Southern Palladium is upbeat about the prospects of its flagship Bengwenyama mine after a recent prefeasibility study allowed the group to reduce the project’s capital requirement by nearly 40%.
The group, run by mining bigwig Roger Baxter, said on Thursday that a staged approach to developing Bengwenyama would cut the project’s peak funding requirements by $173m, or 38%, to $279m (R4.96bn).
This significantly improves the mine’s funding attractiveness, opening the door for more investment in the company at a time when palladium prices remain under pressure.
Platinum prices have been on a tear recently, reaching a 10-year high in June as the metal’s shrinking supply gradually worked its way into the market.
Palladium, however, remains suppressed. While new mine supply is also expected to decline this year, growth in recycling is set to lift the world’s supply of the metal overall, while demand for palladium is also expected to fall this year.
Since the start of the year, palladium prices have risen by 25%, which is less than half the gains platinum enjoyed over the same period. Southern Palladium expects an average price of $1,020/oz this year, falling to $975/oz in 2026.
In April, Impala Platinum CEO Nico Muller told a PGM conference in Johannesburg that, unlike platinum, “the concern for palladium and rhodium is that they do not have the applications in fuel cell electric vehicles (EVs) and hydrogen fuel cells”.
Muller’s fears came to a head this week when Impala announced its intention to shut down its palladium mine in Canada in response to low prices, putting 750 jobs on the line.
‘Much-improved outlook’
Impala Canada also cited lower palladium prices when it cut 95 jobs last year.
In a statement on Thursday, Southern Palladium flagged a “much-improved outlook in terms of risk and return to shareholders” for Bengwenyama, with the staged development approach presenting a “highly attractive option for shareholders”.
“Importantly, the staged approach also improves our ability to further de-risk key geological, technical, and operational assumptions,” said Southern Palladium MD Johan Odendaal.
“It also allows us to align project development with infrastructure rollout and community readiness, ensuring a more sustainable and inclusive growth trajectory,” he said.
The company hopes to eliminate a further $138m in funding by trucking its mined ore to an existing third party-owned processing plant and said it had commenced discussions with various third parties to assess potential arrangements.
The encouraging development comes less than a month after the group raised about R100m through the placement of 16-million new fully paid ordinary shares, with one of its largest shareholders investing a further A$4.6m (R53.5m).
The Bengwenyama project is located on the eastern limb of the Bushveld Complex, which contains more than 70% of the world’s known PGM resources.
While pre-feasibility studies are still in progress, Southern Palladium hopes the project will ultimately deliver over 200,000 oz of PGMs in concentrate per year.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.