Australian critical metals company Southern Palladium (ASX:SPD) has confirmed the UG2 Reef as the best first-stage development option through a Scoping Study at the Bengwenyama Platinum Group Metals (PGM) Project in South Africa.
The company says the internal Scoping Study conducted by mining consultants Minxcon concluded that extracting UG2 represents the best potential project development option. This excludes the unexplored potential within the current tenement area, as well as future economic potential of extracting the Merensky Reef.
Minxcon considers the UG2 project within Bengwenyama has the best potential of 4 development scenarios assessed, and as such, recommends completing a drilling program and undertaking more definitive studies.
Furthermore, the shallow Merensky Reef is recommended for potential future development, noting it may ‘significantly’ extend the life of mine in the area now earmarked for mining.
Commenting on the Scoping Study findings, Southern Palladium Managing Director Johan Odendaal says: “We are pleased to report that our internal Scoping Study on the Bengwenyama Platinum Group Metal project confirms our original analysis that UG2 has the best development potential, so much so that we firmly believe that a mining rights application should be submitted sooner than first envisaged.
“The Scoping Study highlighted the key areas of future work focus to advance the project, especially the decision on Reef selection and sequence of mining”
The Scoping Study highlighted the key areas of future work focus to advance the project, especially the decision on Reef selection and sequence of mining.
It places the emphasis on the UG2 reef, but does not exclude mining the Merensky reef in future. The board of SPD (Southern Palladium) has taken the decision to initiate the PFS (Prefeasibility Study) during the current quarter. This is an excellent development for Southern Palladium which further underpins the company’s value.”
The company reports the 4 project scenarios including mining the UG2 reef alone (scenario 1), mining the Merensky Reef alone (scenario 2), mining both reefs simultaneously (scenario 3), and mining UG2 to completion followed by Merensky (scenario 4).
The conclusion for Scenario 2 was that Merensky may only be viable, but is ‘significantly’ less attractive than scenario 1.
For scenario 3, Minxcon concluded mining both reefs may be more attractive that scenario 1, noting this option has ‘significant’ upside potential in a ‘higher’ platinum price environment.
The study concluded that access infrastructure and capital footprint should be designed so that Merensky could be added at any time in the future. Scenario 4 was considered less attractive than option 3.
The company reports it will be commencing metallurgical studies, initiating a social and labour plan, and starting an Environmental Scoping Study for the PFS. It is also considering a trade-off study.
Southern Palladium is an Australian critical metals company focused on its 70% owned Bengwenyama PGM Project located 250km east-northeast of Pretoria in South Africa. The project is considered prospective for 3PGE (palladium (Pd)-rhodium (Rh)-platinum (Pt)). As of 2021, Bengwenyama has a Mineral Resource Estimate (MRE) of 18.8 million ounces of 3PGE and gold.
Images: Southern Palladium Ltd
