Platinum Group makes new Bushveld discovery

Vancouver – Platinum Group Metals (PTM-T) has hit high grade precious metal intercepts in an area north of the previously mapped Bushveld Complex in South Africa.

At 643 metres depth the company hit 3.5 metres grading 1.11 grams platinum per tonne, 1.74 grams palladium per tonne and 0.62 gram gold per tonne for a combined 3.47 grams in the T1 reef, and then at 662 metres depth the company hit 5 metres grading 1.71 grams platinum, 4.22 grams palladium and 1.07 grams gold for 7 grams combined in the T2 reef.

The company describes the hits as “high grade, thick, layered intercepts”, while Raymond James analyst Bart Jaworksi issued a brief research note highlighting that other un-assayed drill results suggest the zone is a true layer or reef, with visual observations suggesting a lateral extent.  

Jaworksi  went on to compare the recent hits to Eastern Platinum‘s (ELR-T) mining widths and grades, with the latter averaging 1.5 metres and a combined grade of 3.31 grams 4E. While highlighting that Platinum Group’s results are very preliminary, Jaworksi notes that its intercepts yield a value of US$1,053 per metre in the T2 reef and US$401 per metre in the T1 reef, compared with US$239 per metre at Eastplats. The T1 reef is in the ultramafic igneous rock harzburgite while the T2 Reef is hosted in the mafic intrusive igneous rock norite. Assay results for rhodium, copper and nickel are still outstanding.

The discovery was made on the 137-sq.-km Waterberg project, which sits 70 km north of Anglo Platinum‘s Mogalakwena open pit mine with 55 million oz. of 4E reserves, and 82 km north of the Ivanhoe Nickel and Platinum project.

Platinum Group  controls 37% of Waterberg directly and has announced plans to acquired 49.9% of Mnombo, the black empowerment company that holds 26% of the project, giving Platinum Group Metals a further 12.97% for a total of 49.97% of the project.  

The company secured the project by making a prospecting permit application in September 2009, and identified the precious metal prospects in early 2011 through geochemical and geophysics surveys. Shortly after its initial permit application the company entered a deal with Japan Oil, Gas and Metals National Corporation, or JOGMEC, whereby the Japanese company could earn 37% of the project by spending US$3.2-million by 2013. So far JOGMEC has spent about $920,000.

JOGMEC, in conjunction with Itochu, also made a $280-million investment for 10% of Ivanhoe Nickel and Platinum in 2011. Platinum Group notes that as many as 20 drill rigs are operating at Ivanhoe’s project. Platinum Group is operating two drill rigs at its Waterberg project with plans to add two more.

Meanwhile, the company continues to develop its advanced-stage Project 1 and 3 further south on the complex. As of August 31 the company had spent roughly $23 million on exploration, engineering and development at the two projects plus $20 million in property, plant and equipment at Project 1 this year. Construction of Project 1 is ongoing, with Platinum Group awarding the contract to develop two 1,200-metre declines in July, with the winner taking over work in mid-October. The declines should take roughly 17 months to complete, while overall phase 1, currently about 55% to 60% complete, is on budget and 10 to 12 weeks behind.

The company is advancing its 4E project at a time when gold prices have actually surpassed platinum prices. The price of platinum dropped precipitously in September, hitting a low of US$1,444 per oz. after trading at a 52-week high of US$1,887 per oz. in August. Palladium prices were also hit recently, falling to a 52-week low of US$549 per oz. in September from a July high of US$840 in July.

Platinum Group’s share price has, meanwhile, steadily eroded from a 52-week high of $2.79 in December 2010 to a low of 96¢ in early October. On the day of the latest drill results the share price briefly traded as high as $1.55 but closed at $1.37 and has since fallen to $1.05.