JOHANNESBURG (Business Day) -- Production levels from fluorspar producer Sallies’ Witkop mine and the recently acquired Buffalo recycling operation are continuing to accelerate after a slow start to the new financial year.
Sallies CEO Izak Marais, on a visit to the group’s two operations last week, said the mine would produce 10,000 tonnes of fluorspar at Witkop and 3,000 tonnes at Buffalo this month.
Witkop was targeting production of about 12,000 tonnes a month while Buffalo was targeting 4,000 tonnes with its current capacity, Marais said.
Sallies planned to increase processing capacity at Buffalo in the longer term. It is benefiting from an improvement in service from rail utility Spoornet, which set aside more rolling stock to service output from Buffalo.
Most of Sallies’ fluorspar production is exported, although a portion is sold locally to the metallurgical industry.
Fluorspar is used to make refrigerant gases and it is also consumed in the manufacture of steel, cement and ceramics.
There are only three fluorspar processors in South Africa: Sallies’ Witkop and Buffalo plants, and Metorex’s [JSE:MTX] Vergenoeg mine.
Sallies was looking at acquiring other small fluorspar deposits in South Africa, but none of them was big enough to justify its own processing plant, Marais said.
One of the opportunities at Buffalo that Sallies planned to investigate further was the rare earth minerals contained within tailings. Rare earth minerals are used in high-technology manufacturing.
Marais said recoveries at Buffalo from the 100 tonnes a day moving through the wet high-intensity magnetic separation process were about 97%, of which 92% was fluorspar and the rest was monazite containing rare earth elements such as cerium, lanthanum, neodymium, thorium and yttrium.
Some of the rare earth minerals could fetch as much as $4000/kg, but issues such as their economic viability, processing requirements and markets had to be assessed before any decision was made to exploit them.
The group was continuing to explore, sample and confirm the ore bodies at Witkop and Buffalo.
Buffalo was bought earlier this year for R65 million ($9 million) in cash, funded through an issue of shares. The plant has been closed and equipment has to be overhauled before output can begin.
For the first few months, tailings have been transported to the plant by trucks, but from next month the dumps will be hydro-mined, using pumps.
Witkop’s production slowed in the previous financial year because a delay in Sallies receiving its mining licence at its Buffelshoek deposit had made it impossible to achieve the right blend of material through the processing plant. There had also been a four-day wage strike at Witkop last month.
Marais said management’s strategic objectives this financial year were to diversify Sallies’ customer base to at least two international customers in each continent and grow recognition of the Sallies brand.
Exposure to the exchange rate will be limited to at least R7.50/$1 — and the disputed contract with Honeywell, which has gone to international arbitration, should be resolved.
A hurdle rate for acquisitions would be defined and outstanding issues with the South Africa’s Revenue Service would be resolved.
Sallies is appealing a judgment on the tax treatment of a loan.
