Western Bushveld feasibility tackles South African power issues.

A feasibility study for Platinum Group Metals‘ (PTM-T, PLG-A) Western Bushveld joint venture in South Africa proposes producing up to 271,000 oz. of combined platinum, palladium, rhodium and gold in concentrate per year for at least nine years.

The operation would process 140,000 tonnes of ore per month for up to 13 years and would have an overall mine life of 22 years starting in 2010.

Development costs US$507 million for the mine and concentrator and US$684 million for the life of mine funding includes 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 pre-feasibility study.

The next step is for Platinum’s joint venture partners, Anglo Platinum (AMS-J) (37%) and Wesizwe Platinum (WEZ-J) (26%) to go over the study and make a construction decision by early October.

The study estimates the project to have a net present value of US$987 million pre-tax and US$578 million post-tax when 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 tax and US$1.4 billion after tax.

The project has an internal rate of return of 20.08% before taxes and uses a platinum price of US$1,295 per oz. for the 235,000-271,000 oz.-range of combined metals.

When recent metals prices are used, including US$2,035 per oz. platinum, the pre-tax IRR is 34%.