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Bengwenyama scoping study shows attractive economics – Southern Palladium

1st February 2024

By: Tasneem Bulbulia

Senior Contributing Editor Online


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A scoping study of JSE- and ASX-listed Southern Palladium’s 70%-owned Bengwenyama platinum group metals (PGMs) project on the eastern limb of the Bushveld Complex in South Africa shows “very attractive economics”, with results justifying the prefeasibility study which has already started, the company reports.

The life-of-mine (LoM) on the Upper Group Two (UG2) reef only is estimated at 36 years with a total of about 52-million tonnes mined for an average yearly production rate of 330 000 oz of platinum, palladium, rhodium, ruthenium, osmium and gold (6E) PGMs, with cash costs firmly at the low end of the global cost curve, the company points out.

It highlights that the project is strategically situated among major mining operations with all the necessary infrastructure (water, power, roads, services and a skilled labour force) already in place. Mining and processing are also noted as amenable to proven technology.

The study indicates development of an about two-million-tonne-a-year UG2 reef underground mining operation using hybrid mining with a mill feed head grade of 6.55 g/t.

A conventional flotation and spiral plant are set to deliver a marketable PGMs concentrate (about 85% recovery for the major metals) and a chrome concentrate for sale to export markets.

The study outlines an initial capital of about $408-million (including a 15% contingency).

Southern Palladium also highlights low LoM cash costs of about $717/oz of 6E.

The study estimates LoM all-in sustaining costs of about $836/oz of 6E; and a high LoM earnings before interest, taxes, depreciation and amortisation (Ebitda) margin of about 43%.

In terms of financial returns, the study highlights a post‐tax net present value (real) of about $700-million based on conservative commodity price assumptions.

It also indicated a post-tax internal rate of return of about 21%; a post-tax capital payback of about 4.5 years from first concentrate production; and an LoM Ebitda totalling about $5.2-billion.

Southern Palladium says it is reasonable to expect that the company will be able to fund the development of the project upon successful delivery of key development milestones when required.

To achieve the range of outcomes indicated in the scoping study, it is estimated that a peak funding requirement of $403-million for the project development may be required.

“We are thrilled to announce a significant milestone in the journey of Southern Palladium. The recently concluded scoping study represents a pivotal moment for our company, made possible by the A$19-million raised in June 2022 for the drilling programme and associated study work.

“The Bengwenyama project, now recognised to be of world-class stature, has been systematically evaluated and successfully delivered on schedule,” says MD Johan Odendaal.

“Importantly, this study acknowledges the substantial remaining resource in the Merensky reef (MR) and UG2 and MR exploration target areas, which were not included in the current assessment of the 36-year mine life,” he points out.

He adds that the scoping study underscores that Southern Palladium holds a potential world-class PGMs mine, fortified by a substantial resource within an established mining area, effectively mitigating associated risks. Recent geotechnical studies and metallurgical assays confirm the suitability of well-established mining methods and processing techniques for the orebody located in the Steelpoort area.

“This location offers various advantages, including energy accessibility from the national grid, potential for alternative green energy sources, well-developed transportation infrastructure, and a skilled workforce from established mining communities,” Odendaal avers.

He adds that Southern Palladium, through its subsidiary Miracle Upon Miracle, is committed to developing sustainable and impactful shared value, with this commitment laying a foundation for the forthcoming mine development and operation.

“This extends to ensuring sustainable and responsible practices, industry-leading approaches to environmental and cultural heritage management and fostering long-term positive impacts for local communities,” Odendaal says.

The company is also actively exploring more efficient and lower-carbon-intensity energy sources, including renewable energy options and innovative technologies.

“Energy specialists have been engaged to conduct a comprehensive carbon-neutral energy study, which includes investigating the feasibility of a solar photovoltaic project. Carbon intensity forecasts, evaluating greenhouse-gas emissions per production factor, will be refined in the prefeasibility stage.

“This proactive approach enables Southern Palladium to assess both the impacts of the future operation on climate change and the potential impacts of climate change on the operation,” Odendaal says. 

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online



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