Southern Palladium says prospects on Bengwenyama Project look good

Published Feb 2, 2024


A scoping study of Southern Palladium’s 70%-owned Bengwenyama Project has shown “very attractive economics”, the platinum group metals company said yesterday.

The results justified a prefeasibility study for a platinum mine in South Africa’s Bushveld Complex that will cost an estimated $403 million (about R7.54 billion). The study had already started, it said in a notice

Managing director Johan Odendaal said, "The recently concluded scoping study represents a pivotal moment for our company, made possible by the AU$19m (R232m) 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.“

The life of mine on the UG2 reef only was estimated at 36 years, with a total of about 52 million tons mined for an average annual production rate of 330 Koz PGM, with cash costs “firmly at the low end of the global cost curve”, the company said.

The project was well located among major mining operations with all required infrastructure – water, power, roads, services, and skilled labour force – already in place.

Mining and processing were amenable to proven technology. The initial capital cost included a 15% contingency.

The earnings before interest tax depreciation and amortisation margin for the project, which was particularly rich in palladium/rhodium, was forecast at 43%.

The post-tax capital payback was estimated at 4.5 years from first concentrate production. Life of mine Ebitda was forecast at $5.2 billion.

The scoping study was undertaken by Minxcon, a Johannesburg-based mining consulting company.

“Further exploration and evaluation work and appropriate studies are required before Southern Palladium will be in a position to estimate any ore reserves or to provide any assurance of an economic development case,” the company said.

Southern Palladium submitted its application for a mining right on September 29, 2023. On October 17, 2023, the company received notification from the Department of Mineral Resource and Energy (DMRE) that its application for the mining right had been received.

This approval marked the start of extensive expert studies and consultations, laying the groundwork for a final decision by the DMRE anticipated in 2025.

“The scoping study underscores that we possess a potential world-class platinum group metal 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 ore-body located in the Steelpoort area,” said Odendendaal.

Roger Baxter was appointed non-executive chairman of Southern Palladium effective January 1 this year. As at December 31, 2023, Southern Palladium held approximately $8.34m (September 30, 2023: $9.98m) in cash. This figure excluded cash held by the company's 70% subsidiary, Miracle Upon Miracle Investments of $0.566m ($0.632m).