JOHANNESBURG (miningweekly.com) – Despite challenging market conditions facing the South African platinum sector, scaling back on local operations, delays in various projects and a new wage negotiation season, JSE-listed mining company Northam Platinum maintains that it has “a good pipeline of projects at its Booysendal mining lease area, with a balance sheet strong enough” to fund the R4.8-billion required to develop these projects.

CEO Paul Dunne said in February and June that these projects were “to counter” Northam’s perceived lack of replacement projects, investment and a gap developing between platinum demand and primary supply.

Capital investment in the South African platinum industry has declined by 40%, from R30-billion a year in 2008 to R17-billion a year in 2013, according to Creamer Media’s ‘Real Economy Insight: Platinum’ report, published in June. Further, a World Platinum Investment Council-commissioned report by professional services firm Venmyn Deloitte highlights that platinum production from South Africa decreased by about 500 000 oz/y over the same five-year period.

Nevertheless, Northam expects platinum demand to continue to grow at roughly 2% a year, a rate similar to the growth in the world’s gross domestic product, Northam spokesperson Rene Rautenbach says.

Given that South Africa hosts 80% of the world’s platinum resources and that primary South African supply is expected to start declining in the next 10 to 15 years, owing to underinvestment in new projects, this imbalance would create a supply deficit and, therefore, increase platinum prices. “Northam aims to position itself to start delivering higher production volumes in a rising platinum market,” Rautenbach reiterates.

Therefore, Northam, ranked the fourth-largest platinum/platinum-group metals (PGM) producer in South Africa, is focused on its internal growth opportunities, which centre on three projects at Booysendal. These projects are located at the north and south of the Booysendal property, which straddles the Limpopo and Mpumalanga provinces.

The projects entail the deepening of the existing Booysendal North upper group two (UG2) underground mine and the establishment of the Booysendal North Merensky mine.

The Booysendal South mine will incorporate the infrastructure of platinum producer Aquarius Platinum’s former Everest mine, which Northam acquired in June last year for R450-million.

The projects, located on the eastern limb of the platinum-rich Bushveld Igneous Complex, have been approved and project work is under way.

“The greater Booysendal orebody contains more than 100-million ounces of PGMs and we have only just started mining there,” Rautenbach says, adding that the Booysendal UG2 North mine will only consume 5% of the orebody over its 20-year life-of-mine.

The two projects at the North mine are expected to be completed by the 2018 financial year, with the South mine project coming on stream by 2020. The strategy for the greater Booysendal complex is to produce 500 000 oz/y of PGMs by 2022.

“These projects are discrete, each with its own investment case, but all vital for the development of the greater Booysendal mining area,” Rautenbach says.

BOOYSENDAL NORTH
The deepening phase of the Booysendal North UG2 mine is an expansion of the original Booysendal North mine, which came on stream in 2013 and reached steady-state production of 160 000 oz/y at the end of 2015.

Northam has allocated a capital spend of R270-million over three years for the deepening project, which is expected to add 30 000 oz/y of saleable 4E (platinum, palladium, rhodium and gold) product and raise the yearly production to 190 000 oz.

This project, approved in November 2015, will entail the extension of the mine by two levels, which will result in four new production sections, two of which will be mined.

A key component to the extension is the construction of a 5 000 t surge capacity underground silo that will connect the deeper, new section to the existing mine. However, the silo will also decouple these two parts to ensure continuous mining during unexpected stoppages. Construction of the silo started in May this year and is due for completion in July 2017.

MERENSKY NORTH
Northam has further explored the merits of a Merensky reef mine on the Booysendal North mining footprint. The company invested R82.5-milion to establish a boxcut in 2015 and conduct trial mining and bulk sampling.

Key to the project was testing Northam’s mechanised mining method to determine if it could be applied at a reasonable width on the narrower Merensky reef and ensure a decent run-of-mine ore grade.

“The testwork proved successful, with good metallurgical recoveries – these were exactly what we expected,” Rautenbach notes.

Following the success of the initial work, Northam aims to create a small mine, so termed owing to limited concentrator capacity. Rautenbach explains that the Merensky ore will be blended with the UG2 ore from the Booysendal North mine at a UG2 concentrator.

Enhancing the value of the project is the high base metal content of the Merensky ore, which aids PGMs recovery through metallurgical processes, he adds.

Northam will, consequently, spend an additional R300-million over two years to progress underground development and to equip the mine. This will include developing the main decline cluster, or spine, from which two production sections will be developed, installing strike conveyors and equipping the primary decline with a main conveyor.

While Northam initially aims to produce 25 000 oz/y at the Merensky mine, the mine could produce up to 75 000 oz/y should the company have sufficient concentrator capacity in the future, Rautenbach points out.

“The overriding philosophy in all the mine designs is flexibility, so that, if something goes wrong at the UG2 mine, we can continue to produce at a higher rate at the Merensky mine, for example, and vice versa,” he explains.

The project, approved in April this year, is expected to be completed by June 2018.

Rautenbach also emphasises that, as the project development is on reef, some revenue will be generated during development.

Despite being the smallest of the three projects in terms of production volume, Northam views the Merensky mine as “a swing producer”, as it allows for flexible and swift production increases or decreases.

Moreover, as the mine will use the same mining method, equipment and skills currently deployed at Booysendal North UG2, the staff can be transferred from the one mine to the other, thereby taking advantage of efficiencies and synergies and leveraging off the existing capital footprint.

BOOYSENDAL SOUTH
Referred to as Northam’s new flagship project, the Booysendal South mining project has a capital allocation of R4.2-billion over a six-year period. The project has been divided into four modular bord-and-pillar mining modules, which will be accessed from a common central portal complex, reducing its environmental impact and capital requirements.

Initial development includes two UG2 underground modules, Booysendal South 1 and Booysendal South 2, and a Merensky reef mine similar to that at Booysendal North.

“Unlocking the Booysendal South orebody is made possible by Northam’s acquisition of Everest, which has provided the project with a 250 000 t/m concentrator plant, with an integrated chrome extraction plant, power and water supply, tailings facilities and workshops, as well as change houses,” Rautenbach says.

Given the challenging topography in the region, Northam will be installing an aerial wheel-on-rope conveyor system, known as Ropecon, to deliver ore from the central portal complex to the concentrator plant 4.9 km away. The system will be supplied by Austrian ropeway engineering company Doppelmayr Transport Technology, which is currently working on the engineering and design.

“In applying this overhead conveyor system for the first time in South Africa, Northam will once again be taking a pioneering role in the industry, much as it did at Zondereinde with the use of hydropowered mining equipment – which has now become commonplace in the industry,” Rautenbach says.

Further, the company is conducting an early works programme for Booysendal South, for which the access road design has been completed and temporary power and water supplies have been provided for construction purposes, while also preparing the environmental permits for the rest of the work.

A key potential challenge facing the project is the long-lead permitting process, which Northam has factored into its timelines, Rautenbach says.

“In the 2019 financial year, Northam aims to commission the Ropecon system and start the Everest concentrator. Thereafter, the Booysendal South mine will also build up to steady-state production of about 260 000 t/m.”

WAGE AGREEMENTS IN PLACE
While renewed wage negotiations for the local platinum industry will take place this month or this quarter, Northam’s operations and its projects will not be affected, having just entered into the second year of a three-year wage agreement, Rautenbach adds.

At Booysendal, the agreement was signed between mining contractor Murray & Roberts Cementation (MRC) and its representative unions, the Association of Mineworkers and Construction Union, the National Union of Mineworkers and Solidarity across MRC operations in October 2015.

INDUSTRY SIGNIFICANCE
Rautenbach believes that the new mining operations will not only increase Northam’s production profile but also aid job creation and, thereby, local economic development.

Further, the projects – once complete and in full production – should generate about R5-billion a year in additional foreign exchange revenue.

The development of and investment in Booysendal, and turning this massive resource to account, embody Dunne’s unwavering commitment to this business, Rautenbach emphasises.

Dunne has noted: “Northam is exceptionally well positioned in a stressed sector. Our growth projects are fully funded and we intend to be first to market. Importantly, we believe in our country, our company, our people and our product.

“Booysendal has the potential to be one of the biggest, longest-life and lowest-all-in-cost platinum mines in the world.”