An assessment of the economic viability of mining the UG2 Reef within the no.12 Shaft lease area, Impala Platinum Limited

Abstract

The Impala Platinum Mines are located in the western limb of the Bushveld Complex. The economic platinum mineralization which is currently being mined at Impala Platinum occurs in the Merensky and the Upper Group 2 (UG2) Reefs. These ore bearing horizons are stratigraphically located in the Upper Critical Zone of the Bushveld Complex. Due to the variable stratigraphic distance between the UG2 Chromitite Layer and the Merensky Reef, each of these reef horizons is influenced by different geological structural features. It has been observed on several shafts that there is no direct correlation between geological structures encountered on the Merensky Reef to that seen on the UG2 Reef horizon. This observation was prevalent during the geological structural evaluation of the two reef horizons in the No. 12 Shaft area. The Merensky Reef presented itself geologically more favorable to the UG2 Chromitite Layer in terms of structural complexities. Other positive factors included global supply and demand for the resultant metals and the encouraging metal price. There was nonetheless limited trial mining of the UG2 Reef within the No. 12 Shaft area. However, as a result of unfavorable market conditions at the time and complicated geological features which would result in very low extraction rates, it was decided to temporarily cease all mining operations related to the UG2 Reef horizon in this area. It has been strongly recommended in previous geological evaluation reports that the UG2 Chromitite Layer in the No. 12 Shaft area be appraised in significant detail in order to determine the possibility of economically exploiting this mineralized horizon. Due to the current favorable economic climate for platinum group metals, it was suggested by senior management that the UG2 Chromitite Layer be re – evaluated. This dissertation discusses some of the investigative research which was conducted during this re - assessment. The project work comprised research in the following aspects, exploratory drilling, interpretation of geological structural data, grade estimation, mineral resource estimation, financial and sensitivity analyses and aspects concerning risk management. Throughout the project all the input parameters and resultant calculations related to grade, mineral resource and reserve, financial and sensitivity analyses were based on tentative estimates which reflect the author’s personal opinions and assumptions. It is not absolute data of Impala Platinum and thus does not in any way reflect the views of the company. The UG2 Chromitite Layer in the No. 12 Shaft area was benchmarked against the neighboring shafts in terms of its geological and metallurgical characteristics. It was found that regionally, the UG2 Reef displays very limited variability. The financial assessment based on average market input data and assumptions have revealed positive results with regards to general financial and marketing decisions and strategies. In the risk assessment, the high impact risks generally facing all mining companies were found to be within manageable levels. From the investigative geological research based on general business decision criteria, market averages, estimations and assumptions which are used to broadly evaluate projects in the mining industry, it has been demonstrated that it would be economically viable to mine the UG2 Chromitite Layer in the No. 12 Shaft area of Impala Platinum.