Platinum Australia (ASX:PLA, AIM:PLAA) announced that hot commissioning of the crushing section of the Processing Plant at the Smokey Hills Platinum Mine in South Africa had commenced. Platinum Australia has a 69.75% interest in the project with the remainder held by its Black Economic Empowerment partners.
John Lewis, Managing Director of Platinum Australia added that commissioning was 'going well', and that the company was pleased with sampling to date which indicated the average grade of the ore was 10% ahead of projections, at 7.5 grams per tonne 4E PGM.
"The lack of any low grade has necessitated the mixing of some waste with the ore for the initial commissioning period to reduce the head grade to the plant. This is however an issue that we are very happy to have," he stated.
Smokey Hills is expected to be one of the lowest cost producers in South Africa's immense PGM industry, further buoyed by recent weakness in the South African rand against the US dollar. Platinum Australia also reminded investors that its debt financing is provided in Rand, so had also reduced in US dollar terms.
"We have recently reviewed our projected operating costs in light of the recent drop in the Rand to US Dollar exchange rate to ZAR11 to US$1. This drop has reduced our projected average on site production cost to less than US$200/oz 4E PGM (net of credits), giving a total cost including smelting and refining charges of approximately US$300/oz 4E PGM. This provides Smokey Hills a margin of over US$300/oz at the current extremely depressed metal prices of US$800/oz platinum, US$180/oz palladium and US$1,800/oz rhodium. Taking into account our current level of hedging this margin increases to approximately US$350/oz 4E PGM."
Operations at Smokey Hills commenced as an open cut, and are progressing towards a shallow underground mine during the first year of operation. The on site treatment plant has a design capacity of 720,000 tonnes per annum and will produce approximately 95,000 ounces 4E PGM in a flotation concentrate.