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Australian junior plans new chrome mine for NW Province

A new opencast chrome operation is planned west of Sun City, where an old underground mine and its infrastructure are being resuscitated, Mining Weekly can exclusively report.

The excavation of boxcuts for two new open-cut operations will take place in the final quarter of this year, in preparation for mining.

The boxcuts will be at Ruighoek's No 10 Shaft South and No 12 Shaft North and will allow testwork to firm up the geotechnical calculations.

With the chromium-ore price up 150% since 2000, the Australian junior Chrome Corporation is fast-tracking the opencut project at the suspended Ruighoek, where impressive underground infrastructure was left by Barlhako Mining, the one-time wholly-owned subsidiary of Samancor, formerly held 60% by BHP Billiton and 40% by Anglo American, but now wholly-owned by Eastern Europe-based Kermas.

Chrome Corporation MD Brian Thomas reports that nonmetallurgical consumers in particular are keen to obtain supplies of foundry sands, of which there is a reputed shortage in South Africa, and off-take agreements with local consumers are being finalised.

Ruighoek's old plant will be spruced up and additional circuits and heavy-medium separation plant constructed for the production of concentrate.

Thomas anticipates that Ruighoek will be producing at a rate of 150 000 t to 200 000 t a year from the open-cuts and eventually by a similar additional 150 000 t to 200 000 t a year from underground, the optimum underground rate being around 300 000 t a year.

Scoping-study calculations indicate that mining and processing costs will not exceed $70/t at a time at a time of $200-plus/t chrome-ore price.

Ruighoek is situated in the North West Province on the western limb of the Bushveld Complex, the source of 50% of the world's chrome production and the location of 80% to 90% of the world's chrome resources.

Assuming the Australian company can finalise its black economic-empowerment (BEE) partnership in the next month, Ruighoek would be in production in the first quarter of next year, says Thomas, a geologist with 15 years' mining-and-exploration experience and 12 years' financial-services experience, made up of spells in corporate stock broking and investment banking.

Ruighoek has two decline mine shafts, a concentrator, grid power, water, access to a railway siding at Boshoek, mine offices, workshops, stores and a 42-house village built by Samancor when it operated the mine until 1993.

Chrome Corporation is currently landlord to mining professionals from neighbouring mines renting its 40 houses.

Ruighoek was suspended 12 years ago during a chrome-price downturn and R22-million in assessed South African tax losses are still potentially accessible.

It produced some 75 000 t of chromite ore a year from the lower-group six (LG6) chromite layer, predominantly from underground operations, most chrome consumers preferring the purer and larger-grain-size LG6.

Chrome mineralisation is also available in LG1, LG2, LG5 and medium-group-four (MG4) layers on the Ruighoek farm, the MG4 layer being totally unexplored.

LG1, LG2, LG5 and MG4 layers will also be explored on surrounding farms, where joint-venture opportunities with neighbouring chrome-mines and holders of chrome rights are being pursued.

Indicated LG6 resources total five-million tons and inferred LG6 resources 23-million tons, both having a 40% chrome content.

MG4 exploration will be eased as a result of the flat-dipping MG4 outcropping to surface in much the same way as LG6.

"A great joy was to get into the old mine office and find a full set of registered mine plans and exploration data that nobody knew existed when we did the due diligence," says Thomas.

The Australian junior has acquired prospecting rights for 13-million tons of chromium mineralisation on neighbouring farms.

The Australian company, which raised a $5,8-million convertible note to buy Ruighoek, has 785 109 442 fully-paid ordinary shares and a market capitalisation of A$12-million at 1,5c a share.

Thomas cites three reasons why an Australian junior should want to mine chrome in South Africa, the first being the increase in the chrome price, the second that South Africa produces half of the world's chrome and the third that Ruighoek has 200 years of mine life.
The market

Thomas calculates that metallurgical applications consume 91% of chrome – 90% in stainless steel and 1% in general steel hardening – and 9% in nonmetallurgical applications, made up of 5% in the chemical industry, 3% in foundry sands and 1% in refractory bricks.

Thomas says that stainless-steel producers are taking the view that their input prices have gone beyond what they should be.

As a result, some intend producing nickel-free stainless steel that will have more chrome.

Standard 400 series martensitic and ferritic stainless steels contain 12%-to-18% chrome and no nickel and the 200 and 300 series 18%-to-20% chrome and 8%-to-10% nickel.

Of the 17-million tons of chrome ore produced a year globally, 47% of it or eight-million tons is from South Africa.