Platinum Group Elements

Platinum Group Elements: PGE Update – January 2001

Only one year ago, palladium (Pd) prices passed platinum (Pt) prices (December 18,1999) with palladium trading at $443 US, and platinum at $441 US per troy Ounce. News Releases from Russia have predicted $1000 US per Ounce prices early in 2001 and by Christmas 2000, palladium had traded as high as $955 US per troy Oz. And by Janruary 11th , 2001 was 1085 – 1135 US/Oz. (1649 – 1725 Cdn) per Oz. Or 55.50 per gram, see www.kitco.com.

Noril'sk, which has produced up to 67% of the worlds supply of palladium, has been limited in its ability to export due to license restrictions and this is a direct result of depleting high grade ores at Noril'sk. New mines would have to be developed to replace previous production from substantially lower grade disseminated sulphide ore assaying 4 grams/tonne as opposed to massive sulphide grades of up to 60 grams/tonne that were previously mined. Increased demand for palladium stems from emission control standards that have been legislated by many countries in recent years, most notably in the US and Japan in 1995. Over half of the palladium consumption (4.5 million in 1998-99 was for autocatalysts. The Japanese auto industry has normally purchased palladium directly from Noril'sk under contract. These contracts can no longer be honored and as a result the automotive industry has had to go to the world market to purchase palladium and this has resulted in rapid rising metal prices.

The six PGE metals (Platinum (Pt), Palladium (Pd), Rhodium (Rh), Iridium (Ir), Osmium (Os) and Ruthenium (Ru)) are chemically similar and have special unique properties that will sustain their high-long term demand. They are impervious to corrosion (won't tarnish), have high conductivity and high melting temperatures and are excellent catalyzing agents. As a result PGE'' are used in the manufacture of up to 20% of the world'' consumer goods. The PGE's are often alloyed with other metals including combinations of PGE.

Over half of the worlds platinum production is used for jewelry (2.5 million ounces in 1998-1999) with an increase in demand from China and Japan. Roughly 65% of the world's platinum production comes from the Bushveld Complex in South Africa where narrow .3-1.0 meter flat lying layers are mined. Grades are high in these layers and as a result, non-mechanized mining methods are used to avoid dilution of the ore grades by the surrounding waste rock. Mining backs (work faces) of 3.5 – 4.0 ft. (1.3 m) are used where miners work on their knees! In these circumstances, to increase PGE production, more working faces have to be developed, it is not a matter of increasing tonnage where surrounding low grades may contribute additional metal. An experimental open pit on a "dunite pipe" structure is

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Anglo Platinum (formerly Amplats), Impala Platinum (Implats), and Lonmin are the 3 leading producers of PGE's in South Africa. The ores at the Merensky Reef and U-2 reef carry Pt, Pd, Rh with credits of gold, osmium and Ru. The other 2 major world suppliers are Noril'sk, Siberia and Sudbury, Ontario where PGE's are produced as by products of nickel-copper production. Still water, Montana and Lac des Iles (North American Palladium) are a distant fourth and fifth and are the only other North American Sole PGE producers.

In order to recover and refine PGE's, the ores are crushed and ground into a fine powder to liberates the sulphide minerals containing the platinum group elements. The sulphide minerals such as chalcopyrite, pyrrhotite, and pentlandite hold PGE + Au either internally or attached to the outside mineral grain are concentrated by froth flotation – a standard process. This concentrate, which represents 1 – 10% of the weight of "ore", is then smelted at a conventional smelter (such as found in Sudbury) and turned into "matte", a blister form of metals that is then further separated by electroplating to recover nickel and copper, leaving the PGE and gold to be recovered separately.

The platinum group and gold elements plus small amounts of silver are extracted with hydrochloric acid and chlorine gas and precipitates are then melted and poured into ingots or grains of metal or fine powder (sponge). The other less soluble PGE come out later, and rhodium, which is the least soluble, comes out last.

Mining Company Operations and the Financial Outlook of each of the major world producers of PGE and nickel have had dramatic increases in profitability this past year, having come from a period of poorer metal prices and an interval where mining cost reduction and processing efficiency has been achieved. Anglo Platinum has had an 81% increase in gross sale revenue for a 153% increase in gross profit. Implats had a 45% increase in gross profit. Lonmin also had a 153% increase in gross sales and 209% increase in gross profit.

Inco has reported record quarterly income in mid 2000 due to higher nickel prices and PGE sales. North American Palladium has refinanced the company to increase production and now report a profit. All of the major producers have their own web sites with a description of their operations and provide financial statements and in some cases cost of operations.

Platinum Group Elements – General

The platinum group elements (PGE) consist of platinum (Pt), palladium (Pd), and rhodium (Ro), which are the three common metals that are often recovered together along with gold to make up the value of ore being mined. In the Bushveld of South Africa these four elements are called 4E, which is the combined value of the four elements. The other PGE members are ruthenium (Ru), osmium (Os), and iridium (Ir), which are less common and are only recovered in specialized circumstances. Russia does make shipments of these three elements, and all three occur at Sudbury.

The platinum group elements are mined and recovered principally in South Africa (60%), Russia (30%), Canada and the United States, with smaller amounts from Finland, Yugoslavia, and Australia. However, the largest amount of platinum comes from South Africa, and the largest amount of palladium (67%) comes from Russia (Siberia). Canada's only sole PGE producing mine is located at Lac des Iles, 80 km northwest of Thunder Bay, Ontario, which in 1998 produced approximately 85,000 oz palladium, 5,000 oz platinum, and 5,000 oz gold, with roughly 4.2 million pounds of nickel, and 3.8 million pounds of copper byproduct. The rest of Canada's PGE production comes from nickel mining operations in Sudbury for a total of 16,000 kg out of a total world PGE production of 281,000 kg (17.4%). The only other sole PGE operation in North America is the Stillwater mine located in Montana, USA, where at present production levels are approximately 111,000 ounces (source: Stillwater Mining Annual Report 1998).

The total world production of platinum in 1998 was 5,400,000 ounces, with 3,680,000 oz from South Africa, 1,300,000 oz from Russia, and 285,000 oz from North America. Roughly half of the production is used in jewellery (2,370,000 oz) and 1,830,000 oz for auto catalysts with only 405,000 ounces being recovered by recycling. Other industrial uses consume 1,240,000 ounces, which includes computer hard disk layers, fuel cell electrodes, surgical instruments, and pharmaceutical drugs for cancer. An increasing amount is being used for investment purposes (315,000 oz) in the form of bars and the American Eagle coin.

Total world production of palladium in 1998 was 8,400,000 oz of which Russia is the largest producer at 5,800,000 oz followed by South Africa at 1,820,000 oz and then North America at 660,000 ounces. The largest use of palladium is for auto catalysts at 4,470,000 oz, or 53.2% of production. Since palladium used to trade at lower prices, it was substituted for platinum in this usage. Approximately 10 grams (0.3 ounces) of palladium are used in each converter with only 175,000 ounces being recovered. Electronics consumes 2,070,000 oz and dental use consumes 1,230,000 ounces.

For the past three years there has been a shortfall of supply versus demand (source: CMP 1999 report). Stockpiles for platinum are low to non-existent and are estimated to be 10 to 50 million ounces for palladium, according to metal analysts. As a result of an increase in demand for auto catalysts due to more stringent auto exhaust emission requirements in various countries, including recent legislation in Japan making auto catalysts mandatory in every car, the search for PGE – PGM is a worthwhile endeavour. Recent increases in price for Pt to $441/oz and $443/oz for Pd, December 17th, 1999, reflects this demand for precious metals. Hence larger, lower grade deposits of PGM are attractive exploration targets. Prices for PGE reached values of US$814/oz Pd and US$650/oz Pt by February, 2000, before settling in the US$550 – 600/oz in May, 2000.

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The Lac des Iles Mine

The Lac des Iles mine located 80 km northwest of Thunder Bay, Ontario, is Canada's only sole PGE producing mine with an annual production in 1998 of 84,228 ounces of palladium (Pd), 5,535 ounces platinum (Pt), 5,079 ounces of gold, approximately 907,677 pounds of copper, and 675,135 pounds nickel. Total production to the end of September 1998 amounted to 319,925 ounces of palladium, 21,435 ounces platinum, 19,620 ounces gold, 4,787,763 lbs. of copper, and 3,835,862 lbs of nickel.

The ore consists of a pyroxenite and brecciated pyroxenite called the western gabbro, adjacent to a gabbro called the eastern gabbro, which is reflected as an airborne magnetic anomaly. This zone is called the Roby zone and is presently being expanded as a result of an 112,000 foot (34,100 metre) drill program completed in the first half of 1999. An ore reserve of 42 million tons has been reported, up from a previously reported figure of 7.08 million tons with a grade of 4.22 gm (Northern Miner, June 11, 1999). A 0.04 ounce cut-off was used in the most recent discovery calculations. These figures were revised in November to 94 million tonnes of 1.68 gram Pd, 0.18 gram Pt, 0.05% nickel, and 0.06% copper. The sulphide content is low with roughly 2.0% sulphides, including pyrrhotite, pyrite, and chalcopyrite. The new ore adjacent to the original Roby pit is hosted in a brecciated gabbro – pyroxenite, and it is suggested that the Pd values are remobilized and related to a hydrothermal event. Sutcliffe and Sweeny (1986) suggest that the redistribution of sulphide mineralization may be related to the emplacement of late pegmatitic gabbro phases and the breccia zones.

Pye, E G (1968), originally described the geology of the Lac des Iles complex when it was first mapped by the Ontario Department of Mines. The original discovery was made by Walter Baker in 1963 to the east of the present Roby zone at a point where fine-grained sulphides of up to 7% occurred in the gabbro – gabbro – norite. Numerous papers on the mineralogy and petrology have been published, namely Guarnera (1967), Dunning (1979), Watkinson and Dunning (1979), Cabri and Laflamme (1979), and Talkington and Watkinson (1984). Sutcliffe and Sweeny (1986) completed detailed mapping of the complex and Macdonald (1985) and (1988) summarized the geology and results on the Roby zone. A comprehensive paper was completed by Sutcliffe (1989).

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