HomeFeatures & AnalysisPlatinum Group Metals announces positive results of PFS for Waterberg project

Platinum Group Metals announces positive results of PFS for Waterberg project

South Africa – The project was completed by South Africa based engineering firm WorleyParsons RSA, trading as Advisian.

Platinum Group Metals holds a 58.62% effective interest in the Waterberg project with the Japan, Oil, Gas and Metals National Corporation (JOGMEC) holding a 28.35% interest.

Empowerment partner Mnombo Wethu Consultants holds the balance of the joint venture. JOGMEC funding is in place to advance the project through completion of a feasibility study (FS).

Platinum Group Metals plans to continue drilling the deposit and to advance the project to completion of a FS and a construction decision. The company also plans to file a mining right application, with joint venture approval, based substantially on the results of the PFS.

Highlights of the PFS

  • Validation of the 2014 Waterberg preliminary economic assessment (PEA) results for a large scale, shallow, decline accessible, mechanised platinum, palladium, rhodium and gold (4E) mine.
  • Annual steady state production rate of 744 000 4E ounces in concentrate.
  • A 3.5 year construction period.
  • On site life-of-mine average cash cost of US$248 per 4E ounce including by-product credits and exclusive of smelter discounts.
  • After-tax Net Present Value (NPV) of $320 million, at an 8% discount rate, using three-year trailing average metal prices.
  • After-tax NPV of $507 million, at an 8% discount rate, using investment bank consensus average metal prices.
  • Estimated capital to full production of approximately $1.06 billion including US$67 million in contingencies. Peak project funding estimated at $914 million.
  • After-tax Internal Rate of Return (IRR) of 13.5% using three-year trailing average price deck.
  • After-tax IRR of 16.3% at investment bank consensus average metal prices.
  • Probable reserves of 12.3 million 4E ounces.
  • Indicated resources updated to 24.9 million 4E ounces (2.5 g/t 4E cut-off) and deposit remains open on strike to the north and below a 1 250 m arbitrary depth cut-off.

“The completion of the PFS significantly increases the attributable 4E reserves and is an important milestone for the project and the company. The PFS has a similar approach, similar peak funding in US dollar terms with increased production, compared to the PEA,” says R. Michael Jones, CEO and co-founder of Platinum Group.

“Waterberg is designed to be a low cost, multi-decline, fully mechanised, mining complex along an initial 13 km deposit strike length with two 300 000 tpm mills built in close sequence. At 744 000 oz annual steady state production and a modelled 18 year mine life, Waterberg is very large and offers excellent exposure to the essential metals of platinum, palladium, rhodium and gold. The PFS covers only the first 218 Mt in indicated resources to date.”

Scale and PGM industry position

As a result of the shallow depth, good grades and a fully mechanised mining approach, the Waterberg project has the opportunity to be a safe mine within the lowest quartile of the industry cost curve.

The project resources consist of 60% palladium and the PFS estimates that Waterberg will produce 472 000 oz of palladium annually; more palladium than the Stillwater Mine produced in 2015, or about 6% of the world’s palladium production in 2015.

Producing approximately 744 000 4E ounces per year, Waterberg would be one of the largest platinum group metals mine complexes in South Africa based on 2015 production numbers.

It is estimated that Waterberg will create approximately 3 361 new primary highly trained jobs with transferable skills. The increased safety, improved working conditions, low costs and decline access for rapid development all provide attractive features compared to traditional platinum and palladium mines in South Africa.

The project is in an area prioritised for economic development. Relations with the small rural community in the area have been business like and positive.