Key Study Parameters
- Prefeasibility Study (PFS) completed for the 70% owned Bengwenyama Platinum Group Metal (PGM) project indicates very attractive economics justifying development of the project.
- The life of mine (LoM) from the UG2 reef alone is estimated at 29 years with a total of approximately 45 million tonnes mined (~8.88 Moz 6E*) for an average annual steady state saleable product of 400Koz PGM (6E basis) with cash costs firmly at the low end of the global cost curve a result of high delivered grade and shallow mining depths.
- Strategically situated amongst other Tier 1 operations on the Bushveld’s Eastern Limb and owned by major mining companies. All necessary infrastructure (water, power, roads, services, and skilled labour force) already in place. Mining and processing are amenable to proven technology.
Financial Returns
- Post-tax ungeared NPV8 (real) of USD1.059 billion based on conservative long term commodity price assumptions (Pt US$1200/oz, Pd US$1100/oz, Rh US$6,200/oz).
- Post-tax IRR of ~28%. • Post-tax capital payback of ~3.5 years from first concentrate production.
- LoM EBITDA totalling ~USD5.6 billion.
Physical Parameters
- Development of a ~2.4 Mtpa UG2 reef two decline underground mining operation with mill feed head grade of 6.10g/t (6E) averaging over LoM
- Conventional flotation and spiral plant to deliver a marketable PGM concentrate (~85% recovery for PGM) and a 42% chrome concentrate for sale to export markets.
- Initial Capital of ~USD385 million (including a 15% contingency)
- Low LoM cash costs for operations of ~USD644/6E oz (~ZAR2,609/t)
- LoM AISC of ~USD800/6E oz • High LoM EBITDA Margin of ~50%
Bengwenyama Project Production Confidence Levels
- Percentage of JORC Measured and Indicated Resources used in the PFS LoM diluted mine plan is 87% (Inferred 13%) over the first five years, 94% (Inferred 6%) over the first 10 years and 74% (Inferred 26%) over the estimated 29-year mine life.
- Mine scheduling has targeted high grades initially from the shallow area of the UG2 reef with run of mine (RoM) at an average feed grade over the first 10 years of 6.3g/t (6E*).
- Average processing recovery of 85% over the life of mine from testwork demonstrates amenability to conventional processing technology adopted in the South African platinum industry.
Environmental Social Governance
- Widespread community and Traditional Council engagement has been established.
- Extensive environmental baseline studies have been completed across the Project Area.
- Heritage clearances have been completed over the Project development and operations area.
- Environmental Impact Assessment (EIA) was submitted on 11 July 2024, with the Department of Mineral Resources and Energy (DMRE) issuing an acknowledgment on 17 July 2024.
- Additional applications for a Waste Management License (WML) will be submitted to manage waste products and geochemical hazards.
- An Integrated Water and Waste Management Plan (IWWMP) has been initiated, as per GNR 267 of 2017, to regulate water use activities.
- Closure costs for the LoM are estimated at R90.921 million (USD4.65 million) as of April 2024, compiled by OMI Solutions (Pty) Ltd.
- Social and Labour Plan (SLP) has been developed in line with the Mining Charter and MPRDA requirements to support community development.
- On September 29, 2023, Southern Palladium officially submitted its application for a Mining Right (refer ASX Announcement 2 October 2023), a decision by the DMRE is anticipated Q2 2025.
Financial Investment Decision and Value Drivers
- Commencement of feasibility study work to commence in early 2025 in parallel with project construction funding discussions with financiers leading to the Financial Investment Decision (FID).
- Debt financing alternatives already progressed with the appointment of Blackbird Partners.
- Feasibility critical path study work includes metallurgical and geotechnical assessments. Drilling required for both assessments to commence as soon as practicable, subject to statutory approvals.
- FID discussions proposed in late 2025 subject to statutory approvals.
- Key value drivers during 2025 are the granting of the mining right, concentrate offtake outcomes and completion of a definitive feasibility study (DFS).
Value-Adding Opportunities Prior to Financial Investment Decision
- Value-adding opportunities to be carried out by Q1 2025 to be included as part of the FID. This work is expected to make project funding more attractive by either decreasing the ramp up period to full production or by decreasing the up-front capital requirement (or a combination of both). Page 3 | The assessments to be investigated include:-
- accessing the orebody with a single decline initially into the shallower sections of the orebody;
- increasing underground development for initial mine stopes by providing twin drives to enable greater ore and waste extraction until steady state mining is achieved;
- possible use of idle concentrate plant within trucking distance from the Project;
- increasing the rate of early development, including haulages and raises;
- adopting a mining contractor strategy for the underground development work;
- a two-stage processing plant construction with an initial 100,000 tpm plant, followed by second 100,000 tpm processing to match the production profile;
- adopting ore sorters to reduce the feed and increase the head grade thus requiring a smaller processing plant; and
- the utilisation of renewable energy sources.