Transcription of The Stock Network Interview with Southern Palladium (ASX:SPD, JSE:SDL), Executive Chairman Roger Baxter
Lel Smits: Southern Palladium has delivered a major uplift in the economics of its Bengwenyama Platinum Group Metals and Chrome project in South Africa. Ahead of appearing at the Rockstars Mining Investor event, I’m joined by Southern Palladium’s Executive Chair, Roger Baxter, to discuss what’s driving the increased valuation and the company’s next steps towards financing and development. Roger, welcome to the Stock Network.
Roger Baxter: Nice to join you, Lel, and appreciate you letting me on the Stock Network.
Lel Smits: Thank you. Pleasure to have you on, and very keen to really discuss your project valuation.
It’s more than doubled to 1.96 billion US dollars. What’s driven this significant improvement? And also, Roger, what does this mean for investors?
Roger Baxter: So, Lel, we have the best undeveloped platinum group metal project in the world, in our view, and we’ve just demonstrated through this revaluation of our PFS, where we basically upgraded our metallurgical numbers and then obviously the financial numbers. And that takes us up to just under 2 billion US, which is about 2.8 billion, 2.9 billion Australian.
So it’s a really chunky 129% increase, mostly driven by higher PGM prices, and secondly, by the fact that we are going to be producing three times as much chrome, which is a very big jump in chrome production, but also better recoveries on platinum. So if you look at the project itself, just one quick word there, we have a very low cost pathway to generate this post-tax NBV. Our peak funding requirement is about 329 million US, and that’s only 17% of the post-tax NBV, which is very cheap for the scale of this world-class project.
Lel Smits: Absolutely. And when it comes to moving towards that financing and development with the definitive feasibility study targeted for early next year, Roger, what are the key milestones ahead? And also, how are you positioning to attract that development funding?
Roger Baxter: Well, we’ve at this particular stage already at a very highly advanced level. We’ve just received our mining right, which obviously took some three years to get, but it’s now in the bank.
So you’ve got to bank the positive developments as they take place. We still have a couple of outstanding water use and waste management licenses, but those are procedural. We are likely to start our decline development and box cut development before DFS.
So that will likely take place sometime in the next couple of months. We’ve got a highly experienced project team on board who are helping us through the owner’s team to drive the development of the project. So as you said, DFS first quarter, we’ll probably have a chrome prepay sometime in the first half next year, probably by the end of the first quarter from a funding perspective.
And then we’re looking at FID sometime in the third quarter. By that stage, we’ll already have reached the ore body. So we’ll actually be sitting at the ore body, which is only 80 meters deep.
So when we start now, we’ll be touching the ore body by the time we hit FID. And those are all part of just de-risking the project. So yes, very exciting developments.
And maybe one last key revaluation metric is that we are also likely to sign an offtake arrangement for one of the major mining companies for smelting and refining. And that’s one of the big important steps in the evolution of a project of this sort of nature. And we’ll start those discussions next month, November, and we should have those concluded probably in the next six months.
Certainly a busy period for Southern Palladium.
Lel Smits: Thank you for joining us from Sydney, Roger, and look forward to hearing more when you appear at the Rockstars Mining Investor event coming up soon this month.
Roger Baxter: Great to see you, Lel. Thank you very much.
Ends