Nice run...
Platinum Group Metals sees $347-million Project 1 NPV
2005-08-12 14:11 ET - News Release
Mr. R. Michael Jones reports
PLATINUM GROUP METALS LTD.: PRELIMINARY ASSESSMENT INDICATES ROBUST PLATINUM 'PROJECT 1' IN THE WESTERN BUSHVELD JOINT VENTURE
Platinum Group Metals Ltd.'s independent preliminary assessment for the Western Bushveld joint venture in South Africa on the initial resource area, called Project 1, has returned a pretax net present value of 1.91 billion rand ($294-million (U.S.) at 6.5 rand per $1 (U.S.), $347-million at 5.5 rand per $1) at a 5-per-cent discount rate (real terms) and an internal rate of return of 18.9 per cent. The figures are at current metal prices and exchange rates (as at July 1, 2005) as shown in the tables below. At a 10-per-cent discount rate, the NPV is 795 million rand ($122-million (U.S.), $145-million).
The preliminary assessment report includes updated inferred resources that have not been sufficiently drilled to enable them to have economic considerations applied to them to be categorized as reserves. There can be no certainty that the preliminary assessment will be realized. Additional drilling is required before the inferred resources can be upgraded to measured and indicated categories.
The preliminary mine plan in this study involves the sinking of twin vertical shafts to 665 metres to access the higher-grade parts of the resources on the Merensky reef. This infrastructure is capable of producing 250,000 ounces per year of platinum, palladium, rhodium and gold (4E) from 1,357,000 tonnes at full steady state production. The mine plan in the economic assessment accesses only the Domain 1 Merensky part of the resource and has a life of mine of 14 years. The other parts of the resource including the UG2 reef may be considered following more drilling.
The Merensky reef is an approximately 1.35-metre-thick layer within the Bushveld igneous complex in South Africa that is the source of most of the world's platinum. This reef is being mined at the adjacent BRPM platinum mine by Anglo Platinum. For comparison, the BRPM platinum mine has Merensky resources (indicated and inferred) grading 6.2 grams per tonne 4E, while the PTM's Western Bushveld joint venture is targeting the section of its inferred resource (higher-grade facies) grading 9.67 grams per tonne 4E.
PTM holds a 37-per-cent joint venture interest and is the project operator. Anglo American Platinum Corp., the world leader in platinum production, holds 37 per cent and Africa Wide Mineral Prospecting and Exploration holds 26 per cent. The preliminary assessment and resource calculations have been completed by Gordon Cunningham, ECSA, and Tim Spindler, ECSA, of Turnberry Projects Pty. Ltd., as well as Charles Muller of Global Geo Services (SACNASP), as independent qualified persons who completed the investigation under the guidelines of Canadian National Instrument 43-101. As operator, PTM is responsible for exploration and engineering activities. This preliminary assessment has been conducted by independent qualified persons contracted by PTM. Anglo Platinum has not been involved in the preparation of the preliminary assessment nor in the evaluation of the results thereof.
John Gould, managing director of PTM South Africa, said: "The project's initial indication is robust as a result of the excellent grades at accessible depths. The estimates by the independent qualified persons are consistent with my experience in mine construction and as a mine manager in South Africa. We have considerable potential to add to Project 1 by further drilling in the areas with near-surface reef that was not considered in this initial preliminary assessment and thus may be a future option. The assessment is very valuable, as it provides economic drivers to direct the drilling that is in progress now, with four drill rigs."
The estimated initial capital cost is 1.43 billion rand ($220-million (U.S.), $260-million) with a payback period of 4.5 years from completion of construction. The capital estimates includes a mine and concentrator with no capital included for smelting and refining. Project revenue is based on going rates for concentrate sales in the platinum industry in South Africa and allows for downstream processing. The estimates in this study have considerable risks and opportunities as a result of the preliminary nature of the geological investigation, engineering study, and social and licensing arrangements. Some of these are detailed below.
The conclusion of the preliminary assessment on Project 1 indicates that there is sufficient economic potential for the project to proceed with further drilling in the inferred resource area with the objective of advancing part of this area to the indicated and measured category. Exploration drilling outside of the Project 1 area with intercepts at shallow depths (less than 200 metres) indicates that these areas be recommended for follow-up targets for early near-surface resources to potentially accelerate the project and increase the overall economic viability.
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