Work on integrated platinum-group metals (PGMs) producer Northam Platinum’s Zondereinde smelter expansion project to increase the smelter’s capacity remains scheduled for completion by the second half of 2017.

The 16-month project started in February and has a R750-million budget, of which, to date, R292-million has been spent. Northam’s Zondereinde operations are about 30 km from Thabazimbi, on the northern portion of the western limb of the Bushveld Complex, in Limpopo.

The project involves the construction of a 20 MW furnace and dryer, and follows on the extension of Northam’s partnership with German platinum-refining company Heraeus to help finance the furnace. The company has contributed the first €10-million tranche of its €20-million commitment to the smelter expansion, which was agreed in exchange for the renewal of refining arrangements and the guaranteed supply of refined metal.

Work on the smelter expansion has proceeded according to plan, with commissioning still expected by the end of the 2017 calender year.

The development of the Zondereinde mine started in 1986, following a five-year exploration programme. Mining initially focused on the Merensky reef, but this was followed in 2000 with an expansion into the upper group two (UG2) reef. Zondereinde is an established, cash-generative operation, moving down the cost curve.

Northam said in August it expected to produce 280 000 oz to 290 000 oz four-element from Zondereinde in 2016, with the unit cash cost per platinum ounce estimating at R19 409. Northam anticipates that it can keep to this level, including the normal inflationary increases of about 8% yearly.

It notes that to access the more conformable reef, management embarked on the initial development work on the Zondereinde deepening project some years ago – with the equipping of newly opened up areas still continuing.

Northam says work is far advanced on the development of a conveyor decline between Level 16 and 17, which started on June 30. Lateral development progress on Level 16 allows for crosscuts to the reef.

The decline between Level 14 and 16 is being equipped.

Further, in October, in a three-part transaction, Northam announced that it would acquire a strategic resource holding for R1-billion in primary platinum producer Anglo American Platinum’s adjacent Amandelbult mine.

This high-quality resource is on the north-western boundary of the Zondereinde mine and allows Northam to apply its existing infrastructure to exploit and extract it. In addition, the resource provides flexibility and optionality to future Zondereinde mining operations.

Significantly, it improves Zondereinde’s life-of-mine to 30 years, providing for further opportunities in Limpopo.

The acquisition also allows for early access to the additional higher-grade Merensky and UG2 reefs, which reduces the overall average mining depth of the Zondereinde mine, with associated potential savings, such as reducing the mining risk and enhancing the long-term flexibility and optionality, for Zondereinde.

The Zondereinde mine’s proven and probable mineral reserves, as at June 30, 2016, were estimated at 11.7-million ounces, with mineral resources estimated at 84.1- million ounces.

The acquisition transaction is subject to the consent of the Minister of Mineral Resources in terms of Section 102 of the Mineral and Petroleum Resources Development Act, No 28, of 2002.