Southern Palladium confirms UG2 Reef for its PGM project

Southern Palladium advises that mining consultants Minxcon (Pty) Ltd has completed an internal Scoping Study on the Bengwenyama Platinum Group Metal (PGM) project located on the Eastern Limb of the world class Bushveld Complex, South Africa.

The Scoping Study concluded that extracting the UG2 represents the best potential project development option. This excludes the unexplored potential within the current tenement area, as well as future economic potential of extracting the Merensky Reef.

Minxcon considers the UG2 project within Bengwenyama has the best potential of four development scenarios assessed, and as such, recommends completion of the drilling programme (which is fully funded) and more definitive studies be undertaken. The shallow Merensky Reef is recommended for potential future development and may significantly extend the life of the mine in the area now earmarked for mining.

Southern Palladium’s Board welcomes these findings and is continuing with its drilling programme to convert current inferred resources and the exploration target into higher category resources and proceed to the completion of a Pre-Feasibility Study (PFS) as quickly as possible. Drilling re-commenced on 12 January after the contractor returned from their December break.

Commenting on these results, Managing Director Johan Odendaal, said: “We are pleased to report that our internal Scoping Study on the Bengwenyama Platinum Group Metal (PGM) project confirms our original analysis that UG2 has the best development potential, so much so that we firmly believe that a Mining Rights Application should be submitted sooner than first envisaged. The Scoping Study highlighted the key areas of future work focus to advance the Project, especially the decision on Reef selection and sequence of mining. It places the emphasis on the UG2 reef, but it does not exclude mining the Merensky Reef in future. The Board of SPD has taken the decision to initiate the PFS during the current quarter. This is an excellent development for Southern Palladium which further underpins the Company’s value.”

Four project scenarios were studied:

• Scenario 1. Mining the UG2 reef alone.
• Scenario 2. Mining Merensky Reef alone.
• Scenario 3. Mining UG2 and Merensky simultaneously
• Scenario 4. Mining UG2 to completion followed by Merensky.

The results of the Scoping Study have led to the following conclusions:

• The stand-alone UG2 project (Scenario 1), has excellent potential and is therefore recommended to proceed with a prefeasibility study.
• Scenarios 2: Merensky Only may be viable but significantly less attractive than the UG2 Only scenario.
• Scenario 3: UG2 and Merensky combined may be more attractive than the UG2 Only option. This option has significant upside potential in a higher platinum price environment. The study concluded that access infrastructure and capital footprint should be designed such that Merensky could be added at any time in the future.
• Scenario 4: UG2 followed by Merensky is less attractive than UG2 and Merensky combined option.

The company will complete the proposed exploration programme and look to initiate a prefeasibility study during the current quarter.