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OPERATIONS
Boikganthso joint venture
Project
The large, near-surface Drenthe PGM deposit within the Platreef horizon was discovered by Anooraq in early 2000, when it commenced its exploration on the northern limb of the Bushveld. Later in 2003, the Company entered into an initial 50/50 Joint Venture Agreement with Potgietersrus Platinum Limited (PPRust), a wholly owned subsidiary of Anglo Platinum. The was formed to explore and develop PGM, gold and nickel mineralization on Drenthe, Witrivier and the northern portion of PPRust's adjacent Overysel property for up to five years. The objective is to develop a large-scale open pit deposit with the potential to utilize nearby milling, smelting and refining facilities.
Exploration & Resources
Drilling in 2004 traced mineralization over six kilometres, expanding the Drenthe deposit and resulting in the discovery of the Overysel North Deposit. The mineral resources as outlined to September 2004 are tabulated below.
BOIKGANTSHO JOINT VENTURE MINERAL RESOURCES
at a $20GMV/tonne1 cut-off
| Deposit | Category | Tonnes |
3PGM (g/t) |
Pt (g/t) |
Pd (g/t) |
Au (g/t) |
Ni (%) | Cu (%) | Contained Ounces 3PGM |
|---|---|---|---|---|---|---|---|---|---|
| Drenthe | Indicated | 132,239,500 | 1.25 | 0.53 | 0.62 | 0.09 | 0.14 | 0.09 | 5,309,000 |
| Inferred | 88,640,000 | 1.16 | 0.49 | 0.58 | 0.09 | 0.15 | 0.09 | 3,315,000 | |
| Overysel North | Indicated | 44,421,500 | 1.64 | 0.67 | 0.87 | 0.10 | 0.10 | 0.06 | 2,340,000 |
| Inferred | 15,713,500 | 1.63 | 0.65 | 0.88 | 0.10 | 0.11 | 0.06 | 809,000 | |
| Total | Indicated | 176,661,000 | 1.35 | 0.57 | 0.69 | 0.09 | 0.13 | 0.08 | 7,649,000 |
| Inferred | 104,084,000 | 1.23 | 0.52 | 0.63 | 0.09 | 0.14 | 0.09 | 4,124,000 |
1Nov 2004 estimate by Qualified Person G.J. van der Heever, Pr.Sci.Nat. Gross Metal Value (GMV) is sum of Pt, Pd, Au, Cu and Ni grades multiplied by the following metal prices: Pt - US$650/oz; Pd - US$250/oz; Au - US$375/oz; Ni - US$4/lb; Cu - US$1/lb.
Note: By prescribed definition, “Mineral Resources” do not have demonstrated economic viability.
Project Development
A Preliminary Assessment 2 completed in March 2005 indicated favourable financial results for a 32-year mine plan with an estimated in-pit resource of 160 million tonnes grading 1.05 g/t 3PGM (0.44 g/t Pt, 0.53 g/t Pd, 0.08 g/t Au), 0.12% Ni and 0.08% Cu at a cut-off grade of US$10.50GMV/t. The study was based on a conventional open pit mining and milling operation, using South African Rand and US dollar currencies, with a ZAR:US$ exchange ratio of 7:1. At long term metal prices of US$650/oz for platinum, US$250/oz for palladium, US$375/oz for gold, US$4.00/lb for nickel and US$1.00/lb for copper used for the base case, the pre-tax and pre-royalty economic model forecasts the net present value of the project at a 5% discount rate of US$300.5 million and at 10% discount is US$138.8 million with an internal rate of return of 25%. The estimated capital cost is US$152.8 million with a payback of 3¼ years.
The Preliminary Assessment is preliminary in nature and is in part based, on inferred resources that are considered too speculative geologically to have the economic considerations applied that would enable them to be categorized as mineral reserves, and there is no certainty that the economic results from the Preliminary Assessment will be realized.
Over 24,000 m of extensive drilling was done in 2005, to upgrade a substantial portion of the resources of the Drenthe deposit to a measured category in preparation for a feasibility study.
2March 2005 Preliminary Assessment by Qualified Persons T. Tulp, AusIMM, D. Stone, P.Eng., D. Reeves, AusIMM and G.J. van der Heever, Pr.Sci.Nat, based on an in-pit resource at a US$10.50 GMV/t cut-off.
