Platinum Group Metals' Maseve mine on South Africa's Western Bushveld.

Platinum Group Metals’ Maseve mine on South Africa’s Western Bushveld.

Platinum Group Metals reached a milestone this morning with news that its Maseve mine (formerly called WBJV Project 1) in South Africa produced its first concentrate for delivery.

News of hot commissioning comes as the platinum price continues to bump along at about US$940 an ounce, levels visited during the height of the 2008 financial crisis. Platinum hit lows of US$814/oz 2 weeks ago.

“It is very satisfying to see the first concentrate produced and to participate in the commissioning of mine systems from the underground conveyor, into the ore silo, through the mill, flotation and filter press to final product,” said Mike Jones, the company CEO and founder. “Our focus now is to aggressively ramp up our production profile and we have a good team of qualified people in place to do this safely and efficiently.”

If PTM can weather the storm buffeting commodity prices, a key will be the shallow mineralization at its operations. Both the Maseve mine, which is on the Bushveld’s Western Limb and has ramp access, and the high-grade Waterberg project are much shallower than most South African platinum operations, where shafts are used to access the ore, deep underground. Waterberg is on the Bushveld’s Northern Limb.

The Maseve mine has a 20-year mine life and proven and probable reserves of 4.1 million ounces 4E (platinum, palladium, gold and rhodium) and 6.63 million ounces measured and indicated. Production at Maseve is 64% platinum.

Concentrate from Maseve will be processed at Anglo Platinum’s smelter 40 kilometres to the south.

Platinum Group Metals is also working on a prefeasibility study at Waterberg, where the unusually thick nature of the deposit could be conducive to mechanized mining.

In a research note, RBC Capital Markets analyst Sam Crittenden describes hot commissioning of Maseve as a “positive milestone” during a “critical stage” for the mine and mill.

“Management indicated that grade and thickness reconciliation has been good so far and some areas outside the resource model have been developed while faulting and dip angles have made mining more challenging in certain areas,” Crittenden said. “We estimate total platinum and palladium production of 42.5 Koz in 2016E at cash costs of $541/oz (4E), with lower costs in the first few years due to high grades and near surface ore.”

There’s an analyst site tour on Feb. 12.

Other major South African producers have been slashing jobs, selling mines or putting them on care and maintenance in response to plunging prices.

Platinum Group Metals
Price: $1.53
Shares outstanding: 77.6 million
Market cap: $118.7 million

News release: Platinum Group Metals Reports Completed Hot Commissioning Test for the Maseve (WBJV Project 1) Platinum Mine

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