Wrap Text
Bengwenyama Project Scoping Study
Southern Palladium Limited
Incorporated in the Commonwealth of Australia
Australian Company Number 646 391 899
ASX share code: SPD
JSE share code: SDL
ISIN AU0000220808
01 February 2024
ASX:SPD, JSE:SDL Bengwenyama Project Scoping Study
THE NEXT SIGNIFICANT PGM PRODUCER ON THE EASTERN
ACN: 646 399 891 LIMB
Corporate Directory Key Study Parameters
Chairman • Scoping Study completed for the 70% owned Bengwenyama project shows
Roger Baxter very attractive economics, with results justifying the prefeasibility study (PFS)
which has already commenced.
Managing Director • The life of mine on the UG2 reef only is estimated at 36 years with a total of
Johan Odendaal approximately 52 million tonnes mined (~10.9 Moz 7E*) for an average annual
production rate of 330 Koz PGM (6E basis*) with cash costs firmly at the low
Non-Executive Directors end of the global cost curve.
Mike Stirzaker
Rob Thomson • Strategically situated amongst major mining operations with all the necessary
Daan van Heerden infrastructure (water, power, roads, services, and skilled labour force) already
Geoff Hiller in place. Mining and processing are amenable to proven technology.
Company Secretary Physical Parameters
Andrew Cooke • Development of a ~2 Mtpa UG2 reef underground mining operation using the
hybrid mining with mill feed head grade of 6.55g/t (7E)
Top 5 Shareholders
• Conventional flotation and spiral plant to deliver a marketable PGM
Nicholas Daniel Resources Pty ltd concentrate (~85% recovery for the major metals) and a chrome concentrate
Nurinox Investments Pty Ltd for sale to export markets.
Citicorp Nominees Pty Ltd
Legacy Platinum Corporation Operating Costs & Capital Costs
UBS Nominees Pty Ltd
• Initial Capital of ~USD408 million (including a 15% contingency)
Company Overview • Low LOM cash costs of operations of ~USD717/6E oz (~ZAR2,318/t)
• LOM AISC of ~USD836/6E oz
Dual-listed platinum group metal
(PGM) company developing the • High LOM EBITDA Margin of ~43%
advanced Bengwenyama PGM
project, particularly rich in Financial Returns
palladium/rhodium, located in South • Post-tax NPV8 (real) of ~USD700 million based on conservative commodity
Africa's prolific Bushveld Complex. price assumptions (Pt US$1200/oz, Pd US$1100/oz, Rh US$5000/oz)
• Post-tax IRR of ~21%
Contact: • Post-tax capital payback of ~4.5 years from first concentrate production
E: info@southernpalladium.com
W: www.southernpalladium.com • Life of mine EBITDA totalling ~USD5.2 billion.
Cautionary Statements
The Scoping Study referred to in this announcement has been undertaken for the purpose of initial evaluation of a potential
development of the Bengwenyama PGE Project ("Bengwenyama", the "Project" or the "Study") in the Eastern Limb of the
Bushveld Complex in South Africa. It is a preliminary technical and economic study of the potential viability of the
Bengwenyama Project. The Study has been undertaken by Minxcon Pty Ltd, a Johannesburg-based mining consulting
company. The full report is available on the Company's website: https://www.southernpalladium.com/site/investor-
centre/asx-announcements.
The Scoping Study outcome, production target and forecast financial information referred to in this announcement are based
on low accuracy level, technical and economic assessments that are insufficient to support estimation of Ore Reserves. These
include assumptions about the availability of funding. This Scoping Study inputs and assumptions have been assessed to have
a level of accuracy of +/- 30%.
While each of the modifying factors contained in the Australasian Code for Reporting of Exploration Results, Mineral Resources
and Ore Reserves ("JORC Code (2012)") were considered and applied, there is no certainty of eventual conversion to Ore
Reserves or that the production target itself will be realised. Further exploration and evaluation work and appropriate studies
are required before Southern Palladium Limited ("SPD" or "the Company", ASX: SPD; JSE:SDL) will be in a position to estimate
any Ore Reserves or to provide any assurance of an economic development case.
Given the uncertainties involved, investors should not make any investment decisions based solely on the results of the Scoping
Study.
The Mineral Resources and Exploration Target underpinning the production target in the Scoping Study have been prepared
by competent persons in accordance with the requirements of the JORC Code (2012). The Competent Person's Statement is
found at the end of this announcement. The Company has concluded that it has reasonable grounds for disclosing a production
target which includes an amount of Inferred Mineral Resources and Exploration Target.
The JORC compliant Mineral Resource Estimate and Exploration Target was updated before the time of the Bengwenyama
Scoping Study ASX Release, on 7 December 2023 (refer ASX Announcement, 7 December 2023).
For the production target, after applying the modifying factors, Indicated Resources used comprise ~54%, Inferred Resources
comprise ~38% and Exploration Target ~8% of the production schedule over the 36 years modelled Life of Mine (LOM).
Approximately 79% of the tonnes in the payback period is in the Indicated Mineral Resource category with the remainder in
inferred. There is still a total of 4.8 Moz 7E indicated (~80% of the indicated mining inventory) in the mine plan after the
payback period. The payback period based exclusively on indicated resources would be ~17 months longer than the current
payback period.
Accordingly, SPD has concluded that it is satisfied that the financial viability of the project in the Scoping Study is not
dependent on the inclusion of Inferred Resources or Exploration Target early in the production schedule given an estimated
payback period (from commencement of production) of ~7 years. In addition, the inferred Mineral Resources and Exploration
Target does not feature as a significant proportion early in the mine plan.
There is a low level of geological confidence associated with Inferred Mineral Resources and there is no certainty that further
exploration work will result in the determination of Measured and/or Indicated Mineral Resources or that the production
target itself will be realised.
The potential quantity and grade of an Exploration Target is conceptual in nature, there has been insufficient exploration to
determine a Mineral Resource and there is no certainty that further exploration work will result in the determination of mineral
resources or that the production target itself will be realised.
However, due to the consistent characteristics of the ore body (tabular with a uniform width and low-grade variability) and
the high success rate in exploration and conversion to higher confidence categories, SPD is confident in reporting a production
target within a small portion of the Exploration Target.
This announcement has been prepared in compliance with the JORC Code (2012) and the ASX Listing Rules. All material
assumptions, including sufficient progression of all JORC Code (2012) modifying factors, on which the production target and
forecast financial information are based have been disclosed in this announcement.
This announcement contains forward-looking statements. Generally, the words "expect", "potential", "intend", "estimate",
"will" and similar expressions identify forward-looking statements. By their very nature forward-looking statements are
subject to known and unknown risks and uncertainties that may cause actual results, performance, or achievements, to differ
materially from those expressed or implied in any of our forward-looking statements, which are not guarantees of future
performance. Statements in this announcement regarding SPD's business or proposed business, which are not historical facts,
are forward-looking statements that involve risks and uncertainties, such as Mineral Resource estimates, market prices of
palladium, platinum, rhodium, ruthenium, gold, nickel, copper and chrome, capital and operating costs, changes in project
parameters as plans continue to be evaluated, continued availability of capital and financing and general economic, market
or business conditions, and statements that describe SPD's future plans, objectives or goals, including words to the effect that
SPD or SPD's management expects a stated condition or result to occur.
Forward-looking statements are based on estimates and assumptions that, while considered reasonable by SPD, are inherently
subject to significant technical, business, economic, competitive, political and social uncertainties and contingencies. Since
forward-looking statements address future events and conditions, by their very nature, they involve inherent risks and
uncertainties. Actual results in each case could differ materially from those currently anticipated in such statements. Investors
are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date they are made.
Environmental permitting and Mining Right approvals are the main determining factors to first production. On 29 September
2023, Southern Palladium officially submitted its application for a Mining Right. On 17 October 2023, the company received
notification from the Department of Mineral Resource and Energy (DMRE) that its application for the Mining Right has been
accepted. This approval marked the commencement of extensive expert studies and consultations, laying the groundwork for
a final decision by the Department of Mineral Resources and Energy (DMRE) anticipated in 2025. The key document for the
environmental approval process is the Environmental Impact Assessment (EIA) and this is due to be lodged by the end of June
2024. Delays in the environmental approval process or any other development approval could result in a delay to the
commencement of construction (planned for 2026). This could lead to a delay to first production. These dates are indicative
only.
To achieve the range of outcomes indicated in the Scoping Study, a peak funding requirement of USD403million will likely be
required. Investors should note that there is no certainty that SPD will be able to raise that amount of funding when needed.
It is also possible that such funding may only be available on terms that may be dilutive to or otherwise affect the value of
SPD's existing shares. The project development schedule assumes the completion of a Pre-Feasibility Study (PFS) – fully funded
- by the second half of 2024 followed by the Feasibility Study and Final investment decision in 2025. The Board considers the
Company has sufficient cash on hand to complete the PFS and continued metallurgical testing and ongoing exploration of the
project area.
____________________________________________________________________________________________________
Southern Palladium (ASX: SPD; JSE: SDL, "Southern Palladium" or the "Company") is pleased to announce the outcome of its
Scoping Study of its 70% owned Bengwenyama project. SPD has concluded that it has a reasonable basis for providing these
forward-looking statements and the forecast financial information included in this announcement. This includes the
assumption that there is a reasonable basis to expect that it will be able to fund the development of the Project upon
successful delivery of key development milestones when required. To achieve the range of outcomes indicated in the Scoping
Study, it is estimated that a peak funding requirement of USD403m for the project development may be required. There is
no certainty that SPD will be able to source that amount of funding when required. It is also possible that such funding may
only be available on terms that may be dilutive to or otherwise affect the value of SPD's shares. It is also possible that SPD
could pursue other value realisation strategies such as a sale, partial sale or joint venture of the Project. This could materially
reduce SPD's proportionate ownership of the Project. Other detailed reasons for these conclusions are outlined throughout
this announcement (including the Project Funding Sources and Strategy, Risks, and Key Opportunities sections of this
announcement).
Managing Director Johan Odendaal, said: "We are thrilled to announce a significant milestone in the journey of Southern
Palladium. The recently concluded Scoping Study represents a pivotal moment for our company, made possible by the AUD19
million raised in June 2022 for the drilling program and associated study work.
The Bengwenyama project, now recognised to be of world class stature, has been systematically evaluated and successfully
delivered on schedule. Our commitment to exploring every avenue to maximize value and optionality for all stakeholders has
been underscored by the study's impressive outcomes: a NPV8 of USD700 million, an Internal Rate of Return (IRR) of 21%, and
a noteworthy annual Free Cash Flow (Pre-tax, real terms) of approximately USD180 million at steady state over a 36-year
mine life. These compelling figures make a strong case for the continued development of the orebody.
Our exploration efforts have resulted in the identification of a significant resource totalling 26.22 million ounces (7E*).
Notably, the Scoping Study has focused on the UG2 reef only, comprising 15.72 million ounces, with 6.52 million ounces
classified as Indicated Resource. Importantly, this study acknowledges the substantial remaining resource in the Merensky
reef (MR) and UG2 and MR Exploration target areas, which were not included in the current assessment of the 36-year mine
life.
The Scoping Study underscores that we possess a potential world-class Platinum Group Metal mine, fortified by a substantial
resource within an established mining area, effectively mitigating associated risks. Recent geotechnical studies and
metallurgical assays confirm the suitability of well-established mining methods and processing techniques for the orebody
located in the Steelpoort area. This location offers various advantages, including energy accessibility from the national grid,
potential for alternative green energy sources, well-developed transportation infrastructure, and a skilled workforce from
established mining communities.
.
Southern Palladium, through its subsidiary Miracle Upon Miracle ("MUM"), is committed to developing a sustainable and
impactful shared value, guided by responsible Environmental, Social, and Governance (ESG) practices. This commitment,
ingrained in our current activities, lays a robust foundation for the forthcoming mine development and operation. This extends
to ensuring sustainable and responsible practices, industry-leading approaches to environmental and cultural heritage
management and fostering long-term positive impacts for local communities.
To further enhance our commitment, we are actively exploring more efficient and lower carbon intensity sources, including
renewable energy options and innovative technologies. Energy specialists have been engaged to conduct a comprehensive
carbon-neutral energy study, which includes investigating the feasibility of a solar PV project. Carbon intensity forecasts,
evaluating greenhouse gas emissions per production factor, will be refined in the pre-feasibility stage. This proactive approach
enables Southern Palladium to assess both the impacts of the future operation on climate change and the potential impacts
of climate change on the operation.
In summary, this Scoping Study represents a significant step forward for Southern Palladium, reinforcing our commitment to
sustainable development, responsible practices, and delivering lasting value to all stakeholders.
The Key Assumptions underpinning the Scoping Study and the key financial results from the study are summarised below:
Scoping Study summary
*Note:
7E or 6E+Au in this document refers to platinum, palladium, rhodium, ruthenium, iridium, osmium and gold.
6E or 5E+Au refers to platinum, palladium, rhodium, ruthenium, iridium and gold and;
4e or 3E+Au refers to platinum, palladium, rhodium and gold
PROJECT SETTING
The 70% owned Bengwenyama Project is situated in the Limpopo Province, South Africa in the Eastern Limb of the world-
renowned Bushveld Complex. The Project targets platinum group metals ("PGM") from the UG2 and Merensky Reefs
representing one of the very few remaining portions of the Bushveld Complex where economical PGM mineralisation remains
unexploited.
The Project Area occurs on a tenement area centred on the coordinates 30°6'30"E and 24°44'0"S some 360 km northeast of
Johannesburg and 9 km west of the town of Steelpoort. The Bengwenyama-ya-Maswazi Community inhabits the land area,
and actively supports project development. They are actively involved in project decision making process.
Surrounded by numerous Eastern Limb operation, power, water and other infrastructure are available. Access is available via
tarred regional roads and district roads. The figure on the next page illustrates the proximity of the Bengwenyama Project to
other PGMs operation in the Bushveld Complex.
The figure below illustrates the proximity of the Bengwenyama Project to other PGMs operation in the Bushveld Complex
and location for refining.
PROJECT FEATURES
The following aspects for the proposed mining project have been technically assessed:-
• Development of a ~2 Mtpa UG2 reef underground mining operation utilising hybrid mining with conventional stoping
supported by on-reef mechanised development and ore clearance. The life of mine on the UG2 reef only is estimated
at 36 years with a total of approximately 52 million tonnes mined (~10.9 Moz 7E) for an average annual production rate
of 330 Koz PGM (6E basis) ignoring residual value beyond modelled life or any exploration upside.
• Shallow early ounces from two decline systems accessing the UG2 Reef
Annual Saleable Product - 6E
Source: Minxcon Scoping Study Update, February 2024
• UG2 Reef grades of the mining inventory are relatively high for the Eastern Limb, averaging 6.55g/t (7E) over a 1.1 metre
mining width.
Mining Inventory
• Construction of a flotation and spiral plant to deliver PGM and chrome concentrates from a conventional plant with a
monthly ~200 ktpm ore feed design capacity. A 75 micron grind size is envisaged.
• Construction of a dry-stack tailings storage facility ("TSF") conforming to GISTM requirements.
• Connection to the nearby national grid power substation and construction of a 132 kV overhead powerline to supply
(based on initial indications) ~43 MVA peak demand.
• Connection to an existing licenced, bulk water supply pipeline, located at the entrance road to the project. Water supply
will be supplemented with available ground- and surface water.
• Comprehensive integration of all on-site infrastructure, encompassing site access roads, office and administrative
buildings, engineering workshops, stores, guardhouse, surface water storage facilities and other supporting facilities.
• Relatively low capital intensity, with initial capital estimated at US$408m (including a 15% contingency) assisted by the
shallow nature of the UG2 orebody in this area and with well-located power and water infrastructure.
• The project is forecast to offer low cash costs (US$717/oz, 6E basis) assisted by high UG2 grades and, again, the
shallowness of the orebody. (Cost curve is presented below).
• There is a well-established downstream smelting and refining process for PGM concentrates within South Africa. Well-
established commercial terms are in place for UG2 and Merensky concentrates. Most smelters processing the
concentrate from the Eastern and Western Limbs are situated in Rustenburg, with almost all the concentrator product
in the area being transported by truck to Rustenburg. The Project PGM concentrates are believed to be suitable for
these facilities. Completion of the scoping study will allow the company to commence discussions with potential offtake
parties.
Bengwenyama's positioning on the global cost curve.
Source: Adapted from Rene Hochreiter (NOAH Capital Markets & Sieberana Research, 2023)
• The chrome ore concentrate, for the purpose of the Scoping Study, will be trucked to either Maputo or Durban port and
sold on the open export market. There is potential to treat the chrome ore concentrate at a local chrome smelter as
there are several in close proximity to the Project. This option will be investigated in the next phase of study.
• Study completed to an overall accuracy of ±30%. This includes mine design and schedule, process design, infrastructure
design, TSF design, capital estimates and operating cost estimates.
KEY PROJECT METRICS
The financial model assumptions are detailed in the table to follow, indicating the real long-term commodity prices and
exchange rate, tax rate, royalty rate, real discount rate, as well as project physicals.
Financial Model Assumptions
Financial Unit Bengwenyama
Basket Price UG2 USD/4E oz 1,529
Basket Price UG2 USD/6E oz 1,495
Platinum USD/oz. 1,200
Palladium USD/oz. 1,100
Rhodium USD/oz. 5,000
Gold USD/oz. 1,800
Ruthenium USD/oz. 470
Iridium USD/oz. 5,000
Osmium USD/oz. No value attached
Copper USD/tonne 8,200
Nickel USD/tonne 18,500
Chrome USD/tonne 285
Exchange rate ZAR/USD 18.9
Corporate Tax Rate % 27%
Royalty Rate % 0.5% - 7%; Avg 5%
Discount Rate Real % 8%
Physicals
Total Mill Feed over LoM Mt 51.9
Mill Feed per Annum Mtpa 2.0
Total Contained 7E in Mill Feed Moz 10,900
Mill Feed Head Grade 6E + Au g/t 6.55
Total Recovered 6E to Concentrate Moz 8,900
Average Recovery of 6E metals to Concentrate % 81.4%
Total Recovered Ni in Concentrate kt 20,000
Total Recovered Cu in Concentrate t 9,400
Total Recovered Chrome 42% Concentrate kt 3,767
The key study results are detailed in the table to follow. The results indicate an economically viable project with a post-tax
NPV8% of USD700 million and a post-tax IRR of 21%. The payback period has been calculated as 7.5 years from start of
construction and 4.5 years from the first plant throughput. The Project has an AISC USD836/6E oz. Project cashflows are
assessed on a real, pre-finance basis.
Key Project Results
Key Results Units Bengwenyama
Capital Costs
Initial Capital* USDm 408
Sustaining and Ongoing Capital USDm 510
Operating Costs (100% payable basis)
Cash Costs USD/6E oz 717
Royalties USD/6E oz 68
Total Operating Costs USD/6E oz 785
Sustaining Capital USD/6E oz 46
Reclamation & Off-Mine Overheads USD/6E oz 6
All-in Sustaining Costs (AISC) USD/6E oz 836
Initial & Ongoing Direct Capital USD/6E oz 58
All-in Costs USD/6E oz 894
Financial Metrics
Total Net Revenue USDm 12,241
EBITDA USDm 5,213
Project Cashflow - Pre-Tax USDm 4,295
NPV- Pre-Tax (8% discount rate) USDm 1,043
IRR - Pre-Tax % 24%
Tax Paid USDm 1,163
Project Cashflow - Post Tax USDm 3,132
NPV - Post Tax (8% discount rate) USDm 698
IRR - Post Tax % 21%
Peak Funding Requirement USDm 403
Payback Period (Start of Construction) - Post Tax Years 7.5
Payback Period (Start of Mining) - Post Tax Years 6.5
Payback Period (Start of Plant Production) - Post Tax Years 4.5
Note: Initial capital is defined as all direct project capital for first four years up to and including the first metal is produced.
The table below details a range of Project values at fluctuating PGM prices, with the NPV 8% post tax ranging between USD380
million and USD1,013 million and the post tax IRR ranging between 16% and 25%.
Range of Values at Various Prices
Change in 6E PGM Price -15% -10% -5% Base +5% +10% +15%
Pt Price (USD/oz) 1,020 1,080 1,140 1,200 1,260 1,320 1,380
Pd Price (USD/oz) 935 990 1,045 1,100 1,155 1,210 1,265
Rhodium Price (USD/oz) 4,250 4,500 4,750 5,000 5,250 5,500 5,750
Gold Price (USD/oz) 1,530 1,620 1,710 1,800 1,890 1,980 2,070
Ruthenium (USD/oz) 400 423 447 470 494 517 541
Iridium (USD/oz) 4,250 4,500 4,750 5,000 5,250 5,500 5,750
Basket PGM 6E Price (USD/oz) 1,271 1,345 1,420 1,495 1,570 1,644 1,719
NPV8% - Pre Tax (USDm) 595 744 894 1,043 1,193 1,342 1,491
IRR - Pre Tax (%) 18% 20% 22% 24% 25% 27% 29%
NPV8% - Post Tax (USDm) 380 486 592 698 803 908 1,013
IRR - Post Tax (%) 16% 17% 19% 21% 22% 24% 25%
Payback Period (Start of Plant Production) 5.9 5.3 4.9 4.5 4.2 4.0 3.8
Project Cashflow - Post Tax 2,081 2,432 2,782 3,132 3,482 3,832 4,182
NEXT STEPS
A preliminary development schedule has been compiled for the Project. The main activities forming part of the schedule
includes:-
• Pre-Feasibility Study ("PFS");
• Environmental Authorisation ("EA");
• Issue of Mining Right;
• Completion of required drilling (resource infill, metallurgical testwork, geotechnical and hydrogeological);
• Feasibility Study ("FS") & Final Investment Decision ("FID");
• Mine development;
• Construction; and
• Commissioning and Ramp-Up
The completion of the PFS and associated resource drilling is planned to be completed during the second half of calendar 2024
and is fully funded.
JORC Competent Persons Statement
Uwe Engelmann
The information in this report that relates to Exploration Targets, Exploration Results, Mineral Resources or Ore Reserves is
based on information compiled by Mr Uwe Engelmann (BSc (Zoo. & Bot.), BSc Hons (Geol.), Pr.Sci.Nat. No. 400058/08,
FGSSA). Mr Engelmann is a director of Minxcon (Pty) Ltd and a member of the South African Council for Natural Scientific
Professions. Minxcon provides geological consulting services to Southern Palladium Limited. Mr. Engelmann has sufficient
experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity being
undertaken to qualify as a Competent Person as defined in the 2012 Edition of the 'Australasian Code for Reporting of
Exploration Results, Mineral Resources and Ore Reserves'. Mr. Engelmann consents to the inclusion in the report of the
matters based on his information in the form and context in which it appears. Mr Engelmann has a beneficial interest in
Southern Palladium through a shareholding in Nicolas Daniel Resources Proprietary Limited.
Daan van Heerden
The scientific and technical information contained in this announcement has been reviewed, prepared, and approved by Mr
Daan van Heerden (B Eng (Min.), MCom (Bus.Admin.), MMC, Pr.Eng. No. 20050318, AMMSA, FSAIMM). Mr van Heerden is
a director of Minxcon (Pty) Ltd and a Registered Professional Engineer with the Engineering Council of South Africa, a
Member of the Association of Mine Managers South African Council, as well as a Fellow Member of the South African
Institute of Mining and Metallurgy. Mr. van Heerden has sufficient experience relevant to the styles of mineralisation and
activities being undertaken to qualify as a Competent Person, as such term is defined in the 2012 Edition of the
'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves'. Mr van Heerden has a
beneficial interest in Southern Palladium through a shareholding in Nicolas Daniel Resources Proprietary Limited.
For further information, please contact:
Johan Odendaal
Managing Director
Southern Palladium
Phone: +27 82 557 6088
Email: johan.odendaal@southernpalladium.com
Media & investor relations inquiries: Sam Jacobs, Six Degrees Investor Relations: +61 423 755 909
JSE Sponsor
Merchantec Capital
Date: 01-02-2024 08:52:00
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