Southern Palladium, a Johannesburg-listed platinum group metals (PGM) exploration firm, has achieved a significant milestone by completing 82 drill holes at its Bengwenyama deposit. This development lays a solid foundation for the upcoming pre-feasibility study, which is crucial for the $408 million project.
Robust Resource Confirmation
The drilling focused on the UG2 Reef, revealing a weighted average 7E grade of 9.88 grams per ton over a width of 67 centimetres. “These results consistently confirmed the initial inferred mineral resource grades and prill split, thus confirming the robustness of the UG2 Reef and the broader project,” said Johan Odendaal, MD of Southern Palladium.
Exploring Additional Potentials
In addition to platinum and palladium, Southern Palladium is investigating the potential for chrome production from the deposit and assessing whether the footwall of the Merensky Reef holds economic mineralization. Odendaal emphasized the importance of forthcoming updates and continued drilling for the Definitive Feasibility Study to unlock the full potential of this world-class asset.
Financial Projections and Market Conditions
Earlier this year, Southern Palladium published a scoping study for Bengwenyama, projecting a post-tax net present value of $700 million based on conservative metal prices. The capital cost, including contingencies, is forecasted at $408 million. The study assumes average prices of $1,200 per ounce for platinum, $1,100/oz for palladium, and $5,000/oz for rhodium. Historically, palladium and rhodium have shown significant price volatility, adding an element of risk to the projections.
Production and Cost Efficiency
Southern Palladium anticipates an average annual production of 330,000 ounces at an all-in-sustaining cost of $836/6E ounce. This cost efficiency is critical in ensuring the project’s economic viability amid fluctuating PGM prices.
Market Outlook
Despite recent volatility in PGM prices, there are signs of stabilization. In its first-quarter production update in April, Impala Platinum noted significant volatility in platinum and palladium prices due to continued investor activity. However, there is cautious optimism that prices have bottomed out, offering a more stable environment for future operations.
Southern Palladium’s successful drilling campaign and resource confirmation mark a crucial step towards realizing the full potential of the Bengwenyama deposit. As the company moves towards a Definitive Feasibility Study, the groundwork laid by these efforts supports the $408 million project’s ambitious goals, promising significant contributions to the PGM sector.
