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The Styldrift I Project Update
Royal Bafokeng Platinum Limited
Incorporated in South Africa)
Registration number 2008/015696/06
JSE Share code: RBP
ISIN: ZAE000149936
("RBPlat" or the “Company")
THE STYLDRIFT I PROJECT UPDATE
Shareholders are referred to the Company announcement made on the 4th of August 2015 in
which RBPlat announced its strategic decision to materially reduce construction
activities and related capital expenditure at its Styldrift I project, given the
sustained depression in the Platinum Group Metals (PGM) market.
The continued deteriorating PGM pricing environment and associated industry cost
escalations together with the Company’s pro-active approach has resulted in an
increased focus on its more profitable core business, that of mining and processing the
Merensky reef, supported by continued emphasis on the importance of cash preservation
and value creation.
Following the Company’s interim results announcement on the 4th of August 2015 the
focus has been on managing the Company through the current depressed market conditions.
At Styldrift I this included the following:
- Scaling down of activities on the project: Q3 expenditure 32% less than in Q2 of
2015
- Termination of all major contracts notably the mining contract with Aveng Mining,
contractors involved with the overland conveyor belt construction and deferral of
most contracts for supply of mining equipment and associated infrastructure
- Transfer of experienced development resources from Phase III at BRPM to Styldrift
I to assist with early development of key infrastructure
- Progressing with on-reef development to improve face length availability
contributing 12kt of development ore during Q3 2015. Styldrift I now has four
operating teams expected to deliver 40kt of ore during Q4 2015
- Support and lining of silo number 2 commenced in October 2015 and is 51%
complete, remaining on course for completion by year end with the bottom of silo
loading structure complete in 2016
- Commissioning of ventilation shaft number 1 was completed in November of this
year
A key pillar of the business has been to ensure that it has the flexibility to
positively react to changing market conditions and to remain robust throughout
depressed market cycles with a strong and healthy balance sheet. Delaying the start of
stoping at Styldrift I ensures that value is not destroyed by ramping up high quality
Merensky ounces into a depressed market but that instead the business is well
positioned to begin ramp-up when the market improves.
The current depressed market cycle is expected to prevail for the medium term and
accordingly the Company has delayed the timing of Styldrift I reaching steady state to
Q1 2020.
The Styldrift I project remains a key part of the Company’s organic growth strategy.
The key features are the following:
- Styldrift I is a high grade, shallow mechanised mine which at steady state will
deliver 230 000 tonnes per month of Merensky ore, yielding 320 000 4E ounces per
annum
- The project provides access to Merensky resources of 72.9 million tonnes at a
resource grade of 6.94g/t 4E with significant base metal credits
- Steady state operating costs approximately 15% cheaper per tonne than BRPM,
places Styldrift I firmly in the first quartile of the industry cost curve
- The life of mine exceeds 60 years with the first 30 years of extraction from the
Merensky reef, followed by a further 30 years of mining on the UG2
- Styldrift I has commenced with its local skills development programme to develop
local community members in operator and maintenance skills. At steady state
Styldrift I will employ approximately 3000 people therefore providing economic
benefits to surrounding communities and the greater region.
Capital expenditure on the Styldrift I project amounted to R5.186 billion to end of Q3
2015 with the Main shaft commissioned and capable of hoisting up to 230 000 tonnes per
month.
After careful evaluation of the options available to the Company and based on the
assumption that a basket price averaging R17 500 per platinum ounce should be achieved
during 2016, RBPlat has resolved to continue with the development of 6.843km of
underground infrastructure during 2016 of which 5.873km is on-reef and 970m is off-
reef. The on-reef development which will be completed during 2016 equates to 454 000
tonnes and 39 000 4E ounces recovered.
Expenditure on the underground infrastructure which will be completed in 2016 amounts
to R1.0 billion of which R0.7 billion is anticipated to be funded from on-reef
development revenues at Styldrift I and surplus cash generated by BRPM.
The development that will be completed during 2015 and 2016 prepares the mine for
stoping from the first quarter of 2017 but may still be deferred if market conditions
do not support the start of stoping at that time.
2015 2016
STYLDRIFT I UNDERGROUND DEVELOPMENT 2015 AND 2016
METRES METRES
TOTAL DEVELOPMENT (METRES) 1,020 6,843
600 LEVEL DEVELOPMENT 1,020 5,873
Workshops, wash bays, fuel bays and stores 540 2,042
Declines 321 2,778
General access 159 875
Ventilation holes & ventilation access 0 178
642 LEVEL DEVELOPMENT 0 902
Workshops 0 77
Declines 0 483
General access 0 270
Ventilation holes & ventilation access 0 72
708 LEVEL DEVELOPMENT 0 68
Silos and settlers 0 68
Table 1 – Styldrift I development 2015 and 2016
The underground infrastructure development being progressed in 2016 is designed to
proactively create face flexibility to ensure that Styldrift I will start stoping with
four pre-established sections (800m of face length), 4 equipped workshops and 32
workshops already pre-developed.
This will have the benefit of setting an achievable ramp-up profile at a time when the
rapid delivery of high quality ounces into the market will be rewarded. Market
conditions dependant, the start of stoping in the first quarter of 2017 will enable
Styldrift I to deliver increasing production volumes of 624 000 tonnes (75 000 4E
ounces recovered) in 2017 and 904 000 tonnes (116 000 4E ounces recovered) in 2018 with
steady state of 2.76Mtpa being achieved in the first quarter of 2020.
The delayed start of stoping impacts mainly on the treatment plant strategy resulting
in Phase 2 (100ktpm module) of the 350ktpm plant upgrade and overland conveyor belt
being delayed. The upgrade of the existing BRPM concentrator plant to 250ktpm is
delayed until Q1 2016 as the existing treatment plant facilities are adequate to treat
all ore volumes in 2015 and the first half of 2016.
Additional infrastructure which will be progressed during 2016, but only completed in
2017 includes the following:
- Services shaft equipping
- Settler number 1 and associated water pumping infrastructure
- Silo number 4
- Ventilation shaft number 2.
The Company is hosting a site visit today for investors and analysts at its Styldrift I
Project and the presentation to be discussed during the site visit has been made
available on the Company’s website (www.bafokengplatinum.co.za).
Johannesburg
17 November 2015
JSE Sponsor:
Merrill Lynch South Africa Proprietary Limited
For further enquiries, please contact:
Lindiwe Montshiwagae
Investor Relations Manager
Tel: +27 (0)10 590 4517
E-mail: lindiwe@bafokengplatinum.co.za
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