Ivanhoe says Platreef expansion on track for next year

Ivanhoe Mines (TSX: IVN) says it has achieved three major milestones in the Phase 2 expansion of its Platreef mine in South Africa, placing it on track for a near five-fold increase in production by the end of next year.

The mine, located 270 km northeast of Johannesburg, entered production in November following a decades-long effort by Ivanhoe and its partners to develop what it considers to be one of the world’s largest precious metals assets.

Initially, the operation is expected to produce about 100,000 oz. of platinum group metals (platinum, palladium, rhodium) plus gold while the company completes further upgrades. A Phase 2 expansion is underway to substantially improve its processing capacity and extend the mine life to 35 years.

A Phase 3 expansion is also being envisioned to further increase the throughput to upwards of 10.7 million tonnes per annum (Mpta) and extend the operation by another 29 years.

Phase 2 on track

The latest developments place the Platreef Phase 2 expansion on pace for completion by the end of 2027, increasing the mine’s production to over 450,000 oz. of PGMs and gold, Ivanhoe said in a press release on Thursday.

An on-site ceremony took place this week to celebrate its latest development milestones. These include: the completion of construction of the 4-Mtpa Shaft #3; the breaking of ground for the Phase 2 concentrator site; and the commencement of widening of Shaft #2.

In attendance were Ivanhoe’s management team led by CEO Marna Cloete, and other key stakeholders including representatives from the broad-based black equity empowerment (B-BBEE) group and the JOGMEC-ITOCHU consortium, which own 26% and 10% of the mine, respectively.

According to Ivanhoe, the installation of Shaft #3 would increase the total available hoisting capacity five-fold to approximately 5 Mtpa, while also enabling greater flexibility in hoisting both ore and waste rock to the surface, which is severely constrained through Shaft #1 alone.

The Phase 2 concentrator, which broke ground earlier this month, is set to add 3.3 Mpta of processing following its completion. Earthworks is currently underway, with completion targeted for the end of next year.

Meanwhile, Shaft #2 is expected to be ready to hoist labour and materials by the end of 2028 and hoist ore by the end of 2029, providing support for both the steady-state operations of Phase 2 and the future Phase 3 expansion. Once operational, it will be the largest hoisting shaft in Africa, Ivanhoe said.

Generational, low-cost mine

“The Platreef mine is a once-in-a-generation geological wonder…a discovery so vast that it will be producing precious metals for generations to come,” founder and co-chairman Robert Friedland said in the release.

According to a preliminary economic assessment, completion of all expansion phases would take Platreef’s annual precious metals production (PGMs plus gold) to over 1 million oz., plus approximately 22,000 tonnes of nickel and 13,000 tonnes of copper.

Friedland also pointed to the low-cost nature of the operation.

“The flat-lying orebody is approximately twenty-five times thicker than our industry incumbents, averaging 26 meters of continuous mineralization … thickness means scale, which means mechanization, and mechanization means lower costs and safer operations,” he said.

The mine is projected to be the lowest-cost primary PGM producer globally, with the Phase 2 life-of-mine total cash cost estimated at $599/oz., net of nickel and copper byproduct credits.

Ivanhoe Mines’ stock traded 1% lower at midday, with a market capitalization of C$17.4 billion ($12.7 billion).