Stonegate Capital Partners Updates Their Coverage On Eastern Platinum Limited (TSX:ELR)

DALLAS, TX -- October 3rd, 2022 -- Eastern Platinum Limited (TSX:ELR): Stonegate Capital Partners updates coverage on Eastern Platinum Limited (TSX:ELR). The full report can be accessed by clicking on the following link: https://stonegateinc.com/reports/ELR_Q2FY2.pdf

COMPANY DESCRIPTION

Eastern Platinum Limited, together with its subsidiaries, engages in the mining, exploration, and development of platinum group metal (“PGM”) and chrome properties in South Africa. The Company’s PGM deposits include platinum, palladium, rhodium, iridium, and ruthenium. The Company has four properties that include its principal asset the Crocodile River Mine (“CRM”), the Kennedy’s Vale project, the Mareesburg project, and the Spitzkop project. Currently, the Crocodile River Mine is generating revenue via its chrome and PGM productions by processing the CRM tailings resources. All projects are in South Africa, with the Company headquartered in Vancouver, BC Canada.

SUMMARY

• Transition from care & maintenance to revenue generation – The Company started to generate revenue from its Retreatment Project in December 2018. This comes after the Company’s operations were placed in care and maintenance: CRM in 2013 and Mareesburg, Kennedy’s Vale, and Spitzkop in 2012. The Retreatment Project is at the Crocodile River Mine and includes a combined hydro and mechanical re-mining of prior tailings to produce chrome concentrates. During 2019, the Company ramped up its production and produced 588,006 tons of chrome concentrate followed by 987,003 tons in F20, 773,274 tons in F21 period, and 290,961 tons YTD22.
•  PGM revenue stream online in early F21 – During 2020, ELR completed the refurbishment of a small-scale PGM circuit, referred to as “PGM Circuit D.” Operations began in Q4 2020 by processing parts of feed from chrome tails. Following further optimization in Q1 2021, Circuit D produces approximately 200 tons of PGMs per month from April onwards. PGM Main Circuit B was commissioned in October 2021 with the anticipation of adding around 600 tons of PGM concentrate per month to production for a total of 800 tons of PGM concentrate per month. ELR produced 32 dry tons of PGM concentrate in F20 and 1,853 dry tons in F21. In Q2 2022 1,868 dry tons of PGM concentrate was produced compared to 539dry tons in Q2 2021.
•  Potential restart of underground mining - While the CRM mine has remained in care and maintenance since 2013, the Company is looking to re-open the mine. Long-term planning and mine design studies were completed in Q4 2021, and the mine is expected to open in the latter half for F22 subject to secured funding. Importantly, the mine is fully permitted and has a mine life of 22+ years. Furthermore, in Q2 2022, the Company filed an updated NI 43-101 Technical Report that shows the CRM underground M&I resources is 64Mt with 8.49Moz and a reserve of 14.58Mt with 1.72Moz. The project’s NPV11.9% is US$202M with an IRR of 138% (includes tailings storage facility (“TSF”) remining).
•  Additional opportunities in the pipeline – The Company believes the Mareesburg deposit could support a mine that could be placed into production relatively quickly and with a relatively low capital cost. Lastly, the Company has Kennedy’s Vale and the Spitzkop project, which are early stage, exploration opportunities. Recent desktop studies have Spitzkop showing great potential for drilling work.
•  Liquidity to help fund expansion plans – Eastern Platinum raised CDN$11.8M in January 2021 via a rights offering. Importantly, the funding helped support current and future capital projects that include the optimization of the PGM Circuit, mine design and long-term mining plan for underground mining at the Crocodile River Mine, along with other development opportunities. Additionally, the Company closed the sale of its Maroelabult property and related equipment in March 2022 for ~ US$1.3M.
•  Valuation – On an enterprise value to resources basis, Eastern Platinum trades at a significant discount to other platinum mining and exploration companies. With current revenue generation from its retreatment project expected to continue to 2024, and ramp-up in PGM circuit revenue in 2022, along with the potential to restart the Crocodile River underground mine in the latter half of 2022, we would expect some of the discount to diminish.