Platinum Australia (PLAA)
17/04/2008
New prospect identified at Kalpats Platinum Australia (LSE, PLAA) has announced a likely extension to the platinum mineralisation within its Kalplats project in South Africa, with a brand new exploration target known as Mira, generating encouraging results from an initial drilling programme. The Mira prospect lies immediately east of the existing Sirius deposit, therefore adding to the regional upside at Kalplats. Results from the first drilling programme at Mira have been extremely positive. The proximity of the Mira prospect to the Sirius deposit could also have significant implications in terms of the potential development of the Kalplats Project. The Kalplats Project is located 330km west of Johannesburg. It is one of two platinum projects that the company is developing in South Africa. We believe the project hosts significant potential to increase the size of the company's vast resources of platinum, palladium and gold, as all deposits appear to be open at depth and along strike. Under the Kalplats Joint Venture Agreement, PLA is earning up to a 49% stake in the Kalplats Project from African Rainbow Minerals Platinum (Pty) Ltd (ARMplatinum), by completing a Bankable Feasibility Study including further drilling and providing the right for the project to use the Panton metallurgical process (Panton Process). The company believes that subject to the completion of a Bankable Feasibility Study, the project has the potential for development into a sizeable commercial mining operation. Initially, this would be as an open-cut mine, producing 200,000-300,000 ounces of 3E PGM @ 3.5g/t PGM annually over a life of 8-10 years, followed by a similar-sized underground operation grading 4.5g/t PGM, over more than 10 years. Assuming production at the mid-point of this range at 250,000 ounces of PGMs per year and assuming an average sale price of around US$2,000 per ounce, this would generate an amazing US$500 million in revenue each year. So, combining the two planned operations, annual revenues would be in the vicinity of US$690 million, which is incredible for a company with a current market value of around £230 million. Platinum Australia therefore continues to represent what we regard as a rare and high-quality investment opportunity. It possesses two extremely attractive emerging platinum projects in South Africa. Furthermore, an aggressive development timetable, accompanied by record platinum prices, should continue to generate strong investor interest. 
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