Eastplats plans bigger, better PGM smelter

Vancouver – As part of a refurbishment plan, Eastern Platinum (ELR-T, ELR-L) is looking to upgrade platinum group metal (PGM) smelting capacity at its subsidiary’s Crocodile River mining complex in South Africa’s Bushveld Complex.

The upgrade plan would see the smelter complex producing up to 600,000 oz. of PGMs in matte per year.

A previous study on the existing smelting equipment indicated it was in good condition and evaluated three options to reestablish operations. Eastplats views two of the options as suitable to its requirements.

One of the options saw a phased approach in upgrading to a 20-megawatt capacity by initially refurbishing the two existing 3.7-megawatt furnaces and then commissioning an additional 14 megawatts.

The other also reviewed phasing in a 20-megawatt operation but by first installing a new 14-megawatt furnace and then bring the refurbished furnaces online for the additional 7.4 megawatts.

Both plans had cost estimates of about $70 million and an anticipated build-up period of two years to reach Phase 1 production levels (250,000-to-300,000 oz. PGMs per year) and three-to-four years to reach Phase 2 output of 500,000-to-600,000 oz. PGMs annually.

Eastplats, optimistic on the PGM price outlook and demand for additional smelting capacity, plans to commission an updated analysis of the proposals.

South Africa only has three large PGM smelting facilities and one smaller operation prompting concerns of a bottleneck in smelter and refining capacity.

The Crocodile River mine was established in 1987 but cycled in and out of operation due to metal prices fluctuations, currency swings and mine cost over-runs. It was placed back into production in 2004 and underwent extensive underground development and refurbishment of surface facilities.

The operation consists of four mining blocks with access by declines and shafts. As of late-2005, measured and indicated resources stood at 26.76 million tonnes at 2.74 grams platinum per tonne, 1.2 grams palladium per tonne, 0.45 gram rhodium per tonne and 0.03 gram gold per tonne.

In mid-2006 Eastplats completed its acquisition of three private companies that collectively held a 69% interest in the South African PGM producer Barplats Investments (BPL-J). Barplats’ principal mining operation is its 100,000 oz. per year Crocodile River PGM complex in the western Bushveld. It also holds the Kennedys Vale project in the Bushvelds eastern limb that is adjacent to Eastplats’ Spitzkop PGM project.

Eastplats issued about 288.6 million shares plus $27.7 million in cash for the acquisition and satisfied an equity financing requirement by successfully closing a $150-million brokered private placement.

Eastplats is currently in the process of closing a $175-million financing earmarked to fund development of its Spitzkop project and for the smelter evaluation and refurbishment plans at Crocodile River.

The company also recently received approval from the minority shareholders of Barplats to acquire those shares and bring its interest level to 74%. Its Black Economic Empowerment partner, Gubevu Consortium Holdings, will hold its requisite 26% interest with Barplats becoming a private company and delist from the Johannesburg Stock Exchange. Eastplats is acquiring a secondary listing on that exchange.