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TSX-listed Platinum Group Metals is advancing its rare palladium-dominant Waterberg project through definitive feasibility study stage at a time when palladium supply is in deficit.

The company plans to begin construction by 2020, at a time when the supply of this precious metal may be even further threatened due to the possible shut down of some of South Africa’s difficult and high cost deep-level, narrow reef platinum mines where palladium is produced as a by-product, President and CEO MICHAEL JONES tells CHANTELLE KOTZE.

The company’s key business objective right now is to conclude and release the findings of its DFS on the Waterberg project by the end of May 2019, says Jones.

This article first appeared in Mining Review Africa Issue 2, 2019

The ongoing DFS, being undertaken by Stantec Consulting International and DRA Projects as the lead independent project engineers, is considering two large-scale underground fully mechanised bulk mining and milling options – a 600 000 tpm mining complex producing 744 000 ozpa of platinum, palladium, rhodium and gold (4E) platinum-group metals (PGMs) and a more modest, but still large, phased approach commencing with a first phase 250 000 to 350 000 tpm alternative.

On completion of the DFS by the end of Q2, 2019, the next milestone within the Waterberg project’s development will be for South African platinum miner Impala Platinum (Implats) to complete its strategic investment in Waterberg JV Resources to gain a controlling interest in the company.

Platinum Group Metals holds a 50.02% effective interest in Waterberg JV Resources, with the Japan, Oil, Gas and Metals National Corporation (JOGMEC) holding a 21.95% interest.

The Waterberg project is further supported by a group of investors including Impala Platinum (Implats) holding a 15% interest and empowerment partner Mnombo Wethu Consultants holding the balance of the joint venture.

JSE-listed, broad based empowerment group, Hosken Consolidated Investments Limited has recently purchased more than a 15% ownership interest in Platinum Group Metals.

In addition to its 15% stake in the Waterberg project and first right of refusal to its concentrate offtake, Implats further acquired an acquisition and development option for an additional US$166 million investment, allowing Implats to increase its stake to a 50.1% controlling interest after the completion of the DFS – which is exercisable up to 90 days after the DFS.

In doing so, Implats would have to purchase an additional 12.195% share from JOGMEC for $34.8 million as well as an additional 22.815% from both JOGMEC and Platinum Group Metals by spending $130 million on project development.

Additionally, Implats is responsible for delivering full project financing for 100% of the Waterberg JV Resources partners and shareholders to achieve their controlling interest.

Located on the Northern Limb of South Africa’s Bushveld Complex, the project has the potential to positively impact South Africa’s economic development, creating high-value jobs and skills training opportunities for local residents, says Jones, noting that its shallow depth, good grades and ability to support a fully mechanised operation, also stands the project in good stead to be a safe mine with costs in the lowest quartile in the PGMs sector.  

How it all started

First discovered in 2011, Waterberg was found to be a completely new extension of the Bushveld Complex that Platinum Group Metals discovered by extending the Northern Limb further north than anyone else had in the past.

Based on available data from the Council for Geoscience and funded by JOGMEC, PTM used magnetic surveying to confirm whether the Bushveld Complex extended beneath the thick Waterberg sediments – which it did.

Jones explains that Platinum Group Metals found an area where the cover rocks were relatively thin and using drilling, intercepted the Waterberg deposit on the third hole.

A prefeasibility study (PFS) was completed in 2016 by international and South African engineering firm WorleyParsons RSA, who validated the 2014 Waterberg preliminary economic assessment results for a large-scale, shallow, decline-accessible, mechanised 4E mine.

It also confirmed a 3.5-year construction period, as well as a yearly steady-state production rate of 744 000 ozpa of 4E in concentrate.

This was followed by the filing of a mining right application with the South African Department of Mineral Resources in September 2018 (which was accepted in October) and a mineral resource estimate update in October 2018, the results of which are being used for detailed mine planning in the DFS.

The currently mineral resource stands at 242 Mt of measured and indicated 4E ounces grading at 3.38 g/t 4E comprised of 63.04% palladium, 29.16% platinum, 6.37% gold and 1.43% rhodium, for a total measured and indicated mineral resource estimate of 26.34 Moz of 4E.

How it will all come together

The deposit, which starts approximately 140 m from surface along an 8 km strike length, will be developed using long hole open stoping via three portal complexes across the initial five defined mining areas – the North Boundary F, South Boundary F, Central Super F, as well as the T zone and South F.

The ore mined via the three portal complexes will be fed into either one or two modular 300 000 tpm comminution and floatation plants.

The South Portal will provide access into T Zone and South F mining areas and the North Portal will provide access via its own decline cluster to the South Boundary F and North Boundary, while the Central Portal will provide access to the Central Super F mining area - referred to as the “tonnage factory” as this mining area alone will account for 300 000 tpm of production.

“The resource thickness, and its shallowness makes the deposit amenable to bulk mechanised mining allowing the operation to move away from conventional, high-cost narrow reef mining where deposits are usually between 1 m and 2 m thick, and where economic and safety pressure in recent years has been forcing the closure of these types of mines,” says Jones.

The Waterberg resource also has a unique metal balance in that it is dominated by palladium ore, and also contains platinum, rhodium and gold as well as copper and nickel.

The deposit also has low chrome content and the right amount of base metals – making it a perfect Merensky reef replacement capable of being fed into most of South Africa’s smelters.

Meanwhile, the metal balance at the deposit also bodes in favour of the current gold and palladium price, notes Jones, adding that the current basket price for the T reef and F reef are almost exactly the same at US$1 080/oz given the strong gold and palladium pricing.

The future of the resource

“The Waterberg deposit has not been closed out as yet and remains open, both along strike and at depth,” says Jones. The resource extends well beyond the initial 8 km strike length, extending for at least 13 km.

"It also extends as far down as 1 700 m while current reserves have artificially been cut off at 1 250 m below surface.

“While there is lots of additional potential at Waterberg, we are at this point in time interested mainly in what is minable and what we have proven to be minable,” says Jones.

While the company remains focussed on completing the Waterberg DFS, it has at the same started reviewing several new business opportunities focused on platinum group element metals, including extraction opportunities and potential new uses.

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