Northam plans to build new mine at cost of R6 billion

northam platinum is planning to turn its booysendal project into a new platinum mine at a cost of r6 billion, the company announced on thursday.

the final board approval for the project is expected early next year. thursday’s announcement comes after the completion of a viability study.

glyn lewis, northam chief executive, said: “the feasibility study has confirmed our approach to the project. booysendal is living up to our expectations and is likely to be a significant, long-life producer.”

the venture will be built in two parts. during the first phase about 130 000 ounces of platinum group metals (pgms) will be produced and during the second phase production will reach 245 000 ounces of pgms possibly by 2018.

the mine is expected to produce pgms for more than 25 years.

the inclusion of booysendal production would boost northam’s platinum output from 300 000 ounces to 545 000 ounces a year.

“the capital cost of module 1 is expected to be r3 billion over a five-year period with similar capital expenditure anticipated in module 2. our intention remains to fund the project through a combination of rights issue, internal retentions and medium-term bank debt.”

in the first half of next year, northam will start construction of the mine, access road and water pipeline.

first production from the first phase of the mine is expected in 2013 and full production is scheduled for 2015.

eskom has finished a study for a substation to be situation on the booysendal property. power is key to the project’s success.

depending on the economic conditions and the availability of power the construction of the second module should start in 2013.

the conversion of booysendal’s old order mining right to a new order mining right over nine of the 11 farms was completed last month.

“the application for the new order mining rights on the remaining two farms and the transfer of the der brochen extension is in process,” northam said.

the booysendal project is located in mpumalanga near the town of lydenburg.

northam acquired the booysendal project, which as a pgm resource of 103 million ounces, in august last year.

the company’s shares on the jse rose as much as 5 percent on thursday as a result of the booysendal news.

northam shares was last quoted up 4 percent at r34.81, which valued the company at r12.5 billion.

by justin brown