“The near-term target is 2.3 platinum ounces by 2010,” he says, “and then – in terms of our newly-completed fiveyear plan – we are looking at a growth target of 2.5 million ounces by 2012. It is only in the longer term that we envision production of 2.8 million oz, and that will not be before 2015.”
Brown emphasises that all the building blocks are not yet in place. “We’ve obviously identified opportunities to reach 2.8 million ounces, but quite clearly we’re not going to discuss them until we’ve got them in the bag,” he insists.
The group’s operations on the Bushveld Complex in South Africa and the Great Dyke in Zimbabwe – the two largest known deposits of PGMs in the world – give it an attributable mineral resource inventory (inclusive of mineral reserves) of 187 million ounces of platinum. It also has offshore exploration projects in Botswana, Canada, China, Madagascar and Mozambique.
The group’s primary operation is wholly-owned Impala Platinum, situated on the western limb of the Bushveld Complex. Also in South Africa are Marula Platinum (77.5%) and Two Rivers (45%), both of which are located on the eastern limb of the Bushveld Complex.
Implats also has an investment in platinum producer, Aquarius Platinum Limited (8.6%), and its subsidiary Aquarius Platinum (South Africa) (20%), and its Zimbabwe activities are focused on Zimplats (86.9%) and Mimosa (50%).
“A major growth avenue that we have been studying involves organic growth in both South Africa and Zimbabwe,” says Brown, “but obviously, because of the political uncertainty in Zimbabwe, we have tried to position ourselves into providing a South African organic growth pipeline. This was the major driver behind the R4 billion acquisition of African Platinum plc (Afplats), showing shareholders that we had significant potential in both countries, and at the same time balancing our resource bases between the two,” he points out.
EXPANSION TO 2012 FROM EXISTING RESOURCES
“The expansion that we have announced – the 2.5 million ounces to 2012 – is largely organically motivated and will come out of existing resources,” Brown explains. “In other words we already have the resources to produce that 2.5 million ounces – the building blocks are essentially there,” he adds.
Brown confirms that the main elements of the R25 billion to be spent by Implats include: the sinking of three deep- level shafts plus other projects at the Impala operations at Rustenburg; the Marula UG2 and Merensky projects; the Leeuwkop project; Zimplats expansion in Zimbabwe; expansion of smelting and refining plants; and housing.
The primary Implats operational unit, Impala Platinum, has operations situated on the Impala lease area on the western limb of the world-renowned Bushveld Complex, near Rustenburg in South Africa, and in Springs, east of Johannesburg. It has a 30-year production plan in place to produce between 1.1 and 1.2 million ounces of platinum per annum.
“We are in the process of sinking and commissioning two new-generation shafts that will replace some of the older shafts being phased out,” Brown reveals. “They will cost a combined total of R7 billion.”
Number 20 shaft will be in full production by 2013, and will run for 23 years producing 150 000 platinum ounces per annum, according to Brown. Number 16 shaft will move into full production by 2016, and will produce 190 000 ounces a year over a life of 27 years. This combined production of 340 000 ounces will amount to almost a third of Rustenburg’s production of over 1.1 million ounces per annum.
THIRD NEW IMPALA SHAFT ON THE WAY
Up-front capital has been approved for a third new-generation shaft – Number 17 – for which the finance capital still needs to be finalised, which will take total expenditure at Rustenburg to more than R10 billion. “We are already purchasing the capital equipment that has long lead times to ensure that when the project goes to the Board for final approval, the necessary elements are in place,” Brown explains.
Marula Platinum Limited is involved in two projects, one on the UG2 reef and the other on the Merensky reef. They will produce a combined total of 245 000 platinum ounces a year. Implats owns 77.5% of Marula, which was one of the first operations developed on the relatively under-exploited eastern limb of the Bushveld Complex. It is located in the Limpopo Province, some 50 km north of Burgersfort.
In FY2006 the mine’s UG2 operation – which consists of an underground mine and a metallurgical plant – produced 61 000 ounces of platinum in concentrate. “At the moment we are ramping up on the project, and should reach full production of 130 000 ounces per annum by June 2010,” Brown explains. “Capital expenditure on the UG2 project was R830 million, added to which was a purchase price of the mineral rights for R950 million,” he says.
The Marula Merensky expansion – which will cost R3 billion – is in the feasibility stage at the moment. “The study is almost complete, and the results should be available early in 2008, when a decision on the project will be made,” Brown reveals. “If the go-ahead is given, it will result in full production of 115 000 ounces per annum by 2013, although there will be lower production earlier in the ramp-up phase,” he adds.
“With our Leeuwkop project – resulting from our acquisition of Afplats – we are looking to produce about 160 000 ounces per annum,” Brown enthuses. “We are currently re-visiting the earlier BFS and making adjustments where necessary. We hope to start implementation early in 2008, first production is scheduled for June 2010, and the project will be completed and in full production by 2013,” he continues.
“A possible future benefit of this project is the sharing of strike length with other sites in which Implats has a shareholding – the Inkosi and Imbasa farms. This could allow us to look at further ramping up of production at a later stage,” he points out.
Cost of the Leeukop project was originally quoted at R3 billion by the previous owners, but Brown warns: “we expect an increase of some magnitude. I am hesitant to put a figure out there until we have finalised the BFS review – but we should finalise that in the new year,” he adds.
FULL PRODUCTION AT TWO RIVERS BY MID-2008
Implats has a 45% stake in the Two Rivers platinum mine – a joint venture with ARM Platinum – which is located near Steelpoort, in Mpumalanga.
The plant was commissioned last year and started platinum production one month ahead of schedule and R197 million under its overall budget of R1.3 billion. Currently it is mining an average of 110 000 tpm, and the balance is drawn from its 1 million tonne stockpile to make up the plant’s full production of 225 000 tonnes per month. “Full production should be realised in the second half of 2008,” says Brown.
Looking to the future, there are two major factors in terms of upside for Two Rivers. “One is the possibility, with minor modifications, of increasing plant capacity by about 10% to between 250 000 and 260 000 tpm,” he reveals.
Then there is the Merensky reef. “This is being explored presently, but it is very early days, and it will probably take three to five years to gather all the information we will need to make any future production or expansion decisions,” Brown adds. “In the interim, mining will remain focused on the UG2 reef, which has a mineral reserve of 40.3 million tonnes.”
MORE ZIMBABWE EXPANSION POSSIBLE
Moving to Zimbabwe, Zimbabwe Holdings Limited (Zimplats) – 86.9% owned by Implats and located on the Hartley Geological Complex on the Zimbabwean Great Dyke, south-west of Harare – is currently producing about 90 000 platinum ounces a year.
“We are increasing this to 160 000 ounces by June 2010,” Brown reveals. “The capital involved is about US$340 million (almost R2.4 billion) – some 30% above the initial estimate of US$258 million (R1.8 billion) – and this includes the two underground mines and the concentrators,” he calculates.
“The next stage would involve looking to increase our smelting capacity, which would obviously require additional concentrating capacity and also opening of underground portals,” Brown predicts. “Capital expenditure for this sort of expansion would be significant, and quite clearly we would want to ensure that the climate was right for that, “he emphasises. The project started with an opencast mine (1.2 million tonnes per annum), then opened Portal 2 as a trial underground mine and proved the concept. Portal 2 is now at full production (just over 1 million tonnes per annum), and portals 1 and 4 are underway.
“Portal 1 will be completed by FY 2009 and portal 4 by FY 2010,” Brown reveals. It is these expansions which will push production to 160 000 platinum ounces per annum.
Turning to the Mimosa mine, it has been expanded incrementally over a number of years. When we bought into it, it was producing around 30 000 ounces per annum – and we are increasing this to 100 000 platinum ounces. The cost is US$28.8 million (R200 million), and production is scheduled to reach 100 000 ounces by early 2008.
Mimosa is wholly owned by Mimosa Investments Limited – a Mauritius-based company held by Implats and Aquarius Platinum Limited (Aquarius) in a 50:50 jointventure. It is located on the Wedza Geological Complex on the Zimbabwean Great Dyke, east of Bulawayo. The operation comprises a shallow underground mine, accessed by a decline shaft system, and a concentrator.
IS 1 MILLION OUNCES PER ANNUM POSSIBLE?
Replying to reports that Zimplats could reach eventual production of 1 million ounces per annum, Brown describes this as a longer-term aspiration. “When we invested in the Zimbabwean assets we knew that the medium to long-term picture was the one in which we were investing,” he explains.
“It’s frustrating not having been able to exploit this as quickly as we had wanted to, but having said that, it remains an asset we still see as a valuable prize and a significant future differentiator between Implats and our competitors,” he evaluates.
“We are always doing scenario planning in terms of what our prospects could be, and quite clearly we would want to be able to ‘pull the trigger’ when the climate is right,” Brown states. “I fear though that – even if things improved dramatically – there would be still be a great deal of work to be done to ensure that we would be in a position to expand once the dust has settled.”
Reverting to the overall Implats operation, Brown emphasises that it is a company that has significant growth plans.
“We believe in the demand and supply fundamentals of the market, and we are answering that demand call,” he says. “Quite clearly, the dominant consideration is to deliver that growth cost-effectively from both a growth and capital perspective. Sure, there are some real challenges out there,” Brown concludes, “but I believe those challenges can be overcome with strong leadership within the mining industry itself.”