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Aug 2002 - Platinum Production

Platinum production from Australia appears to gradually becoming a reality

And the first platinum producer is……….well, maybe, Platinum Australia.

One year on from the Lonplats’ joint ventures with Helix (HLX) and Platinum Australia (PLA), what should be a simple question, was asked of the representatives of both those companies in the final panel session at Paydirt’s Perth “Australian Platinum Conference” on 21 June 2002 in the form of “when they expected to produce a bar of platinum ?”.

The response to the question from PLA was that if everything goes according to plan, then maybe 2003, but it depended on the metallurgical testwork (through a pilot plant using PLA’s proprietary technology) following mining additional ore from the exploration decline in the current September quarter. For HLX, it was still a case of very “early days”, and apparently nowhere near a BFS (bankable feasibility study).

Part of the reason for the difference between the two orebodies is believed to be their age of formation being approximately 1.8bn years for PLA’s Panton Sill and 2.4bn years for HLX’s Munni Munni. Munni Munni bears an uncanny resemblance to the grade distribution at Hartley platinum (2.4bn years’ old Zimbabwe’s Great Dyke). However, from what we can gather, the grade distribution does vary along Zimbabwe’s Great Dyke and is apparently different at Zimplat’s Ngezi and Aquarius’ Mimosa. South Africa’s Bushveld Merensky mineralization is about 1.8bn years’ old.

Platinum was originally mined as alluvial platinum at Fifield in NSW and possibly at Coronation Hill in the NT (references were made before it became enmeshed in environmental and native title issues). About 4 companies now appear to have various rights over various parts of the Fifield system being Black Range, Golden Cross, Helix and Rimfire, with little progress appearing to occur. There was also a 1.8bn year pge (stands for platinum group element and covers the six minerals that usually all occur together being platinum, palladium, rhodium, ruthenium, iridium and osmium) inlier (apparently South African Merensky-reef style) at Weld Range in WA that received much hype at one stage, but was found to be uneconomically too small.

Apart from the above occurrences in NSW, WA and the NT, that seemed to be about it regarding platinum in Australia. We can recall that New Holland had a pge prospect in Victoria, but dropped the idea when they found that platinum was different to gold and does not simply go through a cip-type plant and produce platinum bars at the other end.

Therein lay the problem and why platinum exploration was never really focused on in Australia, because the barriers to entry to produce platinum were regarded as too high and far too capital intensive. That has changed with the South African companies’ preparedness to take concentrate being produced by third parties and treat the cons to produce the various metals for a toll treating fee. There is also the possibility that further treatment changes could occur if PLA’s proprietary technique passes beyond the pilot plant stage.

That fundamental change to the production barrier to entry has altered the perception of what platinum mineralization there actually is in Australia. It was with interest that we observed at the conference that both Placer Dome and Falconbridge established pge divisions about two years’ ago, and that Falconbridge’s top pge prospect in Australia is the recently floated Apex Minerals’ 50km x 25km Windimurra and 25km x 25km Narndee intrusions (located about half-way between Mt Magnet and Sandstone in WA).

Aside from Windimurra, what is clear is that if you look closer, there are in fact a large number of occurrences of platinum in Australia over a range of different ages. Placer Dome have their farm-in with Western Areas over the Plumridge prospect in WA, and PLA made a presentation at the conference focusing on 6 other Panton-related intrusions and 3 other Stillwater-style pge-bearing intrusions, all within their tenements. Another joint venture we are aware of is Golden Cross’ Broken Hill in NSW, which Sipa is farming into.

PGE’s were used as pathfinders by uranium companies in the 1970’s and 1980’s which resulted in Tanami’s Mordor complex being discovered and minorly drilled for nickel by RIO on its southern edge The Mordor complex is so named because at one time in its life it probably bore a close resemblance to Tolkein’s Mordor, and consists of a 10km sided plain containing a 5km x 3km basin-like pge complex.. The Mordor complex, does not fit into the standard age model being about 1.14bn years’ old, and both it and other pge targets of TAM have yet to be joint-ventured.

Other targets yet to be joint ventured are Pan Australian’s Hawkwood in Queensland which was pegged by John Ferguson (he also pegged HLX’s Munni Munni), using the Greenland 0.25 to 0.5bn-year formation model. Previous work focused on the larger oxide with low grade values (total about 1gpt pge) and ignored the smaller boat-shaped Hawkwood Gabbro hard rock outcrop area that could sit in a square whose sides are about 5km long. There are apparently norites and anorthosites, minor copper and nickel, the usual pge suite, but no chrome bands.

It should be noted that the presence of minor copper and nickel is important as they are the collector minerals during the processing of pges. In a standard South African Merensky orebody, the pges tend to be associated with the chrome bands, and the waste rocks are typically norites and anorthosites.

There was also an occurrence of visible platinum/palladium in Queensland. At Jan Hope’s recent Sydney seminar on 10 July, Glengarry referred to their Westwood layered complex (about 20km west of Mt Morgans in QLD), that contains the Westwood Palladium shaft. The shaft itself is in fact excised by Southern Pacific, but the old timer was chasing platinum/palladium at reputedly 7 g/t in copper mineralization when he sunk his shaft into the property.

In Independence Gold’s Southstar (previously Western Mining) database, there were 31 platinum/palladium anomalies throughout its Australian covered package of which only 1 has been analysed, and IGO’s Randles Find joint venture (located about half-way between Leonora and Leinster in WA) has a massive nickel sulphide core of 5.1% Ni, 0.5% Cu and 5.5g/t pge. By-product pges from nickel production are produced but often do not receive a credit due to the treatment arrangements of Jubilee or Mincor’s nickel production. However, Lionore does expect to receive some credit if its Waterloo nickel prospect (near its 2moz Thunderbox gold orebody in WA) goes into production.

We have mentioned a large number of potential areas of platinum-bearing orebodies in Australia, and undoubtedly there are others, however, as and when platinum is produced by a company in Australia, the rewards can be very high. This can be clearly illustrated in Zimplats’ current market cap of $150m from production building up to 100,000ozpa Pt, Aquarius’ market cap of $660m on 75% of 140,000ozpa Pt increasing to possibly 400,000ozpa Pt, compared to the market caps of Platinum Australia at $35m, Helix at $14m, and Apex’s $12m, etc.

While it is less clear which orebody is likely to become the main platinum-bearing region in Australia, or indeed if Australia hosts a number of platinum-bearing regions, platinum production appears to gradually becoming a reality and could have a long-term future in Australia.

Disclosure and Disclaimer : This article has been written by Keith Goode, the Managing Director of Eagle Research Advisory Pty Ltd, who has a Proper Authority with State One Equities, and with his associates, either has or expects to have interests in most of the stocks in this article, This e-mail address is being protected from spambots. You need JavaScript enabled to view it . The opinions expressed in this article should not be taken as investment advice, but are based on observations by the author. The author does not warrant the accuracy or completeness of any information and is not liable for any loss or damage suffered through any reliance on its contents.

  • Written by: Keith Goode
  • Thursday, 01 August 2002

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