Paul Dunne. Picture: MARTIN RHODES
Paul Dunne. Picture: MARTIN RHODES

Northam Platinum is speeding up plans to get  to its target of 1-million  ounces of platinum group metals a year as various projects gather momentum to take advantage of what is seen as an improving market for the metals.

As the market for palladium shows signs of settling into a long-term deficit, leading to potential substitution by platinum in autocatalytic converter production for petrol engines, pushing up prices for both metals and their sister metal rhodium, Northam’s board is considering a range of projects to further increase production.

The overarching strategy in Northam is to pump out cash and drive up its share price ahead of the 2025 repayment of its empowerment deal, said CEO Paul Dunne.

Northam operates the Zondereinde mine, the world’s deepest platinum mine, and it is busy building a large mining complex on its Booysendal property.

Northam bought Eland mine and concentrator for R175m from Glencore, and added a suspended PGM recycling business in the US to its portfolio.

Booysendal, which will deliver 500,000oz of four PGMs as the Booysendal North and South mines hit full production in coming years.

Key to Booysendal is a network of aerial rope conveyors that will link the north and south operations, feeding concentrators at both ends optimal tonnages and ore blends.

The first rope conveyor linking the central mining area to the concentrator in the south was commissioned at a cost of some R600m. A second rope conveyor linking the north and central mining areas will cost about half what the first one did and parts are already on site.

Northam has 35,500oz of PGMs in ore stockpiled ahead of its concentrators, mainly at Zondereinde. It can either pay to upgrade the concentrating circuit at the mine, send it through the Eland concentrator or sell it to a third party, which is unlikely.

“It depends on what we do with Eland. That is one of the first options, moving the ore to Eland. The cost of trucking relative to the ore stock is a small percentage,” said Dunne.

Eland’s recommissioning, which is nearing completion, costs R70m, while increasing Zondereinde’s milling capacity ahead of its two concentrators would cost about R200m, giving it a long-term solution to increased production at Zondereinde, he said. 

Northam has an agreement with Jubilee Metals to concentrate its PGM-bearing ore at Eland’s concentrator, which will also process Eland’s tailings in the next few months as part of the recommissioning plans. Northam will start trial mining at Eland’s Kukama shaft around the middle of 2019.

“What is does for us is get everything recommissioned on the back of the concentrator business as well as much of the capital cost as much as we can and to be as cash-neutral as possible,” Dunne said, referring to cash flow coming from the tailings and Jubilee material.

It will cost about R1.5bn over seven years to restart Eland, but Northam is timing the restart of the mine with improved metal prices and outlook.

seccombea@businesslive.co.za