Platinum group metals (PGMs) producer Sylvania Platinum’s wholly owned South African subsidiary Sylvania Metals has entered into an unincorporated joint venture (JV) agreement with design engineer ChromTech Mining Company subsidiary Limberg Mining Company (LMC).
The JV will process PGM and chrome ores from historical tailings dumps and current arisings (mining area) from the Limberg chrome mine, located on the northern part of the western limb of the Bushveld Complex in South Africa.
The JV will trade and operate under the name Thaba JV.
Sylvania states that the Thaba JV represents a major step in the delivery of Sylvania’s growth strategy and is a significant step forward for Sylvania Metals in expanding its operations and leveraging its expertise in the recovery of chrome and PGM concentrates.
"The Thaba JV combines the strengths and expertise of both companies in the mining and processing industry. Sylvania Metals has a proven record in the recovery, sale and distribution of PGMs, while LMC contributes ChromTech’s extensive experience of chrome operations, with particular expertise in fine chrome beneficiation,” enthuses Sylvania CEO Jaco Prinsloo.
“We are looking forward to collaborating with LMC, which will provide access rights to the mining area and bring its knowledge and skills in mining and processing operations to ensure the production of low-cost, high-grade chromite concentrate and PGMs from the Middle Group Reef on the north of the western limb of the Bushveld Complex in South Africa.
“We are excited about the prospects of the Thaba JV to create substantial value for our shareholders, and to add chrome to our portfolio of commodities, while strengthening our PGMs production.”
Prinsloo adds that the Thaba JV will add attributable production of about 6 500 oz of platinum, palladium, rhodium and gold (4E) PGMs and 200 000 t of chromite concentrate to Sylvania Metals’ existing production profile.
The JV also offers an attractive investment return on the project that exceeds the company’s internal rate of return hurdle rate of at least 20%, along with a cash payback of less than three years from commissioning, based on current long-term consensus pricing.
“The establishment of the JV holds significant potential for Sylvania as it aligns with the company’s growth strategy and enhances its position in the mining and processing industry. The JV will enable Sylvania Metals to access valuable resources, expand its production capabilities and strengthen its distribution channels for target products, ultimately driving value for the group and its stakeholders,” adds Prinsloo.
"The establishment of the Thaba JV is a ground-breaking collaboration between industry-leading operators that is anticipated to generate sustainable value for all stakeholders.
“LMC eagerly anticipates the formation of this long-lasting partnership with Sylvania Metals. Both our companies share a philosophy for unwavering excellence, underpinned by our collective commitment to environmental, social and governance (ESG) principles,” adds LMC CEO Jono Gay.
“With this JV, we are poised to unlock LMC's potential and position it as a key growth engine within the ChromTech Group. In light of our continued business diversification into opencast chrome and PGMs mining, LMC, the most recent acquisition of the ChromTech Group, represents an essential growth area for our company,” he adds.
DETAILS OF JV
The LMC Thaba chrome mine is an established opencast chrome mine on the northern part of the western limb of the Bushveld Complex, with about two-million tons of existing chrome tailings and an existing run-of-mine (RoM) chrome beneficiation plant.
The mine is currently in production and marketing LG6 chrome ore.
The mine has a 30-year mining right which was issued during 2010 for both chrome and PGMs, and all operations will take place under the existing LMC permits and regulatory approvals.
The Thaba JV will treat a combination of about 50 000 t a month of RoM ore and 16 000 t a month of historical chrome tailings dump material from LMC’s Thaba mine, and will produce about 13 000 oz/y of 4E PGMs and 400 000 t/y of chromite concentrate over the initial ten years (50% attributable to Sylvania Metals).
The addition of 6 500 oz of attributable 4E PGMs will increase Sylvania Metals’ estimated yearly production by about 9%.
The JV will build new secondary fine chrome and PGM beneficiation plants, which are expected to be commissioned within about 18 months from September 1 this year, with first production and sales expected during the second half of the 2025 financial year.
These beneficiation plants will be similar to those at the Mooinooi Sylvania Dump Operations in terms of circuit configuration and technology.
“The company is confident it can replicate its previously established and tested methods and use its expertise to maximise both production and deliver value for all stakeholders,” states Sylvania.
It adds that the Thaba JV agreement provides for an equal 50% participation interest for Sylvania Metals and LMC, allowing for a fair distribution of profits generated from the operations conducted by the Thaba JV.
Both parties will share in the revenue, costs and profit generated by the Thaba JV.
The total capital expenditure (capex), inclusive of all engineering fees, costs and expenses, required to undertake and complete the build project is provisionally budgeted at R600-million.
This will initially be funded by Sylvania Metals from its existing cash resources and will be spent over the 18 to 24 months of the build project.
The JV partners will contribute equally to all capital costs except the upfront capex, subject to the final build project budget approved by the JV board. LMC’s 50% portion of the upfront capex will be funded by way of a loan from Sylvania Metals.
The loan will bear interest linked to the South African Prime Lending rate (currently 11.75%) and will be repaid to Sylvania Metals in equal quarterly instalments commencing on the first anniversary of the commissioning of the PGM and chrome plants. Repayments will be made from LMC’s attributable profits of the JV, and any shortfall will be funded by LMC. In case of an event of default, Sylvania has the right to demand immediate repayment or claim specific performance from LMC.
The loan advanced to LMC will be secured by means of a special notarial bond, to be registered over the existing two-million-ton chrome tailings resources.
Sylvania Metals will also, on a revolving credit basis at a similar interest rate, fund the approximately $5-million working capital and operating expenditure requirements.
This will be funded together with all other business and operational costs of the JV in compliance with the relevant approved budget and any applicable capex programmes for a maximum period of 24 months if required.
LMC will perform all mining activities and will supply both RoM ore and chrome tailings material to the JV according to a material supply agreement, while Sylvania Metals is appointed as the JV manager and will operate the chrome and PGM plants under a management services agreement. Marketing of the chromite concentrate and PGMs will be undertaken by the JV partners and profits will be shared equally.
The Thaba JV will comprise of a board made up of an equal number of representatives from each JV partner. While the initial agreed duration of the JV agreement is ten years from the date of first production, the parties could negotiate in good faith to further extend the term to benefit from the remaining life of the Thaba chrome mine.
