Structural damage Stillwater West costs 20k oz
During March 2023, the US PGM Stillwater West mine suffered structural damage to the shaft which accesses the deeper levels of the mine. The suspension of operations below 50 level during remediation of the shaft has temporarily delayed the repositioned plan and will result in reduced production and elevated costs for 2023 relative to previous guidance.
There were no injuries from this incident and the shaft was successfully recommissioned on 16 April 2023, with production from below 50 level resuming and building-up to normalised levels by the end of April 2023. The incident resulted in approximately 20,000 2Eoz less production from the Stillwater West mine for Q1 2023, with annual production for 2023 expected to be reduced by approximately 30,000 2Eoz.
Primarily due to the incident, mined 2E PGM production from the US PGM operations of 100,690 2Eoz for Q1 2023 was 18% or 21,699 2Eoz lower than for Q1 2022. Production from the Stillwater mine of 61,520 2Eoz for Q1 2023, was, 23% lower than the comparable period in 2022 as a result of the incident.
The East Boulder mine produced 39,170 2Eoz, 8% lower than for Q1 2022, primarily due to persistent geological and geotechnical complexity associated with mining to the western section of the mine, compounded by critical skills shortages, which continue to affect productivity.
Development at the Stillwater mine was significantly impacted by the shaft incident, but continued above 50 level and at the East Boulder mine throughout the period. Following the repositioning of the US PGM operations in mid-2022 and completion of the Benbow decline development during 2022, project development at Stillwater East has been discontinued. Total development declined by 11% in Q1 2023 to 5,821 meters compared to Q1 2022, with development at the Stillwater mine 17% lower year-on-year due to the above mentioned factors. Development at the East Boulder mine increased by 7% year-on-year, in line with the planned increase in development rates to increase operational flexibility at the US PGM operations.
AISC of US$1,861/2Eoz (R33,052/2Eoz) for Q1 2023 was elevated due to the production shortfall and higher ORD costs, which increased by 31% year-on-year to US$55 million (R976 million) and sustaining capital which increased by 89% year-on-year to US$21 million (R367 million), following the reclassification of Stillwater East ORD and sustaining capital during 2022.
This was exacerbated by general inflationary pressures affecting the industry, and continued reliance on higher cost contractor labour due to the ongoing skills shortage.
Total capital expenditure for Q1 2023 increased by 18% year-on-year to US$87 million (R1.5 billion) due to the planned increase in ORD and the increase in sustaining capital year-on-year. Growth project capital was 47% lower at US$11 million (R198 million) due to the completion of the Benbow decline development during 2022 and the suspension of further growth capital at Stillwater East.
