• First Of Six Adits Underway To Access Underground Areas Of Mine
• Hedging Component Of Project Financing Agreement Now In Place
• Kalplats Bankable Feasibility Study To Be Finalised In Final Quarter 2008-09

Platinum Australia (AIM: PLAA; ASX: PLA) says that the treatment plant at its Smokey Hills platinum mine in South Africa, which produced its first concentrates in late January, is now expected to rapidly ramp up to its 60,000t/month design capacity.

In its interim report to end-December 2008, the company comments that, with more than 100,000t of open pit ore grading 7.5g/t 4E PGM* stockpiled on the run-of-mine pad by the end of December, the treatment plant is expected to reach design capacity in the June quarter.

Concentrates will be transported to the Impala smelter in Rustenburg for onward processing under a life-of-mine offtake agreement with Impala Refining Services.

Development of the first of six adits which will provide access to the underground areas at Smokey Hills had advanced approximately 35m by end-December, and PLA anticipates that the underground mine will achieve full production in early 2010 as ore in the open pit is depleted.

At full capacity Smokey Hills is expected to produce 95,000oz/y 4E PGM, and will be amongst the lowest cost producers in the industry, with estimated cash costs of US$300/oz, net of credits and including smelting and refining charges.

As part of the company’s project financing agreement with Standard Bank Limited, PLA has hedged 26,960oz platinum and 29,1235oz palladium over the five year loan period at average prices of Rand15,411/oz and Rand4,339/oz respectively.

PLA has a 65.75p.c. interest in Smokey Hills but, due to nature of the financing which the company provided to its Black Economic Empowerment partners in relation to their stake in the project, PLA is entitled to around 85p.c. of the project’s cash flow over its seven-year life.

Work continues on the bankable feasibility study (BFS) of PLA’s much larger Kalahari Platinum (Kalplats) project, 300km west of Johannesburg, but a number of development options are now being considered in the light of the currently depressed metal prices. These are aimed at reducing capital and operating costs and establishing the most financially attractive and robust project under prevailing metal prices. This means that finalisation of the BFS will be delayed until the June quarter to allow full consideration of the various development options.

PLA is earning up to a 49p.c. interest in Kalplats from African Rainbow Minerals by completing the BFS on the project.

The company’s third PGM project is Panton in the Kimberley region of Western Australia. This has a JORC-compliant resource of 14.3m tonnes grading 5.2g/t 7E PGM**, including a high-grade component of 10.1m tonnes at 6.1g/t containing 2m ounces of 7E PGM. However, the project has been placed on hold pending a significant improvement in PGM prices.

PLA reports a net loss of A$4.91m for the half-year compared with a loss of A$5.50m in the previous corresponding period. At December 31, the company had cash resources of A$11.54m but it has since raised a further A$14.58m through a placement of shares at 54 cents each in early February.

* Platinum, palladium, rhodium and gold
** Platinum, palladium, rhodium, iridium, osmium, ruthenium and gold