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South Africa Preparing for Platinum Strike

Platinum mining companies in South Africa are bracing for the second strike in two years if matters surrounding labour issues and higher wages aren’t sorted out.

Union’s wage talks are set to begin this week with Anglo American Platinum (JSE:AMS), Impala Platinum Holdings  (JSE:IMP), and Lonmin (LSE:LMI).

The Daily Mail reported that the Association of Mineworkers and Construction Union (AMCU) plans to demand a 50 percent pay increase while a smaller union has asked for 20 percent.

Last week, the AMCU demanded a living wage of $850 per month for its lowest-paid workers, which amounts to a 56 percent increase.

“The living wage addresses food inflation because it keeps rising. If we are stuck in that low wage then how are we going to cope with these increases, which are beyond our control,” AMCU president Joseph Mathunjwa told the Daily Mail.

Negotiations open on Tuesday with Anglo American, Lonmin on Wednesday and Impala on Thursday

The strike in 2014, led by AMCU, forced major producers, including the ones listed above, to shed 70,000 jobs. The strike lasted almost half a year, and resulted in 1.3 million ounces of lost production, which is a third of global output.

With that in mind, South Africa is the largest producer of platinum. Although prices have gained 22 percent so far this year, overall they are down 50 percent from 2008 due to oversupply and muted demand from China, according to the Daily Mail.

Don’t forget to follow us @INN_Resource for real-time news updates!

Securities Disclosure: I, Jocelyn Aspa, hold no direct investment interest in any company mentioned in this article.


Sibanye Platinum Miners Still on Strike in South Africa

Since last week,  the Association of Mineworkers and Construction Union  (AMCU) has been on strike.

The union—which is South Africa’s biggest—started a strike at one of the platinum mines operated by Sibanye Gold (NYSE:SBGL) over transport, bonuses and safety pay.

Bloomberg reported that the stoppage commenced  late last week.

Spokesman Manzini Zungu told Bloomberg the strike is about traveling allowances, management not providing transport, safety bonuses, and drilling and risk allowances.

“Management rejected their demands regarding the above and they have engaged with them since January this year,” he said.

A court order was also issued, wherein it declared the strike “unlawful and unprotected,” in a statement from spokesman James Wellsted. This means AMCU is required by the order to suspend any strike action by its members.

Earlier this week, it was also reported that the workers may lose their jobs, according to its chief executive.

Between 80 and 100 jobs could potentially be at risk after a number of workers failed to abide by the court order and return to work Monday evening.

Neal Froneman told Reuters they “will not be bullied or intimidated by unions.”

“The platinum group metals industry is highly exposed to disruptions and companies cannot accept that,” he said.

As far as the platinum price, year-to-date it’s made a 15.19 percent increase of $130 to sit at $986, although for the month of May it dropped from $1,062, or a 6.63 decrease.

Don’t forget to follow us @INN_Resource for real-time news updates!

Securities Disclosure: I, Jocelyn Aspa, hold no direct investment interest in any company mentioned in this article.


Aberdeen Updates Mine Operations at African Thunder Platinum

TORONTO, ONTARIO–(Marketwired – April 1, 2016) - ABERDEEN INTERNATIONAL INC. (“Aberdeen”, or the “Company”) (TSX:AAB) wishes to provide an update on mining activities at African Thunder Platinum.

African Thunder Platinum (“ATP”) has decided to temporarily suspend mining operations at the Smokey Hills platinum-palladium mine effective immediately. As previously disclosed in our press release dated February 22, 2016, ATP was engaged in a process to review mine activities for 2016 including consultation with its workforce. ATP concluded that the best way to optimize the long-term value of the Smokey Hills mine and 2,000 ton-per-day plant facility was to suspend operations and focus on the planning and permitting required to optimize production and costs in the future.

Since ATP hired new management led by COO Rodney O’Reilly, in December, production rates and efficiency increased, equipment availability improved, costs decreased, and the safety record improved. However the continued weak platinum and palladium prices have continued to drag on cash flow. With several more months of underground development required to achieve full production, ATP decided it made the most sense to defer this expenditure until metal prices improve, and other optimization plans can be implemented.

Among the expected future optimizations, ATP has commenced the permitting process for open cast production at the mine to add to low cost tonnage that can be mined upon restart. The open cast is a critical development to the overall plan, as it should provide additional tonnage and improve operating flexibility. Permitting of the open pit is expected to take the remainder of 2016.

In addition to the operational improvements currently being addressed, the major shareholders of ATP, Aberdeen and Pala Investments are reviewing options to restructure the financial position of ATP to provide greater financial flexibility and less risk upon the future restart of operations.

David Stein, President and CEO of Aberdeen commented, “We know the decision to suspend the mine is never an easy one, however we commend ATP for taking a disciplined approach to preserving long-term value with the Smokey Hills operation. Despite achieving many operational successes over the past few months, producing metal in this environment of low prices appears to be wasteful and unnecessary. By combining the mine optimization plan with an improved financial structure, we expect that ATP will be able to return to operations once we see positive movements in the platinum and palladium pricing.”

Cautionary Notes

Except for statements of historical fact contained herein, the information in this press release constitutes “forward-looking information” within the meaning of Canadian securities law. Such forward-looking information may be identified by words such as “plans”, “proposes”, “estimates”, “intends”, “expects”, “believes”, “may”, “will” and include without limitation, statements regarding, proceeds to be received on closing or subsequently, the ability of the Company to generate additional value for shareholders as a result of such transactions, past success as an indicator of future success; net asset value of the Company; the potential of investee companies and the appreciation of their share price; the Company’s plan of business operations; industry opportunities and dynamics and anticipated returns. There can be no assurance that such statements will prove to be accurate; actual results and future events could differ materially from such statements. Factors that could cause actual results to differ materially include, among others, metal prices, competition, financing risks, acquisition risks, risks inherent in the mining industry, and regulatory risks. Most of these factors are beyond the control of the Company. Investors are cautioned not to put undue reliance on forward-looking information. Except as otherwise required by applicable securities statutes or regulation, the Company expressly disclaims any intent or obligation to update publicly forward-looking information, whether as a result of new information, future events or otherwise.


Why Invest in Platinum Stocks? What the Future Could Hold for Lonmin, the AMCU and South African Platinum Production

Could Platinum Save Us from Airpocalypse?

Legendary mining entrepreneur Robert Friedland makes a strong case

Dear Platinum Investor,

Platinum production hit a 15-year low of 4.7 million ounces in 2014. A protracted 5-month long mine worker strike in South Africa cut into the output of top platinum producers last year, but did little to raise platinum prices.

Still, some market participants remain bullish on the white metal. Mining mogul Robert Friedland, executive chairman of Ivanhoe Mines (TSX:IVN), has spoken about the importance of platinum in improving air quality as the world’s growing population continues to urbanize. Specifically, he noted that changing standards in China will require 90 million vehicles to be retrofitted with catalytic converters.

In a presentation at the 2015 Prospectors and Developers Association of Canada (PDAC) conference, he called this coming rise in pollution the “airpocalypse,” and argued that the phenomenon has already begun, with air pollution hitting life-threatening levels in Paris in March 2014.

What could drive the next rise in the price of platinum? Will the platinum price continue to ignore supply/demand fundamentals? Will the price of platinum be driven by an industrial application like the use of platinum in catalytic converters? What is the best way to see investment returns from platinum?

Find out today: get Why Invest in Platinum Stocks? What the Future Could Hold for Lonmin, the AMCU and South African Platinum Production. Download it FREE today!


I’m not saying you shouldn’t do research on your own. Of course, you should. And please, let me know when you find something interesting! But I trust you will return often to Platinum Investing News and our free report. We work hard to bring you reliable, trusted news and information about the price of platinum and what will happen with the platinum price.

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This FREE Special Report, Why Invest in Platinum Stocks? What the Future Could Hold for Lonmin, the AMCU and South African Platinum Production is designed to help you …

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  • Prepare for changes that could have a profound impact on the platinum price

How much would you pay for all of that? How about a cost of absolutely zero, zilch, nada?

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Why you should read Why Invest in Platinum Stocks? What the Future Could Hold for Lonmin, the AMCU and South African Platinum Production

Platinum Investing News is part of Investing News Network, a growing network of authoritative publications delivering independent, unbiased news and education for investors. We deliver knowledgeable, carefully curated coverage of a variety of markets including gold, silver, platinum and many others. This means you read nothing but the best from the entire world of investing advice, and never have to waste your valuable time doing hours, days or weeks of research yourself.

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Why Invest in Platinum Stocks? What the Future Could Hold for Lonmin, the AMCU and South African Platinum Production. What you can learn

Are you worried about global debt and how it might impact the financial system? Seemingly endless turmoil in the Middle East and its inevitable effect on the price – and value – of oil and everything it touches? The rise of the BRIC economies to challenge the U.S.? Or, for that matter, the possibility that Russia’s recent increasing influence in key strategic parts of the world?

You may be surprised by some of the insights in Why Invest in Platinum Stocks? What the Future Could Hold for Lonmin, the AMCU and South African Platinum Production

  • For example, what will be the ongoing impact of the Volkswagen diesel car scandal be on the platinum price?
  • How will changes at the Association of Mineworkers and Construction Union, or the AMCU in South Africa impact the price of platinum?
  • With uncertainty in South Africa, what platinum stocks outside of South Africa exist?

Naturally, different experts have different forecasts. But when you’re trying to decide whether to buy, sell or hold platinum, you don’t want to rely on just one or two expert opinions – or on the opinions of people you can’t trust. That’s why our painstakingly curated Special Report is so valuable to savvy investors like you.

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When you read this report, for instance, you’ll discover …

  • Fuel cells, that require 8-12 times more platinum than catalytic converters are becoming more important in Japan where they are being built for home use
  • Up to 90 million cars on the road in China might need to be retrofitted with catalytic converters to remove excess sulfur from exhaust
  • William Tankard, director of precious metals and mining at Thomson Reuters says that China is an especially important market for platinum.

This is clearly a Special Report that no platinum investor can afford to overlook. And at this price — $0.00 — it’s certainly affordable!

It’s time to stop reading this letter and start reading Why Invest in Platinum Stocks? What the Future Could Hold for Lonmin, the AMCU and South African Platinum Production

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Thank you for hearing me out on this Special Report, and for your interest in Platinum Investing News. And join me soon as a confident platinum investor!

Yours for hard asset investing,

Nick Smith
Publisher & CEO
Investing News Network

PS: Did I mention that this Special Report also includes numerous links to additional insight – information you might never find on your own? This is the kind of guidance that’s a deal at any price — but especially when it’s FREE. Download it today!

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South Africa Public Investment Corporation Ups Stake in Lonmin

Reuters reported that South Africa’s Public Investment Corporation has increased its stake in platinum producer Lonmin Plc (LSE:LMI). The corporation now owns roughly 30 percent of Lonmin shares.

As quoted in the publication:

Bruised by strikes, rising costs, a weak platinum price and slowing demand, South Africa-focused Lonmin also said it planned to raise another $370 million in loans to refinance debt currently due in May 2016.

Lonmin said on Friday that its deeply discounted $400 million rights issue was undersubscribed, after its shareholders only bought 19.2 billion shares, or 71 percent, of its proposed 27 billion share issue.

Click here for the full press release.


Why Invest in Platinum Stocks? What the Future Could Hold for Lonmin, the AMCU and South African Platinum Production

Table of Contents

Robert Friedland and the Case for Platinum Stocks. 2

Urbanization and air pollution. 2

Catalytic converters. 3

Hydrogen fuel cells. 3

Updated Platinum Price Forecast for 2015. 4

So far in 2015. 4

Production cost curve. 5

What’s next for the platinum price forecast?. 5

Why Did the Volkswagen Scandal Hurt Platinum Prices?. 7

A widespread problem.. 8

A Brief History of Platinum and the AMCU.. 9

Where the AMCU began. 9

The 2014 platinum strike. 10

The AMCU and platinum prices. 10

Opportunity in Platinum Stocks Outside of South Africa?. 11

Platinum stocks outside of South Africa. 11

Platinum stocks within South Africa. 13

 

 

 

Robert Friedland and the Case for Platinum Stocks

Few make a stronger case for platinum than legendary mining entrepreneur Robert Friedland. And certainly given his history in the industry, it’s worth taking note of his views.

Of course, he has good reason to be bullish on platinum-group metals (PGMs) — Friedland currently serves as executive chairman and director of Ivanhoe Mines (TSX:IVN), which, among other things, is developing the massive Platreef project in South Africa. What’s more, platinum prices have been under pressure this year, and the recent Volkswagen (ETR:VOW3) emissions scandal hasn’t helped matters.

However, most of Friedland’s positivity on platinum relates to how it will fare in the long term. Here’s a quick overview of some of the thoughts Friedland has shared on platinum, and why he’s bullish on the white metal.

Urbanization and air pollution

“[T]he most important fundamental economic and social transformation” currently taking place “is the process of urbanization, which is changing how most of us live,” Friedland said at the 2014 Sprott Vancouver Natural Resource Symposium. He’s subsequently repeated that point, noting that as more and more people migrate to cities, air pollution will increase substantially.

In a presentation at the 2015 Prospectors and Developers Association of Canada (PDAC) conference, he called this coming rise in pollution the “airpocalypse,” and argued that the phenomenon has already begun, with air pollution hitting life-threatening levels in Paris in March 2014.

That’s important for platinum. As Friedland has explained,”PGMs are absolutely critical to having cleaner air” due to their role in catalytic converters for vehicles and in other emissions-reducing applications.

Catalytic converters

Platinum and its sister metal palladium are widely used in catalytic converters that reduce harmful emissions from automobiles. Platinum is used in converters for diesel engines, while palladium is used for engines that run on gasoline.

It’s been noted that palladium is increasingly being substituted for platinum in catalytic converters for diesel vehicles. Furthermore, as mentioned above, diesel car sales have been on a downward trend, and recent revelations that Volkswagen has been cheating on its emissions tests have pushed interest in diesel vehicles even lower.

Still, it’s worth noting that China is imposing standards to remove sulfur from diesel and gasoline. As Friedland has noted, there’s too much sulfur in diesel and gasoline within China, meaning that platinum catalytic converters are often quickly destroyed; however, removing that excess sulfur could allow the “90 million cars clogging the roads in China” to be retrofitted with catalytic converters.

Hydrogen fuel cells

Beyond catalytic converters, Friedland sees another source of platinum demand from the automotive sector: vehicles that run on hydrogen fuel cells. While electric vehicles running on lithium-ion batteries have stolen the spotlight in recent years, and while there’s a bit of a misplaced stigma around exploding vehicles when it comes to hydrogen fuel cells, Friedland still believes that fuel cell technology is the way of the future.

That’s good news for platinum as the metal is used as a catalyst in hydrogen fuel cells as well. As Friedland noted at PDAC, fuel cells require eight to 12 times as much platinum as is needed in catalytic converters. What’s more, he’s also pointed out that fuel cell technology is becoming more and more important in Japan, where fuel cells are being built for home use.

Certainly, Robert Friedland makes a strong case for platinum and PGMs. The sector is down now, but those who believe in a long-term bullish case for the metal may want to start doing research into platinum stocks in order to get positioned for the future. Of course, investors would also be wise to keep an eye on developments in the market for diesel vehicles, and on the advancement of fuel cell cars in China and elsewhere.

 

 

 

Updated Platinum Price Forecast for 2015

At the start of 2015, analysts were calling for a rosier future for the platinum price forecast.

Sergey Raevskiy of SP Angel — among many others — saw the platinum price averaging US$1,500 per ounce for 2015 on the back of stronger demand and tighter emissions restrictions in Europe. Together, those factors were expected to increase demand for platinum used in catalytic converters.

However, that hasn’t happened. Platinum has remained cheaper than gold since mid-January, and is down 18 percent since the start of 2015. There’s not much hope for the metal to make a meaningful rebound before the end of the year.

To find out more about the situation, the Investing News Network spoke with William Tankard, director of precious metals and mining at Thomson Reuters (TSX:TRI,NYSE:TRI). He shared some of his latest thoughts on what’s been driving the platinum market and what to expect for the remainder of 2015.

So far in 2015

“We certainly did not foresee the severity of the fall,” Tankard said. “Earlier in the year, we were calling for platinum to trade down to $1,000, and it broke through that level. So obviously that has overshot the projections that our analysts put forward back in May.”

What’s behind the dive? Tankard said investor sentiment has played a not-insignificant role, but noted that plenty of factors have led to market uncertainty this year.

Specifically, he pointed to the “increasing rhetoric around the specter of the Federal Reserve beginning to look at tightening rates,” in addition to “ongoing sluggish growth in Europe and increasing uncertainty in China [tied to] the market crash in recent months and worries around how that is likely to trickle through to the country’s broader economy.”

Beyond that, a broader sell off in the commodities space has put pressure on the platinum price as well.

Tankard noted that China is an especially important market for platinum. Platinum jewelry in particular, he explained, is “very much dependent on Chinese consumers’ discretionary spending on luxury goods trickling through to them buying, or continuing to buy, meaningful quantities of platinum jewelry.”

Production cost curve

“In terms of producers’ costs and marginality right now, you have a quite bizarre situation with prices where they are,” Tankard said. Looking at the cost curve, he noted that at $950, three-quarters of the platinum-producing industry is failing to cover its costs and sustaining capital.

“That’s not talking about project capex expansions, that is simply asking the question, ‘are they just focusing on their mid- to medium-term production plans that would lead to the ongoing health of an operation?’” he clarified. “And right now, three-quarters are underwater.”

Of course, investors and market watchers might be hesitant about how sustainable such a situation might be, and for his part, Tankard doesn’t see South African producers materially reducing their costs without taking production out of the market.

“So then one has to ask, is it going to be the price that responds first, or is it going to be production that falls, and then begins to stimulate the price? I worry that it is probably going to be the latter,” he said. “We do need to see capacity taken offline.”

Certainly, that’s already started to happen, with Glencore (LSE:GLEN) finally closing its Eland platinum mine in South Africa.

What’s next for the platinum price forecast?

According to Tankard, Thomson Reuters doesn’t see things looking up for the platinum price in 2015.

“We are relatively pessimistic that the industry in South Africa will act quickly. And that very much speaks to us maintaining quite grounded forecasts for 2015 and 2016,” he said. “We see an average in Q4 of $950, which points to an annual average this year of $1,065.”

For 2016, the firm sees the platinum price averaging slightly lower, around $1,050. “So at the moment we’re pretty grounded on our price expectations. We think on the balance of probability it does favor upside here. But we don’t really see any dramatic rallies coming through just yet.”

What could trigger an upside move? Tankard stated that while Glencore certainly isn’t the only company to have announced reductions in platinum production — Lonmin (LSE:LMI) has been talking about it too — more production needs to be scaled back to improve the price and investor sentiment.

“We have already seen a few announcements around that, but I think that there will have to be more to come if prices don’t improve in relatively short order,” he explained.

Furthermore, he’s optimistic about initiatives by some producers that believe they can run operations more efficiently. Sibanye Gold (NYSE:SBGL) in particular has been making big plays in the platinum space with its purchase of Anglo American Platinum’s (JSE:AMS) Rustenburg operations and its acquisition of Aquarius Platinum (ASX:AQP).

“I think if you do see more mines being taken out of production or downscaled, then that would also serve to introduce more investor confidence and investor enthusiasm towards the metals at a time when they’ve very much taken a beating from investors over recent months,” he concluded.

 

 

Why Did the Volkswagen Scandal Hurt Platinum Prices?

Unless you’ve been living under a rock, you’ll have heard about Volkswagen (ETR:VOW3) cheating on its emissions tests in the US.

The German automaker fitted its diesel cars with “defeat devices” that detected when they were being tested. The cars would put out lower emissions in order to pass tests, but when operating normally, the vehicles would pollute more than regulations allow.

According to the BBC, the US Environmental Protection Agency (EPA) found 482,000 vehicles in violation of its rules, but Volkswagen has since admitted to using defeat devices on approximately 11 million vehicles worldwide.

That hasn’t been good news for the platinum price, which saw major declines after the news surfaced in late September. Indeed, according to Reuters, the platinum price has been hit so hard that some believe the metal’s value could fall below that of its sister metal, palladium.

Why? Because platinum is used in autocatalysts for diesel engines, and following the Volkswagen scandal, analysts are calling for interest to wane in diesel vehicles.

“This is really going to leave a bad taste in consumers’ mouth about diesel automobiles,” Michael Sheehan, senior portfolio manager Orion Commodities Management, told Reuters. “If Volkswagen were doing the same thing in Europe and if there is more to come, it would be really bearish for the platinum market. At some point platinum and palladium prices will go to parity … my guess would be between $700 and $850.”

Similarly, Georgette Boele, a precious metals strategist at ABN Amro, told The Wall Street Journal that the metal’s price could hit $850 per ounce in the wake of the scandal. “If consumers lose confidence in diesel cars, this will have a substantial impact on future platinum demand,” she explained.

Meanwhile, the palladium price has benefited from the situation. That’s because palladium is used in autocatalysts for gasoline engines, which could grab a bigger market share in the wake of the scandal.

As the BBC notes, diesel car sales were already slowing before the revelation of Volkswagen’s practices, and diesel cars only make up about 1 percent of all new car sales in the US.

However, the news is expected to have more of an effect in Europe, where diesel vehicles are more popular.

That said, not all analysts had the same reaction to the emissions scandal. When the news first came out, Carsten Menke of Julius Baer stated that the platinum sell off was overdone. The Wall Street Journal quoted the analyst as stating in a note, “[o]ur longer-term view remains bullish, not least due to persistent supply constraints. South African mine supply has likely peaked as low prices are putting increasing pressure on the producers.”

A widespread problem

Still, the scandal goes beyond Volkswagen. Diesel vehicles made by Mercedes-Benz, Honda (NYSE:HMC), Mazda (TSE:7261) and Mitsubishi (TSE:8058) also put out more dangerous emissions on the road than in lab tests.

The Guardian reported that while vehicles from the automakers hold up well in EU lab-based regulatory emissions tests, pollution from the vehicles goes well over regulatory limits in more realistic on-road tests. Honda, for example, emitted six times the regulatory limit of NOx pollution. A more detailed breakdown of emissions for each company can be found in The Guardian’s article.

Mercedes-Benz, Honda, Mazda and Mitsubishi are not the only companies that have joined the Volkswagen scandal either — The Guardian also reported that vehicles from no less than six other manufacturers pollute more under realistic driving conditions.

Autocatalysts account for roughly 40 percent of global platinum demand.

 

 

A Brief History of Platinum and the AMCU

South Africa produces roughly 70 percent of the world’s platinum supply, so it’s an important region for precious metals investors to watch.

In addition to keeping an eye on major producers such as Anglo American Platinum (JSE:AMS), Impala Platinum (JSE:IMP), Lonmin (LSE:LMI) and now Sibanye Gold (NYSE:SBGL), it’s important keep an eye out for news from the Association of Mineworkers and Construction Union, or the AMCU.

While the National Union of Mineworkers (NUM) is still strong in South Africa, the AMCU has become the major trade union at many platinum mines in South Africa. For example, it’s been noted that the AMCU represents up to 70 percent of lower-level workers at Lonmin, while the NUM is only responsible for about 20 percent. The union also represents workers at mines focused on other commodities, such as gold and coal.

Here’s a very brief overview of the AMCU and what investors need to know about the union.

Where the AMCU began

As per a detailed history of the union from South African History Online, the AMCU was formed in 1998 following a strike at Douglas Colliery, owned by BHP Billiton (NYSE:BHP,ASX:BHP,LSE:BLT). The union was a break-off faction from the NUM, and was officially registered as a union in 2001. The union insists that it remains apolitical.

Joseph Mathunjwa, who led the strike at BHP and was subsequently ousted from NUM, was asked to form a union and is still currently head of the AMCU. Notably, he convinced management at BHP to implement a bonus system for underground workers and admonished management at the mine to take responsibility when a worker died.

However, it wasn’t until 2008 that the AMCU started recruiting workers from platinum mines in the Rustenburg area. Since then, the union has continued to make a dent in NUM ranks, attracting workers who are not satisfied with that union.

The 2014 platinum strike

As part of its mandate to protect workers, neither the AMCU nor NUM are strangers to organizing strikes in order to fight for better rights for their members. Most recently, 30,000 NUM workers went on strike at coal mines in South Africa, while AMCU workers are set to vote to go on strike at gold mines owned by Harmony Gold Mining (NYSE:HMY), AngloGold Ashanti (NYSE:AU) and Sibanye Gold. According to Reuters, the strike will likely be deemed a wildcat at operations owned by the first two companies.

However, the AMCU-led strike at platinum-group metals mines in South Africa in 2014 illustrates just how damaging mineworker strikes can be. The strike lasted five months before officially coming to an end in June. The AMCU had originally demanded wages be raised by roughly 150 percent, but it ended up accepting a more modest rate increase.

When all was said and done, Amplats, Implats and Lonmin lost over $2 billion in revenue due to the strike, while workers lost almost $1 billion in unpaid wages. The companies were still ramping up production and recovering from the strike well into 2015.

Colen Garrow, an economist at Lefika Securities, recently told IOL beta that such strikes damaged the broader South African economy and hurt investor sentiment.

The AMCU and platinum prices

Certainly, halting platinum production in the world’s largest platinum-producing country for five months put a damper on supply. However, the platinum price didn’t react as strongly as expected to the supply crunch. Spot platinum rose roughly 7.36 percent between the start of 2014 and June 23, when the strike ended, but has fallen 32 percent, or $470, since then.

Still, for mining investors, it’s worth keeping an eye on what the AMCU is up to, as the union does have the potential to make major changes in the industry.

 

 

Opportunity in Platinum Stocks Outside of South Africa?

With South Africa producing over 70 percent of the world’s platinum, it’s no surprise that major producers Anglo American Platinum (JSE:AMS), Impala Platinum (JSE:IMP) and Lonmin (LSE:LMI) make the most headlines when it comes to platinum stocks.

However, given that a five-month strike put a big dent in output (and revenues) for those companies in 2014, some investors are no doubt looking at platinum projects in other regions of the world.

Certainly, the platinum price hasn’t performed well over the past year, and the recent Volkswagen (ETR:VOW3) scandal hasn’t helped matters (although the platinum price has bounced back slightly).

However, some investors and market watchers, including legendary mining entrepreneur Robert Friedland, are calling for a positive future for the platinum price in the long term. Investors who agree with that thesis may want to start doing their due diligence on platinum stocks now.

Here’s a look at platinum stocks outside of South Africa, as well as platinum stocks in the country that are smaller than the major producers mentioned above.

Platinum stocks outside of South Africa

Stillwater Mining (NYSE:SWC)

Stillwater Mining is the only US producer of platinum-group metals (PGMs), as well as the largest primary producer of the metals outside of South Africa and Russia. Its operations include the Stillwater and East Boulder mines in Montana, as well as a smelter, refinery and laboratory in the state. Stillwater also has a PGMs recycling operation where it recovers platinum and palladium from spent autocatalysts from vehicles.

Stillwater has seen some losses this year — its share price is down 37.72 percent year-to-date. It has also struggled to come to a labor agreement with union employees at its facilities. In August, the company reported that it would reduce its workforce by 119 employees, citing a deteriorating PGMs market. It has also modified its mine plan to focus on the most profitable areas within the Stillwater mine.

Wallbridge Mining (TSX:WM)

Wallbridge Mining is currently producing copper and PGMs at its Broken Hammer mine in Sudbury, Ontario, along with gold and silver. For the first half of 2015, Broken Hammer produced 87,000 tonnes of ore containing 1.8 million pounds of contained copper, 4,400 ounces of palladium, 5,000 ounces of platinum, 1,400 ounces of gold and 8,900 ounces of silver. The mine was closed from March 28 to June 1 due to municipal road load restrictions, and that impacted cash flow for the quarter.

However, Wallbridge is also advancing exploration properties in Ontario. After uncovering nickel-copper-PGMs mineralization at its Parkin properties in June, it signed an agreement for up to C$11 million in funding from South African PGMs producer Lonmin.

Wellgreen Platinum (TSX:WG)

Wellgreen is advancing its Wellgreen project in Canada’s Yukon. The company announced the results of an updated preliminary economic assessment for the project in February, outlining average annual production of 208,880 ounces of platinum, palladium and gold, as well as 73 million pounds of nickel and 55 million pounds of copper over the first 16 years of its 25-year mine life. The company has said that would make the mine one of the two largest platinum-producing mines outside of South Africa or Russia.

There has not been much further news from the company in 2015, although it did provide a project update at the end of May, stating that preparations are underway for a $4.2-million Phase 1 drill program at Wellgreen.

Transition Metals (TSXV:XTM)

Project generator Transition Metals holds interests in a number of different exploration projects in Canada, including its Itchen Lake gold property in Nunavut, Haultain gold property in Ontario, Janice Lake copper property in Saskatchewan and Sunday Lake platinum-palladium-copper-nickel project in Ontario. Transition announced this past August that it will commence the next phase of drilling at Sunday Lake property with its joint venture partner, Impala Platinum.


 

Sudbury Platinum

A subsidiary of Transition Metals, Sudbury Platinum is focused on advancing the Aer-Kidd property in Sudbury, Ontario. In May, Sudbury reported additional assay results from the property, including further intersections of copper-nickel-PGMs mineralization.

“We continue to be encouraged by the precious metal content of the mineralized zones. We have now defined mineralized trends based on geology, geophysics and mineralization that highlights the further potential at depth,” said Sudbury Platinum CEO Scott McLean. “Pursuit of similar trends at depth at Totten and Victoria adjacent to the Aer-Kidd Property has resulted in two of the most significant discoveries in the Sudbury camp in recent years. Our plan moving forward is to pursue these corridors at depth where we feel that there is excellent blue sky exploration potential.”

Rockland Minerals (OTCMKTS:RKMNF)

Rockland is focused on its Blue Lake copper-nickel-PGMs project in Quebec’s Labrador Trough. The company recently concluded summer exploration work at Blue Lake in August, and five of seven holes drilled encountered heavily disseminated and massive concentrations of magmatic sulfides over significant lengths. Assay results for the holes are still pending.

Polymet Mining (TSX:POM,NYSEMKT:PLM)

Polymet is developing the NorthMet copper-nickel-precious metals project in Northeastern Minnesota. The company is working towards completing an environmental review for the project, and recently received $6 million in secured debenture funding from Glencore (LSE:GLEN). The payment is part of a $30-million loan facility due on March 31, 2016.

Platinum stocks within South Africa

Ivanhoe Mines (TSX:IVN)

Headed by mining financier Robert Friedland, Ivanhoe Mines has been getting attention for its copper projects in the Democratic Republic of the Congo lately. The government recently dropped its previous objections to a transaction between Ivanhoe and China’s Zijin Mining (HKEX:2899).

However, the company is also developing the massive Platreef project in South Africa, for which it released a prefeasibility study in January. According to Ivanhoe, the mine is slated to be the lowest-cost producer of PGMs in Africa. In February, the company reported that box cutting was underway ahead of construction of shaft collar infrastructure for the mine.

Platinum Group Metals (TSX:PGM)

Focused on its Waterberg joint venture project in the Bushveld Complex in South Africa, Platinum Group Metals is targeting platinum production in 2015. The company reported in July that construction at the mine was roughly 90 percent complete, and that mineral resources and reserves at the project had been updated in order to account for the planned increased use of mechanized mining methods.

Platinum Group Metals also announced an increase to indicated and inferred resources at Waterberg on July 22.

Eastern Platinum (TSX:ELR)

Last November, Eastern Platinum entered an agreement to sell its South African assets to China’s Hebei Zhongbo Platinum. The company agreed to restructure the deal back in June, and received approval for the deal from the South African competitive authorities in September.

 


Opportunity in Platinum Stocks Outside South Africa

With South Africa producing over 70 percent of the world’s platinum, it’s no surprise that major producers Anglo American Platinum (JSE:AMS), Impala Platinum (JSE:IMP) and Lonmin (LSE:LMI) make the most headlines when it comes to platinum stocks.

However, given that a five-month strike put a big dent in output (and revenues) for those companies in 2014, some investors are no doubt looking at platinum projects in other regions of the world.

Here’s a look at platinum stocks outside of South Africa, as well as platinum stocks in the country that are smaller than the major producers mentioned above.

Platinum stocks outside South Africa

Stillwater Mining (NYSE:SWC)

Stillwater Mining is the only US producer of platinum-group metals (PGMs), as well as the largest primary producer of the metals outside of South Africa and Russia. Its operations include the Stillwater and East Boulder mines in Montana, as well as a smelter, refinery and laboratory in the state. Stillwater also has a PGMs recycling operation where it recovers platinum and palladium from spent autocatalysts from vehicles.

Stillwater has seen some losses this year — its share price is down 37.72 percent year-to-date. It has also struggled to come to a labor agreement with union employees at its facilities. In August, the company reported that it would reduce its workforce by 119 employees, citing a deteriorating PGMs market. It has also modified its mine plan to focus on the most profitable areas within the Stillwater mine.

Wallbridge Mining (TSX:WM)

Wallbridge Mining is currently producing copper and PGMs at its Broken Hammer mine in Sudbury, Ontario, along with gold and silver. For the first half of 2015, Broken Hammer produced 87,000 tonnes of ore containing 1.8 million pounds of contained copper, 4,400 ounces of palladium, 5,000 ounces of platinum, 1,400 ounces of gold and 8,900 ounces of silver. The mine was closed from March 28 to June 1 due to municipal road load restrictions, and that impacted cash flow for the quarter.

However, Wallbridge is also advancing exploration properties in Ontario. After uncovering nickel-copper-PGMs mineralization at its Parkin properties in June, it signed an agreement for up to C$11 million in funding from South African PGMs producer Lonmin.

Wellgreen Platinum (TSX:WG)

Wellgreen is advancing its Wellgreen project in Canada’s Yukon. The company announced the results of an updated preliminary economic assessment for the project in February, outlining average annual production of 208,880 ounces of platinum, palladium and gold, as well as 73 million pounds of nickel and 55 million pounds of copper over the first 16 years of its 25-year mine life. The company has said that would make the mine one of the two largest platinum-producing mines outside of South Africa and Russia.

There has not been much further news from the company in 2015, although it did provide a project update at the end of May, stating that preparations are underway for a $4.2-million Phase 1 drill program at Wellgreen.

Transition Metals (TSXV:XTM)

Project generator Transition Metals holds interests in a number of different exploration projects in Canada, including its Itchen Lake gold property in Nunavut, Haultain gold property in Ontario, Janice Lake copper property in Saskatchewan and Sunday Lake platinum-palladium-copper-nickel project in Ontario. Transition announced this past August that it will commence the next phase of drilling at Sunday Lake with its joint venture partner, Impala Platinum.

Sudbury Platinum

A subsidiary of Transition Metals, Sudbury Platinum is focused on advancing the Aer-Kidd property in Sudbury, Ontario. In May, Sudbury reported additional assay results from the property, including further intersections of copper-nickel-PGMs mineralization.

“We continue to be encouraged by the precious metal content of the mineralized zones. We have now defined mineralized trends based on geology, geophysics and mineralization that highlights the further potential at depth,” said Sudbury Platinum CEO Scott McLean. “Pursuit of similar trends at depth at Totten and Victoria adjacent to the Aer-Kidd Property has resulted in two of the most significant discoveries in the Sudbury camp in recent years. Our plan moving forward is to pursue these corridors at depth where we feel that there is excellent blue sky exploration potential.”

Rockland Minerals (OTCMKTS:RKMNF)

Rockland is focused on its Blue Lake copper-nickel-PGMs project in Quebec’s Labrador Trough. The company recently concluded summer exploration work at Blue Lake in August, and five of seven holes drilled encountered heavily disseminated and massive concentrations of magmatic sulfides over significant lengths. Assay results for the holes are still pending.

Polymet Mining (TSX:POM,NYSEMKT:PLM)

Polymet is developing the NorthMet copper-nickel-precious metals project in Northeastern Minnesota. The company is working towards completing an environmental review for the project, and recently received $6 million in secured debenture funding from Glencore (LSE:GLEN). The payment is part of a $30-million loan facility due on March 31, 2016.

Platinum stocks within South Africa

Ivanhoe Mines (TSX:IVN)

Headed by mining financier Robert Friedland, Ivanhoe Mines has been getting attention for its copper projects in the Democratic Republic of the Congo lately. The government recently dropped its previous objections to a transaction between Ivanhoe and China’s Zijin Mining (HKEX:2899).

However, the company is also developing the massive Platreef project in South Africa, for which it released a prefeasibility study in January. According to Ivanhoe, the mine is slated to be the lowest-cost producer of PGMs in Africa. In February, the company reported that box cutting was underway ahead of construction of shaft collar infrastructure for the mine.

Platinum Group Metals (TSX:PGM)

Focused on its Waterberg joint venture project in the Bushveld Complex in South Africa, Platinum Group Metals is targeting platinum production in 2015. The company reported in July that construction at the mine was roughly 90 percent complete, and that mineral resources and reserves at the project had been updated in order to account for increased use of mechanized mining methods.

Platinum Group Metals also announced an increase to indicated and inferred resources at Waterberg on July 22.

Eastern Platinum (TSX:ELR)

Last November, Eastern Platinum entered an agreement to sell its South African assets to China’s Hebei Zhongbo Platinum. The company agreed to restructure the deal back in June, and received approval for the deal from the South African competitive authorities in September.

Did we miss a platinum stock outside South Africa? Please let us know in the comments!

 

Securities Disclosure: I, Teresa Matich, hold no direct investment interest in any company mentioned in this article.


Amplats Considers Floating South African Mines

Reuters reported that Anglo American Platinum (OTCMKTS:AGPPY) may float its South African mines instead of selling them because it had received offers that were too low.

As quoted in the market news,

One Johannesburg-based investment banker also said the company, commonly known as Amplats, had received a few offers for its Union Mine and three others near Rustenburg but had “thrown them into the dustbin” because they were too low.

Click here for the full Reuters report


Norilsk Sees Africa Cutting Platinum Output

Bloomberg reported that OAO GMK Norilsk Nickel sees South Africa cutting platinum output in the coming years.

As quoted in the market news,

Production of platinum and palladium, which are mined from the same deposits and used in automobile catalytic converters, has been lower than demand since at least 2012. Opaque stockpiles held by hedge funds have contributed to price volatility, according to Norilsk.

Anton Berlin, head of strategic marketing at Norilsk, stated:

Investments in a vast amount of projects in South Africa were delayed and it’s hard to expect an increase in output in the region. Most likely, it will even fall.

Click here for the full Bloomberg report


Proposal of Establishment of South African PGMs Exchange Delayed

Mining Weekly reported that the vested interests of the existing market structures and the lack of understanding within the industry and in government’s policy creation circles are the reasons behind the delay in the establishment of PGMs exchange in South Africa.

As quoted in the market news,

As more than 80% of the world’s known platinum-group metals (PGMs) reserves are in South Africa, it is ideal that a PGMs exchange be established locally to ensure that the country receives maximum benefit from its mineral wealth, avers investment company Pan-African Investments & Research Services CE Dr Iraj Abedian.

Abedian has been advocating the establishment of a locally based PGMs exchange for about the past five years.

Click here for the full Mining Weekly report


Ivanhoe Mines Resumes Site Work at Platreef Project in South Africa

Ivanhoe Mines Ltd. (TSX:IVN) announced that preparations have begun for a resumption of site work at its planned underground mine at the company’s Platreef project in Limpopo, South Africa. Drilling for metallurgical testing samples seeking to identify platinum-group metals is planned for 2017 after work on the shaft and related mining-plant components is completed.

As quoted in the release:

Ivanhoe Mines Executive Chairman Robert Friedland and Chief Executive Officer Lars-Eric Johansson confirmed today that preparations have begun for a resumption of site work for the construction of the initial production shaft as part of the first phase of development of the planned underground mine at the company’s Platreef Project on the Bushveld’s Northern Limb, in Limpopo province.

Executive Chairman Robert Friedland stated:

For a long time now, the development of our Platreef Project has been a destiny waiting to be fulfilled. It is said that great mines are ‘made’, as much as they are ‘found’.

Our Platreef story began more than 20 years ago when Bill Hayden, the Australia-based international geologist who founded Platreef Resources in 1988, approached Ivanhoe Capital to discuss potential exploration financing…

Mr. Hayden’s pitch coincided with preparations by one of Ivanhoe Capital’s affiliated companies, African Minerals Corp., to organize its own reach for opportunities in southern Africa’s mineral fields. We discovered we shared a keen interest in finding a door to South Africa’s platinum club on the Bushveld.

Click here to see the full new release.


Construction Delays Reported at Robert Friedland’s South Africa Platinum Mine

Ivanhoe Mines (TSX:IVN), lead by billionaire Robert Friedland, has run into delays in construction of its $1.6 billion Platreef mine, according to Bloomberg. The news outlet reported that the roadblock is due to a disagreement between the miner and South Africa’s mines ministry regarding benefits of the mine to local communities.

As quoted in the publication:

South Africa’s Department of Mineral Resources delayed authorization to start building the $1.6 billion Platreef mine by 12 weeks to a target date of Nov. 26, saying some elements of the company’s plan to benefit the surrounding community were “sketchy” and did “not offer much,” according to an Oct. 2 letter sent to Ivanhoe and seen by Bloomberg. The department said its demands were “not exhaustive” and it may request “further clarification” before it gives the go-ahead.

Ivanhoe CEO Lars-Eric Johansson said on October 9:

We believe that each and every formal request by your department to date has been accommodated.

Click here to read the full article.


Russia, South Africa to Become the OPEC of Platinum?

Russia, South Africa to Become the OPEC of Platinum?

Platinum and palladium are not performing as well as expected this year, and major producers Russia and South Africa have decided to do something about it. Bloomberg reported last Wednesday that the two countries will meet next month to discuss their mutual interest in the white metals, and the possibility of bolstering prices.

According to Russian Minister of Natural Resources Sergei Donskoi, one idea is to use central banks to increase platinum and palladium purchases. ”This won’t be a trading agreement, but the main aim of this cooperation is to put together the interests of the two countries in this field,” he told Bloomberg.

It’s a scenario that Mineweb’s Kip Keen recently likened to the formation of the Organization of the Petroleum Exporting Countries (OPEC), noting that despite legal ambiguities surrounding the oil producers’ arrangement, OPEC has “long got away with” what it set out to do. However, he believes the comparison also illustrates the legal difficulties of such an endeavour.

Could it work?

Most signs point to “no,” although there are some positives inherent to the idea. Keen sees the plan as “the least silly idea circulating in the bid to boost platinum prices.” As he explains in his article, nations are more difficult to pin down as the guilty party than other entities when it comes to price-control schemes.

“Look at OPEC,” he states, noting that while some have cried foul over the organization’s control over the oil sector, none have succeeded in bringing the group down.

However, he notes that mirroring the idea with platinum would be incredibly messy and complicated. Harry First, a law professor at the New York University School of Law — who is well versed in the legality of OPEC-type situations — confirmed Keen’s concerns.

Although First said that the nations “could probably do it,” he agrees that such a price-control arrangement would face strong opposition on all fronts: from the public, from end users and of course, from other countries as well.

Not-so-mutual interests

David Jollie, strategic analyst at Mitsui & Co Precious Metals, has also expressed his doubts. In an interview with BizNews.com, the analyst stresses that the two countries actually produce different metals; South Africa is mostly platinum focused, while Russia has mainly palladium. Both players have relationships with different miners, producers and customers, and the analyst believes that “whether they actually share enough interests to want to move the same way in the market will be interesting to see.”

Jollie sees price-boosting efforts as a possibility, but whether it will happen at the state level is “a much more dubious question.”

Even domestic companies may be hesitant about the potential PGM-buying partnership. Russia’s Norilsk Nickel (OTCMKTS:NILSY,MCX:GMKN) has spoken out against the state buying up palladium in the past, stating “[p]alladium is not a gold and currency reserve … It should be sold rather than bought by the state.” BullionVault notes that the company said recently that it is planning to buy palladium from Russia’s government.

Wait and see

There are a number of other roadblocks that such a price-control arrangement could encounter — there’s a good chance the countries’ trading partners wouldn’t be too pleased. However, investors with a stake in platinum and palladium will no doubt be watching for results of the talks next month to see what the top PGM-producing countries come up with.

 

Securities Disclosure: I, Teresa Matich, hold no direct investment interest in any company mentioned in this article.


South African Mine Output Drops to Lowest Since Late 2012

Reuters Africa reported that mining output from South Africa has fallen to its lowest in 19 months, with those losses mostly driven by decreased platinum group metals production.

As quoted in the publication:

Mining output in Africa’s most advanced economy dropped 7.7 percent year-on-year in July, from a revised 5.4 percent decline in June, Statistics South Africa said, with output largely hit by platinum group metals, which fell more than 45 percent.

Economists polled by Reuters had expected mining output to contract 6.35 percent.

Click here to read the full article.


Lonmin Plans to Cut 21% of Workforce in South Africa

The Guardian reported that South African focused platinum producer Lonmin (LSE:LMI) expects to cut roughly 21% of jobs at its South African operations. The cuts come “as part of a drive to increase profits” following this year’s protracted strikes, according to the Guardian.

As quoted in the publication:

The company, the world’s third-largest producer of the precious metal used for emissions-capping catalytic converters, said in June that the strike and low prices meant restructuring of the business had become inevitable.

Job cuts could trigger more labour unrest, including strikes by the Association of Mineworkers and Construction Union (AMCU).

“There will be six shafts closed and 5,700 jobs will go. That is the plan,” the Johannesburg source, who declined to be identified, said. Lonmin has a staff of about 27,000.

The source did not disclose which shafts would go but said Lonmin had decided it could no longer subsidise the loss-making shafts and had to focus on the profitable ones.

Click here to read the full Guardian article.


Northam Platinum Wants to Buy South African Mines

Reuters reported that South Africa’s Northam Platinum (JSE:NHM) wants to buy up South African platinum mines despite recording full year losses due to protracted strikes earlier this year. According to Reuters, Northam has reviewed its strategy due to what it sees as opportunities arising in the sector.

As quoted in the publication:

The mid-tier platinum producer said it would use its positive cash position and call on shareholders for funds to enable it to acquire assets. ”We do believe that we have good support from our institutional shareholders. If we have got the government right behind us – and we work shoulder to shoulder – we could be able to raise the money,” Northam chief executive Paul Dunne said at a results presentation on Thursday.

Anglo American Platinum (Amplats), the world’s top platinum producer, said in July that it plans to sell a slate of mines in its drive to recover from a five-month strike and shift towards more mechanised mining.

Click here to read the full Reuters article.


Platinum Group Metals Files NI 43-101 Technical Report for South African Projects

Platinum Group Metals Ltd. (TSX:PTM,NYSEMKT:PLG) announced that it has filed the NI 43-101 technical report associated with its June 12, 2014 announcement regarding an increase in the estimated inferred mineral resource at its Waterberg joint venture and adjacent Waterberg Extension, both located in South Africa.

As quoted in the press release:

The report, entitled ‘Revised and Updated Mineral Resource Estimate for the Waterberg Joint Venture and Waterberg Extension Projects, South Africa (Latitude 23 degrees 22′ 01″S, Longitude 28 degrees 49′ 42″E)’ is dated effective June 12, 2014 and was prepared by Kenneth Lomberg, B.Sc. (Hons) Geology, B. Com., M. Eng. Pr.Sci.Nat. and Alan Goldschmidt, Pr.Sci.Nat., of Coffey Mining (SA) Pty Ltd. supporting the disclosure of the updated inferred mineral resource estimate. The technical report is consistent in all material respects with the inferred mineral resource estimates announced in the Release. A copy of the report can be found at www.sedar.com and on the Company’s website.

Click here to read the full Platinum Group Metals Ltd. (TSX:PTM,NYSEMKT:PLG) press release.


At Surface and Out of Africa: CEO Greg Johnson on Wellgreen Platinum’s Yukon Project

At Surface and Out of Africa: CEO Greg Johnson on Wellgreen Platinum's Yukon ProjectSouth Africa, long known as a platinum and palladium powerhouse, saw an end to a protracted miners’ strike last week. However, the white metals are still rallying, and South African mines will take time to ramp up production again. In light of those factors, investors and analysts may be interested in looking at companies that operate outside that country. 

One such company is Wellgreen Platinum (TSXV:WG), which holds the Wellgreen deposit, a large PGM-nickel-copper deposit in Canada’s Yukon. It features mineralization that begins at surface rather than deep underground, making it noteworthy for miners and investors alike.

To find out more about the company, Platinum Investing News (PIN) spoke with Wellgreen’s president and CEO, Greg Johnson. In the interview below, the CEO discusses the unique characteristics of the Wellgreen deposit, the importance of PGM projects in mining-friendly jurisdictions and what’s next for Wellgreen Platinum.

PIN: Just to start off with, I don’t think we’ve covered Wellgreen extensively on our network before, so could you tell our readers a bit about your company?

GJ: Wellgreen is a PGM-focused exploration and development company, and our primary asset is the Wellgreen project, which is located in the Yukon territory. It’s one of the largest undeveloped platinum and palladium resources in the world at about 10 million ounces, and it’s an open-pittable type deposit. This is quite unique in that most of the world’s platinum and palladium is concentrated in Southern Africa and Russia, so a large deposit in general is quite rare, and one that’s located in Canada in an open-pittable type configuration is even more scarce, so we’re seeing strong investor interest in the company. We just recently completed a $6.9-million financing that’s going to allow the company to move seamlessly into the prefeasibility level of activity this field season.

PIN: How does the Wellgreen deposit compare to others around the world?

GJ: Wellgreen is one of the largest undeveloped projects of its kind in the world, and has the potential to be a very significant producer. Most of the world’s platinum and palladium production is coming from deep, underground mines that are quite costly to operate, very labor intensive and don’t have the ability to really scale up the way you can with an open pit.

Our project is quite unique in that its very wide widths of mineralization start right at surface and are typically between 100 and up to 700 meters wide. So in many ways our project would look more like a porphyry copper-gold type deposit, except that our metals are PGMs and nickel. This is a project that was historically developed back in the 1970s by HudBay Minerals (TSX:HBM) as a high-grade underground operation, but since the late 90s, the focus has been on looking at it as a bulk mineable deposit, and that has been the focus of Wellgreen Platinum’s activities as well.

PIN: Interesting. I’ve seen a few comparisons between platinum deposits; for example, Ivanhoe Mines’ (TSX:IVN) Flatreef deposit in South Africa vs. the Bushveld Complex. How does Wellgreen compare to that deposit?

GJ: In terms of comparison, what makes the Ivanhoe and Platinum Group Metals (TSX:PTM,NYSEMKT:PLG) deposits stand out from the others in South Africa is that even though they’re mostly underground, they have much greater widths of mineralization than is typical of the area. I believe with Platinum Group Metals it’s around 25 meters width and I think for Ivanhoe it’s up to 90 meters in width.

Our mineralization on the western end of the Wellgreen deposit, where it’s the narrowest, is about 100 to 200 meters in width, and it widens out to over 500 meters at surface in the central part of the deposit; it then expands to almost a kilometer wide at the eastern end of the deposit where it’s open. So it’s a very large system, and we’re also fortunate with the geometry, since mineralization starts right at surface as opposed to being a kilometer deep or more, which is more typical in South Africa and Russia. And that’s just really the result of the particular geologic setting that we have at Wellgreen, which means that it happens to be exposed right at the surface. That allows us to look at far wider zones of mineralization with a slightly overall lower grade because it’s open-pit mining cost as opposed to underground mining cost.

PIN: How unusual is it to have an open-pittable platinum deposit?

GJ: It’s quite unusual, around 95 percent of the world’s platinum production is from underground mines. There are a handful of projects in the first world that are open pit and those tend to be the lowest-cost producers. I think much like we’ve seen in the gold and the silver business over time we’re going to see a migration towards the lower-cost, higher-scale open-pit type operations. The challenge is you have to have the right kinds of geology, the right rocks to host these deposits, and the ultramafic rocks that host ours are exceedingly rare; they only occur in a few places globally.

PIN: And you said there was historic mining in the area?

GJ: Yes, the historic infrastructure is still in place and available. We are right now updating our preliminary economic assessment on the project and targeting this summer for release. It will update the overall resource estimate on the project, as well address the major objective of converting a significant portion of the inferred ounces into measured and indicated.

Importantly, it will also update the overall approach to the mining of the project. The new approach that’s being developed is looking at a smaller-scale operation that has lower capital investment up front, but is focused on higher-grade material, so we think that should enhance the economics. Then, later in the mine plan, the project gets naturally wider as we start mining deeper and towards the east the project; at that point, we would likely scale up to a higher throughput level with the geometry of the deposit changing. And that could result in the project being one of the largest first-world producers of PGMs.

PIN: What does your timeline look like in terms of getting to commercial production?

GJ: Right now we are looking to start prefeasibility activities in the second half of this year. That would likely allow us to start feasibility activities in 2015, so potentially we could be looking at a construction decision in 2017, which would allow for first production in 2018 or perhaps 2019. For a development-stage project, it has the opportunity to move quite rapidly, and because the Yukon is one of the best jurisdictions for mining in Canada, there’s a very straightforward permitting and regulatory process to move the project forward to production.

PIN: Your website highlights the importance of your projects being outside of South Africa and Russia, which have been problematic jurisdictions in the past, but are the world’s largest PGM producers. What is the importance of platinum and palladium projects outside of these jurisdictions?

GJ: Starting on the demand side in general, the fundamentals for platinum and palladium are quite different than what we see today in gold and silver. Platinum and palladium are also precious metals, but the single largest use for both is catalytic converters in automobiles. So we’ve basically seen nearly continuous demand growth since the mid-1980s for platinum and palladium, particularly for catalytic converters. As higher emissions standards are implemented in the first world and in the developing world, we’re seeing that growth continue.

That demand growth was matched up until the mid-2000s, with new mine supply of platinum and palladium as one might expect, but because of the challenges of mining deep underground in South Africa and in Russia, we’ve seen falling mine supplies since 2006 for platinum and since 2004 for palladium. The main decrease in supply on the platinum side was due to a decrease in production supply from South Africa, while the main decrease in supply of palladium came from decreasing supply out of Russia. So the opportunity to have a project located in Canada that has an open-pittable and very saleable configuration that could add to the source of supply outside of Southern Africa or Russia has real strategic value.

PIN: Given the current situation in Russia and South Africa, what do you think the future holds for PGM producers in North America?

GJ: Well, the trend was in motion well before the strike in terms of declining supply out of South Africa and Russia, so most analysts continue to project deficits in terms of mined supply vs. total demand for the metals. That’s obviously very bullish for projects that are in areas that don’t have the same kind of political and operating risks that we see today in South Africa and Russia. We would not expect that the removal of the strike would significantly change the overall fundamentals, and in fact, you’ve taken about a million ounces of platinum off the market this year from the strikes, so potentially with that lack of production taking away additional sources of supply for the market, I think analysts are expecting looking to see continued increase in prices looking forward to at least 2020.

PIN: Well, that’s good news. Did you have anything else to add?

GJ: The other point that we would make is that this is a very large property position. The deposit that we’re working on in the main Wellgreen area is about 2.5 kilometers long and has about 800 drill holes that define the resource, so it’s quite well understood. But that is just one part of an 18-kilometer-long overall geologic system. There has been modest historic work done on those other areas, where the host rocks come to surface, but that’s one of the things we’re also looking at and we’re certainly open to the possibility that this could be more of a district scale operation or play.

 

Securities Disclosure: I, Teresa Matich, hold no direct investment interest in any company mentioned in this article. 

Editorial Disclosure: Interviews conducted by the Investing News Network are edited for clarity. The Investing News Network does not guarantee the accuracy or thoroughness of the information reported. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence. 


Anglo American Puts South Africa Mines Up For Sale

Reuters reported that following earlier indications that American Platinum (LSE:AAL) might sell its assets in South Africa, the miner has indeed put its mines up for sale.

As quoted in the publication:

The Sunday Times said the disposal programme was agreed by the board at a strategy meeting this month and could raise up to $4 billion. Other assets up for sale include its nickel business and copper mines in Chile, it said.

Click here to read the full Reuters article.


South Africa Miners Return to Work

Reuters reported that workers at South African platinum mines owned by Anglo American Platinum (LSE:AAL), Impala Platinum (JSE:IMP) and Lonmin (LSE:LMI) cheered as they returned to work this week following the end of a five month strike. As Reuters wrote, the strike has so far cost the companies an estimated over $1 billion in revenues.

As quoted in the publication:

Lonmin had set up huge canvas tents in a nearby stadium where miners underwent medical and other checks. Calling for a “living wage” for its members, many of whom live in poverty, the Association of Mineworkers and Construction Union (AMCU) had demanded an immediate doubling of basic wages to 12,500 rand (£694) a month. In the end, it settled for raises of up to around 20 percent annually. The companies will find even that increase hard to absorb. Around half of the country’s platinum shafts were losing money even before the strike.

Edward Sterck at BMO Capital Markets told Reuters:

The market is probably still underestimating the true cost of the strike on the companies’ balance sheet and the cost of returning operations to production. So until we have got visibility on that I would remain somewhat cautious. The focus for investors will be whether we see any upward movement of the platinum price and also some clarity on what the true cost of the strike has been.

Click here to read the full Reuters article.