The African Rainbow Minerals (ARM) board of directors has approved the Two Rivers Merensky Project which involves mining of the Merensky reef at Two Rivers Mine. Total capital expenditure for the project is expected to be approximately ZAR5.7 billion (100% basis) to be spent over three years. Construction is planned to commence in July 2021 with plant commissioning expected in second quarter 2023.
Studies indicate that over the life of mine, 52 Mt at an average milled feed grade of 2.9 g per tonne (on a 6E ounce basis) will be mined and processed. Annual steady state production of 182,000 6E PGM ounces, 1,600 t nickel, and 1,300 t of copper is expected once the project is fully ramped up. With this project, Two Rivers Mine is forecast to be positioned in the bottom half of the industry cash cost curve. ARM says an update will be provided once commercial features and governance processes for approval of the project are finalised.
Two Rivers is a joint venture between ARM (54%) and Implats (46%), is managed by ARM. The operation is situated on the farm Dwarsrivier on the southern part of the eastern limb of the Bushveld Complex some 35 km south-west of Burgersforst in Mpumalanga, South Africa. Currently only the UG2 reef is mined which is accessed via two decline shaft systems situated three kilometres apart, namely the Main Shaft and the North Shaft. Underground mining operations are fully mechanised and the bord and pillar mining method is employed where stoping widths average around 1.8 m. A mining section consists of eight 12 m rooms, with pillar sizes increasing with depth below surface.
For the six months ended December 31 2020 (H1 F2021) Two Rivers chrome concentrate sales volumes increased by 28% to 123,554 t as a result of higher chrome yield. This, combined with a 5% improvement in the rand chrome price, resulted in the chrome cash operating profit improving 37%. PGM production volumes increased by 9% after flotation challenges experienced in July 2019 were resolved. PGM volumes increased to 150,304 6E PGM ounces.
The Two Rivers Mine grade remains a constraint as various mining cuts are taken in the multi-split reef areas to optimise grade as far as possible. Accelerated sinking is progressing well, with the completion of level 12 in Main Shaft. PGM grades from North Shaft have improved slightly with priority given to processing this ore at the concentrator plant.
Of the ZAR552 million capital spent at Two Rivers Mine for the period, 17% was for mining fleet replacement and refurbishment. Deepening the Main and North Shafts along with electrical and mechanical installations comprised 24% of total capital expenditure. The remaining capital spend was for the plant expansion and tailings storage facility. The plant expansion project, which will add 40,000 t per month milling capacity, was approved in December 2019. After the contractor placed orders for certain long-lead items, site mobilisation began in July 2020 although COVID-19 restrictions have delayed the forecast project completion date by three months to December 2022. The additional mill is now expected to be commissioned in the second quarter of F2022 with full ramp up to 360,000 ounces 6E PGMs per annum now expected to be achieved in the third quarter of F2022. Construction of the new tailings storage facility was suspended due to COVID-19 lockdown regulations. Construction resumed in May 2020 as lockdown restrictions were eased. ARM expects the project to be finalised in the first quarter of F2022. Delay in the commissioning of the new tailings storage facility is not expected to affect operations.
