A sustained rally in platinum and palladium prices has rejuvenated exploration for these rare metals and breathed some life into the sickly junior mining sector.
Platinum rocketed past $500 recently while palladium has tripled in just a few years and had been trading near US$800 in late February. Prices for the other platinum group metals (PGMs) — iridium, osmium, rhodium and ruthenium — are also robust, because of supply disruptions coupled with increasing demand.
The widening gap between PGMs and slumping gold prices has prompted some juniors to cut their traditional ties to gold and redirect their exploration efforts towards platinum and palladium. Several projects are now under way in Canada, South Africa, the U.S. and Brazil, and a handful of juniors has raised significant financing for the search, mainly through private placements.
But PGM exploration is challenging. Although the metals are commonly found in layered mafic intrusions and associated with nickel-copper sulphide deposits, their distribution tends to be spotty, and economic concentrations are rare. More than 90% of the world’s supply comes from only three mining camps: Bushveld in South Africa, Noril’sk in Russia and Stillwater in the U.S.
“You need sulphides to come into equilibrium with a very large amount of magma in order to concentrate platinum group metals in one place,” says Anthony Naldrett, emeritus professor in University of Toronto’s geology department and an expert on magmatic sulphide deposits. “This simply doesn’t seem to happen very effectively very often.”
Even in the Bushveld complex, which produces about 80% of the world’s platinum and contains 90% of global PGM reserves, concentrations border on the sub-economic, owing to the difficult mining conditions associated with the deep deposits.
“Its doubtful whether we could mine the Bushveld complex in North America with our more expensive labour and possibly more stringent environmental regulations,” says Naldrett.
Grades at the Stillwater complex in Montana, the only profitable primary producer in North America, are about four times higher than those of the Bushveld mines, though tonnages are smaller. At the end of 1998, Stillwater had proven and probable reserves of 36 million tonnes grading 24 grams per tonne palladium and platinum (mostly palladium), compared with 642 million tonnes grading 5.5 grams per tonne PGMs (mostly platinum) at Anglo American Platinum’s Merensky-Platreef operations.
There are two main sources of PGMs: sulphide-rich nickel-copper deposits in which PGMs are a byproduct, such as Noril’sk; and primary PGM deposits (mostly stratabound) that occur in mafic-to-ultramafic layered intrusions, such as Bushveld and Stillwater. The latter are associated with either sulphide or chromitite. Primary deposits can be elusive because sulphides are often sparsely disseminated or nonexistent.
PGM deposits also tend to be metallurgically complex, which reduces their appeal as exploration targets.
“There needs to be a breakthrough in the metallurgical department to give this sector a boost.” says John Kaiser, editor of the Kaiser Bottom-Fishing Report.
But Kaiser says the massive jump in the palladium price, even if unsustainable at current levels, has dramatically improved the economics of deposits discovered during previous PGM rushes.
“During the last big exploration waves, the palladium price was negligible, so all these systems were dismissed as hopelessly uneconomic,” he says. “The systems with a dominant palladium credit need to be re-interpreted.”
Kaiser believes palladium prices, which are currently responding to supply disruptions in Russia, will eventually retrench to the US$300-to-$400 level but remain robust because of growing usage in automobile catalysts. Platinum prices are also expected to remain healthy as demand for the metal for use in computer hard drives, jewelry and fuel cells grows.
The cost of PGM assays has dropped considerably over the past 20 years, making PGM exploration more accessible to junior companies. A typical fire assay for platinum, palladium and gold costs $15 to $30 per sample, only slightly higher than the range for comparable gold and silver analyses.
Most importantly, the major South African producers have put their seal of approval on the search for PGMs in Canada, where Lac des les is the only primary producer, by partnering with juniors. Both Anglo American Platinum (Amplats) and Impala Platinum Holdings (Implats) are focusing on the River Valley Intrusive — a 30-by-15-km, layered intrusion about 50 km northeast of Sudbury, Ont.
Amplats can earn a half-interest in properties held by Pacific Northwest by paying $300,000 cash and spending $4 million on exploration over four years. Implats is earning a 60% interest in 511 claims from
“Because the mineralization tends to be rather spotty, their problem will be to put together sensible tonnages that can be mined, rather than just nice intersections that don’t connect up,” Naldrett says of the Sudbury area explorers.
Some other ongoing PGM projects are outlined below.
Canada
Adjacent to Lac des les,
Mustang Minerals continues to explore the East Bull Lake intrusion, southwest of Sudbury, where drilling intersected narrow intervals grading up to 5.65 grams Pd-Pt-Au.
Billiton Metals Canada can earn a half-interest in
onne Pd-Pt and up to 9.5% nickel.
Muskox Minerals is launching a $2.5-million drill program on the Muskox layered intrusive in Nunavut. The junior has already spent $4.5 million exploring the intrusion, where sulphide mineralization along the margins has been found to grade in excess of 100 grams palladium, 33 grams platinum and 28 grams gold per tonne.
South Africa
United States
Brazil
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