Independent market assessment for project financing

Assessment of global PGM supply, the impact of the restructuring of the South African industry, and the importance of chrome, iridium and ruthenium to mine revenue

SFA (Oxford) undertook an analysis of current and future global trends and influences acting on PGMs along with long-term price forecasts. Key PGM producers and their strategies were identified, as well as PGM projects that are likely to commence producing in the coming years or are currently producing and which are expected to have a significant impact on global PGM supply. PGMs produced as by-products of base metal production were examined, and an assessment was made of the contribution of chrome, iridium and ruthenium to mine revenue and the potential impact on supply. 

Peer group depletion study

Development of a compelling rationale for the investment community and stimulation for a re-rating in a PGM producer's share price based on its costs of production compared with those of the industry

The SFA (Oxford) team carried out a comparative analysis that provided a stark contrast of peer-group depletion rates both physically (ore reserve attrition) and economically (price-induced attrition). This depletion study clearly highlighted the quality of a producer’s assets (including exceptional optionality in production and quality of its reserves) that gives it an edge against acute industry depletion. 

Asset ranking and profit performance

Independent modelling and scenario extrapolation to benchmark and stress test client's mining assets

SFA (Oxford) employed its practical mining and metallurgical knowledge of the Southern African PGM peer group and global players and extrapolated macro and micro scenarios of PGM market and metal price outcomes to augment the client’s strategic assessment of its assets. 

Supply security for end-users

An all-inclusive extrapolation of Southern African PGM production

SFA (Oxford) carried out an assessment of likely scenarios of the size, shape and structure of the Southern African platinum group metals mining industry to 2040 so as to aid a client to evaluate its metal supply requirements, now and in the future.

Joining the dots on the battery metals

A detailed evaluation and investor’s guide on how EV uptake is developing and how individual supply chains for cobalt, lithium and nickel are evolving

The SFA (Oxford) team produced long-term market outlooks for lithium, nickel and cobalt to 2040 for a major mining company, evaluating the deployment of electric vehicles and future metal demand. The team assimilated the breakdown of electric vehicle chemistries by type and regional variability (NMC for EU, LFP for China etc.), supplied a detailed review of the major battery fabricators and calculated battery metal demand by OEM.

Additional supply chain analysis covered the current market status quo, technology evolution, producer reserves and resources, historical supply and demand, demand segments and uses, value chain economics, major producer metal profiles, regional ESG factors, metal substitution risk, price forecasting, and identifying new investment windows of economic opportunity.

Synergies associated with consolidation

Exploration of strategic options for industry consolidation

SFA (Oxford)’s constant monitoring of the industry dynamics, and consequent vigilance of many in the global PGM peer group has led to a unique track record of modelling and assessing strategic opportunities. In this assignment, SFA (Oxford) identified, evaluated and quantified potential synergies associated with a combination of industry consolidation. We developed business cases for consolidation from the perspectives of each party and prioritised target companies.

Augmentation of a PGM producer’s business plan

Verified key shaft production parameters

Alongside the client’s management team, we firmed up and verified key shaft production parameters. This included analysing development rate assumptions, the scrutiny of mine layouts (mechanised versus conventional) referencing geological plans, and the upcoming geological drilling schedule. Assessments of stoping rates and team efficiencies against the shaft construction schedule were also undertaken.

Palladium market fundamentals and project contextualisation

Analysis of the palladium market and mining industry cost curve ranking of a palladium project for a presentation to investors

The SFA (Oxford) team completed an analysis of the palladium market, detailing fundamentals including supply, demand, stock levels, prices, and the peer group cost curve comparisons. This provided the basis of a presentation to select investors.

Indicative valuation of a cobalt deposit in the Democratic Republic of the Congo

An independent articulation of the investment case

A significant mining conglomerate requested SFA to evaluate a cobalt deposit in the DRC and appraise its investment potential. The team assessed the resource potential, mining strategy, processing routes, and developed an NPV model to evaluate the attractiveness of the resource using different market price scenarios and critical project success factors.

PGM industry cost curve analysis

Interactive historical PGM producer cost curve analysis

Provision of historical industry cost curve data analytics back to 2000, creating a level playing field for comparison. The cost curve data pack separately listed operating cash costs and stay-in-business capital. In addition, production/revenue segmented by metal (Pt, Pd, Rh, Au, Cu, Ni) was presented in a manner that allowed cost data manipulation and benchmarking.

Shareholder assurance achieved

A strategic diagnostic of a major PGM producer

Through an in-depth assessment of a PGM producer’s reserves and resources, in-situ assets, benchmarked cost position and business model, SFA (Oxford) worked alongside one of the producer’s major shareholders and its Board, helping it to better understand its competitive position versus that of its peers, and how  investment might be optimised over the coming five to ten years.

Market development assignment: Platinum investment

Enhancing investors' understanding of the fundamentals driving the platinum market

The SFA (Oxford) team provided independent research and analysis to an organisation formed by six leading platinum producers to develop the market for platinum investment. SFA's data and analysis helped to ensure greater transparency of the global platinum market and the delivery of regular data to potential investors.

Benchmarking lithium assets relative to the peer group

Cost optimisation and strategic planning

SFA (Oxford) was commissioned to benchmark a lithium producers’ assets across the global peer group to assess its operational competitiveness and evaluate future strategic value chain opportunities.

Corporate expansion 

An assessment of opportunities to increase a company's PGM output 

SFA (Oxford) undertook an investigation of potential business growth opportunities to meet a client's aggressive PGM production target.

Shaft sequencing

Augmentation of a PGM producer’s business plan

In order to independently assess the timeline for project delivery against this PGM producer’s business plan and delivery schedule, SFA (Oxford) assessed and verified key shaft production parameters (development rates), mine plan in relation to geology (extraction rates), construction schedule (logistics, reef, material handling), mine layout (mechanised versus conventional), stoping rates and team efficiencies, thereby verifying logistical challenges and determining whether any significant bottlenecks prohibit the shaft from reaching its full potential. The shaft’s planned performance was then benchmarked against the wider sector to identify its competitive edges.

Asset divestment

An independent appraisal of market conditions and the commercial outlook for one of South Africa’s major PGM producers

The team compiled credible, long-range PGM pricing inputs for a mine's divestment case. The report articulated potential future outcomes for platinum group metals demand and primary and secondary supplies and economics, as well as the macroeconomic environment impacting on long-term metal prices.

Developing pitch book documentation for lithium clients for contractual purposes

Keeping lithium players informed for commercial success

SFA (Oxford) has aided lithium producers with industry and regional contextualisation, lithium market outlooks and price forecasts to strengthen supply chain negotiations and enhance market messaging.

Asset consolidation achieved

A detailed benchmarking and synergy evaluation for a PGM producer’s joint venture

Working alongside an investment bank, SFA (Oxford) carried out site visits to, and a detailed benchmarking of, a junior’s PGM project against a peer group of South African projects, providing an investment case for the company as part of a proposed project bid. The study critically evaluated the potential synergies and improvements likely to be gained from a joint venture and took into account: geology, reserves and resources, mining, timing, risks and opportunities, and metal price and rand exchange movements.

Project peer group benchmarking

A stand-alone report to complement a bankable feasibility study that benchmarks a project against PGM peers and projects

This was a stand-alone report that provided a detailed examination of the global PGM industry, with an analysis of the supply and demand trends of PGMs. The report gave an independent, economically derived, medium- to long-term view on metal prices: platinum, palladium, rhodium, iridium and ruthenium. It included a comparison of the project with those of industry peers, including greenfield/brownfield projects.

Evaluation of cost-cutting measures and ore mix optimisation

An independent, due-diligence review of a major South African producer’s operations

With a view to leveraging greater value through improved production in line with business planning, SFA (Oxford) worked alongside the PGM producer’s management team, referencing past achievements so as to identify future risk, and challenging its operational planning to ensure maximum value. The producer’s business plan was reviewed in detail, taking into account shaft performances, with analysis and benchmarking of the wider sector also included, ultimately creating detailed mine valuations.

Evaluating nickel assets in Australasia

Unlocking the full potential of nickel assets

SFA (Oxford) assisted a due diligence team in assessing nickel mines and projects across Australasia for strategic investment consideration.

The team critically evaluated the significance of the nickel targets, provided long-term price forecasts for input into financial models, identified potential market premiums, interrogated downstream investment optionality, assessed technical product risks and offtake agreement strategies, and market contextualisation.

Acquisition due diligence

Assessment and financial modelling of a major producer’s operating divisions and projects

We provided our client with an independent evaluation of a PGM producer’s investment options, looking at its reserve base, life-of-mine, regional economics/advantages, ore economics, potential value creation, competitive factors and capital requirements.

Corporate defence

Consulting in support to defend a hostile takeover

SFA (Oxford) worked alongside a major PGM producer and a leading investment bank to build a credible corporate defence case.

An evaluation of contractor and owner-operated mines

Comparative analysis of the performance of contract mining versus owner-operated PGM mines

This assignment compared contract mining with owner-operated models employed on each new PGM project, undertaken by listed mining companies during start-up and then steady-state, since 1997 in South Africa and Zimbabwe. It included a comparative analysis of performance and costs, contrasting the relevant mining methods and consequent workforce models. The analysis provided valuable insight into productivity achievements and production timelines focusing on those contracts used in platinum mining. A review of other sectors was also completed to determine whether the contracts currently in use in the platinum sector are in line with any trends that are being observed in other areas. A strategic recommendation on the approach in terms of the contractor vs. owner-operated for a specific project, that lowered project risk to reach steady-state production was provided.

Evaluating nickel assets on behalf of a client

Supporting growth strategies in new markets

SFA (Oxford) helped to assess nickel targets across the Americas for acquisition.

The team assessed the targets in context with global peer groups, provided long-term price forecasts for financial models, and evaluated downstream processing optionality and offtake agreements.

Mine labour reviews

Cost and efficiency analysis of a mining company's human resources: maximising workforce performance

In assisting a client in the implementation of a progressive shaft improvement schedule, SFA (Oxford) identified and analysed key areas of labour underperformance (health, skills mismatch, prolonged absenteeism, unproductive labour etc.) so as to create additional value through increased productivity, and thus facilitating more cost-effective business planning. We helped to develop value-creating inputs for the strategic planning process to optimise future workforce skills and training going forward.

Future workforce planning

A historical study of the relationship between optimal workforce management and successful mining ramp-ups in South Africa

In order to gauge post-ramp-up success (including schedule, sustainability etc.) in relation to different types of workforce, SFA (Oxford) carried out a comparative analysis of each mine using the relevant mining method and consequent workforce model as variables. The study detailed the mining method and consequent workforce model employed on each new project and a comprehensive reference (contract labour) document was produced.

Investment case

Independent assessment of a PGM project

SFA (Oxford) provided an up-to-date, high-level case for investment in a project against other global projects and operations, to be made available to a potential joint venture partner.

The PGM junior sector: comprehensive competitor analysis

Led to an asset sale

On a mine-by-mine basis, SFA (Oxford) carried out a benchmarking analysis on the projects that populate the PGM junior sector following the 2008 financial crisis, in order to provide the client with a coherent, competitive view of the sector.

Lithium asset due diligence in North America

Mining and processing technical support and asset benchmarking

SFA (Oxford) was tasked to assist the due diligence team of a potential new lithium mine in North America. Along with a site visit, the team analysed all facets of the company and project including its corporate structure, peer-group benchmarking, reviewing the mine plan, processing plant evaluation and offtake partner assessment.

Project valuations for, and augmentation of, a Southern African PGM producer’s investment case

Led to an asset sale

SFA (Oxford) assisted a junior mining company through pre-feasibility and feasibility by way of providing detailed discounted cash flow (DCF) project evaluations, independent metal price forecasts and a PGM market chapter for the company’s feasibility study.

A bankable feasibility study for a junior PGM producer

Led to an asset sale

Through the benchmarking of the cost and profit dynamics of a South African PGM junior project against those of both its local peers and global competitors, and provision of an independent view on the metal price dynamics of platinum-group markets, SFA (Oxford) successfully assisted the company and its banking partners through the final stages of a project feasibility study.

Independent market analysis

An assessment of the threats facing South African chromite producers

SFA (Oxford) led a critical analysis of the state of the PGM and chrome markets in South Africa. The analysis included a review of the primary revenue streams generated by producers of PGMs and UG2 chromite concentrates, an assessment of the probability of capacity reductions and closures among existing producers, and a high-level assessment of the consequent market and commercial impacts on a dual chrome/PGM producer.

Initial public offering cobalt chapter

Cobalt market overview to support an Asian copper producer

SFA (Oxford) provided an independent chapter of concise market commentary on the global cobalt market, detailing cobalt by-product and primary cobalt supply, demand trends, trading conditions and pricing of the metal.

Initial public offering chrome chapter

Initial public offering of a major chrome producer in South Africa

SFA (Oxford) provided an independent chapter of concise market commentary on the global chrome industry, detailing supply and demand trends, trading conditions and pricing of the metal.

Technical studies

Mine and project due diligence on behalf of its clients

SFA (Oxford) and its associates have also conducted evaluations of gold mines and projects globally.

Nickel sulphate in the spotlight

Analysing market dynamics amidst evolving automotive battery demands

As demand for nickel from automotive batteries grows, so will demand for nickel sulphate used to produce battery cathodes. SFA has assessed the market shifts currently underway in the nickel industry as it tries to align itself with rapidly shifting demand profiles and the swiftly expanding supply of semi-refined nickel intermediate products from Indonesia. The study encompasses an in-depth evaluation of how both the supply and demand of nickel sulphate are influenced by the influx of Chinese investment in Indonesian nickel processing and BEV penetration in major automotive markets.

This study complements SFA’s battery metals reporting suite and provides a deeper dive into what is now the section of the nickel market most in the spotlight.