World-wide interest in exploration for platinum and palladium continues to be stimulated by the dramatic rise in prices for these commodities. Since 1996, the price of palladium has steadily increased from levels of around US$100 per oz., reaching a high of US$1,000 per oz. by the end of last year before falling back to current levels of US$650 per oz. Soaring prices have been fueled by strong demand in the automotive sector, combined with uncertainty regarding shipments from Russia, which accounts for about 66% of the world’s palladium supplies. South Africa represents a further 25%. Palladium is mainly used in catalytic converters in automobile exhaust systems, and, to a lesser extent, in electronic components and dentistry.
Platinum has similarly strengthened from levels of just over US$400 per oz. in January 2000 to more than US$600 per oz. for the first time last August. Prices are currently sitting at around US$610 per oz. More than half of the demand for platinum comes from the jewelry sector. Platinum is also used in autocatalysts and in such high-tech applications as computer hard drives, cell phones and fuel cells. South Africa accounts for more than 70% of the global platinum market, whereas Russia represents about 20%.
Gold Field’s Craig Nelsen, senior vice-president of exploration, says the company was able to capitalize on the PGM experience of key members in its exploration division. Gold Fields was formed in 1998 from the merger of the gold assets of Gold Fields of South Africa (GFSA) and Gencor. A former asset of GFSA is the Northam platinum mine in South Africa, which was advanced and developed all the way from the exploration stage. “Even though we’re not directly involved, there is an awful lot of company experience on that project,” says Nelsen.
Gold Fields can earn a 51% interest in the APP project by spending US$13 million over six years. The South African major has already spent more than US$5 million to date and earned a 30% vested interest.
The area of interest is a 125-km-long regional crustal contact dividing Early Proterozoic volcanic and sedimentary rocks of the Svecofennide greenstone belt from Archean rocks that include gneisses, granites and older greenstone belts. A series of layered, mafic-ultramafic intrusions are localized along this major geological feature.
Outokumpu first targeted the area in the 1960s for extensions of its chrome operations at Kemi. During the 1980s, the company explored specifically for PGMs, amassing a database of more than 1,100 drill holes. Several copper-nickel-PGM occurrences were identified in several early Proterozoic mafic-ultramafic intrusions, including the Portimo complex and Penikat intrusive.
When Outokumpu was active on this project in the 1980s, palladium was trading at US$60-80 per oz. and the target was small, high-grade pockets. A lot of Outokumpu’s drilling was done in clusters around higher-grade intercepts, explains Nelson, whereas Gold Fields has taken a more regional, bulk-minable approach.
When asked why Outokumpu felt the need to bring in a joint-venture partner, Nelsen told The Northern Miner that the deal allowed the Finnish miner to leverage a large database, as well as ground that it controlled, by joining forces with a company with which it felt compatible.
‘True partnership’
“It’s been a true partnership, with Gold Fields taking on the mining and processing sides on-site, with a lot of help from Outokumpu metallurgists and technologists looking hard at the smelting side,” Nelson says.
The Portimo layered complex hosts fault-displaced mafic intrusive bodies. Outokumpu has generated four resource targets, two of which, known as Konttijarvi and Ahmavaara, occur as broad zones of lower-grade, disseminated copper-nickel-PGM sulphide mineralization near the base of the Suhanko intrusive.
These two targets were the initial focus of last year’s program of 5,000 metres of resource definition drilling by the APP, under the operatorship of Gold Fields. Last August, the joint venture unveiled a preliminary, 2.9-million-oz. PGM resource for the two deposits, contained in 49.2 million tonnes grading 1.4 grams palladium, 0.34 gram platinum and 0.12 gram gold per tonne, plus 0.19% copper and 0.1% nickel.
The estimate was prepared by Snowdon Mining Industry Consultants using a combined cutoff grade of 0.5 gram palladium-platinum-gold. Preliminary analysis suggested that most of the resource could be mined by open-pit methods at an overall stripping ratio of 2-to-1. None of the resource is any deeper than 200 metres.
Up to last year, the Konttijarvi deposit had received the bulk of the work, with 202 diamond drill holes totalling 13,418 metres. Measured, indicated and inferred resource totalled 23.6 million tonnes grading 1.57 grams palladium, 0.43 gram platinum and 0.11 gram gold, plus 0.14% copper and 0.09% nickel.
The Ahmavaara target, based on 34 core holes totalling 4,846 metres of drilling, contains an inferred resource of 25.6 million tonnes grading 1.25 grams palladium, 0.26 gram platinum and 0.12 gram gold, plus 0.24% copper and 0.11% nickel. Ahmavaara is where the real expansion potential exists, says Nelsen, because it’s part of the much larger Suhanko intrusion, whereas Konttijarvi is an isolated, faulted-off block.
Twelve rigs
This past winter, Gold Fields had as many as 12 rigs turning on the APP. Since the New Year, about 35,000 metres of drilling have been completed. The focus of the program has been to upgrade the resource on 50-metre sections, with 25-metre spacing along those sections down to a depth of 150 metres. This will put the first four years of potential mining reserves at both deposits into measured and indicated categories.
The partnership has extended both deposits downdip, and they continue to remain open. Of the two deposits, Konttijarvi is the more constrained, as it is a fault-bounded segment. The deposit extends over 1,200 metres of strike length.
Based on the drilling to date, Nelsen says the Ahmavaara deposit looks as if it will be extending well to the east. Ahmavaara occurs as a showing on the western end of the Suhanko intrusive, which is exposed over a strike length of 16-18 km. Nelsen says Outokumpu recorded past ore-grade intercepts throughout the entire intrusion, particularly in areas where there was good geophysical response.
The western margin of Ahmavaara is bounded by a northwest-striking fault that continues to Konttijarvi. Ahmavaara dips 30-40 at surface but flattens out to the point that it is almost horizontal, starting at depths of between 100 and 150 metres. Both deposits have thick zones averaging about 50 metres. There are higher-grade sections, which are associated with massive sulphide intercepts within the disseminated sulphide zones. An updated resource calculation is expected in early July.
SK reef
The third resource target in the Portimo complex is the high-grade SK reef, which is exposed principally in the Narkaus intrusion and the SK intrusion, within 15 km of the proposed plant site for Ahmavaara and Konttijarvi. The SK reef has been traced over a distance of 15 km, with a thickness averaging greater than 1 metre. Previous drilling has intersected PGM values in the range of 8-10 grams at a palladium-to-platinum ratio of 4-to-1. In addition, there are fairly large areas of moderate-grade disseminated sulphides occurring in the footwall of the gabbros, within 20-25 metres of the base of the reef. The target has been deemed minable by open-pit methods.
The SK reef is capable of supplying high-grade-to-supplement mill feed during the initial startup of Ahmavaara. Metallurgy tests indicate that the mineralization is compatible with the processing methods proposed for Portimo.
With spring b
reak-up, Gold Fields has moved several rigs on to the SK reef for a first pass of drilling totalling 3,500 metres. The aim is to confirm continuity of mineralization on selected fences down to a depth of about 100 metres, before launching a much larger program of reserve-definition drilling.
A conceptual scoping study of a 5-million-tonne-per-year operation and centralized milling facility was completed on the known resource. It supported continued advancement toward a feasibility study, which is expected to get under way this summer once the new resource calculations are in-hand. A major metallurgical program is in progress.
As it stands, a proposed 5-million-tonne operation would be capable of producing about 250,000 oz. PGMs per year, with significant copper-nickel credits. The project is likely to grow in scope over the next year, and Gold Fields will be investigating the project’s potential as a 10-million-tonne-per-year operation.
The joint venture has looked at various options for treating the PGM concentrate, including utilizing Outokumpu’s Harjavalta copper-nickel smelter, some 200 km away. Nelsen says it may be feasible to develop a new smaller smelter at Harjavalta to take advantage of the acid plants, power and trained workforce.
“The initial excitement we had about this project is still holding,” says Ian Cockerill, managing director and chief operating officer of Gold Fields. “We have had another quarter of drilling results and geological information that give us reason to suggest we’re developing something that’s starting to shape-up, and which is moving into the prefeasibility project stage.”
Gold Fields has also done a lot of work on the Penikat intrusion, 40 km southwest of Portimo. Penikat is a 23-km-long layered sequence that hosts three reef units. The reefs are conformable to igneous layering that strikes in a northeast direction and dips moderately to steeply to the northwest. Gold Fields says Penikat is comparable to the Merensky reef in the Bushveld complex of South Africa and to the J-M reef at the Stillwater complex in Montana.
The joint venture initially focused on the northern 7 km of the SJ reef, in the Sompujarvi block. “We drilled a lot of holes there but are not in a position to make a resource statement,” says Nelson. “The reason is intense variability. We remain excited about the long-term potential of the project, but it is going to take bulk sampling and underground test mining to turn drill data into resource data.”
In the short term, the joint venture has decided not to divert any further expenditures on the SJ reef. Instead, the partners will focus on the feasibility study at Portimo.
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