Platinum Group makes new Bushveld discovery

Platinum Group Metals (PTM-T) has hit high-grade precious metal intercepts in an area north of the previously mapped Bushveld complex in South Africa.

At 643 metres depth the company hit 4 metres grading 1.11 grams platinum per tonne, 1.74 grams palladium per tonne and 0.62 gram gold per tonne for a combined 3.47 grams in the T1 reef, and then at 662 metres depth the company hit 5 metres grading 1.71 grams platinum, 4.22 grams palladium and 1.07 grams gold for 7 grams combined in the T2 reef.

The company describes the hits as “high grade, thick, layered intercepts.” Raymond James analyst Bart Jaworksi issued a brief research note highlighting that other un-assayed drill results suggest the zone is a true layer or reef, with visual observations suggesting a lateral extent. 

Jaworksi compares the recent hits with Eastern Platinum‘s (ELR-T, ELR-L) mining widths and grades. The latter averages 2 metres and a combined grade of 3.31 grams with four elements (4E). While highlighting that Platinum Group’s results are preliminary, Jaworksi notes that its intercepts yield a value of US$1,053 per metre in the T2 reef and US$401 per metre in the T1 reef, compared with US$239 per metre at Eastplats. The T1 reef is in the ultramafic igneous rock harzburgite while the T2 Reef is hosted in the mafic intrusive igneous rock norite, and assay results for rhodium, copper and nickel are outstanding.

The discovery was made on the 137-sq.-km Waterberg project, which sits 70 km north of Anglo Platinum’s Mogalakwena open-pit mine with 55 million oz. of 4E reserves, and 82 km north of the Ivanhoe Nickel and Platinum project.

Platinum Group controls 37% of Waterberg directly and has announced plans to acquire 49.9% of Mnombo, the black empowerment company that holds 26% of the project, giving Platinum Group Metals an additional 12.97% for a total 49.97% of the project. 

The company secured the project by making a prospecting permit application in September 2009, and identified the precious metal prospects early in the year through geochemical and geophysic surveys. Shortly after its initial permit application the company entered a deal with Japan Oil, Gas and Metals National (Jogmec), whereby the Japanese company could earn 37% of the project by spending US$3.2 million before 2013. So far Jogmec has spent $920,000.

Jogmec, in conjunction with Itochu, also made a $280-million investment this year for 10% of Ivanhoe Nickel and Platinum. Platinum Group notes that as many as 20 drill rigs are operating at Ivanhoe’s project. Platinum Group is operating two drill rigs at its Waterberg project with plans to add two more.

The company continues to develop its advanced-stage Project 1 and Project 3 farther south on the complex. As of Aug. 31 the company had spent $23 million on exploration, engineering and development at the two projects, plus $20 million for Project 1’s property, plant and equipment this year. Project 1’s construction is ongoing, with Platinum Group awarding the contract to develop two 1,200-metre declines in July. The winner will take over work in mid-October. The declines are expected in 17 months, while the 55% to 60% completed phase one is on budget and almost 12 weeks behind.

The company is advancing its 4E project during a time that gold prices surpass platinum prices. The price of platinum dropped precipitously in September, hitting a low of US$1,444 per oz. after trading at a 52-week high of US$1,887 per oz. in August. Palladium prices were also hit, falling to a 52-week low of US$549 per oz. in September from a July high of US$840.

Platinum Group’s share price has steadily eroded from a 52-week high of $2.79 in December 2010 to a low of 96¢ in early October.

On the day the latest drill results were released the share price briefly traded as high as $1.55, but closed at $1.37 and has since fallen to $1.05.


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