What a PGE Project Needs Before It Gets Built
- Noel Ong
- 57 minutes ago
- 34 min read
SAMSO INSIGHTS · ARE WE LOOKING AT THE NEXT PGE PRODUCER?
What a platinum group element project needs before it gets built, and what Bengwenyama's rock is actually worth.
Southern Palladium has spent four years turning a shallow reef on South Africa's Eastern Limb into a mining right, an ore reserve and a metallurgical result that has changed what the project is worth. Chalice Mining has spent six years and much more money working towards something similar in Western Australia. Terra Metals has a discovery the market likes and no resource behind it yet. This piece asks one question. What does a platinum group element project need before it gets built, and how many of those things does Bengwenyama have?
Samso Insights | Platinum Group Elements | ASX Small Caps | Investor Awareness |
1.00 — WHY I AM WRITING THIS
One post, and a question I could not answer
I came across a post from Bridge Street Capital Partners[R12] about Southern Palladium, and it started me thinking that this would be a good project to work through properly.
I read through the Bridge Street work, and I felt that this is a great start for me to understand the PGE sector. I worked over three decades in the mineral resource industry, and have done Coffee with Samso interviews with companies in the PGE sector. However, I'm still not much more educated in what we should be looking for as investors, or what kind of boxes need to be ticked.
I saw this as a challenge and an opportunity at the same time. To go properly into what Bridge Street have done with Southern Palladium, and try to get an understanding of the sector.
History shows that Bridge Street are probably the most intimate with this project. They were corporate advisers to Southern Palladium, and lead manager on the company's initial public offering and on its subsequent capital raisings. The analyst who writes their research also holds shares in the company, which Bridge Street disclose themselves.
Being that invested in a company's story is a good sign in one sense, because nobody knows the project better. Others will view it as non-independent. Both readings are fair. In Part 2 of this series we look properly at the research Bridge Street has produced.
My search has shown that only two firms publish research on Southern Palladium and both have a commercial relationship with the company. This Samso Insight would give the Samso community an arm's length view on the potential of the project.
What interested me was what makes this company tick. Why is it heading into production when so many others are not? What are the boxes that have to be ticked, and which ones should an investor be looking at in the first place?
Looking around the internet to find examples of PGE stories, I realised that there are not many examples for the retail investing community to look at a platinum group element project closely enough to answer questions. If anyone have looked at a PGE project, for me, the difficulty is in the sheer volume of information a project to understand.
For example, is it 3E? Is 4E better? What about 6E and 7E? And then, what percentage of each of those E's is the one that makes the world go around? Then you start looking at the depth and the length of intersections? What is good and What is spectacular?
As seasoned ionvestors in the mienral resoruce sector, we can "assume" most parts but I think, new players will need the letters to be clekared up now, because they run through every number in this piece.
Fig. 01 sets the four bases side by side. Each one adds metals to the one above it, which is why the same rock reports 8.12 grams per tonne on a 4E basis and 9.78 on a 7E basis.
3E counts platinum, palladium and gold. 4E adds rhodium. 6E adds ruthenium and iridium on top of that. 7E adds osmium as well.
So the same rock reports a bigger number as more metals are counted. Southern Palladium's UG2 resource comes in at 8.12 grams per tonne on a 4E basis and 9.78 grams per tonne on a 7E basis.[R1] Same rock, same drilling, two figures nearly 20 per cent apart, and both correct.
That matters when you put two projects side by side. Chalice's Gonneville is reported on a 3E basis. Bengwenyama is usually reported on 4E or 7E. Comparing one company's 7E number with another's 3E number tells you very little.
The second half of the question, which percentage is doing the work, is the more interesting one. Section 6.00 gets to it. The short version is that on this reef platinum and palladium are close to even, and rhodium is a small number in the ground doing a large amount of the earning.
2.00 — WHERE THE PROJECT IS
Nine kilometres west of Steelpoort, on the red band
The Bengwenyama project is in the Greater Tubatse and Sekhukhune District Municipalities of Limpopo Province, in the northeast of South Africa. It covers two farms, Nooitverwacht 324 KT and Eerstegeluk 327 KT. The Mining Right granted in August 2026 runs over 5,280 hectares of them.[R4]
Steelpoort is about 9 km east. Burgersfort is 20 km northeast. Pretoria is 250 km west-southwest. This is a working mining district with sealed roads, grid power, a water pipeline and a local workforce that has been mining for generations.
Plate 01 places the project on the national map. Plate 02 is more useful, because it shows where Bengwenyama is within the Bushveld Complex.
The Bushveld Complex is the largest layered igneous complex in the world. It formed between 2.06 billion and 2.058 billion years ago, when successive pulses of molten rock were injected into the crust and then cooled slowly, settling out into layers by density in much the way sediment settles in still water. Those layers can be traced for hundreds of kilometres.
It outcrops in three main arcuate limbs, Western, Eastern and Northern. Bengwenyama is on the Eastern Limb.
The layered sequence divides into zones, and Plate 02 colours them. The red band is the Critical Zone, and that is the one that matters. It carries both the Merensky Reef and the UG2 Reef, the two layers that hold most of the world's platinum group metals. The tan Upper Zone and the grey Main Zone above and below it carry no economic platinum.
The project area is on that red band, immediately south of Steelpoort, in a belt that has been mined for platinum and chrome for close to a century.
Modikwa is immediately north, owned jointly by Valterra Platinum and African Rainbow Minerals. Two Rivers is to the south, held by African Rainbow Minerals and Implats, and beyond it are Mototolo and Booysendal. Marula, an Implats operation, is further north.
All of them mine the same reef Southern Palladium is proposing to mine.
3.00 — GROUND THAT HAS BEEN STUDIED BEFORE
A dome named in 1995, and three papers older than the company - historical PGE hints
This ground has been studied before, and the work was not done by the company that owns it now.
In 1995, Roger Scoon of Trojan Exploration and B. Teigler of Rhodes University published a paper in Economic Geology called “A New LG-6 Chromite Reserve at Eerste Geluk in the Boundary Zone between the Central and Southern Sectors of the Eastern Bushveld Complex”.[R9] It reports an exploration programme Trojan ran on the farm between 1990 and 1993.
In that paper, Scoon and Teigler write that structural complications in the Critical zone are attributed to a hitherto unrecognised fold, the Eerste Geluk dome.
That dome is the structure that has removed the reef from part of Bengwenyama. It was identified, named after the farm, and published in a peer-reviewed journal thirty-one years before Southern Palladium's drilling confirmed it was bigger than expected.
Ten years earlier, in 1985, S.B. Gain of the South African Development Trust Corporation published a detailed description of the UG-2 reef on the farm Maandagshoek, about 20 km northwest of Steelpoort, based on 22 boreholes.[R8] Three years before that, in 1982, Christian McLaren of the Council for Mineral Technology and Johan de Villiers of Rand Afrikaans University published a study of the platinum group chemistry and mineralogy of the UG-2 across the whole Bushveld. They used 23 borehole cores and identified more than six thousand individual mineral grains. Their stated purpose was to work out how to recover the metal.[R7]
Earlier again, in 1929, Percy Wagner recorded old platinum workings on Eerste Geluk itself.[R14]
The historic drilling was left out of the resource
The Pre-Feasibility Study[R1] records that Trojan's drilling from 1990 to 1993 was not used in the current Mineral Resource estimate, because the drillhole data was incomplete or unavailable. The published work and the current resource model are separate exercises on the same ground.
4.00 — WHAT A PGE PROJECT NEEDS BEFORE IT GETS BUILT
Eight things a project needs, and where most of them fail
One of the most intriguing things about the platinum group element sector is how hard it is to say what a project actually needs before it can go into production. When we talk about being in production, what we are really talking about is whether something is economical or not.
This is one I have struggled with over the years.
What is the grade?
What is the size?
What is the combination that turns a PGE deposit into an economical PGE deposit?
If there is any investor out there, whether you have mining or mineral exploration experience or not, I would challenge you that this is a hard one to crack. Compare it with the Bushveld Complex, where the mineralisation is measured in hundreds of kilometres of strike. On the ASX I do not think we have seen anything like that yet.
However, time has changed. That is why this project intrigues me, and why I have been trying to get my head around what makes it tick. Hopefully by doing that, we can then make our own assessment of all the up-and-coming ASX companies playing in this sector.
Several ASX companies have been working towards platinum group element production for years. Chalice Mining found Julimar in 2020 and its share price closed as high as A$10.17 in November 2021. Terra Metals reported 52.97 g/t over one metre at its Southwest prospect in January 2026, and its share price rose about 370 per cent over the twelve months to July 2026. Neither company is in production, and neither is near it.
The time it takes for a mineral resource project to get to the mining stage is usually a long one, and is often measured in decades. So it is very normal for investors to see that projects take a long time to drill out and to establish a scoping study and a pre-feasibility study. That normally takes a lot more money and a lot more time than short-term investors have.
PGE projects may take a little bit longer, due to the complexity of the myriad of products, their value, and their market valuation at the time. That brings us back to whether you are talking about 3E, 4E or 7E.
I have never been involved in the downstream end of a PGE project. I'm not sure whether the complexities of a combination of so many minerals make things harder, or whether it is pretty much the same as a one metal project.
Fig. 02 shows both. Chalice ran from about A$0.25 to a closing high of A$10.17 and back to A$1.38. Terra Metals moved on a single drill result. Neither line represents a producing mine.
Below are the eight things a PGE project needs before it becomes a mine. These are not a Samso invention. Each one comes from something that has actually stopped a project, and the evidence for each is named.
One. Grade high enough to justify a small plant
A higher grade does not make the rock richer in any way that matters on its own. What it does is let you move less dirt to get the same amount of metal, and that allows a smaller plant. Section 5.00 goes into why that is where the value actually comes from.
Southern Palladium's Ore Reserve[R1] is 31.72 million tonnes at 6.17 grams per tonne of 6E. Counting only the three metals Chalice counts, platinum, palladium and gold, the same reserve carries 4.74 grams per tonne of 3E.
Chalice's Ore Reserve at Gonneville[R5] is 260 million tonnes at 0.86 grams per tonne of 3E.
On the same basis, then, Bengwenyama's reserve grade is roughly five and a half times Gonneville's. The 3E figure for Southern Palladium is Samso's arithmetic from the company's own published prill split, so that the two can be read against each other rather than on different bases.
That difference is what the plant sizes reflect. Southern Palladium's Optimised Pre-Feasibility Study[R2] proposes 1.2 million tonnes a year in Stage 1 for over 200,000 ounces of platinum group metals. Chalice's Stage 1 treats 5 million tonnes for about 150,000 ounces of 3E.
A smaller plant needs a smaller mill, less power, less water, a smaller tailings facility and fewer people to run it. All of that costs less to build and less to operate.
Two. An orebody that can be mined
Width, depth, continuity and structure decide what can actually be extracted and at what cost. A drill core measures the rock it passes through. What comes out of a stope is a different number, because mining brings waste up with the ore, loses ground to structures and works around things the drilling did not see.
One of the biggest structural damages that can be done to a perfectly designed mining operation is a change in one of those parameters. A slippage in a wall. A blast going wrong. Structural damage in an underground drive that forces a change to the whole operating system. The damage that turns a perfectly good mine into one you should not have touched can happen very fast.
A recent example is Meeka Metals (ASX: MEK), a gold producer at the Murchison Gold Project in Western Australia, which poured first gold in July 2025.[R15]
Production fell from 9,174 ounces in the December 2025 quarter to 6,083 ounces in the March 2026 quarter, with weather among the factors. The June 2026 quarter recovered only to 6,424 ounces, and the company reported that open pit mining continued to be affected by lower-than-expected contractor productivity, which delayed access to high-grade open pit ore.
The response was to change the plan. Meeka is ending open pit mining in July 2026, preserving what is left of the open pit resource in the ground, and moving to underground ore, which it expects to make up 40 per cent of the mill blend in the September quarter.
None of that is a geological problem. The resource is unchanged. What changed was access to the higher-grade material the plan was built around, first because of weather and then because of contractor performance, and the answer was to abandon one mining method a year into production.
The share price more than halved over the same period. The production shortfall was not the only reason, since sentiment towards small-cap gold developers cooled at the same time and about 117.8 million shares were issued to acquire the Mt Holland South deposits. But it shows how quickly the parameters can move on a mine that was designed properly.
Bengwenyama has real difficulties here. Section 7.00 sets them out in full.
Three. Capital intensity a small company can carry
The clearest way to compare any mining project, such as this PGE project, across different countries is capital cost per annual ounce of production. It removes the effect of scale and asks what it costs to buy an ounce a year.
Southern Palladium's Optimised Pre-Feasibility Study puts Stage 1 development capital at US$219 million for over 200,000 ounces a year. That works out at roughly US$1,100 per annual ounce.
Chalice's Pre-Feasibility Study, released on 8 December 2025[R5], puts Stage 1 development capital at A$820 million for about 150,000 ounces of 3E a year, and Stage 2 expansion capital at a further A$840 million. Stage 1 works out at roughly A$5,500 per annual ounce, or about US$3,900 at the exchange rate of 0.713 on 17 August 2026.
Those calculations are Samso's, using each company's own published capital and production figures.
Capital intensity is a property of the orebody. It only changes if the geology or the engineering changes.
One thing has to be said alongside that, or the comparison is unfair. Gonneville also produces nickel, copper and cobalt, and Chalice's all-in sustaining cost is US$370 an ounce of 3E after those by-product credits, falling to US$50 an ounce in the first three years. Southern Palladium's all-in sustaining cost is US$969 an ounce of 6E in Stage 1 and US$821 across both stages.
So Bengwenyama is much cheaper to build per ounce of annual capacity. Gonneville is much cheaper to run per ounce produced. Chalice describes its project as the lowest cost PGM mine in the western world and the lowest cost of any undeveloped project.
These are different kinds of asset, and the tests do not all point the same way.
Four. A conventional flowsheet
New processing technology adds risk to both the schedule and the budget.
Southern Palladium states its own position directly. In the metallurgical results released on 9 July 2026[R3], the company writes that no novel technology is being applied, and that existing technologies are being optimised for the Bengwenyama orebody.
Chalice shows what the alternative can cost. Its Pre-Feasibility Study announcement records an investment of approximately A$15 million into metallurgical test work and flowsheet design. That work generated over 100 samples from 33 dedicated metallurgical drill holes and involved more than 1,400 metallurgical tests, running through multiple phases and flowsheet iterations since testing began for the Scoping Study in 2021.
Four years and A$15 million to settle a flowsheet, on a project that has not yet been built.
Five. A concentrate someone will buy
More projects are stopped by this than by any of the other seven, and it gets talked about the least.
A mine sells concentrate to a smelter on agreed terms. If no smelter wants that concentrate, or the ones that do are already full, the project does not proceed no matter how good the orebody is.
Bridge Street's February 2025 report[R12] records that Ivanplats secured smelting capacity with Northam, and that this appears to have locked Platinum Group Metals' Waterberg project out of the South African market for the time being. Waterberg holds 18.7 million ounces. That has not been enough to secure it a route to market.
Six. A reserve rather than a resource
A Mineral Resource says the metal is in the ground. An Ore Reserve says someone has tested whether it can be extracted at a profit, applying the mining, metallurgical, economic, legal and environmental factors that decide it.
Southern Palladium declared a maiden Probable Ore Reserve of 6.29 million ounces in October 2024. Chalice declared a maiden Ore Reserve of 7.1 million ounces of 3E in December 2025.[R6] Both companies have passed this test.
Terra Metals has not. Its Southwest prospect, which is what the market is pricing, has no resource at all, and the company's own JORC table states that the drill spacing is not currently sufficient to establish continuity.
Seven. Permits
In South Africa, mineral resources are held by the state as custodian. A company does not buy the right to mine. It applies for a grant of that right under the Mineral and Petroleum Resources Development Act.
Southern Palladium applied in September 2023 and was granted its Mining Right on 7 August 2026.[R4] That wait is a big part of why Bengwenyama has stayed undeveloped for so long, even though it is one of the last shallow outcropping sections of the UG2 on the Eastern Limb.
Eight. Being able to raise the money on the day
The eighth item works differently from the other seven, because it is not a property of the project.
Southern Palladium's peak funding requirement is US$279 million. Whether that can be raised depends on the company's market capitalisation and what the market is willing to fund at the time. Both of those move without anything at Bengwenyama changing.
Southern Palladium's own share price shows this. It has ranged from A$0.195 in May 2025 to A$2.71 in February 2026, and closed at A$1.93 on 17 August 2026. On the 132.3 million shares on issue at 1 June 2026, that last figure is a market capitalisation of about A$255 million. The orebody did not change across any of it.
Fig. 03 puts the company's own milestones against that line. The Pre-Feasibility Study, the Optimised Pre-Feasibility Study, the metallurgical results and the grant of the Mining Right are all marked, and none of them accounts for the size of the swings between them.
The first seven items describe the project. The eighth describes market conditions, and those change.
5.00 — THE FIRST TEST, THE GRADE
What Mintek measured in 1982, and what it means here
Southern Palladium reports the UG2 Mineral Resource at 8.12 grams per tonne on a 4E basis and 9.78 grams per tonne on a 7E basis. Section 1.00 sets out what those letters count. The basis matters here, because 8.12 and 9.78 describe the same rock.
What an independent study found
In 1982, Christian McLaren of the Council for Mineral Technology and Johan de Villiers of Rand Afrikaans University sampled the UG-2 across the whole Bushveld Complex. They used 23 borehole cores and their stated purpose was to work out how to recover the metal.[R7]
They divided their results by sector, and Table 01 sets out what they found.
Bengwenyama is in the central sector of the Eastern Limb. On McLaren and de Villiers' sampling, that sector runs at 10.05 parts per million against a Bushveld-wide UG-2 average of 6.93. The company reports 9.78 grams per tonne on a 7E basis.
Two figures from separate work, 44 years apart, landing in the same place.
Table 01 carries three limits. McLaren and de Villiers were counting platinum, palladium, rhodium, ruthenium, iridium and gold, which is close to a 6E basis rather than a 7E basis. Their central eastern number rests on three cores. It is a regional average from 1982 rather than a measurement of this property, and it is independent rather than precise.
Platinum and palladium are close to even here
The same study reports the ratio of platinum to palladium by sector. The central eastern Bushveld runs at 1.21. The western limb runs at 2.45.
Southern Palladium's Ore Reserve carries platinum at 2.34 grams per tonne and palladium at 2.33. A ratio of about 1.00.
So the relative palladium richness that gives the company its name is a property of this part of the Bushveld rather than something particular to this project. On the western limb, platinum runs at roughly two and a half times palladium. On the eastern limb it runs close to even. The exposure a shareholder takes on the eastern limb is therefore differently weighted from the western limb.
And there is more rhodium than in the Merensky Reef
McLaren and de Villiers report rhodium at 9 per cent of the platinum group element and gold total in the UG-2, against 2 to 5 per cent for the Merensky Reef.
Rhodium is the smallest number in the basket and often the largest in the revenue. Evolution Capital's model has rhodium at 22 per cent of net smelter return, level with palladium and behind only platinum.[R13]
The long-term price assumptions in Southern Palladium's Optimised Pre-Feasibility Study of 10 July 2025[R2] put rhodium at US$6,190 an ounce against US$1,200 for platinum and US$1,100 for palladium. Those figures are the study's own long-term real assumptions, sourced by Minxcon to Consensus Economics, and they are stated here as the study's inputs rather than as current market prices.
Southern Palladium's Ore Reserve carries rhodium at 0.48 grams per tonne within a 6E grade of 6.17, about 7.8 per cent. Close to what the 1982 work found across the whole reef.
Grade is king, but not for the reason most people assume
In the world of mining, our favourite phrase is that grade is king. Some people will equate a high grade to a sense of value. In reality, the grade doesn't really make the rock richer. What it does is allow you to move less dirt to get that value. That really boils down to an operating cost issue, and potentially a capital cost one as well. Hence, in my opinion, this is how it gives value to the project.
Operating cost, usually shortened to opex, is what it costs to run a mine day to day. Capital cost, or capex, is what it costs to build it in the first place.
The Optimised Pre-Feasibility Study proposes 1.2 million tonnes a year in Stage 1, rising to 2.4 million tonnes in Stage 2. That produces over 200,000 ounces of platinum group metals a year, rising to over 400,000.
Chalice's Gonneville deposit carries 0.79 grams per tonne of 3E. To produce about 150,000 ounces a year in its Stage 1, Chalice's Pre-Feasibility Study proposes processing 1 million tonnes of oxide and 4 million tonnes of sulphide, rising to 1 million tonnes of oxide and 12 million tonnes of sulphide in Stage 2, and then to 14 million tonnes of sulphide from year 9.
Southern Palladium moves 1.2 million tonnes for 200,000 ounces. Chalice moves 5 million tonnes for 150,000 ounces.
Southern Palladium moves about a quarter of the rock and produces a third more metal. Section 8.00 puts a capital cost on that difference.
6.00 — THE E'S, AND WHICH ONES MAKE THE WORLD GO ROUND
A twelfth of the metal, a third of the money
Section 1.00 set out what the letters count. This section answers the second half of that question, which is which of those metals is actually earning the money.
3E counts platinum, palladium and gold. 4E adds rhodium. 6E adds ruthenium and iridium. 7E adds osmium.
A company chooses which basis to report on, and the choice is not neutral. Reporting on 7E gives a bigger number than reporting on 3E for exactly the same rock. Southern Palladium's UG2 resource is 8.12 grams per tonne on 4E and 9.78 grams per tonne on 7E. Chalice reports Gonneville on 3E. Terra Metals reports the Dante Reefs on 3E.
So the first thing to do with any platinum group element company is check which letters it is using before comparing its grade with anybody else's.
The proportions, which is where it gets interesting
The mix of metals in a deposit is called the prill split. It is simply what share of the total each metal makes up.
Southern Palladium's Optimised Pre-Feasibility Study[R2] sets out what the mine is expected to produce across both stages over its 33-year life. Those figures, and the long-term prices the same study uses, are all that is needed to work out where the money comes from. Table 02 does that arithmetic.
Table 02 divides out to a basket price of US$1,557 for every 6E ounce, which is the figure the study itself states. The arithmetic reconciles, so the inputs are the right ones.
Rhodium is the one that makes the world go round
Rhodium is 7.8 per cent of the ounces and 31.1 per cent of the revenue. It is the single largest earner in the basket, ahead of both platinum and palladium, on less than a twelfth of the metal.
The reason is the price. The study assumes US$6,190 an ounce for rhodium against US$1,200 for platinum and US$1,100 for palladium.
Rhodium is a very small market and a concentrated one. Johnson Matthey[R16], one of the world's largest refiners of these metals, reports that South Africa supplies over 80 per cent of the world's primary rhodium, ruthenium and iridium, and around 70 per cent of its platinum. The scale of the market is such that Johnson Matthey measures its annual balance in tens of thousands of ounces, recording a shortfall of 50,000 ounces in 2025 and forecasting a surplus of 15,000 ounces in 2026.
Johnson Matthey groups platinum, palladium and rhodium together as the three autocatalyst metals, and forecasts rhodium demand falling about 6 per cent in 2026 as petrol car output declines. So rhodium is small, it comes overwhelmingly from one country, and what it is mostly used for is shrinking.
The concentration runs in two directions.
The upside is in section 5.00. McLaren and de Villiers found rhodium at 9 per cent of the UG-2 basket against 2 to 5 per cent for the Merensky Reef.[R7] The UG2 is the rhodium-rich reef, and Bengwenyama is a UG2 project.
The risk is that a third of the revenue depends on the most volatile price in the group. Bridge Street's own assumed rhodium price has moved from US$6,000 an ounce in October 2024 to US$8,300 in July 2026 across four reports in under two years. A price that moves that far that fast can move back.
Ruthenium is the one that flatters the ounce count
Ruthenium is 12.7 per cent of the ounces and 3.7 per cent of the revenue. It is the second most abundant metal in the basket by weight and the second smallest by earnings.
That is not a criticism of the company, which reports everything it has and states its basis clearly. It is a caution about the notation.
Moving from a 3E number to a 6E number adds ruthenium and iridium. At Bengwenyama, 3E is 76.8 per cent of the ounces and 57.4 per cent of the revenue. So the extra metals counted in the 6E figure add about 23 per cent to the ounce count and about 13 per cent to the money.
The 6E number counts metal that earns less per ounce than the metal in the 3E number. A 6E grade and a 3E grade are therefore not comparable figures.
And you do not get the full price for any of it
There is one more step between the metal in the ground and the money in the bank.
A mine sells concentrate, and the smelter pays for a proportion of the metal in it rather than all of it. That proportion is the payability. Southern Palladium's Pre-Feasibility Study[R1] assumes 86 per cent for platinum and palladium. Bridge Street, working from their own market enquiries, use 80 per cent.[R12]
That six percentage point difference applies to the two largest metals by weight in the basket, so it moves any project economics number that uses it.
Payability for the minor platinum group metals is generally lower again, and in some contracts they are not paid for at all.
So what is a good enough mix?
The prill split on its own does not answer that. There is no combination of metals that is good in the abstract. What decides it is whether the basket those metals produce is comfortably more than what it costs to dig them up.
The basket price is the way to boil the whole mix down to one number. It is the revenue from every metal, divided by the ounces, expressed as dollars per ounce. Bengwenyama's is US$1,557 for every 6E ounce on the study's assumptions, and that single figure carries the entire prill split inside it.
Then you need something to measure it against. The Optimised Pre-Feasibility Study gives the breakeven basket price, which is the level the basket has to reach before the project makes nothing. Those figures are the most useful numbers in the whole study and neither research house quotes them. Table 03 sets them out.
On the full two-stage project, and counting the cost of building it, the basket can fall 43 per cent from US$1,557 to US$891 before the project stops making money.
That is what a good enough mix looks like. Not a particular arrangement of platinum, palladium and rhodium, but a basket with room to fall a long way and still work.
The same test applies to any project, whatever letters it reports on. A low-grade deposit with a valuable mix and a high-grade deposit with a cheap one can arrive at the same place.
And the mix still matters, even once you have the basket
Two projects can have the same basket price and different risks inside it, so the split carries information the summary figure does not.
Bengwenyama takes about a third of its revenue from rhodium. Rhodium and palladium both go overwhelmingly into catalytic converters for petrol engines. Platinum has a wider set of uses, including diesel catalysts, jewellery, industrial demand, investment, and a growing role in fuel cells and electrolysers.[R16]
So more than half of the revenue here is exposed to one end market, and the most concentrated exposure of all is the rhodium third.
Every UG2 mine on the Bushveld carries the same shape, and Bengwenyama's rhodium content is higher than the Merensky Reef's, which is an advantage while rhodium holds up. The rhodium price is the single largest variable in the basket.
7.00 — THE SECOND TEST, AN OREBODY THAT CAN BE MINED
Seventy-three centimetres, and everything that interrupts it
Bengwenyama has some real difficulties with the orebody itself. This section sets them out.
The reef is narrow
The UG2 at Bengwenyama averages about 73 centimetres.
Three independent sources agree that a narrow reef is normal here, and Table 04 puts them alongside the company's own figure.
A narrow reef means conventional narrow-reef mining, which is labour-intensive and has been practised on the Bushveld for a century. Southern Palladium plans a 1 metre stoping width, which means mining about 27 centimetres of waste with every 73 centimetres of reef. That dilution is already in the reserve grade. Plate 03 shows the seam and the cut the mine plan proposes to take.
A dome has removed the reef from part of the property
Roger Scoon and B. Teigler named the Eerste Geluk dome in 1995.[R9] It is a structure in the floor rocks beneath the Bushveld Complex that pushed upwards during and after the intrusion, disturbing the layers above it.
The effect runs both ways.
Where the reef survived, the dome lifted it closer to surface, which is part of why Bengwenyama is shallow.
Where it did not survive, the reef is simply gone. Plate 04 is the company's own cross-section through the dome, and it carries the annotation “More than 600 m of Stratigraphy is missing (No MR, UG2, UG1 & LGs)”.
Southern Palladium's drilling found the dome larger than the earlier modelling had assumed, and the affected ground was removed from the resource.
There is a published precedent for what a dome can do
Scoon returned to this subject in 2002, in a study of dome flanks in the northeastern Bushveld.[R10] He reported that uplift and attenuation on the flanks of domes are more extensive and more severe than previously realised, and that marker layers are absent from some drill holes with some missing altogether.
At a property called Dwarsrand, an exploration programme found economically significant grades in Merensky Reef on a dome flank. Exploration was terminated because of poor strike continuity.
Good grades, and the programme stopped for a reason that had nothing to do with grade. That is a documented outcome on this style of ground.
Two accounts of the faulting, and they do not agree
Southern Palladium reports a system of faults and dyke swarms with throws in excess of 200 metres, dividing the UG2 into 26 structural blocks.[R1]
Scoon and Teigler reported something different in 1995. They found the Steelpoort fault, long thought to be the most prominent structural dislocation in the area, to be a comparatively minor feature. They found no evidence for its northward continuation into Eerste Geluk, and a vibroseismic survey on the property demonstrated a lack of major faulting. Faults cutting their drill-proven area had throws of less than 200 metres.
These are different areas of the property and thirty years apart, with different survey coverage, so they are not necessarily in conflict. Both are reported here and neither is resolved.
Potholes take about a fifth of the reef
A pothole is a roughly circular depression in the reef where the layers have slumped or been scoured away. Inside one, the reef may be thinned, deformed or missing. Plate 05 shows the geometry.
Plate 05 is a Merensky Reef example rather than a UG2 one, and the same geometry occurs on both reefs.
Bengwenyama's UG2 is 77 per cent massive facies and 17 per cent pothole facies. Watson and colleagues reported in 2021 that potholes typically occupy 2 to 35 per cent of reef area for shaft blocks across the Bushveld.[R11] Bengwenyama's 17 per cent is within that range.
The Pre-Feasibility Study applies geological losses of 21 per cent to Measured and Indicated material and 26 per cent to Inferred, with potholes accounting for roughly three quarters of those losses. Plate 06 maps where those losses fall across the property.
What a loss factor does not capture is what potholes do to mining. Watson and colleagues report that potholes are generally left as stability pillars rather than mined, that stoping often stops short of the pothole edge, and that ground conditions deteriorate there with increased jointing.
They measured rock strength inside a pothole against the same rock types outside one at the same mine. Norite came in at 50 megapascals inside against 118 outside. Pyroxenite at 45 against 100. Roughly half strength.
They also measured stresses inside a pothole at 250 metres depth and found a major principal stress of 107 megapascals, against about 14 megapascals measured in the same rock type outside a pothole at similar depth. Plate 07 is what those numbers look like underground.
The authors note this intensity of fracturing is not normally seen at 250 metres on the Merensky Reef, because the rock is usually strong enough at that depth to resist it.
Two things about that measurement. The authors state it is the only such measurement they are aware of in a Bushveld pothole, so it is one documented case rather than a general finding. And it was taken on the Merensky Reef rather than the UG2. The depth of 250 metres is within Bengwenyama's early mining range.
Their conclusion is that none of the current theories of how potholes form adequately explains the stresses they measured, and those theories cannot be used to predict how potholes will behave at depth.
Potholes are mined around routinely across the Bushveld, and after decades of work the profession does not agree on how they form.
Depth, and one decision that has been revised
The initial mining area runs from surface to about 250 metres. For a Bushveld PGM project that is shallow, and it is the single largest advantage Bengwenyama has over deeper Eastern Limb operations. Plate 08 shows the depth profile across the reef.
The Pre-Feasibility Study planned to intersect the reef at about 50 metres using a decline at 6 degrees. Later drilling moved that to about 80 to 85 metres, and the decline gradient to 9 degrees.
The company's explanation is that a steeper decline reaches 80 metres for only marginally more cost than a shallower one reaches 50 metres, and that the deeper intersection avoids oxidised ore.
Something turned up in the literature that the company does not mention, and it may work in its favour.
Gain reported in 1985 that the ratio of platinum to platinum plus palladium in the UG-2 ran at 1.77 in the surface environment against 0.99 unoxidised.[R8] He cited published findings that palladium is more mobile than platinum under weathering conditions, so oxidation strips palladium out preferentially and leaves the remaining material relatively richer in platinum.
If that holds at Bengwenyama, then avoiding the oxidised zone is not only about recovery. It would also mean the ore reaching the plant carries the metal split the resource model assumes, rather than a weathered version of it.
Samso raises that as an observation, not a conclusion. Gain measured it at Maandagshoek forty years ago and no equivalent measurement at Bengwenyama has been published. Whether it applies here, and whether it is worth anything if it does, are questions for the company rather than answers Samso can give. It is put here because it was found in the published record and it looks like it could count in the project's favour.
8.00 — THE THIRD TEST, WHAT IT COSTS TO BUILD
What it costs to buy an ounce a year
The clearest way to compare two mining projects in different countries is to work out what each one costs to build for every ounce it will produce in a year. That figure removes the effect of scale. A big project and a small one can be put side by side and the question becomes what it costs to buy an ounce a year of production capacity.
Both companies publish the numbers needed to work it out, so what follows is Samso's arithmetic on their figures rather than anyone's estimate.
What Southern Palladium says it will cost
The Optimised Pre-Feasibility Study of 10 July 2025[R2] puts Stage 1 initial capital at US$219 million. That builds a 1.2 million tonne a year operation producing over 200,000 ounces of platinum group metals a year.
The capital breaks down as US$87 million for the plant, US$39 million for shared infrastructure, US$30 million for the tailings storage facility, US$27 million for direct mining, US$4 million for capitalised development and US$31 million of contingency.
Stage 2 adds a further US$278 million to take throughput to 2.4 million tonnes a year and production to over 400,000 ounces, and the company intends to fund that out of Stage 1 cash flow rather than by raising it. Table 05 puts both projects side by side.
What that works out to per ounce
On Southern Palladium's figures, Stage 1 costs roughly US$1,100 for every ounce of annual production capacity. Across both stages the number is roughly US$1,300.
On Chalice's figures, Stage 1 costs roughly A$5,500 an ounce, which is about US$3,900 at the exchange rate of 0.713 on 17 August 2026. Across the full project it is roughly A$7,000, or about US$5,000.
So Bengwenyama is roughly three and a half times cheaper to build for each ounce a year it will produce.
That difference comes from section 5.00. Southern Palladium is treating 1.2 million tonnes to get 200,000 ounces. Chalice is treating 5 million tonnes to get 150,000. A smaller plant costs less, and the grade is what allows the smaller plant.
Two qualifications apply to that comparison.
The ounces are counted differently. Southern Palladium's are 6E ounces, which count six metals. Chalice's are 3E, which count three. On a like-for-like basis the gap narrows, though it does not close.
And Gonneville produces a great deal more than platinum group metals. Over its modelled life it also produces 160,000 tonnes of nickel, 186,000 tonnes of copper and 15,000 tonnes of cobalt. Loading all of Chalice's capital onto the platinum group ounces alone overstates the cost of those ounces, because a large part of that plant is there to recover the base metals.
And here the comparison turns around
Chalice's all-in sustaining cost is US$370 an ounce of 3E[R5], and US$50 an ounce over the first three years, both net of by-product credits. Southern Palladium's all-in sustaining cost is US$969 an ounce of 6E in Stage 1 and US$821 across both stages.
Chalice describes Gonneville as the lowest cost platinum group metal mine in the western world and the lowest cost of any undeveloped project.
Those two statements can both be true because they measure different things. Nickel, copper and cobalt revenue is subtracted from Chalice's costs before the cost per platinum group ounce is worked out. That is standard practice for a polymetallic mine and it is not a trick. It does mean Chalice's cost depends on nickel, copper and cobalt prices in a way Southern Palladium's does not.
So one project is much cheaper to build and the other is much cheaper to run. Bengwenyama needs less money to get started. Gonneville makes more margin per ounce once it is going, provided its by-product prices hold.
Neither of those is the whole answer, and an investor deciding between them is really deciding which risk they would rather carry. A funding risk at the front, or a base metal price risk for twenty-three years.
Why the build cost is the one that decides things for a small company
Southern Palladium's share price has ranged from A$0.195 to A$2.71 since May 2025, which on the shares now on issue is a market capitalisation somewhere between about A$26 million and about A$359 million. It closed at A$1.93 on 17 August 2026. Chalice reported A$63 million in cash and listed investments with no debt, and says it has enough funding to reach a final investment decision in 2028.
A company of Southern Palladium's size raising the money for a US$219 million first stage is a large task. The same company raising A$820 million would be a different proposition entirely, and the eighth test in section 4.00 is about exactly that.
Capital intensity is a property of the orebody and it does not change. Whether the money can be raised is a property of the market on the day, and Part 2 takes that up as the eighth test.
9.00 — WHAT WE KNOW SO FAR, AND WHAT IS LEFT
Three tests answered, five still open
Part 1 has run three of the eight tests. The three that have been done and the five that have not are different kinds of question.
The three tests the rock has passed
On grade, Bengwenyama measures up well. The company reports 9.78 grams per tonne on a 7E basis. A 1982 study by Mintek, sampling the UG-2 across the whole Bushveld and having nothing to do with this company, found the central eastern sector averaging 10.05 parts per million against a Bushveld-wide UG-2 average of 6.93. Bengwenyama is in that sector.
Three separate measurements of reef width, from 1982, 1985 and 1995, agree with the company that the reef here is narrow, around 60 to 73 centimetres.
On the basket, the mix works. Rhodium earns about a third of the revenue from less than a twelfth of the metal, which is a property of the UG2 and an advantage while rhodium holds its price. More usefully, the study's basket price of US$1,557 for every 6E ounce is 1.75 times the breakeven of US$891 across both stages. The basket can fall 43 per cent before the project stops making money.
On what it costs to build, the numbers are good. Roughly US$1,100 of capital for every ounce of annual production capacity, against roughly US$3,900 for Chalice's Gonneville on the same calculation. The grade is what buys that. Southern Palladium treats 1.2 million tonnes to produce 200,000 ounces where Chalice treats 5 million to produce 150,000.
What the same three tests also showed
The orebody is difficult, and the difficulties are in the rock rather than in anything the company has done.
What Part 1 has not touched
Everything above is about the rock. None of it says whether this becomes a mine.
Five tests remain. Whether the flowsheet is conventional or novel. Whether anyone will buy the concentrate. Whether the resource has been converted into a reserve that stands up. Whether the permits are in hand. And whether a company of this size can raise US$279 million.
On four of those five, Southern Palladium has a good answer and the evidence is public. On one of them the answer is unresolved, and it is the one that stops more projects than any of the others.
Part 2 takes all five, and gives the verdict.
The vocabulary, in plain English
References and sources
Each source below carries an identifier, [R1] to [R16]. The same identifier appears in the body text at the point that source is used, so any claim can be traced back to the document it came from. Every figure in this piece labelled PLATE is reproduced from a published source and its caption credits that source. There are no original Samso illustrations in Part 1. All tables are compiled by Samso from the sources named in each table caption. Where a calculation is Samso's own, the table caption says so and the underlying figures are the companies' own published numbers.
[R1] Minxcon (Pty) Ltd, “Southern Palladium Limited Pre-Feasibility Study, Summary Report”, effective date 23 October 2024. Source of Plates 01, 02, 03, 04, 06 and 08, and of the resource, reserve, geological loss and mine plan figures.
[R2] Southern Palladium Limited, “Optimised Prefeasibility Study, Project NPV of US$857m with Improved Fundability Through Staged Development”, ASX and JSE announcement, 10 July 2025. Source of the staged development figures, capital costs, all-in sustaining costs, breakeven basket prices, life-of-mine production and the price deck.
[R3] Southern Palladium Limited, “DFS metallurgical studies deliver outstanding PGM and Chromite recoveries”, ASX and JSE announcement, 9 July 2026. Source of the statement that no novel technology is being applied.
[R4] Southern Palladium Limited, “Mining Right Granted for Southern Palladium's Bengwenyama World-class PGM-Chrome Project”, ASX and JSE announcement, 10 August 2026.
[R5] Chalice Mining Limited, “Gonneville Palladium-Nickel-Copper Project Pre-Feasibility Study”, ASX announcement, 8 December 2025. Source of all Gonneville capital, production, cost, recovery and metallurgical test work figures.
[R6] Chalice Mining Limited, Gonneville project page, chalicemining.com. Source of the Mineral Resource and Ore Reserve statements quoted.
[R7] McLaren, C.H. and De Villiers, J.P.R. (1982), “The Platinum-Group Chemistry and Mineralogy of the UG-2 Chromitite Layer of the Bushveld Complex”, Economic Geology, volume 77, pages 1348 to 1366.
[R8] Gain, S.B. (1985), “The Geologic Setting of the Platiniferous UG-2 Chromitite Layer on the Farm Maandagshoek, Eastern Bushveld Complex”, Economic Geology, volume 80, pages 925 to 943.
[R9] Scoon, R.N. and Teigler, B. (1995), “A New LG-6 Chromite Reserve at Eerste Geluk in the Boundary Zone between the Central and Southern Sectors of the Eastern Bushveld Complex”, Economic Geology, volume 90, pages 969 to 982.
[R10] Scoon, R.N. (2002), “A New Occurrence of Merensky Reef on the Flanks of the Zaaikloof Dome, Northeastern Bushveld Complex, Relationship between Diapirism and Magma Replenishment”, Economic Geology, volume 97, pages 1037 to 1049.
[R11] Watson, B.P., Hoffmann, D. and Roberts, D.P. (2021), “Investigation of stress in potholes in the Bushveld Complex, a case study”, Journal of the Southern African Institute of Mining and Metallurgy, volume 121, number 1, pages 47 to 56. DOI 10.17159/2411-9717/1152/2021. Source of Plates 05 and 07.
[R12] Bridge Street Capital Partners, research reports on Southern Palladium Limited, February 2024 to August 2026. Bridge Street are corporate advisers to Southern Palladium and lead manager on its initial public offering and capital raisings, and the analyst holds shares in the company.
[R13] Evolution Capital, initiation of coverage on Southern Palladium Limited, 27 January 2026. Evolution Capital disclose that they have received a financial benefit from the company.
[R14] Wagner, P.A. (1929), “The Platinum Deposits and Mines of Southern Africa”, Oliver and Boyd.
[R15] Meeka Metals Limited (ASX: MEK), December 2025, March 2026 and June 2026 quarterly reports, and the Mt Holland South acquisition announcement. Production, cash flow and mine plan figures as reported in those quarterlies. The share price movement is from market data. Figures reached Samso through secondary coverage of the quarterlies and should be confirmed against the originals before publication.
[R16] Johnson Matthey, PGM Market Report, May 2025 and May 2026 editions, matthey.com. Published annually and covering supply, demand and market balance for platinum, palladium, rhodium, ruthenium and iridium. Source of the South African supply shares, the rhodium market balance figures and the autocatalyst demand forecast.
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