So vast, its true extent is yet to be discovered

South Africa-focused miner Platinum Group Metals’ Waterberg Joint Venture (JV) and Waterberg Extension, cumulatively called the Waterberg projects, have grown enormously since discovery in November 2011. In April this year the company extended the northern limit of the known Waterberg Extension deposit 3.4 km northwards beyond the previous resource limit, CEO Michael Jones tells CHANTELLE KOTZE

The new step-out intercept WE049 – the second step-out intercept to the north undertaken at the Waterberg Extension – is signifi cant as it further establishes the open potential northward along strike on the Waterberg Extension property, where Platinum Group Metals holds an eff ective 87% interest. The Waterberg deposit, located on the Northern Limb of South Africa’s Bushveld Igneous Complex, remains open, beyond the current strike length, for further expansion and all of the intercepts will be considered in the resource update for the Waterberg palladium and platinum deposits, expected in mid-2015. The Waterberg deposit has been divided into the Waterberg I, II, III domains. Each domain represents about 5 km of strike length. The initial engineering work at Waterberg covered Waterberg I. The current inferred mineral resource of the cumulative Waterberg projects, prior to the update in progress, is 29 Moz over about 10 km of strike length.

This estimate comprises an inferred resource of 287 Mt, grading at 3.15 g/t 4E – 0.94 g/t platinum, 1.92 g/t palladium, 0.04 g/t rhodium, 0.25 g/t gold, comprising a ratio of 30%, 61%, 1% and 8% respectively. This, however, excludes an additional 71 000 m of largely in-fi ll drilling that Platinum Group Metals’ operations are located on the Bushveld Igneous Complex, in the North West of South Africa was undertaken since the last resource estimate. One drilling rig continues to prospect the open strike and dip lengths looking for the best palladium and platinum grade and thickness on site at Waterberg. Jones says that fi rst priority for Waterberg this year is to complete the resource update, followed by the release of the prefeasibility study (PFS). The PFS for the Waterberg JV project, being undertaken by multidisciplinary engineering group DRA and funded by Platinum Group Metals and JOGMEC, as a potential large-scale, fully mechanised, decline-accessible mine is continuing and should be completed imminently. Subsequent to this, Platinum Group Metals will initiate the definitive feasibility study and begin work on obtaining its licence applications throughout 2016. Jones says Platinum Group Metals expects to be very active in 2015 and 2016 in finding out “the true extent of the Waterberg deposit and how far it extends”. “We certainly think that there is a large enough resource to consider two major mine developments, but what we don’t know as yet is where the greatest grade thickness lies,” he adds.

Waterberg deposit geology

On a combined basis the Waterberg projects represent a large system containing multiple, thick mineralised layers between 3 m and 60 m in thickness that will likely be amenable to low cost mechanised mining methods. The resource estimate includes the T1, T2 and F layers with the shallowest edge of the known deposit on the Waterberg JV project territory on the T2 layer at 130 m below surface. The resource estimate has been cut off at 1 250 m vertical. “While the layered deposit is part of the Bushveld Igneous Complex, commonly characterised by typical Merensky and UG2 platinum reefs, the Waterberg deposit host rock is diff erent, putting it into another geological domain, much diff erent from the classic UG2 and Merensky reef, Jones explains. “We haven’t found out how far to the north it extends yet but I believe we have yet to intercept the greatest grade thickness, despite having confi rmed intercepts of 60 m in thickness grading at 5 g/t,” Jones enthuses. Platinum Group Metals are in active discussion with Japan Oil, Gas and Metals National Corporation (JOGMEC), the company’s development and Western Bushveld JV Project partner, on coming on board on the Waterberg Extension. “These discussions are important as they will set the overall exploration budget for the Waterberg Extension,” Jones says. Platinum Group Metals reports great shareholder and institutional investor support for its project, having been backed by over $500 million in the past years. Despite experiencing in 2013 one of the worst mining fi nance years over the past 30 years, Platinum Group Metals was one of only eight development stage mining companies listed in North America to get fi nancing over $50 million.

Western Bushveld JV Project 1

Platinum Group Metals is also in the process of developing its fl agship 82.9%-owned Western Bushveld Joint Venture (WBJV) Project 1. The company moves toward production of its high-grade, near-surface deposit by the fourth quarter of 2015. The WBJV Project 1 platinum mine site is located on the Western Limb of the Bushveld Complex about 35 km northwest of the town of Rustenburg, directly adjacent to Wesizwe’s Bakubung platinum project also being developed. The mine is currently being constructed to extract and process platinum group metals and associated minerals from the Merensky and UG2 reefs over a 20 plus year mine-life. The WBJV Project 1 platinum mine will exploit one of the last large, near surface sections of the Merensky Reef no further than 1 000 m below surface. The shallow depth and high grade of the WBJV Project 1 will be mined using a mechanised mining method enabling underground development of between 80 m and 100 m a month, further enabling the company to open up a lot of reef simultaneously. This mining method lowers capital and operating costs along with better working conditions compared to the older, deeper platinum mines operating nearby. Jones says that Project 1, which is currently 78% complete, is expected to produce 275 000 ozpa at steady-state production after a two year ramp up at the end of 2017. Ore extraction is currently occurring at both the North and South mines, while the processing facility is near completion.

Processing

The processing facility will comprise a 5 300 tpd milling circuit producing a concentrate consisting primarily of platinum, palladium, rhodium and gold, and smaller amounts of osmium, iridium, nickel and copper. Anglo American platinum has exercised a fi rst right of refusal for a life-of-mine concentrate off -take from the WBJV Project 1, which will be delivered to its Waterfall smelter about 40 km from the project. Jones says that Platinum Group Metals are using JIC Mining as the mining contractor and DRA as the engineering, procurement and construction management engineer and will likely continue using DRA for some underground infrastructure engineering. “Our plan for now is to continue using a mining contractor to develop the WBJV Project 1,” he continues.

Reserves and resources

The WBJV Project 1 has 8.2 Moz measured and indicated 4E resource and a 4.7 Moz proven and probable reserve, comprising a ratio of 64% platinum, 27% palladium, 5% rhodium and 4% gold.

Financing

Platinum Group Metals announced in April that it expects the peak funding for its WBJV Project 1 to increase by 2% to $514 million on the back of escalating operating costs. Despite this, Jones says that the project’s peak funding requirements have already been fully funded. The remaining development of the WBJV Project 1 will be funded using $106 million from net proceeds of off ering and the company’s existing $55 million in cash, as well as a $40 million operating facility that has been signed with Sprott Resource Lending Partnership for additional working capital. Jones expects the cash costs for the WBJV Project 1 to be in the lowest quartile at $655/oz of high grade Merensky.

WBJV Project 3

The WBJV Project 3, which hosts indicated and inferred mineral resources, is expected to commence with feasibility and development work once Project 1 is in production. MRA