platinum australia

Platinum Australia On Path To South African Production, With Australia In The Wings


By Jack Hammer



Everything’s in place for Platinum Australia to get started on development at its Smokey Hills project on the Eastern Limb of the Bushveld. Everything, that is, except the mining right. Steering a straight and true course through the choppy waters of African bureaucracy is never easy, but on the other hand, negotiating with some western planning regimes isn’t exactly a walk in the park either. In Platinum Australia’s case the signs are that Smokey Hills ought to have the green light by around the end of June. And once the company is allowed to push the buttons it won’t be long at all before mining gets underway. The long lead items – two balls mills and a transformer – are already on order, and in mid -May the final part of the financing from Standard Bank fell into place. Construction and mining are planned for the second half of this year, with plant commissioning expected in March or April 2008.
With a 1 million ounce platinum group metals resource, Smokey Hills is relatively small. But sitting as it does on a hill, with the UG2 outcropping and then dipping to a maximum depth of 170metres, it’s relatively easy to mine. Ten per cent of the project’s total 4.6million tonnage will be mined from an open pit, then after 14 months the company will move underground. With platinum prices continuing to ride high, and payback on current prices modelled to take less than three months, it will be a nice foundation from which to venture forth to bigger things.

First on managing director John Lewins’s to-do list is the development of the bigger and more adventurous 49 per cent owned Kalahari Platinum (Kalplats) project. Kalplats isn’t actually part of the Bushveld complex. Rather, it’s 330km west of Johannesburg on the Kraaipan Greenstone Belt, which runs very roughly south-north up into Botswana. The Kalplats property currently boasts an indicated and inferred resource of 3.4million ounces of platinum, palladium and gold (3E PGM), spread across seven known deposits and along a 12 km strike length. All the deposits are open along strike, and at depth, with ongoing drilling designed to narrow the gaps between them. The latest results are encouraging, with the better intersections including 4metres at 2.98 grammes per tonne, 8metres at 4.83 grammes per tonne and 9metres at 2.09 grammes per tonne, all at depths of less than 100metres. A bankable feasibility study on Kaplats is due for completion by the end of this year.

Australian broker Euroz Securities reckons Smokey Hills will be producing around 60,000 ounces per year from next year, with Kalplats forecast to come on stream by 2009, adding an initial 46,000 ounces production. But by 2010, Kalplats production will be up to nearly 272,000 ounces, taking total production from the two projects to nearly 370,000 ounces. Of that 370,000 ounces, nearly 200,000 are attributable to Platinum Australia. Total costs per ounce will run at around US$300. In terms of the profit and loss account, the company ought to be bringing in revenue of over A$155million, and turning in a profit before tax of A$71million by 2010.

All of that before the company’s long-standing Australian project at Panton is even considered. Panton is on the backburner at the moment as a surge in the palladium price is needed before it becomes a real cash cow. However joint venture partner Sally Malay is currently investigating whether the ore can be treated without using the proprietary and more costly Panton process, specially developed by Platinum Australia when it did its original feasibility study back in 2003. If that proves to be possible then Euroz’s nominal A$50million valuation for Panton will prove highly conservative, especially considering that the project also holds 2 per cent nickel.

Platinum Australia’s shares were at A55 cents last June. They’re now approaching A$2.00 now as the African properties have come on apace. “For me as a junior I want to get into production”, says Mr Lewins. Platinum Australia, he says, is not up for sale. But in order to maintain its independence it may have to go on the acquisition trail itself. Watch this space.

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