PGM miner Northam says it will recommence with mining operations at its Kukama shaft situated at its Eland mine complex in the new financial year – F2020.
This significant development comes after the successful conclusion of a feasibility study for the Kukama project.
After Northam purchased a 100% interest in the Eland mine from Glencore Operations South Africa in February 2017 for R175 million, it placed the mine on care and maintenance in 2015 after which Northam continued to manage it as such whilst undertaking the feasibility study for the Kukama shaft.
The Kukama shaft feasibility study has indicated:
- Steady state production of 150 000 ozpa 4E, at unit costs in the lower half of the industry cost curve.
- Forecast investment returns comfortably in excess of Northam’s current weighted average cost of capital.
- Forecast positive free cash flow generated from year four onwards.
- Creation of 2 800 permanent jobs.
- Life of mine in excess of 30 years.
Whilst completing the feasibility study for Kukama shaft and following positive feedback from the study, Northam commenced early work in preparation for its recommissioning.
This includes refurbishing underground fixed and mobile equipment, as well as certain sections of the concentrator. Processing of the tailings storage facility at Eland mine has also commenced, which facilitated recommissioning of the surface plant and associated infrastructure.
The next steps
Conversion of the Kukama decline shaft into a footwall array will start in F2020, along with limited early stoping.
Strike development and stoping build-up is scheduled to commence in F2021.
Production is forecast to reach 100 000 ozpa 4E by 2025 and steady state production of 150 000 ozpa 4E is forecast from 2029.
Total developmental capital expenditure is estimated at R2.2 billion over a five-year period, in nominal terms (F2019 terms: R1.9 billion), which includes a provision for working capital requirements during the development phase.
The project will be fully funded from Northam’s own resources.
Northam chief executive Paul Dunne points to the positive investment return demonstrated by the Kukama project, which comfortably exceeds the company’s weighted average cost of capital.
“The project further diversifies the group’s operations and production capacity and does so efficiently by utilising an extensive existing capital footprint. Kukama is a project that lends itself to scaling up or down and will form the production base for the broader Eland complex.”
“The mining method to be implemented at Kukama is well-known and well proven. Our focus will be on safe, quality, long-life production, whilst creating sustainable long-term employment in the platinum industry.”