A feasibility study for Platinum Group Metals’ (PTM-T, PLG-X) Western Bushveld joint venture in South Africa proposes producing 160,000 oz. platinum per year for at least nine years, plus palladium, rhodium and gold.
All together, the project would produce 235,000-271,000 oz. of platinum, palladium, rhodium and gold (4E), starting in 2010.
The study estimates there’s enough ore to process 140,000 tonnes per month for up to 13 years and the overall mine life could stretch on for 22 years.
The company plans to mine two deposits: the first 15 years of production would come from the Merenski deposit, which has a reserve of 18 million tonnes grading 5.45 grams per tonne combined 4E for nearly 3.2 million combined oz. Of that, about 64% is platinum, 27% palladium, 4% rhodium and 5% gold.
The company will also bring the lower-grade UG2 deposit into production. UG2 has a reserve of 11.3 million tonnes grading 3.4 grams 4E per tonne totalling 1.2 million combined oz. The breakdown of UG2 reserves is 63% platinum, 26% palladium, 10% rhodium and 1% gold.
Development costs — US$507 million for the mine and concentrator and US$684 million for life-of-mine funding — include US$63.3 million for the self-generation of power until the end of 2012. The solution for the power issue, which would include diesel storage, was not included in the prefeasibility study.
The next step is for Platinum Group’s joint-venture partners, Anglo Platinum (ANP-L, AMS-J) (37%) and Wesizwe Platinum (WSZWF-O, WEZ-J) (26%) to go over the study and make a construction decision by early October.
The study estimates the project’s net present value (NPV) at US$987 million pre-tax and US$578 million after taxes, using a 5% discount rate and three-year trailing average metal prices.
Using recent metal prices, the project is much more attractive with an NPV of US$2.3 billion before taxes and US$1.4 billion after.
The project has an internal rate of return (IRR) of 20.08% before taxes at a platinum price of US$1,295 per oz.
When recent metals prices are used, including US$2,035 per oz. platinum, the pretax IRR rises to 34%.
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