Platinum group elements (PGE) are best known for their use in removing toxic gases from the exhaust emissions of internal combustion engine vehicles. But their use in the production of hydrogen could become a big demand driver.

This potential for growing PGE demand is likely to be music to the ears of Southern Palladium (ASX:SPD) which has just upgraded 3PGE+gold (4E) resources at the UG2 Reef within its Bengwenyama PGM project on the Eastern Limb of South Africa’s Bushveld Complex.

The complex contains 70% of the world’s PGE resources, by 39% to 11.65Moz.

Adding further interest, the company has also converted 2.56Moz of this resource grading 7.65 grams per tonne 4E – in line with previous grade expectations, into the higher confidence Indicated category, which provides information on geology and grade continuity to support mine planning.

Indicated resources also represent another step towards the company’s milestone target of defining a 2Moz Ore Reserve.

Southern Palladium has also updated the UG2 3D geological model, which suggests that the eastern area of the project is less structurally complex than originally thought, a finding that could likely simplify future exploration.

Managing director Johan Odendaal noted that the rate of conversion from Inferred to Indicated resource was high and that it was pleasing that the Far East Block discovery had contributed a significant upgrade to the resource base.

“The immediate aim is to convert more of the resource from Inferred to Indicated on the shallow eastern portion, known as the Payback Area Block, so we can reach an acceptable confidence level in our Prefeasibility Cashflow Model,” he added.

“The updated structural model provides a valuable insight into locating where the most feasible underground access areas are on the Eastern portion of the orebody.

“With our knowledge of this area of the orebody now well-established, one drilling rig will move to the western portion of the Eerstegeluk farm in the coming months to gain a better understanding of the uplifted Horst Block area.”

Further drilling to deliver more PGE upgrades

Southern Palladium has kicked off its Phase 1b drill program, which will focus on closer spaced infill drilling of Phase 1a, to convert more Inferred Resources to the Indicated category.

Phase 1a had focused on obtaining reef intersections across the shallow eastern portion of the UG2 Reef on the farm Eerstegeluk to better understand the overall grade distribution and to develop a more accurate geological model.

Deflections are also being drilled at selected locations for the scoping and pre-feasibility studies, geotechnical studies and for metallurgical samples, flotation efficiency test work (MF2 testing) and bond ball mill work index determinations.

This work is in progress, and the metallurgical sample collection has been completed which will be submitted to the laboratory in June.

Geotechnical studies will be used for mine design purposes and also to better understand the potential mining cuts for Mineral Resources.

As part of its near-term drill program, the company will need to drill the deeper western portion of Eerstegeluk to understand the structures and reef in the Horst Block which currently lies within the Exploration Target.

The company expects to add a sixth drill rig in July to increase the monthly drill metres and to investigate the use of the Horst Block as a second entry point (for faster production ramp up) into the early stages of the mine.

Other activity

Southern Palladium is also on track to submit a Mining Right Application (MRA) in third quarter of 2023, five months ahead of the initial planned date.

The MRA requires a work program, environmental scoping study and social and labour plan, all of which are currently in preparation.

Additionally, the company will also work on an upgraded Scoping Study using the upgrade resource and a potential second entry point.

This will in turn lead to work aimed at delivering a Pre-Feasibility Study.