AMN - SOUTH AFRICA: Positive DFS for Platreef

An independent definitive feasibility study (DFS) for the planned first phase of Ivanhoe Mines’ Platreef project in South Africa has returned positive findings. The first stage involves a 4 million tonnes/annum mine and concentrator at the platinum, palladium, rhodium, gold, nickel and copper project.

The positive DFS has been welcomed by Ivanhoe Mines' executive chairman Robert Friedland, chief executive officer Lars-Eric Johansson and Platreef project managing director Dr Patricia Makhesha.

Platreef, which contains the Flatreef deposit, is a Tier One discovery by Ivanhoe Mines' geologists on the Northern Limb of South Africa's Bushveld Igneous Complex, the world's premier platinum producing region.

Ivanhoe plans to develop project in three phases: An initial rate of 4 mtpa to establish an operating platform to support future expansions; a doubling of production to 8 mtpa; and expansion to a steady-state 12 mtpa.

The independent Platreef DFS covers the first phase of development that would include construction of a state-of-the-art underground mine, concentrator and other associated infrastructure to support initial concentrate production by early 2022. As Phase 1 is being developed and commissioned, there would be opportunities to refine the timing and scope of subsequent phases of expanded production.

"The completion of the definitive feasibility study for the first phase of production is another key milestone in Ivanhoe's planned transformation of the Platreef discovery into one of the pre-eminent South African producers of platinum-group metals," said Robert Friedland.

"Platreef is a massive, high-grade, long-life and Tier One deposit that will produce a suite of vital metals, many of which are essential to sustain our urbanising planet. The nickel and copper by-products are essential in the electric car revolution and the platinum and palladium are equally vital for hydrogen fuel cell technology and catalytic converters to clean the air.

"We now have a clear and defined path forward to initial production and subsequent phases of development. We are confident that the Platreef project will benefit all of our stakeholders, including the 20 local communities that are our equity partners, for generations to come.

"Despite lower metal prices used in the DFS compared to the 2015 pre-feasibility study, we have maintained the excellent economics of the Platreef project due, in part, to the mine optimisation work completed with assistance from industry-leading experts, such as Whittle Consulting of Melbourne, Australia. Even at today's spot metal prices, the Platreef project would generate an operating margin in excess of 40%," Robert Friedland added.

Key features of the DFS include:

• Indicated mineral resources of an estimated 41.9 million ounces of platinum, palladium, rhodium and gold with an additional 52.8 million ounces of platinum, palladium, rhodium and gold in inferred resources.

• Enhanced mineral reserve containing 17.6 million ounces of platinum, palladium, rhodium and gold - an increase of 13% following stope optimisation and mine sequencing work.

• Development of a large, safe, mechanised, underground mine with an initial 4 mtpa concentrator and associated infrastructure.

• Planned initial average annual production rate of 476,000 ounces of platinum, palladium, rhodium and gold (3PE+Au), plus 21 million pounds of nickel and 13 million pounds of copper.

• Estimated pre-production capital requirement of approximately US$1.5 billion.

• Platreef would rank at the bottom of the cash-cost curve, at an estimated US$351 per ounce of 3PE+Au produced, net of by-products and including sustaining capital costs, and US$326 per ounce before sustaining capital costs.

• After-tax Net Present Value (NPV) of US$916 million, at an 8% discount rate.

• After-tax Internal Rate of Return (IRR) of 14.2%. The actual return to project equity owners is expected to be higher as a result of the significant amount of project financing which is being raised.

Ivanhoe indirectly owns 64% of the project through its subsidiary, Ivanplats, and is directing all mine development work. The South African beneficiaries of the approved broad-based, black economic empowerment structure have a 26% stake in the project. The remaining 10% is owned by a Japanese consortium of ITOCHU Corporation; Japan Oil, Gas and Metals National Corporation; ITC Platinum Development Ltd., an ITOCHU affiliate; and Japan Gas Corporation.

www.ivanhoemines.com