Australian precious metals firm Delta Gold recently outlined plans to strengthen its already close relationship with fellow Australian miner, BHP Minerals, through a corporate marriage which by 2008 could see Zimbabwe break the current monopoly exercised by South Africa and Russia on the world platinum supply.
A flurry of activity has been stirred up by the recent success of Zimbabwe's flagship mining project, the Hartley platinum mine, a joint venture in which Delta hold a 33.33% stake with the balance being held by BHP. The mine, a little south of Harare, is rapidly building up to production at design capacity after months of delays and cost overruns. Current mill throughput is 50,000 tonnes per month of ore with a maximum 180,000 tonne throughput targeted for year-end. This will give the mine an output of 150,000oz of platinum per annum, 110,000oz of palladium, 11,500oz of rhodium, 23,000oz of gold, 3,200 tonnes of nickel, 2,300 tonnes of copper and 87,000lb of cobalt.
Delta has plans to quadruple Hartley's platinum output within the next decade but needs first to come to reorder its relationship with BHP. While it owns a third of Hartley, it is entitled to only 9.9% of the mine's income due to a financial arrangement which saw BHP come in as Delta's partner in the project in 1990 and finance the feasibility study, making the decision to proceed with the mine's development.
This ultimately cost US$289m with another US$140m swallowed up by working capital requirements. Delta would now like to exercise its option to take 33.3% of the mine's income and is locked in talks with BHP to achieve this. It will have to pay its partner either its share of costs incurred to date, plus interest, or come to an alternative arrangement.
What is being proposed is to merge Delta and BHP's platinum interests in Zimbabwe to form a platinum producer which would be second only to the South African giants Amplats, Impala Platinum and Lonrho in output and which would out-perform these in terms of profit margin.