Southern Palladium Doubles Chrome Recovery, Targets DFS Completion in Late 2026

Metallurgical Breakthrough Doubles Chrome Recovery

Southern Palladium (ASX:SPD) has revealed a significant step-change in the metallurgical performance of its Bengwenyama PGM Project in South Africa, with chromite recoveries soaring to approximately 65% from the previously assumed 30%. This doubling in recovery rates materially enhances the project's revenue potential, given chrome's contribution of around 12% to the Optimised Pre-Feasibility Study (OPFS) base case revenue. The company confirmed that incorporating Dense Media Separation (DMS) into the processing flowsheet will enable early-stage waste rejection and reduce downstream milling and flotation circuit sizes, aligning the design with industry standards for UG2 ore beneficiation.

This breakthrough has prompted Southern Palladium to redesign the plant flowsheet, resulting in a revised timeline for the Definitive Feasibility Study (DFS), now targeted for completion in late Q4 2026. The metallurgical results closely reflect the high-grade nature of the UG2 reef and are expected to improve both PGM feed grades and chrome concentrate yields, potentially reshaping project economics and capital intensity. These findings build on the company's earlier Bengwenyama DFS metallurgical test work update, which first flagged the enhanced chrome recovery and processing optimisation.

Drilling Delays and Mine Design Optimisation

Drilling activity remained a key focus during the March quarter, with six diamond drill rigs operating simultaneously. However, severe weather in the Limpopo region caused a loss of 29 working days, impacting the drilling schedule. Despite this, the company completed 72 drillholes and 45 deflections totaling 10,250 metres in the Phase 2 programme. The drilling results continue to validate the geological model and resource continuity of the UG2 reef, supporting mine design inputs such as geotechnical parameters and structural interpretation.

Mine design optimisation progressed, with a notable decision to steepen the decline gradient from 6° to 9°, reducing total development metres and simplifying the mine layout without significantly increasing costs. The mining strategy now targets reef intersections at shallower depths of 80 to 85 metres to avoid oxidised ore zones and improve early production consistency. Early development planning has commenced with Requests for Quotation issued for box cut and decline development, aiming for contractor appointments by May 2026, pending regulatory approvals.

Strengthening Project Execution and Community Relations

In a move to bolster project execution, Southern Palladium appointed Mark Humphery as Project Manager during the quarter. Humphery brings nearly three decades of global mining experience, including project development and construction, which is expected to enhance the company's capacity as it transitions from study to development phases.

The company also maintained strong community engagement with the Bengwenyama community, which holds a 34% interest in the project. A Community Engagement Day held in late March reinforced social licence and stakeholder support, critical factors given the project's location within the Bushveld Complex and its reliance on local partnerships.

Permitting Status and Financial Position

The Mining Right application remains pending with South Africa's Department of Mineral and Petroleum Resources. The timing for early development execution is contingent on receiving this approval and environmental operating permits under the National Environmental Management Act. Southern Palladium enters the June quarter with a cash balance of approximately A$20.62 million, sufficient to fund DFS completion and early development activities. Exploration and evaluation expenditures for the quarter were A$1.51 million, reflecting ongoing technical work and drilling.

Southern Palladium’s strengthened balance sheet follows a series of capital raises, including a notable A$20 million raise earlier in 2026, which underpins its ability to advance the Bengwenyama Project through to a Final Investment Decision. This financial foundation supports the company’s strategy to capitalise on the improved metallurgical results and refined mine design, positioning it for a potentially lower-cost, higher-grade underground operation within a globally significant PGM hub, the Bushveld Complex.

The company’s progress and challenges illustrate the complexities of advancing a large-scale underground PGM project in a competitive mining jurisdiction. The revised DFS timeline reflects a cautious approach to integrating new metallurgical insights and managing external risks such as weather disruptions. Southern Palladium’s focus on execution capability and community relations will be critical as it moves toward development, while regulatory uncertainties remain a watchpoint.

Investors and market observers should note the interplay between technical advancements and permitting timelines, which will shape the project’s trajectory in the coming quarters. The company’s ability to deliver on its revised DFS schedule and secure necessary approvals will be pivotal for unlocking the full value of the Bengwenyama Project, a key player in the platinum group metals sector.

These developments build on Southern Palladium’s earlier momentum, including the A$20m capital raise and mining progress that fortified its balance sheet and advanced feasibility activities, underscoring a methodical approach to project de-risking and value creation.