Ivanhoe Mines strikes streams and offtake agreements for Platreef

Ivanplats, the South African subsidiary of Ivanhoe Mines (TSX: IVN; US-OTC: IVPAF),  has struck two stream financing deals with Orion Mine Finance and Nomad Royalty for its Platreef palladium-rhodium-platinum-nickel-copper-gold project in South Africa.

Proceeds from the US$200 million gold-stream and the US$100 million palladium and platinum stream will be used to build the first phase of the mine, with commercial production expected to start in 2024.

The company says a definitive feasibility study on a phased development plan for the initial mine and later expansions will be completed in the first quarter of next year.

In addition to the streams, Ivanplats has signed offtake arrangements with Heron Metals (a joint venture with Trafigura) and Northam Platinum. The offtake deals are for 100% of Phase 1’s PGM concentrate production and total 40,000 tonnes per year. The PGM concentrate contains six payable metals: palladium, rhodium, platinum, nickel, copper and gold.

“The stream financing agreements, which represent a small fraction of Platreef’s incredible resource base, and accompanying offtake arrangements are critical milestones in the progression to commercial production for Ivanplats,” Marna Cloete, president of Ivanhoe Mines, said in a news release. “They provide funding for a significant portion of the mine’s initial phase of development, as well as a long-term home for our PGM, nickel and copper concentrates.”

Cloete noted that the first phase, 700,000 tonne-per-year operation is “only our starter mine—one that will establish a strategic production foothold on South Africa’s Bushveld PGM Complex, and support potential future expansions of this unique orebody, which contains 59 million ounces of platinum, palladium and rhodium plus gold (3PE+Au) in indicated resources and a further 94 million ounces in inferred, in addition to significant quantities of nickel and copper, at a cut-off grade of 1 gram per tonne 3PE+Au.”

In addition, future expansions to 12 million tonnes per year “and beyond,” he said, “would position Platreef among the world’s largest and lowest cost nickel and PGM mines, producing more than 24,000 tonnes of nickel and 1.1 million ounces of palladium, rhodium, platinum, and gold per year.”

Under the stream agreements, Orion Mine Finance will provide US$225 million in funding and Nomad Royalty (in which Orion Mine Finance is a shareholder) will provide US$75 million. The facilities are a prepaid forward sale of refined metals.

Under the US$200 million gold stream, Ivanplats will deliver a total of 80% of contained gold in concentrate until 350,000 ounces have been deliver, at which point the stream is reduced to 64% of contained gold in concentrate for the remaining life of the facility (until 685,280 ounces of gold have been delivered).

Under the US$100 million palladium and platinum stream agreement, Orion Mine Finance will receive a total of 4.2% of contained palladium and platinum in concentrate until 350,000 ounces have been delivered, after which the stream falls to 2.4% for the remaining life of the facility, or the delivery of 485,115 ounces of palladium and platinum.

Under the offtake agreements, Northam Platinum will receive 50% of the concentrate production from Phase 1, which is about 20,000 tonnes per year, over a ten-year period. Ivanplats has the option to reduce this by 5,000 tonnes to an annual total of 150,000 tonnes.

Heron Metals will receive the other 50% of the PGM concentrate from Phase 1, or 20,000 tonnes per year, also for ten years, and Ivanplats has the right to lower that by 5,000 tonnes to 150,000 tonnes per year.

Ivanhoe Mines has a market cap of $12.08 billion. Over the last year its shares have traded in a range of $5.84 and $10.59 and at presstime in Toronto were changing hands at $10.00 apiece.