are being experienced currently, predicts Johnson Matthey.
This outlook has encouraged the junior PGM companies, most of which have a project at or nearing the stage of bankable feasibility.
Meet the platinum pretenders:
Name: African Platinum (Afplats)
Profile: London Stock Exchange’s Alternative Investment Market (AIM)-listed Afplats, formerly Southern African Resources, is an exploration and development company currently aiming to establish a resource base of over 100-million ounces, by exploring various projects in Africa.
Leadership: Roy Pitchford, CEO.
Projects: Afplats has four exploration projects in South Africa, Botswana, Zimbabwe and Mozambique. The company’s flagship project is the Leeuwkop project, situated on the western limb of South Africa’s Bushveld Complex.
Progress to date: Afplats’ sole South African exploration operation, Leeuwkop project, involves the establishment of a platinum mine at the 4 600-ha property. Following the completion of a favourable prefeasibility study, which envisaged a 300 000-oz/y mining and concentrating operation, a definitive feasibility study was undertaken and completed in February this year.
The key findings of this study encompass an increase in mineral reserves from 5,3-million ounces to 6,9-million ounces, including both proven and probable reserves; an accelerated development schedule at a cost of R2,3-billion; and very robust project returns of 21% using a long-term basket price of $729/oz.
Afplats is in the process of raising the capital needed for the mine-construction phase while, at the same time, completing critical design work so that the shaft sink can start once the funds are in place. The company is also working on new-order mining rights for Leeuwkop, the attainment of which will mark a further advance in its drive to build Afplats into a premier platinum company.
First production expected: Although the date for shaft sinking is dependent on finalising the capital raising, first mining will take place in Month 21 after development commences and the first ore will be milled in Month 36.
BEE partner: Afplats’ black economic-empowerment (BEE) partner on the Leeuwkop property is the Bakwena Ba-Ga Mogopa traditional community.
Name: Anooraq
Profile: Anooraq is a North American listed, black economically-empowered company with significant assets on the Bushveld Complex.
Leadership: Tumelo Motsisi, MD and deputy CEO.
Projects: The company has a number of projects in South Africa, although Drenthe-Overysel, the Boikgantsho joint venture (JV) and the Ga-Phasha Platinum Group Metals Project are the flagship projects in Anooraq’s portfolio.
Progress to date: Ga-Phasha is a 50:50 joint venture with the world’s leading platinum producer, Anglo Platinum. The project, located directly between Anglo Platinum’s Lebowa Platinum mine and the Twickenham Platinum mine, is the most advanced project in the company’s portfolio.
Drilling to date has shown that mineral resources are found in both the upper group two (UG2) and Merensky reefs. Studies show an estimated 14,7-million ounces of platinum, palladium, rhodium and gold in the measured and indicated categories in the UG2 reef; and an estimated 6,1-million ounces in the measured and indicated categories in the Merensky reef. In April, the JV venture announced that its programme, which includes extensive additional drilling of the Merensky Reef horizon, to enable the parties to determine how to optimally mine the mineralised horizons and utilise, on a cost-sharing basis, some of the regional infrastructure already established by Anglo Platinum, is being reviewed. The JV expects the review to be completed by the end of the second quarter of 2006. The review is expected to guide the JV in determining any further studies to be undertaken and drafting a timetable for a bankable feasibility study. The announcement further states that Anglo Platinum has agreed, in principle, to undertake a financing into Anooraq, which will be limited to $10-million. The majority of the proceeds from this will be used by the company to advance the project to bankable feasibility study.
First production expected: Such dates and detail will be provided at a later stage.
Partner: Anglo Platinum, on both the Ga-Phasha Project and the Boikganthso JV.
Name: Barplats Investments (Barplats).
Profile: Johannesburg Stock Exchange (JSE)-listed Barplats’ core business is PGM mining and processing in South Africa’s Bushveld Complex. In May 2005, Eastplats acquired a 69% majority shareholding in the company.
Leadership: Wayne Robinson, MD.
Projects: The company’s two main assets are the operating Crocodile River mine on the western limb of the Bushveld Complex, near Brits, in the North West province, and the Kennedy’s Vale project, on the eastern limb of the Bushveld Complex, near Steelpoort in the province of Mpumalanga. The company controls more than 70-million PGM resource ounces.
Progress to date: Production is ramping up at the Crocodile River mine: at the Maroelabult section, steady-state production of 40 000 t/m is expected by December 2006 and at the Zandfontein section, ramp-up to 120 000 t/m is planned for December 2008. At the new Crocette section, a drilling programme is scheduled to begin shortly, with production planned to begin in mid-2007.
A feasibility study evaluating the optimal exploitation of near-surface resources at Kennedy’s Vale is due for completion in the latter half of 2007. This property already has two shafts sunk, which will give access to the deeper portions of the orebody.
First production expected: 2007.
BEE partner: The Gubevu Consortium holds a 26% stake and is led by Dr Penuell Maduna, former South African Minister of Minerals and Energy and Justice and Constitutional Development.
Name: Eastern Platinum (Eastplats).
Profile: Eastplats, founded in April 2005 to focus on PGM opportunities in South Africa, is listed on the AIM and the Toronto Stock Exchange (TSX).
Leadership: Allen Palmiere, CEO.
Projects: Eastplats has two properties on the eastern limb of the Bushveld Complex: the two-million-ounce Mareesburg deposit, and the eight-million-ounce Spitzkop deposit. Both projects are high-grade, platinum-rich, near-surface deposits which make for simple mining and low-cost operations.
Progress to date: In May 2006, Eastplats acquired a 69% stake in Barplats and is now a major shareholder of Barplats, whose assets include the operating Crocodile River mine and the Kennedy’s Vale project. This acquisition makes Eastplats the sixth-largest platinum producer in South Africa and the holder of the third-largest platinum resource in the world. Through this acquisition, Eastplats now has control of a resource base of 86-million ounces of PGMs on the Bushveld Complex.
First production expected: Feasibility studies are under way at Spitzkop and Mareesburg.
BEE partner: The Gubevu Consortium has a 26% stake in Barplats while Zwelakhe Sisulu’s Afri Minerals holds 26% of Spitzkop and Zondwa Mining, led by Mazwai Yuko, holds 26% of Mareesburg.
Name: Eland Platinum (Elandplats).
Profile: Elandplats was established in South Africa in the second half of 2005 to seek opportunities arising from the country’s new mineral-rights dispensation, and the expected long-term market demand for PGMs. The company listed on the JSE at the end of March 2006.
Leadership: Dr David Salter, MD.
Project: To date, the company has two projects, the Elandsfontein Platinum project and Zilkaatsnek, located on the south-eastern part of the eastern limb of the Bushveld Complex. The Elandsfontein project was purchased from Rustenburg Platinum in October last year for R117-million.
Progress to date: The project has a large, shallow UG2 reef resource of 107,5-million tons, containing approximately 14,9-million ounces of platinum, palladium, rhodium and gold. The project is in the first stage of its development phase, which started in January this year and includes the completion of a bankable feasibility study for the project and the closure of the debt-funding process. It is expected that this phase will be completed within six to nine months. To speed up the mine development schedule, Elandplats is ordering the long-lead items required for the project during this phase.
It is intended that phase two, or the mining development phase, will begin once the mining right is awarded and the capital raising is complete. Site preparation is scheduled to start during the third quarter of 2006 and construction in the fourth quarter of this year. Openpit mining is expected to begin in the second quarter of 2007.
First production expected: The first concentrate from openpit operations will arise in 2008, followed by the first concentrate production from underground ore in Q4 2009.
BEE partner: Ngazana consortium.
Name: Nkwe Platinum Profile: Australian Stock Exchange (ASX)-listed platinum group Nkwe Platinum was incorporated in October 2002 with the intention of acquiring and developing platinum properties in South Africa.
Leadership: Tony Weber, MD.
Projects: Nkwe has five project areas in the Bushveld Complex – De Wildt, Pilanesberg, Ghost Mountain, Tinderbox, Eastern Bushveld – with a combined resource of approximately 17-million ounces of PGMs. The company aims to develop a R500-million mine.
Progress to date: The De Wildt prospect, located 10 km east of Brits, is the company’s flagship project.
Progress on this project was hampered by the delay in acquiring a BEE partner in order to secure the new-order prospecting right. However, during the first quarter of this year, the company concluded negotiations, with a BEE investor firm, Blue Nightingale, which acquired a 30% equity interest in Nkwe Platinum South Africa.
Nkwe has subsequently met with the Department of Minerals and Energy to finalise the conversion of the old-order rights at its flagship project into new-order prospecting rights and will commence with the exploration and feasibility plans required to commercialise this project during this quarter.
This project is currently inferred to hold a resource of 6,1-million ounces at a grade of 3,4 g/t over 6 km of inferred outcrop, at a favourable platinum-to-palladium prill split in excess of 3,5:1.
As part of the exploration programme to be undertaken, an additional four-million ounces at 2,5 g/t of target mineralisation is sought to be proven up. This resource base may enable the development of a 100 000-t/m operation as put forward. Exploration activities on De Wildt for the March quarter to have cost an estimated R779 120.
First production expected: Development is scheduled to start during the latter part of 2007.
BEE partner: Blue Nightingale.
Name: Platinum Group Metals (PTM).
Profile: Formed in 2000, PTM is a TSX-listed platinum junior involved in various exploration projects in South Africa and Canada.
Leadership: John Gould, MD.
Projects: PTM holds significant mineral rights in the northern and western limbs of the Bushveld Complex of South Africa. The company is currently investigating four projects, although the flagship project is the Western Bushveld Joint Venture (WBJV) with Anglo Platinum and Africa Wide Mining on the western limb of the Bushveld Complex.
Progress to date: The WBJV, covering an area of 67 km2 of prime platinum real estate, is the company’s most advanced project and is the culmination of three years of exploration and development work by PTM. The exploration site is surrounded by 12 mines that produce 70% of the world’s platinum supply and the project also adjoins Anglo Platinum’s BRPM platinum mine.
In March this year, PTM announced updated drilling and resource results, which has paved the way for an expected completion of the prefeasibility study by next month. An independent classification shows an indicated resource of 2,57-million ounces of platinum, palladium, rhodium and gold. Drilling is expected to continue throughout 2006 as only 35% of the prospective joint venture area has been classified as a resource to date. The final feasibility study and mine production decisions are targeted by PTM for December 2006.
PTM’s lead stake in this property positions the company to shift from exploration into mine planning and engineering.
First production expected: A decision will be taken in December this year.
BEE partner: Africa Wide Mining.
Name: Ridge Mining.
Profile: The company was founded in 1996 as Cluff Mining and was admitted to London’s AIM exchange in 2000. In May 2004, the name changed to Ridge Mining.
Leadership: Terence Wilkinson, CE.
Projects: Ridge Mining has a number of highly-prospective PGM projects in and around South Africa’s Bushveld Complex. The company’s two most advanced projects are the wholly-owned Blue Ridge project on the eastern limb of the Bushveld Complex and the nearby Sheba’s Ridge project, a joint venture with Anglo Platinum.
Progress to date: The Blue Ridge project is the company’s most advanced project. Ridge Mining recently announced that a consortium of South African banks comprising the Development Bank of Southern Africa, Investec Bank and Standard Bank to arrange loan finance of R650-million has been mandated to arrange project finance for the development of the Blue Ridge mine.
The provision of the facilities is subject to equity funding to the project of approximately R440-million, legal and technical due diligence, credit committee approval and the completion of formal legal documentation, all of which are expected to be completed by the middle of this year. A positive feasibility study completed in November 2005 envisages a mine at Blue Ridge, producing 75 000 oz of platinum, 35 000 oz of palladium, 13 000 ounces of rhodium, and 1 600 oz of gold a year.
First production expected: Mid-2008.
BEE partner: Ridge has not yet enetered into BEE negotiations.
Name: Wesizwe Platinum.
Profile: Established in 2004, Wesizwe is one of South Africa’s most successful broad-based black economic-empowerment PGM exploration companies, involved in exploration on properties on the western limb of South Africa’s Bushveld Complex. The company listed on the JSE in December last year.
Leadership: Mike Solomon, CEO.
Projects: Wesizwe initially raised R115-million, began exploration on four properties to prove up its reserves on the Zandrivierspoort, Ledig, Frischgewaargd and Mimosa farms. The prospective orebodies are reportedly shallower than 1 100 m and the farms are contiguous to properties currently being explored by Anglo Platinum and the Bafokeng.
Progress to date: Wesizwe has been granted new-order prospecting rights for all its strategic properties of the Pilanesberg project.
At the end of March 2006, the company reported that it had drilled an additional 5 000 m and added some 423 000 oz of attributable inferred resources, bringing the total to 6,9-million ounces. Wesizwe is in the process of raising capital for the next exploration phase, which is intended to upgrade the current inferred resource to indicated resource during the course of this year and to measured resource during the first half of 2007. The projected budget to the end of 2008 will involve taking the Pilanesberg project through to bankable feasibility stage, as well as making provision for the exploration of other properties.
First production expected: Still in exploration phase.
BEE partner: Bakubung-Ba-Ratheo community.
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