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Business review
A steady operating performance from the Zondereinde mine resulted in year-on-year production being marginally (3%) higher at 9 408kg (302 474oz). Also similar to the previous year were the 26 production days lost owing to the stoppages related to ongoing and intensive safety training and initiatives. Much improved were the metal sales, 21% higher at 333 159oz.
| Ownership | Wholly-owned by Northam Platinum Limited |
| Location | Northern part of the western limb of the Bushveld Complex in Limpopo Province; adjacent to the Anglo Platinum’s Amandelbult operation |
| Access and infrastructure | Well-established infrastructure: tarred roads, railway, water and power |
| Project extent | 7 625 hectares; strike length of 8km |
| Reserves | 8.1Moz (3PGE+Au) |
| Resources | 26.8Moz (3PGE+Au) |
| Life of mine | 18 years |
| Operations | Underground mining operations on the Merensky and UG2 reefs |
| Underground equipment driven by hydropower. | |
| Surface operations include a Merensky and UG2 concentrator plant, a smelter and base metals removal plant (BMR). | |
| Production profile | Steady state output of approx 300 000oz (3PGM+Au) annually |
| Precious metals refining | Performed by WC Heraeus GmbH (Heraeus) in terms of toll-treating agreement |
| Marketing | In-house, independent marketing to established global customer base |
| F2009 capex | R330 million |
| F2010 capex (estimate) | R270 million |
| F2009 cash costs | R199 680/kg (3PGE+Au) |
| F2009 | F2008 | |
|---|---|---|
| Merensky reef | ||
| Development metres | 8 071 | 9 615 |
| Square metres mined | 201 014 | 205 251 |
| Tonnes milled | 1 050 404 | 1 059 624 |
| Head grade (g/t 3PGE+Au) | 5.8 | 5.6 |
| PGMs in concentrate produced (kg) | 5 164 | 5 051 |
| Ore reserve availability (months) | 20 | 18 |
| UG2 reef | ||
| Development metres | 3 770 | 3 117 |
| Square metres mined | 160 555 | 158 294 |
| Tonnes milled | 1 054 687 | 963 033 |
| Head grade (g/t 3PGE+Au) | 4.4 | 4.4 |
| PGMs in concentrate produced (kg) | 3 835 | 3 285 |
| Ore reserve availability (months) | 19 | 21 |
| Combined reefs | ||
| Development metres | 11 841 | 12 732 |
| Square metres mined | 361 569 | 363 545 |
| Tonnes milled | 2 105 091 | 2 022 657 |
| Head grade (g/t 3PGE+Au) | 5.1 | 5.0 |
| PGMs in conc. produced from u/g mining (kg | 8 999 | 8 336 |
| PGMs in conc. from other sources (kg) | 409 | 777 |
| Total (kg) | 9 408 | 9 113 |
| PGMs in conc. purchased | 487 | – |
The year in review: mining and production
The higher output was largely a result of the 4% increase in tonnages milled to 2 105 091 tonnes, along with a 2% increase in the combined Merensky and UG2 head grade.
Merensky tonnage was only marginally lower in the period at 1 050 404 tonnes, indicating the effect of the reduced mining flexibility resulting from the intersection of the unmineable NP2 upper transition reef in the eastern section of the mine. The impact of this was more acutely felt on the ore reserve development metres, which were 16% lower year on year. Improved mining and grade controls contributed to the improvement in the Merensky grade to 5.8g/t (F2008: 5.6g/t) and in turn the combined mill head grade was 2% higher at 5.1g/t.
In contrast with the Merensky reef, development on the UG2 reef was 21% higher, ameliorating the constraints of lower extraction ratios in the eastern section of the mine. Good progress has been made in mining UG2 reef under Merensky pillars, thus improving the overall extraction of this reef.
Metallurgical operations
The planned rebuild of the smelter at the Zondereinde mine was completed on schedule by the end of H1 of the financial year at a cost of R74 million. The smelter was successfully recommissioned in the first weeks of January 2009.
Continued improvements in the UG2 concentrator circuit resulted in recoveries averaging 86% for the year. The main factor contributing to this success was the sparger column cell technology which is applied as a cleaner at the end of the circuit. The other UG plant modifications, which started in F2008, were the installation of the high pressure roll crusher and the conversion of the rod mill to a ball mill. The overall effect of this suite improvement has been a sustained improvement in recoveries and lower operating costs.
Expansion project
The effective sterilisation of the Merensky reef on the eastern section of the mine has added to the impetus to accelerate the 18 level expansion project, which has progressed satisfactorily. The conveyor decline has reached the 16 level elevation of the mine, while stoping has started on 13 and 14 levels and further ore reserve development on these levels is underway.
On the material decline, which will provide logistical support by allowing access for men and material for mining to 18 level, the excavations for the hoist chamber on 12 level, and the stations on 13 and 14 level, have been completed. The stations for this shaft will be pre-developed from the conveyor decline and and the shaft barrell will be raisebored in sections between levels.
The capital cost of this five-year project is estimated at R650 million (in today’s money spread over five years). With every level opened up below 12 level we add two years’ life of mine.
Sales
The 21% increase in sales volumes to 10 362kg (333 159oz) arose from the marginally higher production combined with the effects of the purchase of 487kg (15 567oz) of custom material and the decrease in metal inventories. The higher UG2 tonnages milled contributed to higher rhodium sales.
| Metal sales | F2009 | F2008 | ||
|---|---|---|---|---|
| kg | oz | kg | oz | |
| Platinum | 6 288 | 202 154 | 5 275 | 169 612 |
| Palladium | 3 046 | 97 941 | 2 523 | 81 103 |
| Rhodium | 848 | 27 270 | 643 | 20 666 |
| Gold | 180 | 5 794 | 145 | 4 678 |
| Total (3PGE+Au) | 10 362 | 333 159 | 8 586 | 276 059 |
| Ruthenium | 1 227 | 39 446 | 1 059 | 34 035 |
| Iridium | 249 | 8 006 | 208 | 6 700 |
| Osmium | – | – | 4 | 116 |
| Silver | 200 | 6 430 | 184 | 5 909 |
| Total | 12 038 | 387 041 | 10 041 | 322 819 |
| Copper (tonnes) | 800 | 573 | ||
| Nickel (tonnes) | 1 529 | 1 110 |
Costs
Higher production volumes and inflationary increases (such as the 25% higher cost of power and water) contributed to the 17% increase in operating costs to R1 906 million (F2008: R1 627 million). The increase in volumes helped to contain the increase in unit cash costs to 14%, or to R199 680/kg.
Capital
Capital expenditure for the year amounted to R330 million. The main contributors to the capital spend were the 18 level expansion project and the R89 million spent on the metallurgical plants – which included the smelter rebuild in the first half of the financial year.
Into F2010
An extensive drilling programme has revealed that the downdip portion of the mine boasts a higher percentage of normal Merensky reef. This is a stable reef type lending itself to higher extraction ratios, yielding high tonnages and ounces assisting the Merensky position going forward.
The year ahead should see marginally improved production at the Zondereinde mine. Costs are likely to increase in line with inflation, while capex in the year ahead will be at significantly lower levels. The capital forecast for F2010 is lower at R270 million. Of this, R104 million is budgeted for the expansion project. The balance is allocated to maintenance and routine capex items.
| Ownership | Wholly-owned by Northam Platinum Limited |
| Location | Eastern limb of the Bushveld Complex in Mpumalanga Province; adjacent to the Everest and Mototolo operations. Closest town is Lydenburg |
| Access and infrastructure | Tarred road access from Lydenburg; new private road being constructed across the Der Brochen property |
| 16MW power secured from Anglo Platinum via the Mototolo sub-station; | |
| 7 Ml of water secured for start-up | |
| Project extent | 15 170 hectares; strike length of 14.5km |
| Resources | 103Moz (3PGE+Au) |
| Life of mine | 50 years and beyond |
| Project status | Feasibility study being finalised. Construction due to start in F2010; first production for 2011 |
The year in review
The Northam review of the Anglo Platinum pre-feasibility study on the Booysendal project was completed early in the financial year, and included a review of the geology and resource base; an investigation of the mining method and production options; the determination of the principal project elements including metallurgy, bulk infrastructure, engineering and services; human resources and environmental permitting.
This review was followed in this year with the launch of a feasibility study which is based on the concept of a modular design which provides flexibility in implementation and lends itself to being replicated as conditions allow. The plan remains to start mining the UG2 reef. Infrastructure, mine and metallurgical designs are largely complete. Some geotechnical drilling is in progress and will inform the final designs.
Into F2010
Access and infrastructural considerations will start towards the end of the end of the calendar year while final designs and associated value engineering are being completed. Should it be possible to source and secure additional power and water for the project, there may be scope for some design changes and an increase in the planned production profile.
| Ownership | Lonmin: 42.5% |
| Anglo Platinum: 42.5% | |
| Northam: 7.5% | |
| Bapo Ba Mogale Mining Company: 7.5% | |
| Location | Western limb of the Bushveld Complex on certain portions of the farms Hartebeespoort, Roodekopjes and Uitvalgrond near Brits in the North West Province adjacent to Eastern Platinum Mine (EPM). |
| Access and infrastructure | Existing infrastructure at EPM has been utilised to gain quick access to the Pandora Mine. |
| Resources (total) | 21.08Moz (158Mt @ 4.29g/t) |
| Resource (attributable to Northam) | 1.6Moz |
| Life of mine | 30 years and beyond |
| Project status | Pre-feasibility completed; stand-alone mine of 240 000 tpm being considered. |
The year in review
Following the implementation of various agreements relating to the acquisition of Booysendal, the group became recognised as a historically disadvantaged South African (HDSA) entity. Consequently Northam became entitled to acquire the 7.5% interest in Pandora, which had been warehoused by Mvela Resources. Northam has now consolidated the Pandora income into its accounts for the first time.
Pandora is producing on a relatively small scale from Lonmin’s Eastern Platinum infrastructure, while a feasibility study for the future mining operation is concluded.
Into F2010
The feasibility study is expected to be completed early in 2010 at which stage the joint venture partners will make an investment decision.
