IVANHOE Mines, the Toronto-listed firm founded by mining entrepreneur Robert Friedland, is voting with its pocket by proceeding with plans to sink a bulk sample shaft to determine the extent of its underground mineral deposits in Limpopo.
In a statement released yesterday Ivanhoe, which has changed its name from Ivanplats to reflect its diverse portfolio, said it had been fiven the go-ahead to start sinking the bulk sample shaft at its Platreef project on the Bushveld Complex last month. It would start the $80 million (R800m) shaft to explore for platinum group metals, nickel, copper and gold in the fourth quarter.
“It is definitely a vote of confidence in SA mining provided the asset is ‘right’ in economic terms,” Investec analyst Albert Minassian said.
The funding is part of $180m (R1.8 billion) in dedicated funds remaining in Ivanhoe’s treasury from the $280m received in 2011 for the sale of an 8 percent interest in the Platreef project to a Japanese consortium of Itochu Corporation, Japan Oil, Gas and Metals National Corporation and JGC.
The shaft will descend 800m below the surface for the collection of a mineralised bulk sample. Sinking will continue into the second half of 2015.
The sample would assess the mineral discovery at the Platreef site in Limpopo comprising platinum, palladium, nickel, copper, gold and rhodium deposits.
The firm said contractor mobilisation and site preparation for the 7.25m diameter shaft would begin in the fourth quarter. About 250 contractors would be employeed once the sinking began.
Although the news was positive, Kieron Hodgson, a commodities and mining analyst at Charles Stanley Securities, stressed that it was critical for the company to attain a mining licence. “If it is a high-grade deposit, the company can put pressure on the regulator to give it a permit.”
Ivanhoe hopes to build a world-class underground mine that would create 10 000 direct and indirect jobs.
Hodgson said Ivanhoe was likely to take a decision to construct a mine in five years’ time, depending on the grade of resource it found.
Ivanhoe applied for a mining right from the Department of Mineral Resources in June. It has committed to a broad-based empowerment ownership model aimed at benefiting employees, women, children and communities.
It said the department had given it the go-ahead for the planned bulk sampling.
The company said it had started the environmental and social impact assessment process which would involve a thorough appraisal of its environmental management programme, social and labour plan and mining work programme, which must be filed with the department by February 24 next year.
Friedland, who is the executive chairman at Ivanhoe, said the shaft-sinking was a significant milestone for the firm.
“We are at the stage where we need to get underground and obtain a bulk sample from the mineral deposit to confirm Platreef’s metallurgy and mining characteristics to help us finalise our design and operations planning,” he said in a statement on Monday.
The company is working with the Japanese consortium on a plan based on an exclusive underground mining operation of up to 12 million tons a year using several shafts.
“Together with our Japanese partners and our South African employees, we look forward to the day when we can take our stakeholders and investors underground to show them firsthand the incredible thickness, grades and continuity of the Flatreef platinum, palladium, nickel, copper, gold and rhodium mineralisation.”
Aveng Mining is the shaft-sinking contractor, which has been working on shaft engineering and design since June.