Anglo American Bokoni Platinum Mine: Upping the ante in the platinum industry

Over the last couple of years South Africa’s mining industry has undergone turmoil. Despite the much-publicised issues of labour disputes, it is still very possible for companies to turn a profit. In August Atlasta Resources Corporation posted it strongest operating quarter and half-year performance in 5 years, with more than a little help from the flagship Bokoni Platinum Mine.

AngloAmericanAtlatsa lifted platinum-group metal (PGM) ounces by 27.5 per cent from 61,897 ounces in the first half of 2012 to 78,944 ounces for the 6 months ended June 30. Similarly, second-quarter production improved by 25.8 per cent to 42,901 ounces in the 3 months ended June, up from the 34,098 ounces produced in the same quarter of last year.

Chief commercial officer Joel Kesler attributed the production upsurge to operational improvements, which included a revised management team at Bokoni, in addition to a new productivity-linked bonus incentive scheme.

Bokoni Platinum Holdings Proprietary Limited is a 51:49 joint venture between Atlatsa Resources Corporation (Atlatsa) and Rustenburg Platinum Mines. The mine is located in the province of Limpopo and situated roughly 80 kilometres south-east of the town of Polokwane. It forms part of the North-eastern Limb of the Bushveld Complex and operates under a mining right covering a total area of 147 square kilometres.

The Bokoni property consists of seven mining licences in all, covering an area of some 15,000 hectares. On May 12, 2008, the DME granted Bokoni conversion of their “old order” mining rights to “new order” mining rights.

At present the mining infrastructure comprises of a vertical shaft, 3 decline shafts (UM2, Middelpunt Hill and Brakfontein) and a concentrator. The older Vertical and UM2 shafts make use of conventional mining methods, while the Brakfontein and Middelpunt Hill shafts, which are in ramp-up phase, use hybrid mining methods.

The Vertical, UM2 and Brakfontein shafts all produce merensky ore, while the Middelpunt Hill Shaft is responsible for UG2 ore. At the moment the operating depth for the current workings is between surface and 500 metres below surface.

The Bokoni mine has a projected resource of 99 million 4E ounces of ore and an ore reserve in the region of 10.1 million 4E ounces, exclusive of ore reserves.

The recently reported successes at the mine can be traced back to a number of changes that took place during 2012. Last year Anglo American Platinum Limited and Atlatsa agreed in principle to the restructuring, recapitalisation and refinancing of Atlatsa and Bokoni Platinum Holdings Proprietary Limited.

The implementation of the transactions is subject to the fulfilment of certain conditions precedent, including regulatory approval and Atlatsa shareholder approval. This transaction will be accounted for once agreements have been signed and these conditions have been fulfilled. Anglo American Platinum Limited and Atlatsa are collaborating on initiatives to optimise Bokoni Platinum Mine and Atlatsa’s finances.

What did not wait however, was a change in management at the site, which helped to introduce improvements in safety, production and cost performance.

Commenting on the changes that took effect last year, Kessler stated: “All key operating and financial metrics at Bokoni are moving in the right direction. Our immediate goals remain repositioning the mine towards the lower end of the PGM industry cost curve and generating improved cash flows from our operations, despite what remains a challenging environment for South African PGM producers.

Additionally, it was reported that the mine’s flexibility was enhanced by the creation of additional stoppable ore reserves and improved geological potholing management and support structures on the upper group 2 (UG2) operations.

It was reported that Atlatsa and Anglo American Platinum (Amplats) agreed on the R3.5 billion restructuring, recapitalisation and refinancing plans for Atlatsa and the Bokoni group of companies in March.

The announcement followed on from a detailed strategic review which suggested that Atlatsa may struggle to repay a R3.5 billion debt to Amplats in the medium term, on account of the prevailing market issues.

The renegotiated transaction, put an agreement in place for Amplats to acquire the eastern section of Atlatsa’s Ga-Phasha and Boikgantsho projects for R1.7 billion, enabling Atlatsa to reduce its existing debt.

Kesler suggested that the absolute and unit cost–cutting measures put in place would remain a key focus at the Bokoni operations, with further reductions in unit costs anticipated from the third quarter onwards as a result of continued efficiency improvements, together with the ramp-up of the Merensky opencast mining operations.

In March the announcement was made that the reorganisation had been concluded.

The agreement saw Amplats subscribe for 125 million new common shares in Atlatsa for an aggregate subscription price of R750 million, the proceeds of which would be used by Atlatsa to further reduce the existing debt owing to Amplats.

On implementation of the transaction, Atlatsa and the Bokoni Group will be well positioned to implement its business strategy on a more conservative, lower-risk and sustainable basis,” commented Amplats CEO Chris Griffith.

In the meantime, mining operations at the Bokoni platinum mine look set to expand to produce 160,000 t/m, up from the current 100 000 t/m, at a total expected capital cost of R1.1 billion to fill the existing concentrator to its capacity.

Kesler stated that the new operating plan included lower-cost, opencast project opportunities, which would allow Bokoni to fill its installed processing capacity in the near term, whilst at the same time ramping up production in a lower-risk and less capital-intensive manner.

Capital expenditure of some R2.3 billion, associated with UG2 expansions at the Bokoni mine, has been deferred, thereby reducing the anticipated debt burden for the company through to 2020,” he commented.

As a result, Bokoni mine will become a predominantly Merensky Reef producer, accounting for 70 per cent of total estimated production,” he concluded.