An independent definitive feasibility study (DFS) into the Waterberg joint venture (JV) project, in South Africa, provides “a clear outline of the world-class nature of the Waterberg palladium deposit and concludes that it can be one of the largest fully mechanised, low-cost platinum group metals mines in the world”, says Platinum Group Metals (PTM) CEO and cofounder R Michael Jones.

The DFS, which was completed by international and South African engineering firms Stantec Consulting International and DRA Projects, along with a team of specialists, was managed by Waterberg JV Resources, representing the JV partners – PTM; Impala Platinum; Japan Oil, Gas & Metals National Corporation; Hanwa; and Mnombo Wethu Consultants.

Highlights of the DFS include a significant increase in mineral reserves from the project’s 2016 prefeasibility study (PFS) for a large-scale, shallow, decline-accessible, mechanised palladium/platinum/rhodium/gold (4E) mine.

The inclusion of the use of backfill in the DFS design lowers risk and increases mined ore extraction rates.

The DFS indicates a steady-state production rate of 420 000 oz of 4E, which is lower than the production rate set out in the PFS. The lower production rate aims to reduce capital costs and simplify construction and ramp-up.

The DFS estimates an after-tax net present value (NPV) of $982-million, at an 8% real discount rate, and an after-tax NPV of $333-million at three-year trailing prices.

The DFS indicates an after-tax internal rate of return of 20.7% at spot prices and 13.3% at three-year trailing prices.

The estimated project capital, according to the DFS, is $874-million, including $87-million in contingencies. Peak project funding is estimated at $617-million.

The DFS indicates that the site life-of-mine average cash cost, inclusive of by-product credits and smelter discounts, for the spot metal price scenario equates to $640/oz of 4E.

There is an updated measured and indicated mineral resources of 242-million tonnes at 3.38 g/t 4E for 26.4-million ounces of 4E, using a 2.5 g/t 4E cutoff, and the deposit remains open on strike to the north and below an arbitrary depth cutoff of 1250 m.

Proven and probable mineral reserves are 187-million tonnes at 3.24 g/t 4E for 19.5-million ounces of 4E.

“The DFS provides a clear outline of the world-class nature of the Waterberg palladium deposit and concludes that it can be one of the largest fully mechanised, low-cost platinum group metals mines in the world,” commented R. Michael Jones in a statement last week.

The company indicated that the project would create about 1 100 new highly skilled jobs. Moreover, considerable investment in local training and business opportunities was part of the benefits to stakeholders including local communities, shareholders, and provincial and national governments.

The project includes an upgrade to the local water infrastructure under a current cooperation agreement with the municipality and a connection to State-owned utility Eskom’s power grid.