Share Price | Pallinghurst Resources Limited: JSE:PGL ZAc 268 1 (0.37%)
NAV Per Share: ZAc 436 (as at 30 June 2017)

Platinum Group Metals


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.

For more information on Sedibelo Platinum Mines, please visit: www.sedibeloplatinum.com

plat-group-icon

Production Levels

Sedibelo Platinum Mines achieved annual dispatches of 165,000 4E PGM ounces.

Sedibelo Safety

Sedibelo Platinum Mines recorded more than 4.2 million fatality-free shifts.

Technology

Pioneering “Kell” beneficiation technology successfully completes the feasibility stage.

Investment Strategy

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.

Investment History

Investment Launch

In 2007, Pallinghurst identified three shallow PGM deposits north of the Pilanesberg on the Western Limb of the BC which, while individually attractive, could benefit significantly from economies of scale and synergies if combined into a consolidated entity. Pallinghurst assembled a consortium of Pallinghurst Co-Investors, including the Group, to invest in this PGM strategy. The Bakgatla Ba Kgafela Tribe (the “Bakgatla”), which already held interests in the deposits, joined the consortium as its Black Economic Empowerment (“BEE”) partner.

Consolidation of PGM Assets

Over a period of six years, the Pallinghurst Co-Investors, including the Group, acquired the Pilanesberg Platinum Mine (“PPM”), Sedibelo and Magazynskraal, and in 2012, consolidated them into a single contiguous operation with shallow resources of approximately 70 million 4E PGM (platinum, palladium, rhodium and gold) ounces. Together with its other assets, Sedibelo Platinum Mines Limited (“Sedibelo Platinum Mines”, “Sedibelo” or “SPM”, formerly Platmin Limited) has a total resources base of some 100 million ounces, making one of the world’s significant PGM asset owners,which can extract its shallow resources in a safe and sustainable fashion.

IDC Investment

Following the consolidation, the Industrial Development Corporation (“IDC”) invested the Rand equivalent of US$400 million into the newly created Sedibelo Platinum Mines. These funds, together with an additional US$65 million invested by international investors, were used to develop the consolidated operations into a “PGM producer for the 21st Century”; its generally shallow orebodies offering safety and cost benefits.

Sedibelo Platinum Mines

One of the world’s significant PGM asset owners.

Prosperity

Production Levels

Kell Technology

Tailings Scavenging Plant

Partnership With Bakgatla

Investment In Local Community

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.

From The Directors

Outlook

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.