Steady State production of PGM
Platinum Group Metals Ltd reports the Company's financial results for the three months ended November 30, 2019, and provides a summary of recent events and outlook. The Company is focused on advancing the palladium dominant Waterberg Project located on the North Limb of the Bushveld Complex in South Africa.
Key findings of the Waterberg DFS are 1: Annual Steady State production rate of 420K 4E ounces. Estimated mine life of 45 years on current reserves. The planned production rate is by careful design in order to reduce capital costs and simplify construction and ramp-up.
2: After-tax Net Present Value of $982 million, at an 8% real discount rate is using spot metal prices as at September 4, 2019, including of $1,546 Pd/oz, Spot Prices. 3: After-tax NPV of $333 million, at an 8% real discount rate, using three-year trailing average metal prices up until September 4, 2019, including $1,055 Pd/oz Three Year Trailing Prices.
4: After-tax Internal Rate of Return of 20.7% at Spot Prices and 13.3% at Three Year Trailing Prices. 5: On-site life of mine average cash cost (inclusive of by-product credits and smelter discounts) for the spot price scenario equates to $640 per 4E ounce.
The Company took significant steps to cut costs and reduce debt during calendar 2019. During the three months ended November 30, 2019, the Company realized a net gain of $0.55 million over November 30, 2018, had registered a net loss of $5.64 million.
Total expenditures on the Waterberg Project, before partner reimbursements, for three months ended November 30, 2019, were approximately $1.0 million (November 30, 2018 - $3.0 million). At period end, $39.2 million in accumulated net costs had been capitalized to the Waterberg Project. Total expenditures on the property since inception to November 30, 2019, are approximately $71.2 million.
The Company achieved several important business objectives during the past calendar year, including the repayment of a significant portion of the Company's secured debt and the completion and approval of the Waterberg DFS. The positive results of the Waterberg DFS provide a solid base for the assessment of value for the Waterberg Project in 2020.
Subsequent to Waterberg JV Co. shareholders approving the Waterberg DFS on December 5, 2019, Implants may elect to exercise their Purchase and Development Option within 90 business days. The Waterberg DFS project schedule anticipates the grant of a mining right and the start of project engineering in calendar Q1 2020.
The Company's key business objective is to advance the palladium dominant Waterberg Project to a development and construction decision. An interim implementation budget of Rand 22.9 million (approximately $1.6 million at November 30, 2019) was approved by Waterberg JV Co. at a meeting of its Board of Directors on September 3, 2019.
At present, the Company continues to work on advancing project permitting, infrastructure servitudes and community relationships with its joint venture partners through a technical committee of Waterberg JV Co. Concentrate off-take negotiations with Implants are currently in process, along with other off-take possibilities being considered, subject to Implants' right to match.
The spot metal basket price per 4E ounce for the Waterberg Project has increased by an aggregate of approximately 25% since spot prices for the DFS were measured on September 4, 2019. The market outlook for strong palladium demand and the potential for continued palladium supply deficits indicate a bright future for Waterberg's dominant metal.