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Notes on Stillwater:

* In general, Stillwater looks like a good buy if one expects platinum to maintain current high levels.

* They have plenty of proven/probable reserves at decent grades. Current market cap is about $33/oz of P&P PGMs (80% of which is palladium.)

* Stillwater is highly leveraged to PGM prices, and specifically palladium. Platinum is only 20% of production.

* They have some hedges in place (at $1035/oz) on ~1/3 of platinum production between Oct 07 and June 08. Some of the loss was already taken last quarter. I suspect there will be another $5-10MM hedging loss taken for Q407.

* They have the assets in place to make a lot of money, but they are a high cost miner and thus highly leveraged to the commodity price. My model indicates that constant platinum price of $1350 and Palladium of $300 would support the current market price. Platinum at $1500 and Palladium at $360 (constant over time) doubles the intrinsic value.

* They should cash flow around $2/share in 08 (at current prices) which could support a $20 share price.

 

I'd like to compare to other PGM producers, and research supply/demand fundamentals of palladium market, prior to reaching a conclusion on this one.

 

Stillwater is up about 60% since I posted this a couple weeks ago. If I had bought it, it would have went down 60% instead.

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Stillwater is up about 60% since I posted this a couple weeks ago. If I had bought it, it would have went down 60% instead.

 

Got any more research notes? Only interested if you promise not to buy them though :lol:

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Appreciate that Jaguar. If you can spot shares in their infancy like that, i reckon others would welcome your comments on here more often.

 

Riggers

 

Hi Riggers,

 

Thanks for your interest - will do my best!

 

jaguar2001

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Hi Riggers,

 

Thanks for your interest - will do my best!

 

jaguar2001

 

Another FRR will do fine :lol:

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Notes on Stillwater:

* In general, Stillwater looks like a good buy if one expects platinum to maintain current high levels.

* They have plenty of proven/probable reserves at decent grades. Current market cap is about $33/oz of P&P PGMs (80% of which is palladium.)

* Stillwater is highly leveraged to PGM prices, and specifically palladium. Platinum is only 20% of production.

* They have some hedges in place (at $1035/oz) on ~1/3 of platinum production between Oct 07 and June 08. Some of the loss was already taken last quarter. I suspect there will be another $5-10MM hedging loss taken for Q407.

* They have the assets in place to make a lot of money, but they are a high cost miner and thus highly leveraged to the commodity price. My model indicates that constant platinum price of $1350 and Palladium of $300 would support the current market price. Platinum at $1500 and Palladium at $360 (constant over time) doubles the intrinsic value.

* They should cash flow around $2/share in 08 (at current prices) which could support a $20 share price.

 

I'd like to compare to other PGM producers, and research supply/demand fundamentals of palladium market, prior to reaching a conclusion on this one.

 

Ace,

 

Know you posted these have since risen, but have you seen the article on Palladium, i've just posted on the palladium fund thread, looking for others insight. Asked for comments.

 

Maybe it should be re-named Palladium thread instead of Palladium fund?

 

Riggers

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Appreciate that Jaguar. If you can spot shares in their infancy like that, i reckon others would welcome your comments on here more often.

 

Riggers

 

 

Riggers

 

Take a look at Gold Summit - GSM on TSX-V

 

May get a thread going here to see if there is any interest

 

Already have one at adfvn

 

http://www.advfn.com/cmn/fbb/thread.php3?id=14894663

 

Where again there is a lively discussion. But that's the way it seems to be with me. Pick baggers that no one else has heard of till they take off...

 

B)

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PLATINUM JUNIOR VALUATIONS

 

Company...... AMC/oz*:Stk price/ Primary listing

 

ARQ.t- : Anooraq.......... 11 : C$ 2.82 / Toronto - 1690733

CAL.t- : Caledonia Mining. 88 : C$ 0.17 / Toronto - 103296

ELR.t- : Eastern Platinum. 15 : C$ 2.67 / Toronto - 2736285

JLP.L- : Jubilee Platinum.. 6 : ££ 1.23 / London - 1223392

NKP.au : Nkwe Platinum.... 15 : A$ 1.01 / Australia - 1558493

PPD.au : Pan Palladium..... 3 : A$ 0.25 / Australia - 390357

PLA.au : Platinum Austral. 68 : A$ 1.80 / Australia - 215694

PMCI.L : PMC of India..... 27 : ££ 0.12 / London - 1954520

PPN.t- : Platmin Ltd...... 37 : C$ 9.50 / Toronto - 2390411

PTM.t- : PlatinumGr.Metals 32 : C$ 4.56 / Toronto - 1736999

RDG.L- : Ridge Mining...... 6 : ££ 1.51 / Toronto - 176068

WEZ.za : Wesizwe Platinum 123 : R 14.00 / JSE - Wesizwe

 

Symbol : (Others)

AIMR.L : AIM Resources....... : £ .0925 / London - 1948228

BTP.v- : Beartooth Platinum.. : C$ 0.16 / CDNX - 1219948

BRR.L- : Braemore Resources.. : £ .0935 / London - 1945004

CPW.v- : Cons. Puma Minerals. : C$ 1.90 / CDNX - 152461

PDL.t- : No.Amer. Palladium.. : C$11.25 / Toronto - 103469

PFN.t- : Pacific Northwest... : C$ 0.49 / Toronto -1300046

SVL.L- : Sylvania Resources.. : £ 0.810 / London

- -

* Adjusted market capitalisation, US$/ounce

** Under offer / taken over :

APP.L- : African Platinum** 8 : ££ 0.55 / London -

xxxxxx : Afriore**........ 15 : C$ 8.72 / Toronto -

ELD.za : Eland Platinum**. 73 : R117.50 / JSE -

 

Source: RBC Capital Markets

 

/see: Advfn charts thread: http://www.advfn.com/cmn/fbb/thread.php3?id=16500505

 

= = =

Are Junior platinum shares going to lead the junior golds "out of the basement"? I hope so.

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NEW YORK/LONDON, Feb 15 (Reuters) - Platinum surged 3 percent to hit a record high for the 12th successive day on Friday, with acute power problems in top producer South Africa encouraging investors and consumers to buy up the metal.

 

Spot metal hit a high of $2,060 an ounce before easing to $2,050/2,055 by 2:59 p.m. EST (1959 GMT), against $1,997/2,007 in New York late on Thursday. It has jumped more than 34 percent this year on the top of 37 percent gains recorded in 2007.

 

"It's panic, panic, panic. If you are a platinum consumer, you are not going to sleep at night," said Robin Bhar, metals analyst at UBS Investment Bank.

 

"The price move shows you the unprecedented nature of the market. People can see actual physical shortages somewhere down the road and prices moving away from them. It's not a case of just speculation. There is genuine demand coming through."

 

 

The article highlights the platinum deficit could widen to "400,000 to 500,000 ounces by the end of 2008, compared with about 265,000 ounces in 2007. The market had a surplus of 65,000 ounces in 2006 following seven successive years of deficits".

 

 

But to give balance it highlights some traders have concerns and suggests there could be a pullback of up to $200 ""We already know that platinum is a news-driven market. It's all coming out of South Africa. If everything stays the same right now, and if the shortfall is not going to get greater, this market will not go substantially higher," said Ralph D'Esposito, NYMEX floor trader with RJ Futures in New York.

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Hi Drbubb

 

Have been pushing Gold Summit recently but intrigued that it's found its way onto your earlier post on platinum companies?

 

GSM.v- : Gold Summit Corp.... : C$0.135 / CDNX - 1497967

 

Any reason for that?

 

Thanks

 

jaguar2001

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Have been pushing Gold Summit recently but intrigued that it's found its way onto your earlier post on platinum companies?

 

 

guess it's my fault for mentioning them on this platinum thread, in response to riggers queries regarding other companies

 

of course they are gold/ silver exploration but have also got involved recently in nickel

 

sorry about that, :blink: but they should be removed from here and also your advfn thread

 

cheers

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You are right.

 

Obviously, that new thread still needs some tinkering,

 

And here's a new one, with the larger companies on it:

 

PLAT: http://www.advfn.com/cmn/fbb/thread.php3?id=16504123

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New thread on adfvn looks good but please add SLV Sylvania Resources ta

 

You will find SLV charts on the other thread, for Junior platinum co's:

BTP:: http://www.advfn.com/cmn/fbb/thread.php3?id=16500505

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Interesting RNS on BRR. Don't hold these but from their statement, there seems to be some significance in this piece of information

 

"Completion of our first quarter's production confirms that our exclusive license for the ConRoast process can provide emerging PGM producers with an economic alternative for smelting their concentrates with significant levels of chrome. It further demonstrates that the process is efficient, economical and environmentally friendly".

 

My first thought was they had planned a 10mw smelter, but i'm trying to understand there seems to be some kind of different significance about this? Is it revoloutionary, does it give them an edge?

 

Will this affect others in the sector, do they need to embrace this sort of technology?

 

Anybody help me out here?

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Interesting RNS on BRR. Don't hold these but from their statement, there seems to be some significance in this piece of information

 

"Completion of our first quarter's production confirms that our exclusive license for the ConRoast process can provide emerging PGM producers with an economic alternative for smelting their concentrates with significant levels of chrome. It further demonstrates that the process is efficient, economical and environmentally friendly".

 

My first thought was they had planned a 10mw smelter, but i'm trying to understand there seems to be some kind of different significance about this? Is it revoloutionary, does it give them an edge?

 

Will this affect others in the sector, do they need to embrace this sort of technology?

 

Anybody help me out here?

 

 

Rigger

 

There seems to be a few new processes around. Alexander mining - AXM, have a new process called AmmLeach using ammonia rather than acid. Seems to have applications for improving extraction for several metals, not sure about platinum yet. Also environmentally friendly and very cheap when de-commissioning.

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Platinum and Palladium – Great for Franconia Minerals

 

JPMorgan sets $26 price target for Stillwater on palladium strength.

 

http://www.mineweb.com/mineweb/view/minewe...4&sn=Detail

 

Well, how does that concern companies in the Duluth District such as Franconia, Polymet and Duluth Metals?

 

There are supply concerns in South Africa that are driving the price of PGMs a lot higher. (Platinum around $2150/oz and Palladium around $510/oz) And, we are seeing more interest in North American miners.

 

Stillwater http://www.stillwatermining.com/ are the only US producer of Palladium and Platinum – understand that they mine, per year, around 600,000 ozs PGMS.

 

Polymet should become the second producer followed by Franconia and Duluth.

 

Since I am more familiar with Franconia:

 

Franconia, http://www.franconiaminerals.com/s/BirchLake.asp , plan “combined annual production of 74 million lbs copper, 19 million lbs nickel, 2.9 million lbs cobalt, 7,400 oz gold, 33,000 oz platinum and 68,000 oz palladium over a 26-year mine life at Birch Lake and a 24-year mine life at Maturi”

 

That’s around 100,000 ozs per year (with I believe similar ratios to Stillwater)

 

Stillwater market cap is around $1.7 Billion compared to Franconia’s $91 Million ie Stillwater is around 20 times bigger than Franconia but it’s PGM production is only 6 times bigger (than FRA potential) !

 

Now, Franconia’s main value is Nickel/ Copper. The PGMs only account for around 15% of the total.

 

That’s remarkable. Using only Franconia’s PGM and Stillwater as an example, FRA could once it is in similar production have a market cap of around $300 million – for PGM metals alone.

 

Eventually, the market should waken up to the PGM potential of the Duluth District companies.

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Here are a couple of Australian juniors you might want to add to the "other" part of the list.

 

Platina Resources (PGM.AX) - Solely focused on PGMs, mainly in Australia. Exploration stage.

Rusina Mining (RML.AX) - Nickel, chromite and PGMS in Philippines. Nickel is at pre-feasibility stage, PGMs are in explo.

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Good to see Franconia mentioned in Toronto Financial Post.

 

"This is a signal to go and find more of this stuff because we'll need it down the line," said Brian Gavin, chief executive of platinum explorer Franconia Minerals Corp.

 

A number of exploration plays like Franconia and Marathon PGM Corp. are pushing projects in North America towards production, but there are no primary platinum mines on the continent, Mr. Jones said

 

http://www.financialpost.com/trading_desk/....html?id=353621

 

Platinum, Palladium Are Hot

 

Both Are Up 50%; Play crucial role in the auto industry

 

Peter Koven, Financial Post Published: Wednesday, March 05, 2008

 

While gold and base metals get most of the attention, platinum and palladium have emerged as a hot topic at this year's PDAC conference as the industry digests massive price increases with the possibility of even more on the horizon.

The two precious metals have been on a tear all year, with prices up about 50% for each, including a record high for platinum yesterday of US$2,277.50 an ounce. Those gains accelerated in the last week amid blackouts and a worsening power crisis in South Africa, which is responsible for nearly 80% of the world's platinum and more than 30% of its palladium.

 

The sudden leap in prices serves as a stark reminder of the tightness of many metal markets -- and how much the world relies on a small number of sources for many of the secondary metals.

 

"This is a signal to go and find more of this stuff because we'll need it down the line," said Brian Gavin, chief executive of platinum explorer Franconia Minerals Corp.

 

The markets for platinum group metals (or PGMs) are very small, with annual consumption of both platinum and palladium below 10 million ounces. But they play a crucial role in the auto industry because of their use in catalytic converters to cut down on emissions. As a result, they are benefiting from the growth in emerging markets as more and more Chinese and Indians buy cars, and automakers take steps to reduce emissions.

 

At the same time, they are still precious metals and, like gold, have seen their prices rise on increased demand from jewellery manufacturers and investors looking for an alternative asset class.

 

Exchange-traded funds have continued to be aggressive buyers at elevated prices. And jewellery demand has been surprisingly resilient despite those increases.

"You really have to wonder whether platinum jewellery has reached the 'Gucci Bag' effect where the more they charge for it, the more people like it," said Mike Jones, chief executive of Platinum Group Metals Ltd., which operates in South Africa.

 

He has seen the power crunch in South Africa firsthand. Escom, the beleaguered state utility, is forcing producers to cut usage to 90% of prior levels, which can have a disproportionately large effect on production. The big three producers (Anglo Platinum Ltd., Impala Platinum and Lonmin PLC) are all working in very close proximity and the market is worried about their ability to maintain supply.

"There's no commodity like platinum in terms of geographic focus," Mr. Jones said.

And there may not be any relief in sight. In a well-attended talk on platinum and palladium on the conference's first day, HSBC Securities analyst Victor Flores said his models suggested that while palladium is likely to be in surplus at the end of the year, platinum could be in a deficit.

The palladium situation is thought to be not as bad because of higher inventories and less geographic concentration, but auto and ETF demand for both are big wild cards.

 

"We believe the behaviour of two very different end users -- investors and auto companies -- will drive PGM prices this year. Negative elasticity of demand, due respectively to speculative demand and supply concerns, could lead to further price spikes," he said.

 

The sudden interest in platinum and palladium also highlights how few companies are focused on those metals. After the "Big Three" South African producers and Russia's Norilsk Nickel, there is a big drop-off before you get to companies like North American Palladium Ltd., which supplies about 5% of the global palladium market.

 

A number of exploration plays like Franconia and Marathon PGM Corp. are pushing projects in North America towards production, but there are no primary platinum mines on the continent, Mr. Jones said.

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Northern Miner Podcast – CEO Interview

Platinum Group Metals Ltd. President and CEO Michael Jones was recently interviewed on the Northern Miner podcast. He discusses the company’s large-scale Waterberg PGM project in South Africa, the newly developed technology patent using palladium in lithium-ion batteries and shares his views on the outlook for both platinum and palladium. The full interview can be found here:

Northern Miner Podcast - Episode 213 - November 17, 2020

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