EXPLORATION ROUNDUP — Platexco explores for platinum in South Africa –Drills target Merensky, UG-2 reefs at Winnaarshoek property

Steelpoort, South Africa — Emerging with a victory after years of legal wrangling with South African giant Anglo American, junior Platexco (PGMI-C) has begun an exploration campaign on the Winnaarshoek platinum property in northeastern South Africa.

The 1,781-ha Winnaarshoek property is 240 km northeast of Pretoria in South Africa’s Northern province. The property, designated as farm number 250KT in the South African land-management system, is accessible by gravel road, and the Steelpoort railhead and airstrip are 30 km away.

Winnaarshoek is situated on the eastern limb of the famed Bushveld complex, a layered intrusion formed nearly 2 billion ago that hosts enormous deposits of platinum group metals, chromite, vanadium, copper and fluorspar. The Bushveld has the shape of a 65,000-sq.-km. ellipse measuring 350 km west-to-east and 250 km north-to-south.

In the late 19th century, just 10 km from Winnaarshoek, Hans Merensky was born at the Maandagshoek mission to German parents who returned with him to Europe a few years after his birth. The geologist returned to the area of his birth when he was in his 40s and, in 1924, found the platinum-rich Merensky discovery outcrop just 2 km from his birthplace. Not long afterwards, the platinum-bearing UG-2 reef was discovered in the eastern limb, as was the Merensky reef on the Bushveld’s slightly richer western limb, where Anglo American’s Rustenburg Platinum Mines (RPM) began mining platinum soon after its discovery.

In the Bushveld, the Merensky is generally continuous and sheet-like with a true width of 0.5 to 1.5 metres. The UG-2, which occurs from 15 to 370 metres below the Merensky, is also continuous and sheet-like, with a thickness of 0.7 to 1.4 metres. The UG-2 is more complex metallurgically than the Merensky, and was first mined in the early 1980s.

Virtually all mineral rights to the shallow Merensky and UG-2 platinum deposits in the eastern limb are held by Anglo American’s platinum subsidiary, Amplats, with the exception of Winnaarshoek.

Although the mineral rights at Winnaarshoek are owned by Vansa Vanadium of South Africa, there had originally been a prospecting contract with Amplats through RPM. The validity of this prospecting contract was challenged by Vansa in the Supreme Court in Pretoria in 1994.

A judgment in favor of Vansa was given in February 1996, but RPM filed an appeal, only to withdraw it this past July, paving the way for Platexco to begin prospecting for, among other things, platinum on the Winnaarshoek property through its wholly owned subsidiary, Trojan Platinum.

Unlisted trader

Platexco, which began unlisted trading in Canada this past May, was formed specifically to carry out platinum and platinum group metal (PGM) exploration and development in South Africa’s Bushveld igneous complex.

Managed by South Africans, the company has an office near Johannesburg and a head office in Toronto.

Under a contract with Vansa, Platexco can acquire the Winnaarshoek property during the 15 months of the prospecting option for 24 million rand (about $7 million), with Vansa retaining the right to subscribe for up to 20% of the investment capital of the company that mines the property.

Platexco has been involved in negotiations with Vansa’s controlling shareholders, PGM Investments, to acquire a 100% interest in Vansa.

As of May 1997, Platexco had cash reserves of $7.5 million for the development of its platinum projects, acquisition of mineral rights and working capital.

“When you first come to South Africa, you are overwhelmed by the amount of mineral potential,” said Martin Brink, Platexco’s president, as he addressed a group of foreign analysts and media visiting Winnaarshoek. “But you must realize that nothing is available. The first thing that we, as a company, had to do was prospect for the availability of prospects.”

“We spent eight years in court against Anglo American,” added Lawrence Blomkamp, vice-president of project development. “Because, at the time, we were two private individuals (Brink and Blomkamp through Trojan), they couldn’t get to us they way they could if we were a public company. We received really bad press in South Africa, but the perception of who we are is changing. In the north of South Africa, we are now quite welcome.” Winnaarshoek

At Winnaarshoek, the Merensky reef dips 13 west, extending along strike for 2 km within the property and outcropping for more than 1 km — a rare surface occurrence for the Merensky anywhere in the Bushveld.

Roger Scoon, vice-president of exploration, described the Merensky at Winnaarshoek as comprising a 2-to-3-metre-thick feldspathic pyroxenite with prominent oikocrysts of chromian diopside and two to three 1-cm chromitite bands. A coarse-grained pegmatoid occurs in the lower part of the reef, and a distinct layer of gossan marks the boundary between the main concentration of base-metal sulphides and PGMs in the upper part.

Platexco believes that at Winnaarshoek, within the Merensky reef, there exists a potential a resource of 40 million tonnes grading 6 grams PGM per tonne over a reef width of between 0.66 and 0.92 metre (PGM here refers to platinum, palladium and thorium plus gold). On the UG-2 reef, the company hopes to outline a resource of 50 million tonnes grading 6.95 grams pgm per tonne over a reef width of 0.68 metre.

Randomly distributed, near-circular depressions, termed “potholes,” in the Merensky and UG-2 can ultimately reduce the reserve area by about 15%.

The two reefs also have associated nickel, copper and cobalt values.

Surface geological mapping on the property this summer uncovered some 30 old workings, including trenches, dumps and declines measuring up to 100 metres long. The declines, dating back to a 1924-30 platinum rush in the area, were probably sunk to evaluate the reef at a depth of 40 metres, below the oxidation zone.

Once the adits are refurbished, operators plan to channel-sample, as well as take two bulk samples — one from the oxidized portion of the deposit and another from the sulphide portion.

A recent helicopter-borne magnetic and radiometric survey completed over Winnaarshoek indicates structural disturbances in the form of minor faulting, post-Bushveld dykes, replacement pegmatites and an intrusive dunite pipe.

The core of this dunite pipe could potentially be another minable source of platinum (but not palladium), as three similar pipes in the area were mined for platinum earlier this century, prior to the discovery of the Merensky reef.

A 13,000-metre diamond-drilling campaign is under way at Winnaarshoek, the objective being to intersect both the Merensky and UG-2 reefs. The campaign is designed to intersect the Merensky at depths of 50, 100, 200, 300, 400 and 500 metres, with line spacing from 250 metres for the shallowest holes to 1 km for the deepest ones.

The following assay results are from Platexco’s first set of 16 holes drilled, which were drilled to intersect the Merensky reef at a depth of 50 metres (platinum, palladium, rhodium and gold content are here designated “PGM”):

* 30 cm grading 6.19 grams PGM per tonne in hole 1;

* 100 cm of 6.58 grams PGM in hole 2;

* 100 cm of 7.36 grams PGM in hole 3;

* 80 cm of 5.66 grams PGM in hole 4;

* 50 cm of 16.34 grams PGM in hole 5;

* 50 cm of 11.14 grams PGM in hole 6;

* 90 cm of 7.98 grams PGM in hole 7a;

* 178 cm of 3.47 grams PGM in hole 8;

* 60 cm of 10.78 grams PGM in hole 9;

* 80 cm of 11.89 grams PGM in hole 12;

* 60 cm of 5.84 grams PGM in hole 13;

* 220 cm of 2.42 grams PGM in hole 14;

* 50 cm of 6.22 grams PGM in hole 15; and

* 63 cm of 19.26 grams PGM in hole 16.

Holes 10 and 11, which were collared in a structurally disturbed area adjacent to the dunite pipe, did not intersect the Merensky reef.

The intersections of holes 7, 8 and 9 represent a mineralized zone in the lower part of the reef near the pipe.

Using an 80-cm mining width, holes 1-9 and 12-15 graded an average of 6.81 grams PGM per tonne.

The individual assay values for platinum, palladium, rhodium and gold are currently being prepared, as a
re values for the ruthenium, iridium, nickel and copper concentrations. (Overall, the platinum-to-palladium ratio in the Merensky is roughly 2-to-1, while in the UG-2 it is about 1-to-1.) Another 10 holes are being drilled on a grid at 400-metre intervals designed to intersect the Merensky reef at a depth of about 100 metres.

Deepening of holes 1, 5 and 15 to intersect the UG-2 reef some 400 metres vertically below the Merensky have been completed.

Hole 9 was deepened to intersect the UG-2 reef but encountered only a thin chromitite layer adjacent to the dunite pipe.

Drilling has also been completed stratigraphically below the Merensky in the easternmost corner of the property, where three shallow holes have intersected the UG-2 reef.

Conceivably, a monthly production level at Winnaarshoek of 200,000 tonnes, just from the Merensky, could produce 250,000 oz. platinum annually over 20 years. The open-pit potential represents only about 2% of the total resource.

Most likely, the future of the Winnaarshoek project lies either in a joint venture with a major or in an outright sale. “Our expertise is in licence acquisition and exploration, not in mining,” said Warren Newfield, vice-president of corporate development.

Winnaarshoek is about 25 km south along strike of Amplats’ open-pit Atok platinum mine, the only fully operating platinum mine on the eastern limb, which has been mining the Merensky since the 1970s.

Platexco’s first lawsuit against Anglo involved the Atok mine; Platexco bought the base metal rights — a purchase contested by Anglo American.

The UG-2 reef at Winnaarshoek is contiguous with Amplats’ trial mining operation of the UG-2 on the adjacent properties of Hackney (to the north), Driekop (south and east) and Maandagshoek (south). Platexco describes the UG-2 in the area as comprising a layer of massive chromitite, 0.5 to 0.8 metre thick, which is similar in appearance to chromitite layers lower in the stratigraphy currently being mined for chromite.

Mokopane

Platexco also has a 42% interest in a joint-venture project called Mokopane Mining, which has applied for the prospecting and mining rights on two properties: Turfspruit (241KR) and Macalacaskop (243 KR).

The local 55,000-person Mokopane community owns the remaining 58% interest in Mokopane Mining, which was formed in 1995 as part of a program aimed at giving blacks greater economic control.

The two properties are 3 km southeast of Amplats’ PPRust Sandsloot platinum mine on the southern tip of the Potgietersrus limb of the Bushveld complex, situated to the north, between the western and eastern limbs.

Mineral rights at the properties were previously held by Amplats but are no longer controlled by any company.

Platexco is also assisting the Mokopane community with an application to the Lands Claim court to have these properties returned to them under the Restitution of Lands Act of 1994.

At the 4-year-old Sandsloot open-pit mine, Amplats holds reserves within the platinum-bearing Platreef of 28.7 million tonnes grading 4.81 grams PGM plus gold, 0.27% nickel, 0.14% copper. Mining is ongoing at a monthly rate of 250,000 tonnes, equivalent to 142,000 oz. platinum per year. The mine has South Africa’s lowest platinum production costs — US$150 per oz. platinum (net of byproducts).

The Platreef is thicker (15 metres at Sandsloot) than the Merensky and UG-2 reefs but has a more erratic grade and a steeper dip (45 at Sandsloot).

Buffelshoek

Platexco’s third project, the 3,025-ha Buffelshoek property, is situated farther south on the Bushveld’s eastern limb. The property contains an estimated resource of 51 million tonnes of UG-2 reef grading between 6 and 7 grams PGM plus gold per tonne over a reef width of 1.2 metres, but at a minimum depth of 550 metres.

Platexco also had an equal joint-venture agreement with Pangea Goldfields (PGD-T), dubbed the Bushgold venture, which consisted of 3,550 metres of drilling into the eastern limb of the Bushveld in the hopes of finding gold mineralization analogous to that found in Greenland’s Skaergaard intrusion.

No anomalous gold values were found and the project was abandoned.

South Africa produces two-thirds of the world’s platinum, all from the Bushveld igneous complex.

Almost all rights of value in the western limb are held by Amplats (Anglo-American), Impala (Gencor) or Lonrho (in which Anglo holds 27.5% interest), with Northam (Gold Fields) and BHP being relatively small newcomers. Together, the mines of the western limb almost contiguously cover a strike length of over 50 km.

According to Johnson Matthey’s Platinum 1997, Amplats, Impala, Lonrho and Northam’s 1996 platinum production from the Bushveld totalled 1.66 million oz., 962,000 oz., 598,000 oz. and 170,000 oz., respectively.

As well, the recovery of base metals, namely nickel and copper, accounts for 20% of the revenue from the Merensky.

Platinum is in demand for use in automobile catalytic converters (as an oxidizing catalyst), jewelry, electronics, glass making and petroleum refining. Sales of pure platinum, in the form of coins and bars, remains a popular investment, particularly in Japan.