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New R4 billion platinum mine for SA

At work in a
platinum smelter
Johannesburg, South Africa — MININGREVIEW.COM — 08 July 2008 – Toronto-listed Platinum Group Metals (PTM) has released details of a major new platinum group metals (PGM) mine to be located in the heart of the Western Bushveld area of South Africa, where 70% of the world’s platinum is produced.

The partners in the joint venture are PTM, which holds 37% and is the designated operator; Anglo Platinum – the world’s largest producer of platinum – also with 37%; and Wesizwe Platinum with 26%.

A bankable feasibility study (BFS) into the Project One platinum mine released here and in Vancouver revealed that it would produce between 235 000 and 271 000 PGM oz a year over the first nine years of the 22-year life of mine. Capital cost for the mine and concentrator complex was calculated at US$507 million (more than R4 billion) for peak funding and US$684 million (almostR5.5 billion) for life of mine funding. A contingency of US$58.4 million (R467 million) was included in the overall capital estimate.

The study added that the partners would now proceed to consider a decision to mine within 90 days, following the delivery of the report to them on 1 July 2008 “They will review the BFS, and it is planned that a decision to mine will be made by early October 2008,” it added.

During the intervening period project management, project construction, engineering, procurement and construction management will be planned. Project finance arrangements and legal documentation for the formal mining rights application will also be undertaken.

PTM says it has been approached by several commercial banking groups interested in participating in a lending syndicate to provide the debt requirements of the company and the project.

The results of the BFS are robust and the project has a 20% IRR pre-tax with a net present value (NPV) at a 5% discount rate of US$987 million (almost R8 billion), based on three-year trailing metal prices. Using recent metal prices the project IRR is 34% pre-tax and its NPV at a 5% discount rate is US$2.3 billion (more than R18 billion).