One of the highlights of reading the competent persons’ report on the Stillwater palladium and platinum assets bought by SA’s Sibanye for $2.2bn is not only the assurance that it is a quality asset worth more than the price tag, but the evocative names of areas around the mines and underground in Montana.
The geological model showing the Johns-Manville (J-M) Reef, which contains palladium and platinum in a ratio of about 3.5 to 1, has features with names such as Frog Pond and Brass Monkey West, with bonanza blocks called "ballrooms" and the "Horseman Thrust Fault", while on the surface there is Sweet Grass County and Bear Tooth Mountain. Of course, the hard-nosed team at South African gold and platinum group metals (PGMs) miner Sibanye, led by veteran miner Neal Froneman, did not buy the Stillwater and East Boulder mines with their associated concentrators and the Columbia Metallurgical plant because they were entranced by the vivid imagery the names evoked.
The US company mined and sold 549,200oz of low-cost palladium and platinum in 2016. It recycled 668,300oz of palladium, platinum and rhodium that year, a company record.
The report commissioned by Stillwater from The Mineral Corporation for submission to the JSE described the J-M Reef as a "world-class PGM deposit", with some similarities to the highly sought-after Merensky Reef in SA but with key differences lying primarily in a vastly higher grade of an average 25g a tonne, no pothole faulting and the tendency to pinch and balloon, with the possibilities of finding "ballrooms".
The PGM content in the Merensky Reef is between 4g and 10g a tonne.
The J-M Reef has total proved and probable reserves of 22-million ounces of palladium and platinum and total measured, indicated and inferred resources of 81-million ounces.
The Stillwater complex covers 4,400km², compared with the Bushveld Complex, which covers some 65,000km² and hosts the world’s largest known deposits of PGMs.
The Mineral Corporation valued the Stillwater mineral assets at $2.7bn. The report contained just two material warnings: that one of the main risks for Stillwater was a sharp fall in metal prices – arguably a generic warning that would apply to most mining companies – and that there was a "potential huge financial burden arising from the implementation of the rule" that outlined the financial responsibilities of owners and operators of hard rock mining assets.
This rule had been proposed by the US’s Environmental Protection Agency and was being considered for promulgation.
The report also offered sound advice, drawing on its observations of US mining regulations applied by the state and national governments, which it noted were painfully slow when it came to granting permits and very expensive.