File photo: SUNDAY TIMES/MOELETSI MABE
File photo: SUNDAY TIMES/MOELETSI MABE

Northam Platinum will spend R20m to buy the mothballed Maroelabult mine to “considerably accelerate” bringing its Eland operation into production, CEO Paul Dunne says.

In yet another deal from Northam, agreement was reached with Canada’s TSX- and JSE-listed Eastern Platinum to buy Maroelabult mine, which neighbours Eland.

Eland, in which Xstrata and Glencore invested R14bn to buy and build, was shut in 2015. Northam bought the mine and large concentrator for R175m and has outlined plans to restart the mine in a R2bn project.

Eland has two decline shafts and Maroelabult will add a third, giving access to stoping areas, while Northam will accelerate development into the Eland block of reserves and resources. Eland was planned to reach an output of 100,000oz of platinum group metals (PGMs) by 2025 and four years later reach steady-state production of 150,000oz. 

Asked whether the addition of Maroelabult would result in higher output, Dunne said in an interview the new property would “considerably accelerate our timeline to bring Eland to steady-state production”.

Paul Dunne, CEO of Northam Platinum. Picture: SUPPLIED
Paul Dunne, CEO of Northam Platinum. Picture: SUPPLIED

“We will need very little capital to bring Maroelabult to account and to do the development into the Eland orebody,” he said, declining to put a number of the capital spend or how much sooner Eland would reach steady-state production.

The Maroelabult resource base is small, but it gives Northam flexibility in tackling Eland. Maroelabult has a resource of 232,000oz of four PGMs and a reserve of 188,400oz. The orebody is a natural extension to the one Eland is mining and it costs Northam $7.30 per reserve ounce to add it to its portfolio, a good price for the industry.

“Eastplats is pleased to close this transaction with Eland and to monetise Maroelabult. The company obtains an immediate cash savings while Eland can exploit the resources for which it is better located and positioned,” said Eastplats CEO Diana Hu.

The Eland mine is the latest addition to Northam, which has Zondereinde, the deepest platinum mine in the world, and the shallow, mechanised Booysendal property at which it is building new shallow declines to feed the sister concentrator to the one at Eland, a 250,000 tons-a-month plant.

With all three mines in production, Northam will have output of 1-million ounces a year of PGMs. Dunne was confident this would be a quick process to secure the rights to mine Maroelabult, given the ability to create jobs and quickly bring a mothballed mine back into production.

Northam will take over management of Maroelabult from November 1, as well as assume R6m a month of maintenance costs. It will not take over any rehabilitation provision Eastern Platinum has set aside for the mine and instead start its own fund, Dunne said.

seccombea@bdfm.co.za