Platinum Group Metals Announces a Positive Preliminary Economic
Assessment for a 655,000 Ounce Per Year Platinum, Palladium and
Gold Mine at the Waterberg Joint Venture
VANCOUVER, BRITISH COLUMBIA and JOHANNESBURG, SOUTH
AFRICA--(Marketwired - Feb 14, 2014) - Platinum Group Metals Ltd.
(TSX:PTM)(NYSEMKT:PLG)(NYSE Amex:PLG) ("Platinum Group" or the
"Company") announces positive results from an Independent
Preliminary Economic Assessment ("PEA") on the Waterberg Joint
Venture project (the "Project") completed by international and
South African engineering firm WorleyParsons. Platinum Group Metals
Ltd. holds a 49% effective interest in the Waterberg Joint Venture
while the Japan Oil, Gas and Metals National Corporation ("JOGMEC")
holds a 37% interest. Empowerment partner Mnombo Wethu Consultants
Pty Ltd. holds the balance of the joint venture.
The Project will immediately advance to the pre-feasibility
stage. Details of the PEA include:
- Steady state production of 655,000 ounces of platinum,
palladium and gold, "3E";
- A two year construction period planned in 2016 to 2018;
- A Project post-tax NPV (7.5% discount rate) of 5.1 billion Rand
or US$ 509 million (10R/US$);
- Peak Funding of 8.85 billion Rand or US$ 885 million
(10R/US$);
- Major Risks to be assessed at pre-feasibility including
smelting plans, water and power delivery and geotechnical work for
mine design along with normal increased resource, metallurgical and
cost confidence levels; and
- Opportunities include significant resource expansion,
optimization of mine plans, mine ramp up profiles, increased
metallurgical recoveries and smelter terms and consideration of
adjacent deposit exploration.
R. Michael Jones, President of Platinum Group Metals Ltd. said
"The Waterberg Joint Venture project stands out as an exceptional
opportunity for the shallow production of safe, low cost platinum,
palladium and gold by fully mechanized mining methods utilizing
multiple decline access ramps. The planned 655,000 3E ounces of
steady state production is significant in the global market for
platinum group elements. The peak funding estimate is modest
compared to the opportunity for large scale participation in the
platinum and palladium markets. In addition we see significant
opportunity to expand the Project's resources and to optimize the
Project in the pre-feasibility study. We will continue our positive
consultation with the rural communities in the mine area as our
Project confidence advances. The potential for good margins,
improved safety, better productivity and well paid workers along
with improved working conditions compared to conventional mines is
exciting."
Details
Assumptions and Results
Pricing
|
Approximate Recent/Spot |
Applied in model Approx. 3 yr. Trailing Prices |
Platinum (US$/oz) |
1,380.00 |
1,586.06 |
Palladium (US$/oz) |
708.00 |
701.04 |
Gold (US$/oz) |
1,259.00 |
1,548.84 |
Copper (US$/lb) |
3.41 |
3.58 |
Nickel (US$/lb) |
6.29 |
8.35 |
R/US$ |
11.13 |
10.00 |
Basket Price per T Layer and F Layer
Metal Splits in US$ and Rand
|
|
Recent Spot 11.13 R/US$ |
3 Year trailing Average 10R/US$ |
T Zone |
$/oz |
1,014.40 |
1,129.60 |
|
R/oz |
11,290.25 |
11,296.00 |
F Zone |
$/oz |
934.83 |
1,005.23 |
|
R/oz |
10,404.62 |
10,052.33 |
Super F Zone |
$/oz |
934.68 |
1,005.03 |
|
R/oz |
10,402.99 |
10,050.34 |
Total |
$/oz |
961.57 |
1,047.04 |
|
R/oz |
10,702.24 |
10,470.41 |
Recoveries and Treatment Terms
2E&Au recovery T |
88.3% |
2E&Au recovery F |
82.9% |
Cu recovery T |
86.6% |
Cu recovery F |
74.1% |
Ni recovery T |
82.9% |
Ni recovery F |
59.2% |
Tolling terms 2E&Au |
85.0% |
Tolling terms Cu |
67.5% |
Tolling terms Ni |
72.5% |
Mined Tonnes and Recovered Ounces
Total Resource Tonnes mined |
126,555,041 |
Total Pt_ozs |
3,381,234 |
Total Pd_ozs |
6,901,055 |
Total Au_ozs |
1,127,123 |
Financial Metrics
Peak Funding (Rand billion) |
8.853 |
Operating Cost (Rand/tonne) |
501 |
Operating Cost (US $/3E ounce, Not including Cu, Ni Credits,/
including Cu, Ni Credits) |
555/368 |
Production Cost, including royalty, and overhead (US $/3E ounce,
Not including, Cu, Ni Credits/including Cu, Ni credits) |
626/438 |
Undiscounted NPV (US$millions/@10) |
2,085 |
NPV @ 7.5%(US$m) pre-tax |
804.7 |
NPV @ 7.5% (US$m) post-tax |
508.8 |
IRR pre-tax |
16.4% |
IRR post-tax |
14.0% |
Start of Construction |
2016 |
Commencement of production |
2018 |
Payback |
2024 |
Note: at fixed metal prices at 10R/US$, no escalation costs or
prices
The PEA conforms to the requirements of Canada's National
Instrument 43-101. The economic analysis is based on Inferred
Resources and is preliminary in nature. Inferred Resources are
considered too speculative geologically to have economic
considerations applied to them that would enable them to be
categorized as Mineral Reserves. There is no certainty that the PEA
will be realized. The estimates in this preliminary assessment are
estimated at +/-30% accuracy on an engineering basis. The complete
PEA technical report on the Waterberg Joint Venture property will
be filed on SEDAR (www.sedar.com) within 45 days of this
release.
Mining
The mine plan in the PEA utilizes 3 decline clusters for access
as a result of the shallow depth of the deposit. The shallow edge
of the T layer is at 130 meters vertical and the shallow edge of
the F layer is at 220 meters. The planned mining method is all
mechanized including a combination of room and pillar mining on
mineralized layers 3 to 10 meters thick and long hole open stoping
on layers from 10 to 60 meters thick. The decline ramps for
underground access are planned to be developed to the shallow edge
of the T and F deposit layers. From there development ramps are to
be all within the deposit along an apparent dip angle. This
development approach is possible because of the thickness of the
deposit and lowers waste development tonnes and costs.
Processing
Utilizing a standard flotation mill, at steady state the Project
is estimated to produce 655,000 ounces per year 3E (platinum,
palladium and gold) in concentrate, with copper and nickel as
credits. The PEA relies on the previously reported preliminary
metallurgical recovery estimates from test work at SGS labs of 83%
3E on the F layer mineralization and 88% 3E on the T layers. Other
independent test work has been completed confirming these recovery
rates or higher as well as indicating the ability to produce an
attractive concentrate from both the T and F mineralized material
of more than 100 g/t 3E containing almost no chrome. Further work
to confirm the concentrate recoveries and characteristics will be
completed during the pre-feasibility study stage. Co-mingling of
the F and T materials does not appear to negatively affect
recoveries in the initial test work.
Financial Results
The life of mine capital cost estimate over a 22 year period is
un-escalated 17.8 billion Rand. Peak funding for the mine is
estimated at 8.85 billion Rand. Undiscounted total positive cash
flow for the project over a 22 year period is 21 billion Rand or
US$ 2.1 billion on a 100% basis.
Operating cost including mining, milling, concentrate shipment
and onsite overheads are estimated to be US$ 555 per 3E ounce over
the life of the mine excluding Cu, Ni credits and US$ 368 per 3E
ounce including Cu and Ni as credits. Including the state royalty
and an allocation for head office overheads the operating costs are
estimated to be US$ 626 per 3E ounce excluding Cu, Ni credits and
US$ 438 per 3E ounce including Cu and Ni as credits, all at 10
Rand/US$.
The PEA considers the costs to concentrate and assumes a
payability of 85% on the 3Eounces from a third party purchaser.
Considerable further work will be required to confirm potential
terms and a smelter sales plan. No offtake concentrate agreement is
in place and the cost of a smelter is not included in the PEA. The
concentrate from Waterberg is a sulphide concentrate with
negligible chrome or other penalty elements and should be desirable
based on its initial test characteristics.
The PEA assumes fixed metal prices for the life of mine based on
February 2014 three year trailing average prices per ounce of US$
1,586 for platinum, US$ 701 for palladium and US$ 1,549 for gold.
The PEA is un-escalated and assumes and a fixed exchange rate for
the life of mine at 10 Rand to the US dollar. The project IRR on a
100% basis is 16% pre-tax. The project pre-tax NPV is US$ 804.7
million (7.5 % discount rate). The post-tax the IRR is 14% and the
post-tax NPV is US$ 508.8 million (7.5% discount rate). Peak
funding for 100% of the Project is 8.85 billion Rand (US$ 885
million at 10 Rand/US$). Capital costs to first production are
estimated to be 7.92 billion Rand un-escalated (US$ 792 million at
10 Rand/US$).
Interestingly, recent spot metal prices converted at 11.13 Rand
to the US$ (approximately the spot currency rate) provided a Rand
basket price within 3% of the three year trailing average prices
supporting the model assumptions. The model being un-escalated, the
conservative fixed exchange rate at 10 Rand to the US$ over the
Project life, and the fixed life of mine metal prices for revenue
provide a potential offset to anticipated South African inflation
on costs.
The large scale, near surface mechanized nature of the deposit
contributes to the highly competitive cost structure for the
Project, estimated to be in the lowest quartile of costs in the
platinum industry. The PEA indicates that the Waterberg deposit has
potential to be a large platinum, palladium and gold mine
comparable to some of the largest mining blocks in South
Africa.
Resource Estimate Details
For the PEA mine plan WorleyParsons utilized the inferred
resource estimate as reported on September 3, 2013 by Independent
Qualified Person Ken Lomberg of Coffey. The Inferred resources are
estimated at 167 million tonnes grading 3.26 g/t 3 E (0.98 g/t Pt,
1.97 g/t Pd, 0.32 g/t Au) in the T and F layers.
There is resource expansion potential on the T layers within the
Waterberg Joint Venture and the deposit has been truncated for
initial economic reasons prior to the PEA at 1,000 meters deep on
both the T and F layers. As a Project opportunity the arbitrary cut
off may be reconsidered during the pre-feasibility stage of Project
study with potential for increased resource areas to be
considered.
Inferred 2PGE+Au Resource Estimate for Waterberg JV Project,
September 2, 2013
|
|
Thickness M |
|
Tonnes Mt |
|
Pt (g/t) |
|
Pd (g/t) |
|
Au (g/t) |
|
2PGE+Au (g/t) |
|
Pt:Pd:Au |
|
2PGE+Au (koz) |
|
Cu (%) |
|
Ni (%) |
|
Cu (t) |
|
Ni (t) |
T1 |
|
2.30 |
|
8.50 |
|
1.04 |
|
1.55 |
|
0.47 |
|
3.06 |
|
34:51:15 |
|
842 |
|
0.17 |
|
0.10 |
|
14,500 |
|
8,400 |
T2 |
|
3.77 |
|
39.16 |
|
1.16 |
|
2.04 |
|
0.84 |
|
4.04 |
|
29:50:21 |
|
5,107 |
|
0.18 |
|
0.10 |
|
69,400 |
|
37,600 |
T Total |
|
3.38 |
|
47.66 |
|
1.14 |
|
1.95 |
|
0.77 |
|
3.86 |
|
30:50:20 |
|
5,948 |
|
0.18 |
|
0.10 |
|
83,900 |
|
46,000 |
F Total |
|
3.0 to 30.0 |
|
119.05 |
|
0.91 |
|
1.98 |
|
0.13 |
|
3.02 |
|
30:65:5 |
|
11,575 |
|
0.07 |
|
0.17 |
|
78,800 |
|
202,200 |
Total |
|
|
|
166.71 |
|
0.98 |
|
1.97 |
|
0.32 |
|
3.26 |
|
30:60:10 |
|
17,523 |
|
0.10 |
|
0.15 |
|
162,700 |
|
248,200 |
|
|
Note: |
The T1 and F layers are reported with a 2g/t 2PGE+Au cut-off The T2
layer is reported based on the selection of a mining cut of a
minimum of 2m consistently across all deflections |
- Mineral resources that are not mineral reserves do not have
demonstrated economic viability
- CIM definitions are followed for classification of Mineral
Resources
The resource was calculated by Coffey by using 111 bore holes
with a total of 301 pierce points including deflections. The
resource estimate was undertaken by Coffey and a number of
iterations were done to confirm the validity of the estimate. The
resource estimation was completed using an Inverse Distance
Weighted to the Power 2 methodology and examined at various cut-off
grades. The previous split of the FH and FP layers were merged into
one F zone. The average thickness was calculated for the T zones
that have distinct rock layer characteristics. The F zone is
located consistently near the floor of the Bushveld Complex and is
associated with olivine rich rocks with a thickness of 3 meters to
30 meters on average. An area of F layer related to an interpreted
depression in the floor rocks where thickness of the mineralization
is greater than 10 meters has been given the name "Super F".
The estimate for the T Layer was based on cuts identified from
examination of the borehole core. The cut selection was based on a
combination of the stratigraphic position, minimum thickness of 2
meters and consistency between the intersections from the
motherhole and the deflections. The estimation was restricted based
on the tenement, geological interpretation of the extent of the T
layer and a maximum depth of 1,000 meters below surface. A
geological loss of 12.5% was applied based on the geological
understanding of the deposit which is informed by the regular
drilling grid of 250 meters x250 meters.
The F layer estimation was undertaken on a flattened model
utilizing the base of the F layer as a stratigraphic marker. The
block size was selected as 125 meters x 125 meters x 3 meters
(Northing, Easting, RL). A grade tonnage profile was utilised with
a grade cut off of 2g/t 2PGE+Au for resource declaration. Prior to
the estimation domains within the F layer were determined based on
the geology and grade characteristics. These domains were
independently estimated. The estimation was restricted based on the
tenement, geological interpretation of the extent of the F layer
and a maximum depth of 1,000 metres below surface. A geological
loss of 12.5% was also applied to the F layer estimate.
The independent Qualified Person, under the definitions in NI
43-101, for the Sept 2, 2013 resource estimate is Ken Lomberg of
Coffey. He has a Master's degree in engineering and has 27 years of
relevant experience in precious metals and PGM evaluations. He has
verified the data by reviewing the detailed assay and geological
information on the Waterberg deposit and visiting the site and core
yard many times in 2013. He is satisfied that the data is
appropriate for the resource estimate by reviewing the core, assay
certificates and quality control information as well as reviewing
the procedures on sampling, chain of custody and data base records
of the Platinum Group exploration team. WorleyParsons has relied on
Coffey as an expert for the resource estimate. The resource
estimate has been completed under the SAMREC code and this code has
no substantive differences from the CIM guidelines.
Inferred mineral resource estimates, under the CIM guidelines,
do not have demonstrated economic viability and may never achieve
the confidence to be mineral reserve estimates or to be mined. An
inferred resource has reasonably assumed continuity based on
limited sampling but the geological and grade continuity has not
been verified. The property is held under a prospecting right with
the exclusive right to convert that right to a mining right. There
can be no assurance that a mining right will be granted without
extensive further work and an Application to the Department of
Mineral Resources of South Africa. WorleyParsons has not completed
a review of the validity of the Company mineral tenure.
Jobs and Social, Labour Environment and Permitting
The Waterberg Project is estimated to create about 2,200 new
jobs at full production and will have a positive effect on the
local economy. The mechanized nature of the proposed mining at
Waterberg will rely on skilled, well paid workers. Should the
Project proceed there will be a significant opportunity for
training and transformation of the local economy. Consultation with
the local rural population that has occurred before and during the
prospecting work will continue during the feasibility stage.
A number of large unpopulated areas are being studied for mine
infrastructure. Considerable work in training local people will be
required for the Project. Preliminary contact has been made with
utilities for power and water and these aspects have not
demonstrated fatal flaws at this stage. Considerable work will be
required to secure these bulk services. Early cost estimates for
these services and road improvements have been included in the
PEA.
The Company has briefed the Department of Mineral Resources on
the Waterberg Project and the Project was given a specific,
positive comment in a speech by Minister of Mineral Resources at
the recent mining Indaba in Cape Town.
The Waterberg Joint Venture property is held under a prospecting
right and considerable work will be required to apply for a mining
right.
Risks and Opportunities
Significant risks that will be studied at pre-feasibility
include but are not limited to:
- Geological risks associated with inferred resources that cannot
be assumed to be economically viable, may never be upgraded or
declared reserves and will require further confirmation drilling
for consideration in a pre-feasibility study;
- Geotechnical risks of the rock stability underground for the
assumed mining method and extraction ratios;
- Metallurgical and marketing risks for the proposed
concentrate;
- Social and permitting risk as the Project is held under a
prospecting right and a mining right will need to be applied
for;
- The Project will require water, power and infrastructure. These
are regionally available but will need to be secured;
- Financing risk for a large Project and metals price risk
combined with South African inflation and Rand exchange rate
volatility, particularly as escalation was not used on costs and a
fixed exchange rate was used; and
- South African labour relations, training and availability.
Significant Opportunities include but are not limited to:
- Optimization of the mine plan and the timing and sequencing of
the capital investment into modules;
- Optimization of the mine plan by grade as outlined by more
drilling;
- Expansion of the deposit down dip (T and F layers) and along
strike (T layer); and
- Consideration of the potential on the Waterberg Extension
Permits for larger resources and scale to reduce fixed
infrastructure costs.
Authors and Qualified Persons Statement
The PEA was prepared in conformance with NI 43-101 by
WorleyParsons. WorleyParsons has extensive experience in
engineering and construction of platinum projects including mining
and processing in Southern Africa. Dr. Michael Roberts, a Fellow of
the SAIMM, is an independent "Qualified Person" under NI 43-101 and
has supervised the preparation of the information that forms the
basis of the written disclosure in this news release and he is the
person responsible for the PEA. Dr. Roberts has a PhD in mining
engineering and has more than 35 years of experience in mining
engineering and has published numerous technical papers.
He has visited the property and verified the information to his
satisfaction. Input for the PEA was provided by Ken Lomberg, the
independent Qualified Person for the mineral resource estimate and
experienced professionals at WorleyParsons Charles Brittain, for
engineering and project management, Paul Bates for mining and
ventilation, and Paul Lombard for financial modelling. Ken Lomberg
has also reviewed the references to mineral resource estimates in
this news release.
R. Michael Jones, P.Eng is a non-independent Qualified Person
for the Company and has verified information for the Company.
Next Steps
WorleyParsons has now successfully concluded the PEA, which has
met its objectives. Technically WorleyParsons recommends that the
Waterberg Joint Venture to proceed to the pre-feasibility stage and
the Waterberg Joint Venture will consider the plan and budget
ahead. A program of infill drilling, rock mechanics and
metallurgical studies and other engineering and costing estimates
will be planned by Platinum Group Metals Ltd., the operator of the
Waterberg Joint Venture, for 2014. Detailed work on the
pre-feasibility work will commence in the near term and budgets and
plans of the Waterberg Joint Venture will be provided shortly.
Adjacent to the Waterberg Joint Venture, Platinum Group Metals
is drilling with 10 machines with the objective of expanding the
Waterberg Deposit onto the Waterberg Extension prospecting rights
held with an effective interest of 87% by Platinum Group Metals.
Further drill results will be provided in the weeks ahead.
About Platinum Group Metals Ltd.
Platinum Group is based in Johannesburg, South Africa and
Vancouver, Canada. The Company's business is currently focused on
the construction of the WBJV Project 1 platinum mine and the newly
discovered Waterberg platinum deposit, where the Company is the
operator of the Waterberg Joint Venture Project with JOGMEC and
Mnombo. The Company has also expanded its exploration northward on
to the Waterberg Extension project. As a result of the resource
scale and thickness of the Waterberg deposit, the Waterberg Joint
Venture project and the Waterberg Extension project have increased
in importance in the Company's business.
Disclosure
The Toronto Stock Exchange and the NYSEMKT LLC have not
reviewed and do not accept responsibility for the accuracy or
adequacy of this news release, which has been prepared by
management.
This press release contains forward-looking information
within the meaning of Canadian securities laws and forward-looking
statements within the meaning of U.S. securities laws
("forward-looking statements"). Forward-looking statements are
typically identified by words such as: believe, expect, anticipate,
intend, estimate, plans, postulate and similar expressions, or are
those, which, by their nature, refer to future events. All
statements that are not statements of historical fact are
forward-looking statements. Forward-looking statements in this
press release include, without limitation, the extent and timing of
exploration programs and exploration results, the results of the
PEA, including the planned construction period, the post-tax NPV
and peak funding estimates, the risks and opportunities outlined in
the PEA, the potential tonnage, grades and content of deposits,
timing, establishment and extent of resources estimates, potential
production from and viability of the Company's properties,
production and operating costs and permitting submission and
timing. These forward-looking statements are made as of the date of
this press release. Although the Company believes the
forward-looking statements in this press release are reasonable, it
can give no assurance that the expectations and assumptions in such
statements will prove to be correct. The Company cautions investors
that any forward-looking statements by the Company are not
guarantees of future results or performance, and are subject to
risks, uncertainties, assumptions and other factors which could
cause events or outcomes to differ materially from those expressed
or implied by such forward-looking statements. Such factors and
assumptions include, among others, variations in market conditions;
the nature, quality and quantity of any mineral deposits that may
be located; metal prices; other prices and costs; currency exchange
rates; the Company's ability to obtain any necessary permits,
consents or authorizations required for its activities; the
Company's ability to access further funding and produce minerals
from its properties successfully or profitably, to continue its
projected growth, or to be fully able to implement its business
strategies. In addition, there are known and unknown risk factors
which could cause our actual results, performance or achievements
to differ materially from any future results, performance or
achievements expressed or implied by the forward-looking
statements. Known risk factors include risks associated with
exploration and project development; the need for additional
financing; the calculation of mineral resources; operational risks
associated with mining and mineral processing; fluctuations in
metal prices; title matters; government regulation; obtaining and
renewing necessary licences and permits; environmental liability
and insurance; reliance on key personnel; currency fluctuations;
labour disputes; competition; dilution; the volatility of our
common share price and volume; future sales of shares by existing
shareholders; and other risk factors described in the Company's
Form 40-F annual report, annual information form and other filings
with the SEC and Canadian securities regulators, which may be
viewed at www.sec.gov and www.sedar.com, respectively. Although we
have attempted to identify important factors that could cause
actual actions, events or results to differ materially from those
described in forward-looking statements, there may be other factors
that cause actions, events or results not to be as anticipated,
estimated or intended. There can be no assurance that
forward-looking statements will prove to be accurate, as actual
results and future events could differ materially from those
anticipated in such statements. Accordingly, readers should not
place undue reliance on forward-looking statements. We are under no
obligation to update or alter any forward-looking statements except
as required under applicable securities laws.
Cautionary Note to U.S. Investors Regarding Estimates of
Inferred Mineral Resources
This press release uses the terms "inferred mineral
resources." We advise U.S. investors that while these terms are
recognized and required by Canadian regulations, the SEC does not
recognize them. "Inferred mineral resources" have a great amount of
uncertainty as to their existence, and great uncertainty as to
their economic and legal feasibility. It cannot be assumed that all
or any part of an "inferred mineral resource" will ever be upgraded
to a higher category. Under Canadian rules, estimates of "inferred
mineral resources" may not form the basis of a feasibility study or
prefeasibility studies, except in rare cases. The SEC normally only
permits issuers to report mineralization that does not constitute
"reserves" as in-place tonnage and grade without reference to unit
measures. U.S. investors are cautioned not to assume that any part
or all of an inferred resource exists or is economically or legally
mineable.
Platinum Group Metals Ltd.R. Michael JonesPresident(604)
899-5450 / Toll Free: (866) 899-5450www.platinumgroupmetals.net
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