South Africa is well known for being the world’s largest producer of platinum, accounting for roughly 73 per cent of global production as of 2022 and emerging producers such as Eastern Platinum Ltd. (TSX:ELR) are poised to be game changers in the space.
With a portfolio of platinum group metals (PGMs) and chrome assets in South Africa, the company is ideally situated within the Bushveld Complex, the geological environment that is host to approximately 80 per cent of the world’s PGM-bearing ore.
As South Africa looks to continue its dominance in global PGM production, Eastern Platinum is getting ready for significant growth – with its PGM production expected to account for 65 per cent of the company’s revenue by 2025/2026.
(Source: Eastern Platinum Ltd.)
Notably, the company is currently focusing on restarting its Zandfontein underground operations at its flagship Crocodile River Mine, which is in the northwest province of South Africa, 70 kilometres northwest of Johannesburg.
“The company is currently remining the tailings to extract chrome and low-grade PGMs,” Wylie Hui, CFO of Eastern Platinum told The Market Herald Canada in an interview. “We will then focus on the Zandfontein underground initiating a soft-restart and reopening of the mine.”
With a company history that dates back to the 1980s, Eastern Platinum is in a unique position in South Africa. To date, roughly US$630 million has been invested in the Crocodile River Mine – with more than $100 million invested since new ownership took over in 2016 – which has allowed the company to keep the Zandfontein mine well maintained. As such, this also means minimal time and cost is required for it to reopen.
Reopening the Zandfontein underground within the Crocodile River Mine
Initially established in 1987, the Crocodile River Mine is a shallow long-life hybrid PGM mine on the Western limb of the Bushveld complex. Though Crocodile River Mine commenced operations in 1987, it has been under care and maintenance since 2013.
In May, the company completed a rights offering for C$7 million, part of which will be used to restart the Zandfontein underground.
At present, the retreatment of existing tailings to recover chrome and platinum group metals is ongoing at the Zandfontein tailings storage facility. Crocodile River is planning to mine the UG2 chromitite layer from its Zandfontein vertical shaft.
Hui explained the Crocodile River Mine is ideally located in an area with good infrastructure and good access to employment – which he added is a key element for mining projects to be successful.
“Being in this area, 70 kilometres away from Johannesburg … the government and Department of Mineral Resources and Energy are very keen for us to restart the mine and create jobs for South Africans,” he told The Market Herald Canada.
Within the Crocodile River Mine are three key mining lease areas, which includes the Zandfontein mine and two development sections – Crocette and Kareespruit.
(Source: Eastern Platinum Ltd.)
Hui told The Market Herald Canada the mine has a lot of upside, and operations are “ramping up slowly” at the Zandfontein underground operation.
Eastern Platinum has also completed a life-of-mine study and underground mine design for Zandfontein, which confirms the mine’s economics and provides the company comfort to restart the mine slowly and ramp up production rates as PGM prices increase.”
“Initially, [Eastern Platinum] wanted to restart the mine with at the full run-rate, but mindful of shareholder dilution we are able to reopen the mine in a phased approach,” he said. Hui explained that the company will look to make its first blast in October or November.
As part of the mine’s soft relaunch, Hui said two crews are trained with the aim of increasing to four teams.
The company’s strategy at the mine is to steadily ramp up to a peak production rate of approximately 1.02 million tons per annum from the underground operations utilizing a hybrid mining method. A steady ramp-up of three years has been incorporated into the mining schedule, with mining beginning at 20,000 tons (20kt) per month followed by 40kt per month for two years. Eastern Platinum will then ramp up to a steady state of production of 80kt per month. Zandfontein has a life of mine of approximately 22 years.
(Source: Eastern Platinum Ltd.)
Other developments
While restarting the Zandfontein underground is a big part of Eastern Platinum’s focus, the company is also focused on processing tailings from the Crocodile River Mine where it produces chrome and PGM concentrates.
Currently, the majority of the company’s revenue – roughly 94 per cent in Q2 2023 – comes from chrome concentrate sales. Up until July 2022, that revenue had been based on an offtake agreement that Eastern Platinum’s subsidiary Barplats Mine held with Union Goal Offshore Solutions Limited. Though this offtake agreement is still in place, the company’s chrome concentrates are generated through third-party sales allowing Eastern Platinum to take advantage of better chrome pricing, resulting in higher-than-expected margins.
However, chrome sales are expected to wind down for the remainder of 2023 and into 2024 as chrome concentrate from tailings approaches its completion date. When that occurs, the PGM concentrate production will become the main source of revenue for Eastern Platinum.
Hui also explained the company is focusing on working closely with local communities to have a structure in South Africa, which allows the company to have solid partnerships. He said that as it currently stands, Eastern Platinum is seeking Black Economic Empowerment (BEE) partners who will add value to the mine and help it get to the next level as it restarts the Zandfontein underground.
“It’s important for [the company] to have good, active BEE partners that are knowledgeable in mining,” Hui explained, adding that Eastern Platinum has strong relationships with the community.
What’s next for Eastern Platinum?
With only a few months left in 2023, and as 2024 approaches, Eastern Platinum’s focus will be on restarting the Zandfontein mine.
Other goals moving forward include:
- Operate and optimize the PGM Circuits
- Raise additional capital for reopening the Zandfontein underground operations
- Operate and optimize the Retreatment Project
- Complete the optimization of the chrome recovery plant for the Retreatment Project
- Assess the value for continued use of the chrome recovery plant after optimization
- Complete the second phase of the tailing’s storage facility capital works program
- Advance the Mareesburg project (located on the eastern limb) environmental work to complete the legal analysis on the Environmental Impact Assessment
- Continue prospecting and assessment work in relation to Zandfontein, Crocette and Spitzkop ore bodies
- Commission main plant circuit A for underground operations
Eastern Platinum said care and maintenance will also continue for its Kennedy’s Vale, Spitzkop and Mareesburg projects for 2023.
“Down the road, we’re looking at ways to maximize the value of our assets, which includes all mergers and acquisitions opportunities,” Hui told The Market Herald Canada. “[The company’s] goal is to be a mid-tier PGM and chrome producer.”
Eastern Platinum’s management team
Wanjin Yang, CEO
Wanjin Yang is a senior exploration geologist with more than 30 years of experience in major mineral exploration projects, corporate management and corporate development. Yang previously was the project geologist at Whitehorse Gold working on its mineral exploration projects, new project acquisitions and other corporate development work.
Wylie Hui, CFO
Wylie Hui has more than 25 years of financial and operational experience in his role with Eastern Platinum with a majority of his experience in the mining and metals industry. Hui has been integral in financial reporting, risk management, and administration processes and functions at many mining companies. Hui also manages and oversees the financial planning and analysis, treasury management, risk management, corporate finance and investor relations functions of the company.
Hui has also served as CFO of several public mining companies including Tinta Resources (now Sandfire Resources America) by developing the Black Butte Copper Project. He has also provided CFO, controllership and consulting services to numerous public and private companies, including BQE Water as well as Universal Mineral Services, Sombrero Resources, Tier One Silver, Fury Gold Mines and Torq Resources. Hui has also worked for two international accounting firms Ernst & Young and BDO.
Haiying Wang, vice president
Haiying Wang has more than 20 years of experience in international trading and logistics including 10 years of mineral investment and trading in North America.He has more than five years of experience in operations, supply chain and human resource management. Wang is responsible for new project development, planning, marketing and promotion, investment, and socio-economic strategy at Eastern Platinum. He graduated from the Guangdong University of Foreign Studies with a bachelor’s degree in economics.
The investment opportunity
As of the time of this writing, Eastern Platinum has a share price of $0.09. The company’s share price isn’t entirely representative of the impact it is having in South Africa and the overarching PGM sector.
As Eastern Platinum continues to ramp up activity at its Zandfontein underground, excitement will only continue to build as the company uncovers the mine’s potential.
What’s more, thanks to its deep roots in South Africa – and support from the local community and government – Eastern Platinum Ltd. undoubtedly has the legs to carry the mine long-term, which means investors won’t want to miss out on this growing opportunity.
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