Platinum Group Metals fine tunes feasibility

Vancouver – Platinum Group Metals (PTM-T, PLG-X) along with Western Bushveld joint venture (WBJV) partners Anglo Platinum (AGPPY-O, ANP-L, AMS-J) and Wesizwe Platinum (WEZ-J) are looking to refine some mine design details in the feasibility study underway at the South African platinum deposit.

The Project 1 engineering team at WBJV recommends tweaking some areas of the mine plan tabled in last year’s pre-feasibility study. Proposals include boosting the production rate from the early ore, optimizing capital requirements, deferring some capital expenditures and reducing electrical consumption at the operation.

Increasing early production at the planned mine is aimed at fast-tracking payback and sweetening the economics. Decline development plans continue to target planned annual output of 250,000 oz. combined platinum, palladium, rhodium and gold, however construction of a vertical shaft part of the current mine plan may be deferred to reduce early-stage capital expenditures.

“Major mine development in South Africa is facing increased risks of a shortage of available grid power in the next five years” states Platinum Group Metals’ president R. Michael Jones in the announcement. “Current mine design provides a significant strategic advantage and our engineering team is working to optimize the proposed design and respond to concerns regarding power supply. We have shallow resources that can be accessed quickly with lower capital costs and reduced electrical demands when compared to deep ounces.”

South African power utility Eskom has been struggling to keep up with rising demand exemplified by an increasing number of blackouts throughout the nation. The utility has proposed power rationing, or quotas, as an interim method to deal with the issue.

WBJV partners have held planning meetings with Eskom with indications that an allocation of 2 megawatts for project construction is possible.

Platinum Group Metals states in its release, “Potential for decreased grid electrical power availability from Eskom for new projects up to 2012 has put an increased strategic focus on maximizing the value of shallow platinum ounces which require relatively less power than deeper mines, and minimizing power requirements for the WBJV Project 1 start up.”

Use of diesel power generation to offset potential shortfalls is being considered although it would boost capital and operating costs. Increased electrical demand at the mine is expected by late-2012.

Work on the feasibility study is slated to wrap up by mid-2008 with a production start still anticipated for 2010 – assuming appropriate permits are received in the timeline.

The WBJV partners have initiated the public consultation stage in its permit application process that will run in unison with its feasibility-engineering optimization program.

In mid-2007, a resource update on the Project 1 section of the WBJV reviewed 44.23 million measured and indicated tonnes grading 3.27 grams platinum per tonne, 1.37 grams palladium per tonne, 0.34 gram rhodium per tonne and 0.16 gram gold per tonne on both the UG2 and Merensky Reef units.

The Bushveld layered igneous complex in northern South Africa hosts about 75% of the world’s platinum group metal resources. The 350-km diameter structure was formed from multiple injections of magma into a chamber where it slowly cooled allowing for segregation and “layering” of different minerals during the crystallization process. Precipitation of certain minerals resulted in the accumulation or concentration of certain elements, such as platinum, palladium, chromium and vanadium, into economic deposits.

Main producing areas of the Bushveld complex are around its rim as the centre is deeply covered by rock sequences. Two principal mineralized horizons, the Merensky and Upper Group 2 (UG2) reefs, are being worked in the eastern and western limbs of the complex. The layers are quite thin, usually less than one metre, necessitating labour intensive underground mining.

Platinum group metal resources on the WBJV are primarily hosted in three distinct units. In the Merensky Reef, which contains about 80% of the resource, mineralization occurs both in a pegmatoidal feldspathic pyroxenite unit and in the contact reef. PGMs also occur in the UG2 chromitite seam.

Platinum Group Metals, the project operator, and Anglo Platinum each hold 37% in the Project 1 joint venture while Wesizwe Platinum has a 26% interest it acquired through its takeover of the previous WBJV Black Economic Empowerment company Africa Wide Mining.