Southern Palladium Boosts Bengwenyama Resource to 40 Moz with $1.06bn NPV
Southern Palladium has upgraded its Bengwenyama PGM project resource to 40.25 million ounces and delivered a positive prefeasibility study with a post-tax NPV of USD 1.059 billion, marking a pivotal step from exploration to development.
- Total combined UG2 and Merensky Reef Mineral Resource upgraded to 40.25 Moz
- Prefeasibility Study shows post-tax NPV8% of USD 1.059 billion and IRR of 28%
- Mining Right Application submitted, decision expected early Q2 2025
- Low-cost, long-life underground mine with 29-year life from UG2 reef
- Strong cash position of A$3.65 million supports ongoing development and funding efforts
Resource Upgrade and Project Scale
Southern Palladium has reported a significant upgrade to its flagship Bengwenyama Platinum Group Metals (PGM) project, located in South Africa's prolific Bushveld Complex. The combined Mineral Resource for the UG2 and Merensky Reef now stands at 40.25 million ounces (Moz) on a 7E and 4E basis, with Measured and Indicated Resources totaling 10.39 Moz. This upgrade reflects a 17% increase in the Merensky Reef Indicated Resource and a 54% increase in the Inferred Mineral Resource, underscoring the project's growing scale and potential.
The Bengwenyama project is strategically positioned alongside other Tier 1 operations, benefiting from established infrastructure and mining expertise in the region. The resource upgrade consolidates Southern Palladium’s standing as a key player in the PGM sector, particularly given the project's rich palladium and rhodium content.
Positive Prefeasibility Study Validates Development
The recently completed Prefeasibility Study (PFS) confirms the commercial viability of the Bengwenyama project. Key financial metrics include a post-tax, ungeared Net Present Value (NPV) at an 8% discount rate of USD 1.059 billion and an Internal Rate of Return (IRR) of approximately 28%. The study forecasts a 29-year mine life from the UG2 reef alone, with an average annual steady-state production of 400,000 ounces of saleable PGM (6E basis).
Operational costs are positioned at the low end of the global cost curve, with all-in sustaining costs (AISC) estimated at USD 800 per 6E ounce. This cost efficiency is driven by high delivered grades and shallow mining depths, which together support strong EBITDA margins averaging 50% over the life of mine.
Advancing Toward Mine Development
Southern Palladium submitted its Mining Right Application in September 2023, with the Department of Mineral Resources and Energy (DMRE) expected to deliver a decision in early Q2 2025. The company is concurrently progressing environmental impact assessments, waste management licensing, and water use permits, all critical for regulatory compliance and project advancement.
On the corporate front, Roger Baxter has transitioned to the role of Executive Chairman, focusing on investor and government relations, while Managing Director Johan Odendaal oversees technical development. The company maintains a strong cash balance of A$3.65 million, excluding subsidiary funds, supporting ongoing project development, offtake negotiations, and funding discussions.
Strategic Positioning and Next Steps
The Bengwenyama project’s location in the Bushveld Complex, the world’s largest source of PGMs, combined with its robust economics and resource scale, positions Southern Palladium well for the next phase of development. The company plans to commence feasibility studies in early 2025 alongside advancing project funding discussions, including debt financing options facilitated by Blackbird Partners.
Key value drivers for 2025 include the granting of the Mining Right, securing concentrate offtake agreements, and completing a definitive feasibility study (DFS). These milestones will be critical in shaping the project’s path to production and unlocking shareholder value.
Bottom Line?
With a robust resource base and compelling economics, Southern Palladium is poised to transition from explorer to producer, but the pending mining right decision will be a crucial inflection point.
Questions in the middle?
- When exactly will the Department of Mineral Resources and Energy grant the Mining Right, and under what conditions?
- How will Southern Palladium structure its project financing to meet the USD 452 million peak capital requirement?
- What are the potential risks or delays associated with environmental and social governance approvals?
