Platinum Group Metals Ltd. Announces Positive Independent Definitive Feasibility Study Update for the Waterberg Mine
838 – 1100 Melville Street
Vancouver, BC V6E 4A6
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News Release No. 24-478
September 16, 2024
Platinum Group Metals Ltd. Announces Positive Independent
Definitive Feasibility Study Update for the Waterberg Mine
(Vancouver/Johannesburg) Platinum Group Metals Ltd. (PTM-TSX; PLG-NYSE American)
(“Platinum Group” or the “ Company”) announces positive results from an Independent
Definitive Feasibility Study Update (“2024 DFS”) for the Waterberg Mine (the “Waterberg
Project”) completed by a team of specialists including international engineering firm Stantec
Consulting International Ltd. (“Stantec”) and South African engineering firm DRA Projects
SA (Pty) Ltd . (“DRA”). Engineering oversight and project management for the 2024 DFS
was provided by South African engineering firm Fraser McGill (Pty) Ltd. (“Fraser McGill”).
The 2024 DFS is an update to the Waterberg Project’s original Independent Definitive
Feasibility Study published in September 2019 (“2019 DFS”) for a safe, large-scale, shallow,
decline-accessible, mechanised, platinum (“Pt”), palladium (“Pd”), rhodium (“Rh”) and gold
(“Au”) (collectively “PGM” or “4E”) mine. The 2019 DFS and the 2024 DFS were completed
by the same authors and Qualified Persons (each, a “QP”), within the meaning of National
Instrument 43-101 Standards of Disclosure for Mineral Projects (“NI 43-101”) and Subpart
1300 and Item 601 of the U.S. Securities and Exchange Commission’s Regulation S-K (“S-K
1300”). The 2024 DFS was prepared on behalf of Platinum Group and Waterberg JV
Resources (Pty) Ltd. (“Waterberg JV Co.”), representing owners Platinum Group (37.19%
held directly by Platinum Group Metals (RSA) (Pty) Ltd. (“PTM RSA”) plus 12.97% held
indirectly through PTM RSA’s 49.9% interest in Mnombo Wethu Consultants (Pty) Ltd.
(“Mnombo”)), Mnombo (26.0% direct), Impala Platinum Holdings Ltd. (“Implats”) (14.86%
direct), and HJ Platinum Metals Company Limited (“HJM”) (21.95% direct). HJM is a special
purpose entity established in 2023 to hold and fund t he equity interests of the Japan
Organization for Metals and Energy Security, and Hanwa Co. Ltd. (“Hanwa”).
All the joint venture owners contributed to the 2024 DFS through the technical committee
and the board of directors of Waterberg JV Co. The 2024 DFS builds on the positive results
of the 2019 DFS and incorporates elements of optimization and de-risking studies completed
by Implats and Waterberg JV Co. since 2019.
Highlights:
• Increased Mineral Reserve Estimate: Proven and Probable mineral reserves increased
by 20% to 23.41 million 4E oz (246.2 million tonnes at an average grade of 2.96 4E g/t,
0.08% copper (“Cu”), and 0.17% nickel (“Ni”).
• Extended Life of Mine (“LOM”): LOM increased from 45 years to 54 years with annual
steady state average production in concentrate of 353,208 4E oz and p eak annual
production of 432,950 4E oz.
• Robust Economics: After-tax Net Present Value (“NPV”) at an 8% real discount rate in
U.S. Dollars (“US$” or “USD”) of US$569 million (South African Rand (“ ZAR”) 11.557
billion) and Internal Rate of Return (“IRR”) of 14.2% using average long term consensus
metal prices as of May 2024 (“Consensus Prices”).
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• One of the Lowest Cost PGM Mines in Southern Africa: On site LOM average cash
cost (including base metal by-product credits and smelter discounts as a cost) of US$658
per 4E oz, with an all-in sustaining cost (“AISC”) of US$761 per 4E oz.
• Strong Cash Flow Generation: LOM free after -tax cashflow of US$ 6.50 billion
(ZAR130.59 billion) at Consensus Prices.
• Reasonable Capital: Estimated total project capital of US$946 million (ZAR18.862
billion), including 8.5% for contingencies, and peak capital estimated at US$776 million
(ZAR15.428 billion).
The 2024 DFS updated mineral resource estimate is larger and of higher confidence,
facilitating important mine design improvements versus the 2019 DFS.
Improvements:
• Increased Confidence: The 32 hole infill drill program completed in 2023 increased the
confidence level of resources in shallow mine blocks in the T -Zone and F-Central Zone,
and refined the delineation of subcrop positions, improving the overall deposit model and
the shallow portion of the mine plan.
• Increased Continuity: The 4E economic cut-off grade for feasibility modeling of the F-
Central Zone and F-South Zone was reduced by one half a gram to 2.0 4E g/t, resulting
in a slightly lower reserve grade, but significantly improving continuity in the ore body
for mine scheduling purposes. F-Central reserve tonnage and 4E metal content increased
by 88% and 63% respectively. Reserves for all other mineralized zones were estimated
at a 2.5 4E g/t cut-off grade as in the 2019 DFS.
• Increased Mineral Resources: Measured and Indicated mineral resources increased
by 9.5% to 33.76 million 4E oz at a 2.5 4E g/t (F-Central Zone and F-South Zone at 2.0
4E g/t) cut-off grade (345.03 million tonnes at an average grade of 3.04 4E g/t, 0.09%
Cu and 0.18% Ni). Inferred mineral resources increased by 6.6% to 8.52 million 4E oz
at a 2.5 4E g/t (F-Central Zone and F-South Zone at 2.0 4E g/t) cut-off grade (89.70
million tonnes at an average grade of 2.96 4E g/t, 0.08% Cu, and 0.15% Ni).
• Increased Tonnage Per Vertical Metre: Ore tonnes per vertical metre of development
in the F-Central Zone also increased by approximately 88%, improving the steady state
ore to waste ratio by 31%, from 11.3 in the 2019 DFS to 14.8 in the 2024 DFS. LOM ore
to waste ratio improved by 44%, from 7.8 in the 2019 DFS to 11.3 in the 2024 DFS. The
result is improved capital efficiency, reduced development metres per tonne of ore, and
lower operating costs.
• Reduced Capital Expenditure: The 88% increase in F-Central reserve tonnage and the
improved continuity of the reserve presented the opportunity to increase F -Central
production to 400,000 t onnes per month (“tpm”) and thereby reduce and delay the
capital cost of developing the South Complex T-Zone infrastructure, saving an estimated
US$200 million in up-front capital.
• Simplified Mine Management: Deferral of South Complex mining will simplify the mine
plan, logistics, training requirements, equipment fleet and mining method.
• Simplified Mine Establishment: Sublevel spacing for the upper mining block (100
metres) in the F-Central Zone reduced to 20 metres from the 2019 DFS combination of
20 metres and 40 metres to allow mine crews to safely complete mine establishment and
gain work experience before transitioning to 40 metre sublevel spacing.
• Reduced Water Consumption: The 2024 DFS models dry stack tailings technology,
including a dewatering plant and dry tailings handling system, reducing estimated steady
state make-up water requirements by 36% to approximately 2.85 megalitres per day
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(“Ml/d”) and reducing the tailings impoundment surface footprint by approximately
46.0% to 155 hectares.
• Reduced Risk: Design and scheduling improvements as described above materially
reduce execution risk during mine development, construction, ramp-up and operations.
• Flexibility: Any time after peak capital a twin heading into the T-Zone can be developed
underground from the Central Complex infrastructure to allow the mining of up to
100,000 tpm of T-Zone, with a concurrent reduction from the F-Central Zone down to
300,000 tpm.
Frank R. Hallam, President and CEO of Platinum Group said, “ The 2024 DFS validates the
world-class nature of the Waterberg Project. Engineering teams from Stantec, DRA, and
Fraser McGill have collaborated to achieve an optimized and de-risked mine plan while also
minimizing capital requirements. The primary objectives of the 2024 DFS were to update
and minimize capital and operating costs , and to simplify the construction, ramp up and
operating profile of the Waterberg Mine. I believe these objectives have been achieved. We
look forward to advancing the Waterberg Project for the benefit of our partners and local
communities, as well as all the people of South Africa. The Waterberg Project is planned to
create approximately 2,000 jobs during construction and approximately 1,425 mostly high
skilled jobs once steady state mining is achieved. PGMs, copper and nickel play key roles in
automotive emissions control and energy transition technologies, including that found in
battery electric, plug -in hybrid, gasoline hybrid and hydrogen fuel cell vehicles. The
Waterberg Project is a long life asset capable of profitably producing these critical metals.”
MINE PLAN
At a depth of approximately 140 metres vertical at its shallowest, the Waterberg Project PGM
deposit is accessible with decline tunnels, which are safer and less costly to install and
operate than vertical shafts. At over 100 metres thick in places, the Waterberg Project PGM
deposit is amongst the thickest in Southern Africa. By comparison, the Merensky Reef and
UG2 Reef in South Africa, from which approximately 45% of annual global PGM supply is
produced, are most often mined by manual methods at depths below 500 metres vertical
and at approximately 1.0 to 2.2 metres thick. With mining widths of up to 118 metres in the
F-Zone and 20 metres in the T-Zone, the scale of the Waterberg Project orebodies allows for
safe, high efficiency bulk mining on 20 to 40 meter sublevels with large underground
equipment and conveyors for ore and waste transport.
Many of the larger, successful, bulk underground mines in the world use th e same method
of mining as planned for the Waterberg Project. Production rates in the 2024 DFS have been
benchmarked against global and African operations and are within comparable ranges. Cost
estimates, development rates and production tonnage rates in the 2024 DFS have also been
benchmarked against several of these peer group operations. Specific programs are planned
and budgeted for in the 2024 DFS to ensure that the workforce is well trained and developed
to world class standards.
Maintaining safety and reliability were key mine design criteria. The 2024 DFS mine plan
models steady state production at 4.8 million tonnes of ore per annum and a LOM average
of 353,208 4E oz per year in concentrate, versus a LOM average of 390,796 4E oz per year
in concentrate in the 2019 DFS , when calculated in the same manner . Maximum annual
production is estimated in the 2024 DFS at 432,950 4E oz in concentrate. The mine initially
accesses the F -Central Zone orebody using a single set of twin declin e tunnels (service
decline and conveyor decline) with mining of 400,000 tpm by fully mechanised long hole
stoping methods. The Central -F steady state ore to waste ratio in the 2024 DFS is a
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favourable 14.8 and approximately 47% of waste rock will be placed underground as backfill,
with the balance to be trucked or conveyed to surface. Ore will be mucked to one of
numerous underground rock breakers, from where it will be sized and then transported to
surface by conveyors. Paste backfill will be utilized, allowing for a high mining extraction
ratio as mining can be completed next to backfilled stopes with few internal pillars.
After approximately 26 years of mining, once production in the Central Complex begins to
ramp down, the T-Zone and F-South Zones are scheduled for access by development of twin
drives from the F-Central Zone infrastructure. Mining is to continue utilizing fully mechanised
long hole stoping methods and paste backfill. A s in the 2019 DFS, a separate box cut and
portal to access the North Complex with twin declines is also scheduled later in the mine
plan. Once established , the South Complex (100,000 tpm) and North Complex (300,000
tpm), are scheduled to ramp up to maintain 400,000 tpm production for the balance of the
LOM. The North Complex mine design and grade profile is unchanged from the 2019 DFS.
METALLURGICAL RECOVERY AND SMELTER ASSUMPTIONS
Metallurgical test work has focused on maximizing recovery of platinum-group elements and
base metals while producing a concentrate suitable for further processing and/or sale to a
third party. Following extensive test work at a pre-feasibility and definitive feasibility level,
DRA, an experienced South African engineering, procurement, construction and management
firm, based the plant designs, metallurgical recoveries and costing on a standard South
African flotation MF -2 (Mill –Float–Mill–Float) circuit. Additional metallurgical checks on
mineral types and potential recoveries were completed prior to the 2019 DFS at XPS Expert
Process Solutions’ metallurgical testing service laboratory in Sudbury, Ontario. Further
metallurgical test work was carried out in 2023. The detailed mill design is based on this
aggregate metallurgical test work. Modelled recoveries were completed for the different
recovered elements and zones within the Waterberg Project mining complex over the 54 year
LOM and an average 4E rec overy of 78% is estimated. Cu recoveries are forecast at 8 1%
and Ni recovery is modelled at 4 4%. Net payability after smelter discount is modelled at
83% for Pt and Pd, 80% for Au and Rh (with Rh subject to a minimum grade of 1.0 g/t in
concentrate), 63% for Cu and 70% for Ni, based on an 80 4E g/t target concentrate grade
sold to a South African smelter. The target concentrate grade is similar to concentrate
produced at other Northern Limb PGM mines. Mineral royalties payable to the government
of South Africa, have been calculated and included as a cost per 4E o z for an estimate of
financial returns.
Generally, the optimal smelting of PGMs requires some PGM bearing sulphide concentrate to
enhance recoveries and reduce furnace operating temperatures. The T -Zone and F-Zone at
the Waterberg Project are PGM bearing sulphide deposits capable of producing a sulphide
concentrate at a grade that can be processed by current operating smelters in South Africa,
with almost zero chrome and no significant penalty elements. As the industry in South Africa
moves towards mining a larger proportion of PGMs in UG2 ore , which is chromite rich,
sulphide sources of PGMs in Merensky and Northern Limb ores are becoming more in
demand.
CONCENTRATE OFFTAKE AND PROCESSING
The 2024 DFS assumes PGM smelter payability deductions as described above based on
current market conditions and ongoing concentrate offtake discussions with several South
African smelter/refiners. As a result, smelter payability deductions in the 2024 DF S are
modelled at a higher cost than the flat 15% smelter discount assumption modelled in the
2019 DFS. Implats holds a first right of refusal for smelter offtake from the Waterberg Project
and Hanwa holds the rights to market the final refined metal at market prices.
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Before a construction decision can be undertaken arrangements will be required for
Waterberg Project concentrate offtake or processing. The Company and Waterberg JV Co.
are assessing commercial alternatives for mine development financing and concentrate
offtake. Obtaining reasonable terms for Waterberg Project concentrate offtake from an
existing smelter/refiner in South Africa is considered the preferred option. The Company is
in discussion with several South African smelter operators, including Implats, with a view to
establishing formal concentrate offtake arrangements for the Waterberg Project. Although
discussions continue, to date, binding concentrate offtake terms have not been agreed.
The Company is also assessing the economic feasibility of constructing a smelter and base
metal refinery (“ BMR”) to process Waterberg Project concentrate outside of South Africa.
On December 20, 2023, the Company announced a Cooperation Agreement with Ajlan & Bros
Mining and Metals Co. to study the establishment of a stand-alone PGM smelter and BMR in
Saudi Arabia. See the Company’s news release dated December 20, 2023, for more details.
Before Waterberg Project concentrate could be processed in Saudi Arabia, a long term export
approval to ship unrefined precious metals in concentrate from South Africa would be
required. Platinum Group is working with the Government of South Africa to identify local
beneficiation opportunities and to analyze the economic impact of exporting concentrate.
CAPITAL COSTS AND INFRASTRUCTURE, INCLUDING POWER AND WATER
Capital costs for the Waterberg Project are estimated predominantly in ZAR, with all cost
estimates expressed in ZAR real June 2024 terms. Revised quotations on all major equipment
have been obtained and market related rates have been applied to all measurables.
Contractor mining costs were determined from contractor quotes. Major operating cost
drivers have been updated including market related labour costs.
Peak capital in the 2024 DFS at Consensus Prices is estimated at US$776 million (ZAR15.428
billion), while total capital is estimated at US$ 946 million (ZAR18.862 billion) including an
8.5% allocation for contingencies. Modelled costs in ZAR are converted to US$ at forecast
real exchange rate s from 202 5 to 2027 and then long term for 2028 and later at 20.07
(US$/ZAR). The real escalation of costs (in ZAR terms) is estimated to be offset, over time,
by the future devaluation of the ZAR against the US$.
Regional infrastructure in the 2024 DFS capital cost estimate includes road upgrades to
access the mine area, a power line to connect to the electrical grid and water pipelines to
connect to drilled water resources with associated servitudes.
The bulk electricity supply will comprise a permanent grid -based supply by South African
power utility Eskom Holdings SOC Ltd. (“Eskom”) from its 132 kV electrical network. Eskom
has confirmed the availability of a supply capacity of 140 MVA and primary electrical supply
will be via one 132 kV overhead line approximately 74 km in length, from the existing Eskom
Burotho 400/132 kV Main Transmission Station to a new Eskom 132 kV switching station to
be located on or near the Goedetrouw farm. Mine-owned infrastructure will include a 132/11
kV step-down substation. Estimated maximum electrical demand in the 2024 DFS while
steady state mining in the Central Complex is 72.3 MVA versus 85.9 MVA at steady state in
the 2019 DFS, a 15.8% reduction. The electrical infrastructure is to be completed in terms
of a self -build process with most of the development work to be completed under Eskom
supervision. Environmental impact studies are currently underway to obtain Environmental
Authorisations (“EAs”) for the above -mentioned infrastructure, and to amend portions for
which EAs were previously issued. Negotiations with landowners to acquire servitudes for
overhead lines are in advanced stages.
The 2019 DFS modelled a wet deposited tailings facility and associated infrastructure. These
types of tailings facilities are associated with high water losses due to substantial
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evaporation. They also carry a high risk of potential collapse or liquefaction. Water
consumption estimates in the 2024 DFS are based on a mine-wide water balance and includes
underground water inflows, anticipated water losses, water storage dams, calculated
consumptions and the use of dry stack tailings technology, including a dewatering plant and
dry tailings handling system. Dry stacked tailings handling, and storage methodologies, are
more sustainable and efficient because most of the water in the tai lings is captured in the
dewatering plant, pumped directly back to the concentrator, and re-used within the process.
Dry stacked tailings facilities are also deemed to be inherently safer, as there is no hydraulic
deposition; hence, in the unlikely event of a catastrophic failure, the risk of flooding the
surrounding areas with tailings will be minimal.
The total complex raw water requirement is calculated at a maximum of 5.67 Ml/d. Due to
significant inflows from the mine underground works and smaller gains from surface
stormwater systems, and the use of dry stack tailings technology, the make up water demand
of the mine will be on average 2.85 Ml/d during the mining of the Central Complex, reducing
to 1.15 Ml/d during the mining of the South and North Complexes. This is a significant 36%
reduction from the 2019 DFS steady state make up water requirement of 4.5 Ml/d, is below
net make up water requirements reported by other PGM and diamond mines also located in
the Limpopo Province, and will reduce the long term demand on ground water resources.
Raw water will be sourced from local boreholes through a water collection pipeline network.
Waterberg JV Co. has drill tested, studied, and assessed available water resources together
with community needs in detail. The raw water supply for the mine from boreholes was
determined excluding the positive effect of rainfall. Based on hydrological studies and test
wells it was concluded that the water to be supplied by boreholes and mine infiltration will
be sufficient to support the necessary mining and processing operations over the LOM. The
capture and use of rainfall water will allow for a reduced demand on groundwater during the
rainy season. Waterberg JV Co. has ente red into various groundwater and pipeline surface
lease agreements. Improvement in service delivery of water to the local communities is
included in the 2024 DFS capital cost estimate and plans.
Project Capital Breakdown
Estimated Waterberg Project total capital expenditure and peak capital (or “peak funding”)
are shown below.
Metric ZAR Million US$ Million
Mine 5,039 253
Plant 4,476 224
Backfill & Dewatering Plant 1,835 91
Tailings Storage Facility 263 13
Regional Infrastructure 1,869 95
Project Indirects 1,372 70
Sub-Total1 14,854 746
Owner Fleet Purchases 698 35
Rebuild & Replacement of Equipment 0.4 0
Total CapEx (excluding Capitalized OpEx) 15,553 781
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Metric ZAR Million US$ Million
Capitalized Opex 3,309 165
Total Project CapEx (including Capitalized OpEx) 18,862 946
Net Revenue Receipts (243) (12)
Capital Post Peak Funding (3,191) (158)
Peak Funding (Consensus View) 15,428 776
Note:
1. Contingency of ZAR 1.164 billion (US$63.0 million) included in Sub-Total.
Project capital is defined as all required capital expenditure until the Waterberg Project
achieves 70% of planned steady-state plant production, estimated to be by December 2030.
Post December 2030, the 2024 DFS estimates stay-in-business or sustaining capital for the
LOM at US$1.88 billion (ZAR37.73 billion). The 2024 DFS estimates peak capital at US$776
million (ZAR 15.43 billion) at Consensus Prices . This includes all spend offset by revenue
receipts during the project capital phase.
ENVIRONMENTAL, PERMITTING AND COMMUNITIES
A formal mining right application (“MRA”) for the Waterberg Project, including the Waterberg
Social and Labour Plan, was filed with the South African Department of Mineral and Petroleum
Resources (“ DMR”) in September 2018. The Company held local public participation
meetings on numerous occasions in advance of the MRA. A program of public consultation
as part of the formal MRA and EA application was completed in August 2019. An
Environmental Impact Assessment and Environmental Management Program were filed with
the DMR in August 2019.
An EA and Waste Management License was issued for the Waterberg Project on November
10, 2020. On January 28, 2021, the DMR issued a mining right for the Waterberg Project.
The Waterberg Mining Right was notarially executed on April 13, 2021, was registered at the
Mineral and Petroleum Titles Registration Office on July 6, 2021 and remains active. Another
key authorization required is a Water Use License, which application Waterberg JV Co. is in
the process of finalizing for submission.
The Waterberg Project area is underdeveloped, and the construction of considerable
infrastructure is required. Skills development is a key to achieving large -scale production
with efficient modern international mining methods. The mitigation to this risk is an early
investment in training. Training for a new mechanised mining workforce is an important part
of the 2024 DFS. The 2024 DFS models a significant investment in training, focussed on the
immediate area of the Waterberg Project, working in co -operation with local colleges and
facilities. A significant investment in local education, economic development and business
opportunities is also planned for local communities.
The 2024 DFS includes upgrades to local water, road, and electrical grid infrastructure.
PROJECT TIMELINE
Under the 2024 DFS financial model, construction is deemed to begin in December 2025 and
first production is modelled in September 2029, with ramp-up to steady state by May 2032.
The LOM on current estimated mineral reserve extends to 2081. The deposit remains open
at depth and on strike to the northeast.
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METALS MARKETS AND PRICE DECK ASSUMPTIONS
The Waterberg Project has a considerable ramp up period and a long LOM. Metals markets
and foreign exchange rates are difficult to predict 10 to 20 years in the future. The Waterberg
Project financial performance has been estimated in the 2024 DFS at Consensus Prices as
set out in the table below. These prices were based on a review of long term (2028)
consensus price forecasts assembled by Bloomberg and Select Cap IQ as of May 31, 2024.
At Consensus Prices, the basket price per LOM average 4E oz is estimated at US$1,325.
ZAR based costs in the 2024 DFS are converted to US$ at forecast real exchange rates from
2025 to 2027 and then long term for 2028 and later at 20.07 (US$/ZAR). The exchange rate
assumptions within Consensus Prices are based on Oxford Economics forward projection as
of May 15, 2024.
Price Deck Assumptions
ESTIMATED FINANCIAL RETURNS
At Consensus Prices and an 8% real discount rate, the 2024 DFS estimates an after-tax NPV
for the Waterberg Project of US$569 million (ZAR11.557 billion), and a 14.2% IRR. Peak
capital is estimated at US$ 776 million (ZAR15.428 billion) and the undiscounted payback
period measured from first production is estimated at 5.8 years.
At Consensus Prices, the cash cost per 4E o z is estimated at US$ 658, including a smelter
payability discount on PGMs at an average of approximately 19.2% as a cost, as well as by-
product credits from Cu and Ni sales. Comparing this cash cost to the 4E basket price of
US$1,325 / 4E oz (Consensus Prices) indicates a healthy operating margin of 50%. At Steady
State the Mine is estimated to produce, on a 100% project basis, an average of
approximately US$142 million (ZAR2.84 billion) of after-tax positive cash flow per annum at
Consensus Prices.
Description Commodity Unit of
Measure
Long term
Real
Consensus Prices
Pt USD / oz 1,605
Pd USD / oz 1,062
Au USD / oz 1,812
Rh USD / oz 6,209
Cu USD / lb 4.53
Ni USD / lb 9.73
Exchange Rate 2025 USD/ZAR 18.92
Exchange Rate 2026 USD/ZAR 19.28
Exchange Rate 2027 USD/ZAR 19.67
Exchange Rate 2028 USD/ZAR 20.07
Exchange Rate Long Term USD/ZAR 20.07