TORONTO (miningweekly.com) – Project developer Platinum Group Metals (PTM) on Friday revealed that the weakening South African rand could result in a 10% increase in capital expenditure at its initial 275 000-oz/y Western Bushveld Joint Venture Project 1 (WBJV), located in the North West province.

Peak funding for the project, which was reduced by $64-million to $443-million, in a 2009 feasibility study through a change in design to use mostly grid power and improvements in mine design, were now expected to be nearer to the original $507-million price tag for the project.

PTM said it was seeing an escalation in rand terms in areas such as labour, diesel fuel, power and certain supplies, as was generally being observed at other mines in the country over the last 18 months.

The TSX- and NYSE-listed company explained that its original cost estimates were modelled at R8 to the dollar, but, with the rand currently at or near R10 to the dollar, these cost escalations were substantially offset in dollar terms and the net effect of cost escalation and project delays were estimated at less than a 10% increase from previous cost estimates.

PTM also revealed development of a second set of twin declines at the south mine were being developed into the ore body 1.8 km south of the north mine portal, however, as a result of the slower development rates in the south mine and a one-month project delay as a result of Section 54 safety work stoppages, the targeted start date for first concentrate production was delayed by six months to mid-2015.

The development of these declines was progressing slower than expected as a result of poorer-than-expected ground conditions in the first 50 m vertically down from the surface. The south declines were expected to move out of the poor near-surface conditions in the next month and development rates would improve.

Despite the delay, the ramp-up profile for production from this date forward over the following two years was, however, similar to previous expectations. Development of the twin south mine portals was about 60 m complete.

Meanwhile, the north mine twin declines were now developed to a length of about 1.22 km.

PTM said an underground drive along the strike of the deposit was now advanced on the Merensky reef for about 130 m with no significant offsets. The first raise position into the Merensky Reef panel was reached and the raise would start shortly.

The declines themselves were continuing and would turn into development headings targeting mine blocks below the current development level.

Crews were currently achieving the planned advance rates at the north mine.

Further, PTM also said surface development was on track. Surface earthworks and lay down areas were well advanced. Significant mill components had been ordered and expected deliveries for all significant components remained on schedule.

Power and water requirements were expected to be provided as required. Eskom was currently installing transformers for the initial 10 MVA service to the site. The company and Eskom were working on a plan to provide the site with another 10 MVA for commissioning and early production requirements, which would be ample for all mining and milling operations until the full 40 MVA service was delivered. The operation did not require more than 20 MVA for several years.