Southern Palladium Unveils $857m NPV with Staged Bengwenyama Development

Optimised Prefeasibility Study Highlights

Southern Palladium (ASX – SPD) has released the results of its Optimised Prefeasibility Study (OPFS) for the Bengwenyama Platinum Group Metals (PGM) Project, located in South Africa’s Bushveld Complex. The study proposes a staged development approach that significantly lowers initial capital requirements while maintaining robust project economics. The project’s post-tax net present value (NPV8) is estimated at US$857 million, with an internal rate of return (IRR) of 26.4%, underscoring its potential as a Tier 1 PGM asset.

The staged plan starts with an initial production rate of 100,000 tonnes per annum (ktpa) in Stage 1, ramping up to 200 ktpa in Stage 2 after four years. This approach reduces the peak funding requirement by 38%, from US$452 million in the original Prefeasibility Study to US$279 million, improving the project’s fundability and reducing shareholder dilution risk.

Strategic and Financial Implications

Managing Director Johan Odendaal emphasised the pragmatic nature of the staged development, noting it balances unlocking project value with manageable capital outlays. Stage 1 is designed to be cash generative, enabling traditional market-related debt financing. This reduces reliance on equity and mitigates funding risks, a critical factor given the scale and complexity of PGM projects.

Cash costs for both stages are projected to be within the lowest quartile globally, with Stage 1 costs estimated at US$875 per ounce and Stage 2 costs dropping to US$750 per ounce. These competitive costs, combined with strong PGM market fundamentals, including structural deficits in platinum and palladium, position the project well for long-term profitability.

Operational and Infrastructure Considerations

The Bengwenyama Project benefits from proximity to existing mining infrastructure in Limpopo Province, including processing plants and power supply, which Southern Palladium is exploring for potential shared use. This could further reduce capital expenditure and accelerate development timelines. The company is also investigating off-site processing options for Stage 1 ore, which could eliminate the need for an initial processing plant and significantly lower upfront costs.

Mining will commence via the South Decline, allowing earlier ore access and a faster ramp-up to steady-state production. The project’s orebody access strategy and processing technology have been optimised to improve recovery rates and operational efficiency.

Market Context and Next Steps

Southern Palladium’s OPFS was conducted using a PGM basket price slightly below current market levels, which have recently reached decade highs. This conservative pricing adds a margin of safety to the study’s economic assumptions. The company anticipates near-term catalysts including the issuance of the mining right and completion of a Definitive Feasibility Study (DFS), which will incorporate further drilling and metallurgical test work.

The staged development strategy also allows Southern Palladium to de-risk geological and operational assumptions progressively, aligning project growth with infrastructure roll-out and community readiness. This approach supports sustainable development and stakeholder engagement in the region.