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Northam to restart operations at Eland’s fully funded Kukama shaft

Northam CE Paul Dunne

Northam CE Paul Dunne

Photo by Creamer Media

26th June 2019

By: Martin Creamer

Creamer Media Editor

     

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JOHANNESBURG (miningweekly.com) – Platinum group metals (PGM) mining and marketing company Northam Platinum on Wednesday announced the company’s decision to recommence operations in the new 2020 financial year at the Kukama shaft situated at the Eland mine complex in Brits.

Total developmental capital expenditure is estimated at R2.2-billion over five years and the project will be fully funded from Northam’s own resources.

This development follows the conclusion of a feasibility study for the Kukama project.

A total of 2 800 permanent jobs are expected to be generated.

“Our focus will be on safe, quality, long-life production, while creating sustainable long-term employment in the platinum industry,” said Northam CE Paul Dunne in a release to Creamer Media’s Mining Weekly Online.

Northam bought the mothballed Eland mine from Glencore in February 2017 for R175-million and continued to manage it as such while undertaking the Kukama shaft feasibility study.

Acquired from Glencore were Eland’s two mining rights with a resource currently estimated at 19.3-million ounces of four element (4E) PGMs, which consist of platinum, palladium, rhodium and gold. The expected average in situ grade is 3.95 g/t.

Surface and underground infrastructure includes a concentrator with a nameplate capacity of 250 000 t/m, a chrome spiral recovery plant, a tailings storage facility (TSF), two decline systems and surface support infrastructure.

Also acquired were immovable property and a mining fleet of mote than 100 vehicles, which includes low-profile mechanised mining equipment.

The feasibility study estimates steady state production of 150 000 oz/y of 4E, at unit costs in the lower half of the industry cost curve.

Forecast investment returns are forecast to be “comfortably in excess of Northam’s current weighted average cost of capital”.

Positive free cash flow generation is expected from year four onwards and the life-of-mine is calculated at more than 30 years.

While completing the feasibility study for Kukama and following positive feedback from the study, Northam began early work in preparation for the recommissioning.

This early work includes refurbishing underground fixed and mobile equipment, as well as certain sections of the concentrator.

Processing of the TSF at Eland mine has also begun, which has facilitated a restart of the surface plant and associated infrastructure. 

Conversion of the Kukama decline shaft into a footwall array will start during the 2020 financial year, along with limited early stoping. Strike development and stoping build-up is scheduled to begin in the following financial year. Production is forecast to reach 100 000 oz/y 4E by 2025 and steady state production of 150 000 oz/y 4E is forecast from 2029.

In addition to exceeding the weighted average cost of capital, the project diversifies the group’s operations and production capacity still further and does so efficiently by using an existing capital footprint.

Kukama is a project that lends itself to scaling up or down and will form the production base for the broader Eland complex. 

A presentation to the investment community was about to get under way in Johannesburg at the time of going to press.

Edited by Creamer Media Reporter

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