Platinum Group Metals (TSX: PTM; NYSE-A: PLG) is seeking South African approval to export converter matte from its Waterberg project rather than bagged concentrate, CEO Frank Hallam says.
Converter matte is a smelter intermediate that upgrades concentrates into a denser, higher-value product for the project in Limpopo, northern South Africa. The value-added compromise is to keep most processing, jobs and spend in-country while opening a bankable path to offtake and financing, the industry veteran of more than 30 years said in an interview.
“About 85% of the capital and jobs would still be in South Africa,“ Hallam told The Northern Miner in Vancouver. “And you take the traffic off the roads – instead of about 14 trucks a day of concentrate, it’s less than one truck a day of matte.”
The dual-track plan has emerged after years of talks with integrated smelter owners in South Africa, the centre of global platinum production. “They’ve told us they see the best return when they process their own material,” adding that smelting terms offered by integrated majors to Waterberg have been “demanding too much.”
South Africa’s PGM scene remains dominated by the integrated majors – Anglo American (LSE: AAL), Impala Platinum Holdings (JSE: IMP), Sibanye-Stillwater (JSE: SSW; NYSE: SBSW) and Northam Platinum — that largely control smelting capacity and purchase terms. A newer cohort is edging forward, including Ivanhoe Mines’s (TSX: IVN; US-OTC: IVPAF) Platreef, Zijin Mining Group’s Nkwe Platinum (Garatau), Wesizwe’s Bakubung, Sedibelo’s Pilanesberg and Southern Palladium’s Bengwenyama projects.
Against that backdrop of constrained capital spend and closures at mature shafts, a long-life, mechanized project like Waterberg is being framed as “make-up ounces” later this decade rather than incremental supply that overwhelms the market.
Platinum Group shares have nearly doubled over the past 12 months to C$3.68. It has a market capitalization of C$426 million.
A plan view of Platinum Group’s Waterberg project in South Africa’s Limpopo province. Credit: Platinum Group Metals
Value-add requirement
South Africa’s beneficiation demand has become the gating item for Waterberg – a thick, shallow, bulk-mechanized platinum-group metals (PGM) mine pitched to replace ounces as aging deep shafts wind down. A matte-export green light would keep most value-add onshore while giving Platinum Group a viable outlet to start moving metal and de-risk project finance.
The matte concept emerged from a three-year collaboration with Saudi Arabia partners Ajlan & Bros Mining & Metals (ABM) and the Saudi Ministry of Investment of who want to co-process Waterberg feed with spent auto-catalysts and petrochemical catalysts from the Gulf.
“They’re prepared to provide infrastructure and incentives and finance up to 75–80% of the capital at low single-digit rates,” he said. “Energy costs are 50–60% lower there, which offsets the shipping.” South African authorities, he added, have engaged constructively and appointed technical advisers to evaluate the plan.
The company’s ownership already embeds options to access smelters for Waterberg material. Implats holds about 15% of the project and a right of first refusal on concentrate, while the Japan Organization for Metals and Energy Security (Jogmec) and Osaka-based trading house Hanwa jointly hold about 22% and marketing rights, respectively.
The matte proposal, he said, would add a furnace and converter in South Africa and ship a higher-value, lower-volume product abroad.
Meanwhile, marketing and policy dynamics are central to timing. Hallam said the integrated producers “would prefer to use their capacity for their own mines” and have pushed for higher returns on processing – a stance that, in his view, overlooks the returns needed by mine builders carrying the capital and start-up risk.
“It’s all fine for them to say they want a better return,” he said, “but you can’t eat the developer’s lunch.”
‘Cash machine’
Waterberg was born from a 2007–08 “new business” ideas hunt in South Africa, Hallam explained, that led Platinum Group to stake a vast block using the country’s online cadastre system. The third hole of the 2010–11 drill program hit the intrusion with visible sulphides. Initially dismissed by majors, the discovery has since been defined by about 375,000 metres of core drilling over more than 13 km of strike.
Waterberg’s 2024 feasibility study frames a 54-year mine based on 246.2 million in proven and probable reserves grading 1.88 grams per tonne palladium, 0.85 gram platinum, 0.04 gram rhodium and 0.18 gram gold (2.96 grams per tonne 4E) plus 0.17% nickel, for 23.4 million oz. 4E. At steady state, output is about 353,000 oz. 4E per year.
At consensus prices, the study shows a post-tax net present value of $569 million, a 14.2% internal rate of return, peak funding of $776 million and roughly $6.5 billion in life-of-mine post-tax cash flow. A 20% metals price lift takes the NPV above $1 billion and the IRR to about 19%.
Platinum Group cites a fully permitted mining right with environmental authorization and an approved Social and Labour Plan, with early works focused on power, water and roads near the three host communities. Hallam said community leadership “is hugely in favour of the mine.”
“This isn’t a 10- or 15-year mine,” Hallam said. “It’s a machine for generations.”
‘Monster’ to matte
The mine plan targets the thick central F-Zone with long-hole open stoping via twin declines beginning around 140–150 metres below surface, moving to 40-metres stopes after a training period. “It’s a tonnage factory,” Hallam said. “You drop a stope and muck it out in three to six months. Highly mechanized, very efficient and you can operate machines under supported ground or remotely.”
Diesel contractor fleets would start, with scope to transition to electric equipment as battery cycle times improve.
The current reserve envelope covers about 8.8 km of strike; the resource, about 13 km. Additional sublevel development would allow systematic step-outs from underground in later phases.
The district-scale nature of the discovery leaves the door open for further discovery, Hallam said.
“It’s a monster of a deposit,” he said. “We’ve drilled so much and proved over 13 km of strike in resource, with step-outs almost 26 km away. It’s open at depth – you could make it as big as you want.”
Watch below a short video of Hallam explaining some key drill cores on display at the Vancouver head office:
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