A preliminary feasibility study is under way at TGME to include both Rietfontein and Beta Mines. As with any preliminary study, there are both upside and downside risks as the mine advances towards the completion of a definitive feasibility study and a final investment decision early in 2018.
Being underground operations, risk relating to ultimate reserve scale and head grade remains high as inferred resource status can be high risk. For underground mines, a higher degree of risk relates to mine scheduling/dilution. The projects are fully permitted so the main risks to the development timeline will be the completion of drilling and engineering work combined with project funding.
The aim is to finalise the PFS by 2H17 and then the DFS by 1Q18 before commencement of construction. The first ore is expected to be processed in 4Q18, with commercial scale production in 2019.
The legal mining permit issued in 2006 allows for the mining of Rietfontein and specifically by a mining right (358MR) registered with the DMR. The mining permit is valid until 2028 with options to extend. This right allows for the construction of the surface infrastructure, rehabilitation of the adits, access to the underground workings, disposal of waste rock on the surface, and mining of ore.
Power lines suitable for providing the necessary power for infrastructure and mining are nearby and follow the main bitumen road that allows direct access to the site. The right also allows for the transport of ore along this road to Pilgrims Rest, where Stonewall’s TGME metallurgical processing facility is some 41km from Rietfontein Mine.
The project also has a water user licence, which is valid for the duration of the project. The mining right includes phase two developments in the southern area of Rietfontein, where additional mining infrastructure is planned on surface.
Stonewall owns 76% of the TGME project, with 24% held by the Black Empowerment Party (BEE). The effective economic interest (on a discounted cash flow basis) may be higher and depends on loan rates, funding, tax losses and other factors (as the first cash flow is used to pay back loans and expenditure by Stonewall).
In this case, the BEE group consists of several different parties, all of which have been with the company since inception.