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Sedibelo Platinum Mines achieved annual dispatches of 165,000 4E PGM ounces.
Sedibelo Platinum Mines recorded more than 4.2 million fatality-free shifts.
Pioneering “Kell” beneficiation technology successfully completes the feasibility stage.
At its launch in 2007, Pallinghurst identified the platinum group metals (“PGM” or “PGMs”) industry as having attractive long term investment fundamentals. PGMs remain essential to a wide range of industries and do not have any substitutes in their main applications, particularly in automotive catalytic converters. An estimated 20% of consumer products either contain PGMs or use them during the manufacturing process. Demand for PGMs is also driven by their use in high-end jewellery, investments in physical metals and Exchange Traded Funds. Strong demand for PGMs is expected as the global population grows, economies expand and the consuming middle class in emerging markets increases. Given their key application in cleaning exhaust fumes from fossil fueled engines and their essential role in fuel-cells, the success of PGMs are directly linked to a desire for a cleaner and healthier existence.
As has been pointed out many times before, the supply of PGMs is constrained. The Bushveld Complex (“BC”), north of Johannesburg, South Africa, contains approximately 80% of the world’s known PGM resources and accounts for over 80% of the world’s annual output. Significant safety, operating cost and capital expenditure challenges arise from the ever increasing depth of mining, given the operating constraints, and limited global occurrences of PGM bearing reefs, production is likely to remain flat in the near to medium-term. The diverse and solid demand dynamics, combined with ongoing supply pressures and high barriers to entry, should bring stronger future prices.
Sedibelo has prudently responded to
the low-price environment by reducing costs and focussing on cash preservation rather than maximising volumes produced. Whilst management has been focussed on cost containment, due to the continued depressed metal prices, Sedibelo is expected to record a loss for the year. However, Sedibelo continues to benefit from having significant cash reserves and no long-term debt.
Accordingly, during 2016, Sedibelo achieved annual dispatches of 165,000 4E PGM ounces, a decrease of 6% when compared to 2015.
During the year, the bankable feasibility study was successfully completed for the pioneering “Kell technology”, which is an innovative hydrometallurgical alternative to the smelting of PGM concentrates.
Kell is an environmentally friendly process, requiring only a small amount of electricity compared to traditional smelting, and has the potential to increase PGM recoveries. Sedibelo and its partners (the IDC and LifeZone Ltd) are contemplating the establishment of the first Kell PGM beneficiation plant in Southern Africa.
Sedibelo commissioned its Tailings Scavenging Plant in March 2016, which recovers low-cost PGM ounces. Sedibelo has also invested in Rados, a sorter technology to upgrade UG2 and Silicate packages by removing waste. Rados is expected to achieve up to 95% recovery and reduce costs considerably. Sedibelo also commenced the construction of its first chrome extraction plant, from which the first cash flow is expected by the end of 2017. This new revenue stream has the potential to have a significant effect on Sedibelo’s profitability.
Sedibelo’s existing open pit operations employ around 2,000 people, most of whom are from the North West Province, and many specifically from the local Bakgatla community. The expansion in the medium-term of Sedibelo’s operations is expected to increase the number of sustainable jobs for the Bakgatla, and in turn become a catalyst for community development, providing lasting social benefits for the region.
Sedibelo maintains and develops local roads and water supplies, provides training and development programmes to improve mining related skills and also funds scholarships for local community members to attend full-time educational studies. This tangible commitment to, and involvement in, the local community is one of the cornerstones for the successful development of the PGM portfolio.
Due to the challenging PGM price environment, the company has focussed on production optimisation and cash preservation. Whilst other producers have been required to raise equity to survive, including some at large discounts to enforce participation, we have avoided doing so, due to our strategy of avoiding debt and implementing significant cost reductions.
Sedibelo achieved 4.2 million fatality-free shifts in 2016; one of the PGM industry’s best safety records. Sedibelo dispatched 165,000 4E PGM ounces during 2016 and whilst this is less than the previous year, it reflects an optimal production level given the continued depressed price environment.
Platinum mining supply is expected to be constrained in the medium-term and with demand likely to remain robust, the market deficit is expected to increase, which should support a stronger platinum price going forward. In the current environment, Sedibelo’s management have developed a five-year plan to enable it to continue to operate for several years at the recent weak prices without having to seek new capital. Sedibelo, with its large, sustainable and relatively shallow resource base, is well-positioned to benefit from any price improvements and remains committed to undertake a public listing when market conditions are more favourable.