Bengwenyama Project NPV Hits US$857M with 38% Lower Funding Needs

Regulatory Milestone Achieved

Southern Palladium Limited (ASX, SPD) marked a significant step forward in the development of its Bengwenyama platinum group metals (PGM) project in South Africa during the September 2025 quarter. The company successfully completed the Environmental Authorisation (EA) process with no objections lodged, a critical regulatory milestone that paves the way for the anticipated award of the Mining Right. This outcome reflects the company's effective environmental management and community engagement strategies in the Bushveld Complex, one of the world’s richest PGM regions.

Robust Economics Confirmed by Optimised Pre-Feasibility Study

In July, Southern Palladium released an Optimised Pre-Feasibility Study (OPFS) that reinforced the project’s strong economic fundamentals. The study estimates a post-tax net present value (NPV) of US$857 million (approximately A$1.3 billion) and an internal rate of return of 26.4%, based on conservative PGM price assumptions. Notably, current spot prices for platinum, palladium, and rhodium have surged by around 32% since the original study, potentially adding an uplift of US$300 million to the project’s real post-tax NPV after currency adjustments.

The OPFS proposes a staged development approach, starting with an initial production rate of 1.2 million tonnes per annum (mtpa) and expanding to 2.4 mtpa after four years. This strategy reduces peak funding requirements by 38% to US$279 million, enhancing the project’s financial attractiveness and reducing shareholder dilution risk. Stage 1 is expected to be cash generative, supporting debt financing for the initial phase, while Stage 2 would be funded from operating cash flow.

Advancing Definitive Feasibility Study and Drilling Programs

Complementing the OPFS, Southern Palladium commenced a ~10,000-metre metallurgical and geotechnical drilling program in September to underpin the Definitive Feasibility Study (DFS). Five drill rigs are active on site, targeting a 140-kilogram bulk sample from the UG2 Reef for metallurgical testing and informing mine design. The geotechnical drilling also supports infrastructure planning, including the location of the box-cut for Stage 1 development. The DFS is scheduled for completion in the first half of 2026, providing a comprehensive basis for the Final Investment Decision (FID) targeted for the third quarter of 2026.

Capital Raising Strengthens Financial Position

Post quarter-end, Southern Palladium secured firm commitments for a two-tranche placement to raise A$20 million at A$1.10 per share, with Tranche 1 completed in late October raising A$7.26 million. The placement attracted strong support from major existing shareholders and new offshore institutional investors. An accompanying Share Purchase Plan (SPP) of up to A$1 million will offer retail shareholders an opportunity to participate on the same terms. These funds will finance ongoing DFS activities, permitting, early mine development, and preparation for the Mining Right award.

Market Context and Outlook

The timing of these developments aligns with a robust global PGM market. Structural supply deficits, particularly in platinum and rhodium, persist due to declining South African mine output and limited recycling growth. The World Platinum Investment Council forecasts platinum deficits continuing through 2029, supporting strong price momentum. Year-to-date, platinum prices have risen over 79%, with palladium and rhodium also experiencing significant gains. This favourable market backdrop enhances the strategic relevance and economic potential of the Bengwenyama project.

Southern Palladium’s Executive Chairman, Roger Baxter, emphasised the company’s commitment to responsible development and community engagement, highlighting the project as one of the last low-cost, high-grade, near-surface PGM deposits in the Bushveld Complex. With a strong balance sheet and critical approvals in hand, the company is well positioned to advance towards production.