Optimisation of mining cut at Zimbabwe platinum mines through economic evaluation

Abstract

Zimbabwe Platinum Mines(Zimplats) extracts Platinum Group Metals(platinum, palladium, rhodium, gold, iridium, ruthenium and osmium), and base metals (nickel, copper and cobalt) from the Great Dyke of Zimbabwe. Historically, the price of platinum has been higher than that of palladium until, 2017 when the palladium price overtook the platinum price. Recent trends from 2017 to 2020 have revealed that the annual revenue for Zimplats from palladium now exceeds revenue from platinum due to a higher palladium price, which is likely to persist in the short to medium term. The current 2.5 m mining cut at Zimplats was determined with an aim of maximising platinum production because platinum has been the biggest revenue contributor for Zimplats based on the volumes produced and a high platinum price. However, the change in platinum and palladium prices motivated the need to optimise the mining cut at Zimplats mine to maximise palladium extraction. This research evaluated several possible mining cut scenarios within the mineralised orebody profile to maximise palladium extraction, revenue and subsequently, the Net Present Value. The study was done on Ngwarati Mine one of Zimplats’ operations. The current mining cut was used as the base case, and four other possible mining cut scenarios namely 2.25 m, 2.75 m, 3.00 m and 3.25 m were evaluated in the research. This was achieved by simulating various positions of the mining cut across the reef profile and carrying out an economic evaluation to get the Net Present Value. The study found that by varying the mining cut according to the prevailing and projected prices, Zimplats could increase revenue. The research found that a 2.75 m mining cut is the optimal cut sizefor Ngwarati Mine, based on the current economic assumptions. The optimal mining cut had the highest NPV of $271.4 million, giving a $20.2 million positive differential cash flow against the base case option. The research findings can be applied on Zimplats’ other mines. The success and implementation of the research findings will assist in value creation and thus improve shareholder value. A sensitivity analysis done found that the NPV is most sensitivity to changes in 6E grade, followed by palladium price and lastly operating cost. Therefore, it is recommended that the company should manage these factors to ensure sustainable value creation.