June 26, 2019 / 7:59 AM / 3 months ago

Northam Platinum expects Kukama shaft to be operational in FY 2020

JOHANNESBURG, June 26 (Reuters) - South Africa's Northam Platinum said on Wednesday mining operations at the Kukama shaft at its Eland mine would recommence in the 2020 financial year after the conclusion of a feasibility study on the project.

Northam bought a 100% interest in Eland from Glencore's South African unit in February 2017 for 175 million rand ($12.2 million). The mine had been placed on care and maintenance in 2015 due to a price fall and difficult operating conditions.

Northam continued to manage the Eland mine, situated in North West province, on care and maintenance while undertaking the feasibility study for the Kukama shaft.

The study found that the life of the mine was in excess of 30 years and estimated positive free cash flow to be generated from year four onwards. It also forecast investment returns "comfortably in excess of Northam's current weighted average cost of capital", the miner said in a statement.

Annual production at Kukama is forecast to reach 100,000 ounces of the four elements making up the platinum group metals — platinum, palladium, rhodium and gold - by 2025, with steady state production of 150,000 ounces per year from 2029.

"The project further diversifies the group's operations and production capacity and does so efficiently by utilising an extensive existing capital footprint," Northam chief executive Paul Dunne said.

Work done to the shaft in preparation for its recommissioning includes refurbishing underground fixed and mobile equipment, as well as certain sections of the concentrator. Processing of the tailings storage facility at the Eland mine has also commenced, the miner said.

Developmental capital expenditure is estimated at 2.2 billion rand over five years, in nominal terms, which includes a provision for working capital requirements during the development phase, Northam added.

The project will be fully funded from Northam's resources. ($1 = 14.3153 rand) (Reporting by Nqobile Dludla; Editing by Dale Hudson)

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