Canadian mine builder goes platinum in South Africa
Vancouver engineer foresees September start-up for $514M project
Mining entrepreneur Mike Jones has scored his biggest wins by being a trend follower, not a crowd follower.
The trends he follows are geological extensions of existing mining districts and uncovering them requires going against conventional wisdom, beyond existing models.
As the chief executive of Platinum Group Metals put it during a recent interview at the company’s Vancouver head office, “all of my mines have been discovered with a ruler.”
Jones, a geological engineer, staked his first claims as a thirdyear University of Toronto student. Since then, he has been involved in six mine discoveries and co-founded companies including West Timmins Mining and MAG Silver.
“Both of those companies had great geology and great camps, right on trend with some of the best-grade mines in the world,” he said. “The extension of that ruler line became those discoveries.”
Jones is now building his largest project yet: Phase 1 of the Western Bushveld joint venture (WBJV), an underground platinum/palladium mine on the western limb of South Africa’s Bushveld complex.
He describes the Bushveld as a “geological wonder of the world,” and it’s no exaggeration: the mineral-rich formation contains an estimated two-thirds of the world’s platinum. Major uses for the metal include catalytic converters (used to cut down on vehicle pollution), jewelry and technology — everything from flat-panel TVs to fuel cells.
More than 1,800 people are on site building the $514-million mine, Jones said, which is fully funded and scheduled for September start-up. After a twoyear ramp-up, it will produce about 275,000 ounces of platinum, palladium, rhodium and gold annually.
The father of two flies to South Africa to visit the project every six weeks — “from the door of my house to the door of my office (in South Africa), it’s 27 hours” — and stays at a house on the mine site while there.
Mention “South Africa” and “platinum mines” and the August 2012 massacre of 34 striking mine workers by South African police and security forces at the Marikana platinum mine looms large. Jones and his son Logan were in South Africa at the time of the killings, which echoed the country’s apartheid era and triggered mine protests and social unrest.
Jones is proud that his company’s operations weren’t affected much by the fallout: “We didn’t lose a blast or a shift in the five months after the massacre.”
He said he learned important lessons about communication, social buy-in and relationshipbuilding during a stint as a vicepresident of Aber Resources, which was building the Diavik diamond mine with Rio Tinto. Building relationships with disadvantaged local communities was key.
In South Africa, black economic empowerment partners are involved with the company’s projects.
Platinum Group Metals has also incentivized safety through a bonus system that pays out 30 to 50 per cent bonuses for meeting production targets safely, which has resulted in a safety record far better than the industry average, according to Jones.
Thirteen years of working in South Africa has given Jones an appreciation for the “modern democracy” and its people.
“When I land in Johannesburg, I take a Bombardier train at 165 kilometres an hour to my office,” he said. “It’s not exactly what you think of when you think of Africa.”
Rustenberg, a city of 500,000 people, is a 20-minute drive away from the WBJV mine site.
“And yet, South Africa trades at an enormous discount when you compare other precious metals companies.”
Jones even got some face time with African National Congress heavyweight Cyril Ramaphosa, after a Toronto speech about a decade ago by the man who is now South Africa’s deputy president. Ramaphosa wanted to learn more about the company’s South African projects, Jones said.
“Cyril Ramaphosa is the only person I’ve ever drank a bottle of wine with who’s written a constitution” — one modelled on Canada’s, Jones added.
The WBJV deposit is a sloping, one-metre-thick slab of rock measuring about 2.5 kilometres by five kilometres. It contains reserves of 4.7 million ounces of the platinum group metals — platinum, palladium, rhodium and gold — in a total resource estimated at 8.2 million ounces.
The company is also developing its Waterberg and Waterberg extension discoveries on the Bushveld’s northern limb. With combined inferred resources of 29 million ounces and growing, the projects are much larger deposits that could eventually vault Platinum Group Metals into the ranks of the world’s top producers, Jones said. JOGMEC, the state-run Japanese firm, is a joint venture partner on Waterberg.
“We’re not done yet finding out how big Waterberg is,” he said. “It’s 13 kilometres long, and we haven’t found the end of it.”
The deposit’s size and depth (40 metres) will allow for mechanized mining by operators sitting in air-conditioned comfort, Jones said, a contrast to the manual jackhammer work that will be required at the WBJV.
The shallowness of the company’s deposits are a big advantage in a region where some platinum mines are 2.5 kilometres underground, increasing the danger level and costs.
So how did a kid from Kingston, Ont., end up building a platinum mine in South Africa?
Rocks was the family business — his dad was a professor of geology at Queen’s University — and Jones took his first geological field trip as a toddler.
While Jones’ father will not see the mine go into production — he died last year — his legacy lives on both in the son and in the tools of his trade. Jones points to a tattered old geology text on a crowded bookshelf in his office — Mining Geology, published in 1948 — and said he still uses some of its principles.
There was also a South African angle to Jones’ first mining venture, in Ontario.
In the early 20th century, the federal government granted land to Canadian veterans of the Boer War, but mistakenly included mineral rights in the grant. Jones discovered that two fault lines, including one extending east from the rich Timmins gold camp, met under a farm owned by descendants of a Boer War vet. Jones acquired the property, the farmhouse and the mineral rights, and the Glimmer gold mine he built there is still producing (Black Fox mine).
Platinum Group Metals has a Canadian neighbour in South Africa — Robert Friedland’s Ivanhoe Mines, which is developing its Platreef deposit south of Waterberg.
“Isn’t it interesting that two of the most important platinum discoveries in the world get made by two Canadian companies three blocks from each other on the other side of the earth?”
With the support of major shareholders including a subsidiary of insurance giant Liberty Mutual, Jones has weathered one of the worst mining bear markets in recent history.
And he continues to keep his ruler handy. On Monday, the company announced a rich intercept 3.4 kilometres north of the existing Waterberg resource. The company’s shares on the Toronto Stock Exchange reacted to the news by falling three cents to 57 cents, giving the company a market capitalization of about $440 million.
Jones, however, is untroubled by the vagaries of the market.
“Near-surface, high-grade deposits always come out of the ground, in any market.”