October 17, 2019
On October 17, 2019, Ivanhoe announced that the spot price of palladium has reached another all-time high of US$1,781 an ounce. Recent increases in the price of palladium, nickel, rhodium and gold has resulted in the weighted price of the ‘basket’ of metals contained in the ore at the Platreef palladium-platinum-rhodium-nickel-copper-gold project to rise to a new, multi-year high.
Figure 1. Revenue per tonne of ore at the Platreef Project has risen steadily since 2016 (shown in US dollars)
Figure 2. Revenue per tonne of ore at the Platreef Project has risen steadily since 2016 (shown in South African rand).
Source for figures 1 & 2: Bloomberg. Based on historical weekly commodity prices at the end of each week.
Palladium, nickel and rhodium have been three of the best performing metals in 2019. The platinum-to-palladium ratio at Platreef is approximately 1:1, and Platreef has remarkably high concentrations of nickel and copper. At current prices, palladium and nickel comprise more than 60% of the weighted price of the ‘basket’ of metals in Platreef’s ore. Rhodium and gold also add significant contributions to Platreef’s contained metal valuation.
Platreef’s flat-lying mineralized zones are up to 90 metres thick, at a 1 g/t 3PE+Au cut-off, with platinum-group-metals grades that are as high, or higher, than many of the narrow-veined PGM mines on South Africa’s eastern and western limbs. Platreef also has large quantities of nickel, copper and gold, which are expected to establish Platreef as the lowest-cost PGM producer in Africa.
Based on independent analysis prepared in the 2017 definitive feasibility study (DFS), Platreef is projected to have a cash cost of US$351 per ounce of 3PE+Au, net of nickel and copper by-products, and including sustaining capital costs. The DFS estimated that Platreef’s initial, average annual production rate will be approximately 219,000 ounces of palladium, 214,000 ounces of platinum, 30,000 ounces of gold and 14,000 ounces of rhodium (combined 477,000 ounces of 3PE+Au), plus 21 million pounds of nickel and 13 million pounds of copper.
The mineral resources used as the basis of the DFS were those amenable to underground selective mining. Information on Platreef Project geology and mineralization is contained in the Platreef Project National Instrument (NI) 43-101 Technical Report dated September 4, 2017, filed on SEDAR at www.sedar.com and on the Ivanhoe Mines website at www.ivanhoemines.com.