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WEZ
WEZ
WEZ - Wesizwe Platinum Limited - Pre feasibilty study
Wesizwe Platinum Limited
(Incorporated in the Republic of South Africa)
(Registration number 2003/020161/06)
JSE code: WEZ & ISIN: ZAE000075859
Executive Summary of Wesizwe Platinum Pre-feasibility Study
1. INTRODUCTION
This report is a summary of the Ledig Frischgewaagd project Pre-
feasibility Study which was carried out from October 2006 to January 2007.
The study was managed by the Wesizwe Platinum owners team while the
technical work was undertaken by the following team of independent
consultants:
* The Mineral Corporation Geology and Mineral Resources and Reserves
* TWP Consulting (Pty) Ltd Mining
* SGS Lakefield Research Africa Metallurgical Testwork
(Pty) Ltd
* Ecolaw Mineral Rights
The study confirms, with increased levels of confidence, the outcome of
the Independent Engineers Report received by Wesizwe in the last quarter
of 2006 relating to the viability of the core Frischgewaagd-Ledig complex
in the Pilanesberg project. This report provides a range of Net Present
Values (NPVs) and Internal Rates of Return (IRRs) that strongly endorse
the economic and commercial potential of the project.
On the basis of these indicative NPV`s and IRR`s, the report recommends
that Wesizwe Platinum Limited proceeds with a Bankable Feasibility Study
("BFS") of the project. This next stage of the study will provide the
levels of confidence in the capital and operating expenditure within
approximately +/- 10% and will assess the viability of the project to
proceed with the construction phase. Summaries of the specialist studies
which were undertaken by individual consultants are available on
application from the Wesizwe Platinum offices in Illovo, Johannesburg.
2. LOCATION
Wesizwe`s core portfolio of exploration properties is situated in the
North West Province in the Moses Kotane Municipality. The locality is some
30 to 40km northwest of the town of Rustenburg and just south of the
Pilanesberg National Park. Wesizwe`s current focus is the exploration and
resource development of Ledig 909 JQ ("Ledig"), and portions 3, 4 and 11
of Frischgewaagd 96 JQ ("Frischgewaagd"). The portfolio also includes
portions of Mimosa 81 JQ ("Mimosa") and Zandrivierspoort 210 JP
("Zandrivierspoort"), which are currently unexplored and are not included
in this Pre-feasibility Study. The nearest railway sidings are at Boshoek
(12km to the south) and Mogwase (15km to the east). The properties are
served by tarred roads and the Pilanesberg Airport is situated 8 km to the
east of the Frisch-Ledig complex.
3. STUDY RESULTS
3.1 Mineral Resources and Reserves
The resource model used in the Pre-feasibility Study was constructed by
the Mineral Corporation with the Competent Person being Mr Dave Young Bsc,
FGSSA, FAusIMM, Pr Sci Nat. The model is based on the quarterly results
released by Wesizwe Platinum in September 2006. Significant exploration
drilling has been undertaken since the release of these results.
The total resource estimate for the project remains as reported in
September 2006.
Table 1. The total Merensky resource estimate as at end September 2006
Category Tons 4E Au Pd Pt Rh
(millions) (g/ton) (g/ton) (g/ton) (g/ton)
(g/ton)
Indicated 11 037 000 5.52 0.22 1.53 3.51 0.26
Inferred 21 919 000 6.02 0.22 1.58 3.94 0.27
Table 2. The total UG2 resource estimate as at end September 2006
Category Tons 4E Au Pd Pt Rh
(millions) (g/ton) (g/ton) (g/ton) (g/ton) (g/ton)
Indicated 5 708 000 4.64 0.02 1.42 2.70 0.5
Inferred 34 855 000 4.32 0.02 1.27 2.57 0.46
Table 3 shows the geological losses that were employed in estimating the
Mineral Resources for the project.
Table 3. Geological losses employed
Reef Losses due Losses due Losses due Total
Intrusions to Faults to Potholes Geological
Losses
Merensky 3.5% 9.0% 15.0% 27.5%
UG2 3.5% 9.0% 17.9% 30.4%
Based on the conceptual stoping design, reef development layout, mineral
resource statement and assumed modifying factors, the mineral reserves can
be ascertained for the Merensky and UG2 Reefs. The modifying factors
employed are contained in Table 4.
Table 4. Modifying factors to apply to the Merensky and UG2 Reefs
Item Merensky Reef UG2 Reef
Strike Pillar Loss 6.62% 6.62%
Dip Pillar Loss 5.0% 5.0%
Hangingwall Dilution 0.1m 0.1m
Hangingwall Dilution Grade 0.46 g/t 4E 0.57 g/t 4E
Footwall Dilution 0.1m 0.1m
Footwall Dilution Grade 0.22 g/t 4E 1.41 g/t 4E
Development Waste 3.61% 2.56%
Schedule Efficiency Loss 1.6% 1.6%
Mining Reef Losses 4.0% 4.0%
Mining Dilution Gains 4.0% 4.0%
Mine Call Factor 95% 95%
Based on the modifying factors in Table 4, the Mineral Reserves estimate
employed in the scheduling of production tonnage and grade is contained in
Table 5.
Table 5. Mineral Reserve Statement
Reef Classification Tonnage (M) Grade Width
(g/t PGE (m)
(4))
Merensky Reef (Normal) Probable 11.0 4.44 1.54
UG2 Reef (Normal) Probable 5.7 3.75 1.35
All Probable 16.7 4.20 1.48
Based on the same principles to convert the Indicated Mineral Resources to
Mineral Reserves, the Inferred Mineral Resources have been converted to
"Potential" Reserves to understand the Life of Mine (LOM) parameters. A
potential 56 million tonne at a grade of 4.1g/t 4E and mining width of
1.52cm for both the Merensky and UG2 Reef are added by this method,
however, there can be no guarantee that these reserves will be generated
by the conversion of Inferred to Indicated Resources and hence Probable
Reserves.
4. MINING
The mine design for the Wesizwe project takes into account the variability
of the dip of the ore body and the respective mining widths for both the
Merensky and UG2 Reefs. Best mining practice considerations in respect of
the reef, geology and geotechnical considerations suggest a hybrid system
comprising conventional drilling, blasting and cleaning. This will employ
conventional breast stoping with scraper cleaning on the stope faces,
strike and dip gullies. Main development will be carried out using
mechanized drilling, cleaning and transportation. The Merensky and UG2
Reefs will be mined separately due to processing considerations.
The average strike length from boundary to mine boundary is 3,400m. This
provides for an average strike length of approximately 1,700m on a half
level. Back lengths of a maximum of 240m between levels allow for 14 main
levels and 19 inter-levels. The structural geology dictates considerable
variability in strike lengths from level to level. The dip extent of the
block from the top to bottom boundaries is 2,800m.
4.1 Primary Access
Primary access is by means of a twin vertical shaft system comprising a
10.5m main shaft and a 8.5m ventilation shaft.
Access to the mining areas from the main shaft is by means of a single
level decline which will traverse the ore body in a northwest to southeast
orientation and located approximately 30m below the UG2 Reef. A system of
footwall drives will spur off from the decline at appropriate elevations.
The decline will be developed at approximately -9? from the horizontal and
be comprised of separate conveyor, air intake and material tunnels.
Transport of ore and waste rock to the shaft system will be via conveyors.
High speed rail bound tramming will be considered as an option in the BFS.
Station crosscuts are to be developed from the station to a position of
20m vertically below the UG2 reef plane, on each level. At this point, the
crosscuts split into two separate footwall drives which are advanced in
opposite directions on strike, to the block boundary on either side of the
decline.
Footwall drives are to be developed on strike to the boundary of the
mining block, with raise connections established on reef at 210m
intervals. The strike footwall drives will be developed using mechanised
equipment and techniques for drilling, blasting and cleaning. All
development in the footwall is to be done on a minimal gradient of 0,3? to
allow water to flow to the main shaft water handling systems. The haulages
will be adequately supported to minimise damage arising from induced
stress levels generated by stoping operations
4.2 Stoping
The principle mining method proposed will be conventional breast mining.
Breast panels are to be a maximum of 30m long (skin to skin), and will be
stoped after ledging is completed. In-stope crush pillars (4m x 3m) with
3m holings will be left on the down dip side of the gullies. Panel
drilling will be done with pneumatic hand-held rock drills. The advance
strike gulley ("ASG") will be mined at an angle of 15? above the strike
direction to facilitate the negotiation of reef undulations and to enable
effective water control in the ASGs.
Blasted ore will be cleared by 37kW face scrapers into the ASG immediately
down dip of the panels. The ASGs will be cleaned by strike scrapers to the
centre gullies. The ore will be scraped down the centre gullies into two
ore passes, from where it will gravitate to mucking bays. Loading from
the mucking bays will be carried out by LHDs onto 50 ton articulated dump
trucks and transported to the level station at the decline. It is
anticipated that the footwall drives will be shallow dipping. However the
use of trucks to haul ore and waste to the level station will allow
flexibility in the vertical as well as horizontal planes.
4.3 Production profile
Two production scenarios with five options were examined to optimise
mining economics and returns on the key financial indicators for the
project. These are listed below. The two production scenarios consider
mining 180,000tpm and 240,000tpm with five options of sequencing the
timing of mining the two reefs.
* Option 1: Mining Merensky only at 180,000tpm ore
* Option 2: Mining Merensky with early UG2 at 180,000tpm ore
* Option 3: Mining Merensky with late UG2 at 180,000tpm ore
* Option 4: Mining UG2 with early Merensky at 180,000tpm ore
* Option 5: Mining at a rate of 240,000tpm ore for Option 2
The study concluded that Option 3 provided the optimal result in terms of
engineering design and economic benefit. This Option is based on a total
run of mine (ROM) production of 2,1 million tons of ore per annum,
producing approximately 280,000 ounces of 4E in concentrate. The study
recommended that Option 5 be evaluated further in the BFS to determine the
benefits of a 240,000tpm production mine.
At 180,000tpm the LOM is 20 years. This takes into consideration a
decrease in grade as the operation advances from mining indicated
resources to inferred resources as delineated in the September 2006
quarterly drilling results.
4.4 Metallurgical processing
4.4.1 Metallurgical testwork
SGS was commissioned by The Mineral Corporation to undertake a
mineralogical examination of the platiniferous minerals occurring and
conduct laboratory scale metallurgical testwork for selective
Merensky and UG2 Reef core samples from Wesizwe`s Pilanesberg
Project. The main objective of this exercise was to determine the
deportment of the platinum group minerals occurring, and the
flotation kinetics and recoveries of both ore types. The following
conclusions were drawn.
* From the standard rougher rate flotation test, the highest 4E
grade and recoveries for the UG2 were achieved in sample WF09-
D3. The rougher concentrate assayed 78g/t 4E with an 89%
recovery. The rougher tails had a grade of 0.6g/t 4E
* The highest 4E recovery and grade for the Merensky reef was
achieved in sample WF62-D3. The rougher concentrate achieved
60g/t 4E with a 90% recovery. The rougher tails had a grade of
0.4g/t 4E
* There were quite large differences in flotation kinetics and
flotation response between the samples.
Table 6 contains the summarised flotation results.
Table 6. Summary of metallurgical testwork
Sample Rougher Final Rougher Rougher Head Final Rougher
Number Mass Concentrate Grade Tails Grade Concentrate
Pull Grade Calc Recovery
Merensky (%) 4E g/t Ni (%) 4E g/t 4E g/t 4E (%) Ni (%)
Reef
WL1-02-D2 9.04 46.92 1.11 0.49 4.69 90.49 58.08
WF62-D3 5.86 59.65 1.45 0.39 3.86 90.49 64.31
WL1-03-D3 12.49 29.25 1.20 1.68 5.12 71.30 63.20
WF09-D1 5.88 61.09 1.77 1.00 4.53 79.24 50.1
UG2 Reef (%) 4E g/t Cr2O3 4E g/t 4E g/t 4E g/t Cr2O3
(%) (%)
WL1-50-D5 10.81 44.54 10.01 1.40 6.06 79.44 3.39
WF69-D2 8.05 55.65 9.89 0.69 5.12 87.55 2.52
WF07-D6 7.96 56.73 8.64 0.51 4.99 90.59 2.46
WF09-D3 5.80 78.14 10.29 0.58 5.08 89.29 2.05
The Regional Pothole UG2 Reef has recoveries similar to the Normal
UG2 Reef. The Single Chromitite Merensky Reef with pervasive footwall
base metal sulphide mineralisation has recoveries similar to the
Normal and Detached Merensky Reefs. This preliminary testwork
indicates that the different facies types of the Merensky and UG2
Reefs have recoveries that are typical to those encountered in other
operations on the Western Limb of the Bushveld Complex.
4.4.2 Plant Design
The plant design is based on benchmarking the Western Limb operations
and current trends and experience. The plant design that has been
selected is a Mill-Float-Mill-Float or MF2 circuit with ultra-fine
grinding on the combined cleaner tails streams. This circuit has been
proven to produce the best percentage metal recovery based on the
test work and other ores. The predominant characteristic of the MF2
plant is that the ore is first milled to a relatively coarse grind
and subjected to flotation in the primary flotation rougher cells.
The primary flotation rougher cell tailings are then re-milled to a
finer product and re-floated in secondary rougher flotation cells.
The primary concentrate produced is generally low in chromite as the
chromitite is slow floating. The high-grade concentrate also
minimises the entrainment of chromitite. The proposed plant layout
area will allow for the addition of a cleaner flotation tailings re-
grind section for conversion to an MF3 plant. This should be viable
as 3-stage milling and flotation is the optimum requirement for
Merensky ore. A Fully Autogenous Grind ("FAG") and a Semi-Autogenous
Grind ("SAG") milling regime is considered. A summary of the
predicted performance is shown in the table below.
Table 7. Plant design parameters
Parameter Performance
Head Grade Delivered 4.04 g/t (4E)
Grind 80% passing -75?m
Mass Pull 3.5% to 1.5%
4E Recovery 88% to 78%
Concentrate Production per Month 8 400 tonne
Concentrate Grade 4E 92 g/t to 216 g/t
Chromitite Content 3.0%
The recovery of platinum group metals from the Merensky Reef is
expected to be 88% when the mill feed is only Merensky Reef. It is
anticipated that the UG2 will have a lower recovery of 78%. When the
two ores are mixed the overall recoveries drop leading to the
strategy to mine them separately.
4.5 WASTE DISPOSAL
The Mineral Corporation engaged ECMP to provide a preliminary conceptual
design of a suitable tailings and return water facility for the project.
The design criteria employed was as follows:
* Total Run of Mine tonnage: 65 million
* Average deposition rate: 180,000 tons per month
* Dry density (assumed): 1.5t/m3
* Volume required: 43 million m3
At the Bankable Feasibility stage it will be necessary to complete all the
test work and detailed design, which will include cognizance of the
properties of residual material and pollution control measures. It was
found that there is sufficient space on Mimosa to accommodate a tailings
dam of this size.
4.6 SUPPORTING INFRASTRUCTURE
4.6.1 Water Supply
The anticipated water source will be Magalies Water which abstracts
water from the Olifants River and the Vaalkop Dam. There is a growing
demand on this water source. With several new platinum mining
projects being developed in the Rustenburg area, Magalies Water and
the local Moses Kotane Municipality have been engaged in discussions
to secure water supply. A water balance study has been carried out by
TWP and indicates the requirement for 4.87 Ml per day for mining and
5.60 Ml per day for surface usage including the refrigeration plant.
The following were considered:
* The mine service water supply from the surface dams to the plant
and underground workings
* The mine return water reticulation from the cross cuts to the
level dams and to surface.
4.6.2 Electricity Supply
The permanent power supply will be provided by Eskom at 33kV via an
overhead line to the Main Consumer Substation, where it will be
stepped down to 11kV and then to 550 volts. The distance to the
nearest Eskom distribution point is expected to be from the current
power lines that traverse the western margin of the project area.
Eskom had been approached to provide the electricity needs of the
project, and an initial study provides for a three stage supply phase
of power from construction to production.
5. ECONOMIC ANALYSIS
A financial model covering the five Pre-feasibility Study mining options
has been developed using a discounted cash flow ("DCF") analysis to
estimate net present values ("NPVs") and internal rates of return
("IRRs"). The envisaged mine includes a concentrator, but excludes a
smelter and refinery.
In determining state royalty payments, it has been assumed that
concentrate produced will be smelted and refined by a third party. This
assumption results in an effective 3% royalty. The financial model
excludes debt and assumes 100% equity financing upfront and free cash
flows are assumed to be distributed by way of dividends. NPVs are stated
in 2007 money terms, but are projected to the approximate project
construction start date (June 2008). In this report, NPVs and IRRs are
stated on an after tax basis.
5.1 TECHNICAL INPUTS
The technical criteria for the financial model over a ramp up period of
five years are shown in Table 8.
Table 8. Technical criteria for the financial model
Yr1 Yr2 Yr3 Yr4 Yr5 Yr6 Yr7
Tons Mines (`000) - - 118 391 840 1172 2088
Head Grade (4E) 4.40 4.40 4.77 4.52 4.57
Recoveries 88% 88% 88% 88% 88%
4E Concentrate (tonne`000) - - - 38 91 136 234
5.2 CAPITAL COSTS
The development of the capital footprint of the project takes eight years
from commencement to full production. This comprises:
* two years for shaft sinking
* five years of production buildup
* one year for establishing ongoing capital development.
Peak funding occurs in Year 6 (2013) at R866 million of the project
buildup. Operating costs from start of project are capitalized until reef
development for raise establishment. Provision for ongoing capital is 4%
of direct operating cost starting from Year 6 of full production. An
additional 4% of direct operating cost of ongoing capital has been
budgeted for commencing in Year 6 of full production. The capital cost
schedule developed for the five mining options and used in the financial
valuation is summarized in Table 9.
Table 9. Direct costs for each of the mining options
Options 1,2 & 3 Option 4 Option 5
Item Direct Cost Direct Cost Direct Cost
(ZAR`000) (ZAR`000) (ZAR`000)
Common Infrastructure 86,002 86,002 86,002
Shaft Surface Complex 249,099 249,099 249,099
Infrastructure
Main Shaft 1,661,121 1,568,973 1,868,419
Ventilation Shaft 196,322 196,322 196,322
Other 400,903 400,903 400,903
Indirect Costs 391,666 391,666 391,666
Total Mining 2,985,113 2,892,966 3,192,411
Concentrator 610,000 610,000 610,000
Project Total 3,595,113 3,502,966 3,802,411
5.3 OPERATING COSTS
Operating costs have been estimated using first principles based on the
production profile derived from the mine design. Benchmarks were carried
out on operating costs of operating mines in the area to determine costs.
Environmental management costs were not provided for in the operating
costs but rather as a provisional allowance at the end of mine life. Table
10 below shows the direct shaft head and costs up until the mill gate for
the various options.
Table 10. Operating costs for each of the mining options
Item Option Option Option Option Option
1 2 3 4 5
Shaft Head Cost (R/ton) 238.55 225.21 236.12 229.97 211.75
Mill Gate (R/ton) 241.86 228.93 240.05 234.37 214.89
The operating cost for the processing plant is estimated at R46.98 per ton
treated. An additional R6,30 per ton from Year 5 is provided as capital
replacement. The table below provides the element breakdown of the cost.
These costs include cost of tailing disposal.
Table 11. Operating costs for the processing plant.
Item Cost (R/ton)
Metallurgical Consumables 32.84
Engineering Consumables 5.89
Safety Consumables 0.66
Plant Labour 7.59
Total 46.98
5.4 ECONOMIC INPUTS
In carrying out the valuation, a number of economic and regulatory
assumptions sourced from various consensus sources have been taken into
account are detailed below. The sources include government and investment
banks.
5.4.1 Taxation
The valuation model has incorporates Company Tax and Secondary Tax on
Companies (STC). The model assumes that all capital expenditure is
written off in the year expensed. Estimated unredeemed capital
balances up to the project start have been brought forward for write
off. The net present value (NPV) of the project is based on real
free cash flows after capital expenditure, company tax and secondary
tax on companies (STC) on declared dividends. The valuation assumes
all free cash flows are distributed to shareholders by way of
dividends.
Table 12. Tax rates
Description %
Company Tax 29
Secondary Tax on 10
Companies (STC)
5.4.2 Royalties
State Royalties have been calculated on turnover from 1 May 2009 in
accordance with the latest Minerals and Energy Royalties Bill.
Royalties will be payable at 3% on PGM revenue, 1.5% on Gold revenue
and 2% on Base Metals. The royalties are assumed to be tax
deductible
Table 13. Royalties payable
Description %
PGM Royalty 3
Gold 1.5
Base Metals 2
5.4.3 Inflation
The following rates of inflation are applied to bottom line cash
flows to convert into real cash flows.
Table 14. Inflation rates
Description %
South Africa Inflation 5.1
US Inflation 2.5
Capital escalation 8
5.4.4 Exchange Rates
The forecast US$/ZAR exchange rate are shown in Table 15.
.
Table 15. Exchange rates
Description 2007 2008 2009 2010
Exchange rate in 2007 money terms 7.3 7.3 7.3 7.3
Exchange Rate Nominal Terms 7.3 7.5 7.7 7.9
5.4.5 Metal Price Projections
The valuation model has four different metal price assumptions. These
include the base case, low, medium, high and the spot price.
The Base Case version represents a conservative metal price
assumption as shown in Table 16.
Table 16. Base case and spot metal prices
Description Unit Base Case Spot
Metal Prices
Platinum $/Oz 950 1,239
Palladium $/Oz 360 353
Rhodium $/Oz 3,000 6,100
Gold $/Oz 620 664
Nickel $/kg 13 35.7
Copper $/kg 5 6.33
*27 March 2007
6. VALUATION
6.1 Results
The pre-feasibility project valuation is calculated using the discounted
cash flow model (DCF) based on real cash flows. Cash flows are first
calculated in nominal (money of the day) terms to achieve greater accuracy
in tax, revenue and working capital estimation. Then the bottom line cash
flows are converted into real terms, before discounting using real
discount rates ranging between 5% and 12%. The cash flow forecast is
assumed to start at the estimated start of mine construction (July 2008),
and have been discounted to this future date. The model assumes 100%
equity finance upfront, and NPVs and IRRs are stated on an after tax
basis. Gearing will be considered in the Bankable Feasibility Study.
The Mineral Reserves estimated to date (16.7M tonne) are insufficient to
sustain a mine life of 20 years thus in the financial modelling the
Inferred Mineral Resources have also been employed to value the project to
a 20 year mine life. Thus in terms of the SAMREC Code two values have to
be presented, one value based on the Probable Reserves only (14.0 M tonne
scheduled) and one based on the assumption that both the Probable Reserves
and Inferred Mineral Resources (an additional 42.5M tonne) will be mined.
Table 17. Valuation of the Probable Reserves and Inferred Mineral
Resources for the various options
NPV at 30 June 2008 in 2007 money
terms
real discount rate
Real Nominal
IRR IRR 5% 7.50% 9% 12%
Option R million
1 13% 19% R 2,097 R 1,211 R 804 R 195
2 13% 18% R 3,064 R 1,571 R 954 R 116
3 14% 20% R 3,439 R 1,908 R 1,267 R 383
4 8% 13% R 1,553 R 5 -R 576 -R
1,282
5 15% 21% R 4,000 R 2,388 R 1,691 R 700
From Table 17 it can be seen that Option 5 provides the highest value,
however, a high level of technical risk is associated with this mining
schedule. Option 3 is deemed the most appropriate mining schedule to value
the project.
To fulfill the requirements of the SAMREC Code by splitting Indicated from
Inferred for valuation purpose, without the use of a mining schedule, the
most appropriate method selected was the deemed ounces method. In this
method the production schedule is deemed to be entirely sourced from
Indicated sources, until the Probable 4E ounce inventory is exhausted, At
which time the life of mine has been assumed to end. Hence the full
forecast cash flows is attributed to Probable Reserves, until the Reserves
are depleted. This method has the advantage of extracting maximum value
from the Probable Reserves by depletion at the planned maximum rate of
production.
Table 18 contains the valuation of Option 3 for the Probable Reserve case
and the Probable Reserve and Inferred Mineral Resource case for both the
base case metal prices and spot metal prices (Table 16).
Table 18. Valuation of Option 3 for the Probable Reserve case and the
Probable Reserve and Inferred Mineral Resource case at the base and spot
metal prices.
NPV5% in ZAR billions NPV Based on NPV Based on
Probable Probable Reserves
Reserves Inferred Resources
Only
Base Case Metal Prices R 0.000 R 3.439
Spot Metal Prices (27 R 2.279 R 10.065
March 2007)
6.2 Sensitivity Analysis
Sensitivities were applied to three inputs to the NPV calculation namely
revenue, capital and operational cost to determine the economic robustness
of the project. These varied from 10% to 30%.
In both cases, the project is more sensitive to revenue and less sensitive
to capital and operating costs.
7. CONCLUSION AND RECOMMENDATIONS
The exploration over the Wesizwe Pilanesberg Project to September 2006 has
identified an estimated Mineral Resource of approximately 73.5 million
tonne at a grade of 5.05g/t of 4E on both the Merensky and UG2 Reefs. Of
this total Mineral Resource, approximately 16.7 million tonne at a grade
of 4.2g/t 4E is in the Indicated Mineral Resource category. Exploration
drilling is currently ongoing to progress the Inferred Mineral Resources
into the Indicated and then Measured categories.
The main conclusions of this study are as follows:
* Based on the Datamine model of the Merensky Reef structure, TWP have
derived an overall underground access layout. This design encompasses
a three tunnel decline system with footwall drives and conventional
scraper cleaned stopes.
* Access to underground will be via a twin vertical shaft system. Ore
underground will be transported by trucks on the levels to decline
stations and then by conveyor along the declines to the shaft
* Nearly all off-reef development will be completed by trackless
equipment whereas all reef development and stoping will be via
conventional handheld drilling machines.
* The capital costs for the mine infrastructure, processing plant and
underground development to steady state conditions is estimated to be
between R3.5 bn and R3.8 bn depending on the mining option that is
selected (Option 3 or Option 5). These costs will be examined in
further detail during the Bankable Feasibility Study.
* TWP have derived the most favourable rate and ore source of mining
through a series of tonnage and ore options. A mining rate of 180,000
ton per month ore and 40,000 ton of waste are deemed to be the
optimum rate of mining. The best return on investment would be to
mine the Merensky Reef first and phase the UG2 Reef in quickly when
the Merensky Reef depletes (Option 3).
* TWP have derived the operating costs for both the mining and
processing functions to the level of a concentrate that is suitable
for sale to a smelter and refiner. The costs for Option 3 are R244
per ton for mining, and R53 per tonne for processing.
* The Mineral Resources have been converted to Mineral Reserves based
on the mining method and associated modifying factors. A Probable
Reserve of 16.7 million tonne at a grade of 4.2g/t 4E over an average
width of 1.5m has been identified for the Merensky and UG2 Reefs.
* Conversion of the Inferred Mineral Resources to the Mineral Reserves
has been completed by TWP to understand the life of mine parameters
assuming the Inferred Mineral Resources will be converted to
Indicated Mineral Resources via the current exploration campaign. The
total Reserve based on this process is 72.7 million tons at a grade
of 3.7g/t PGE (4) over a width of 1.6m for both the Merensky and UG2
Reefs.
Based on the dictates of the SAMREC Code the value of the project is seen
to have a NPV5% of between nil when only the current Indicated Resources
(Probable Reserves) are considered and returns at R3,439 bn when
considering 100% of the Inferred Mineral Resources for the optimum mining
schedule at the base case metal prices. The principal risk associated with
this would be that sufficient Indicated Mineral Resources may not be
identified to sustain the project.
Based on the various valuations as well as consideration of the cash and
capital costs derived for the project, continuance of the study into a
Bankable Feasibility Study is warranted.
Registered office: Second Floor, AMB Capital, 18 Fricker
Road, Illovo 2196
Investor relations enquiries: College Hill, Fred Cornet
Telephone: +27 11 447 3030
Wesizwe Platinum Limited, Melanie Low
Telephone: +27 11 215 2375
Web site: http://www.wesizwe.com
Date: 30/03/2007 08:44:50 Produced by the JSE SENS Department.
