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[xirox]

Contrarian Alert: A Compelling Opportunity Is Emerging For North American Platinum And Palladium Producers And Developers


Global inventories of platinum and palladium are rapidly depleting.
Major South African producers are reducing production.
Russian ministers are meeting again with South African ministers in November in efforts to establish a global Pt/Pd cartel.
North America holds large Pt/Pd resources, and select producers/developers could benefit significantly from the coming bull market.
After a close review of North American producers and developers, I favor Stillwater Mining and Wellgreen Platinum.
[This article covers one or more stocks trading at less than $1 per share and/or with less than a $100 million market cap. Please be aware of the risks associated with these stocks.]

After a close study of J.P. Morgan's recent 111-page research report on platinum and palladium, with special emphasis on South African producers, I am very bullish on select North American platinum and palladium producers and developers. The J.P. Morgan analysts are very positive on the future of both platinum [Pt] and palladium [Pd], and now, after the apparent bottoming pattern of the price for both commodities, it appears the short-term consolidation in a longer-term bull market has returned, or is close to doing so, and presents a significant value investment opportunity here at these levels.

Based on a thorough breakdown of global inventories, of projected supply of Pt and Pd production by mine and region, and of demand by application and region, the J.P. Morgan report demonstrates that Pt and Pd are in deficit - significantly more is getting used than is being produced. This fact has been previously well-documented by CPM Group, Thomson Reuters GFMS and Johnson Matthey. The price of platinum, today in the range of $1,260/oz., is well below production cost for more than half of all platinum mines, which are overwhelmingly concentrated in South Africa and rely on the labor-intensive, manual mining methods necessary to extract from the deep and narrow mineralized seams typical of the region.

Platinum Projections

Pt prices need to rise substantially to incentivize increased production that would be necessary to offset continued global growth in demand - driven predominantly by the autocatalyst sector, which is forecast to continue to expand in terms of both catalytic converter units and PGM loading per unit, as detailed by Standard Bank Group in their report from April this year. J.P. Morgan projects an average price for platinum in 2015 of $1638/oz. - with the price rising each quarter next year - a very bullish projection.

In 2016, the analysts anticipate platinum to average $1850/oz. Their longer-term price is $2000/oz., based on the minimum estimated price to incentivize the development of a new deep-level South African mine.

Key to any analysis of platinum and palladium fundamentals is a recognition of the role that above-ground stockpiles have and continue to play in the near term. The most recent and obvious example was the fact that, despite the lengthy and costly South Africa labor strike in 2014, which resulted in over a million ounces of lost production, the platinum price remained relatively stable. Both the J.P. Morgan and Standard Bank studies address this factor and conclude that excess stockpiles of Pt are in the process of being rapidly depleted, and by growing supply deficits, this will accelerate to negligible within the next three years. As this plays out, pricing action in Pt will become more purely governed by the bullish supply/demand fundamentals.

Palladium Projections

The situation is similar, but more dramatic, with respect to the palladium industry, where analysts project stockpiles to be eliminated more rapidly. It is part of the reason J.P. Morgan analysts are even more bullish on palladium than platinum. Pd is clearly in production deficit today. Russia and South Africa are the largest suppliers. While an ounce of palladium is currently priced in the range of $780/oz., they project an average price in 2015 of $963/oz. and $1000/oz. in 2016, with a longer-term price of $1100/oz., based on their projection of the incentive price for new mine production. This represents increases of 23%, 28% and 41%, respectively. Those are the kinds of numbers that have a dramatic effect on a producer's bottom line and on the valuation given to those in the development stages.

A major takeaway from the J.P. Morgan report is that there is very little near-term stability among the major Pt and Pd producers, most of which are based in South Africa, with some production in Russia and Zimbabwe. Major producers are reducing supply and restructuring existing operations. More on this in a moment. Even with additional recycling, it is clear that new supplies are needed to meet the growth demands of the global auto manufacturers, who use a small amount of either platinum for diesel engines or palladium for gasoline engines in the catalytic converters of every new car and truck produced. As environmental conditions in the emerging world become critical and more stringent environmental emissions standards come into force - along with growth in auto sales - new sources of supply from stable regions will be needed. North America is the one mining-stable region with large undeveloped Pt/Pd resources.

Auto Emission Standards Are Rising Globally

(click to enlarge)
Table

Source: Standard Bank Group, SBG Securities, April 23, 2014

Platinum and Palladium Mine Production Continues to Fall

Since South Africa produces the most platinum and holds the most reserves, the state of the major South African platinum producers is critical to understanding the future of the industry. These companies - Anglo American Platinum (Amplats), Impala Platinum (Implats), Lonmin, Aquarius, Atlatsa, as well as Northam, Africa Rainbow Minerals and Royal Bafokeng - have just this year endured a five-month workers' strike, and have now to adjust operations and make significant restructuring, selling or spinning off low-margin production that would lose money today, in order to continue operating and to satisfy terms of the adjusted contracts. And this has to be done cautiously, with all South African eyes on employment rates in the mining sector. Mine production peaked in 2006 for platinum and in 2004 for palladium, and has been falling ever since - a long-term trend that's about to intensify.

As stated in a Bloomberg article on October 9, "South African producers, the source of more than 70 percent of the precious metal, are under pressure to close or sell their least-efficient operations amid the lowest platinum prices in five years, dwindling ore grades and higher labor costs they agreed to during a five-month strike, according to Platinum Group Chief Executive Officer Michael Jones. The biggest platinum miners may reduce as much as 2 million ounces of annual capacity in the next six months, Jones said. 'The change in the business environment is going to allow room for new deposits to come on.'" (Note that Platinum Group Metals (NYSEMKT:PLG) is in construction of a PGM mine in the western Bushveld, and holds a large PGM resource in early development in the northern Bushveld.)

OPEC-Style Cartel in Formation for Pt and Pd

1. Platinum is extremely rare. Pt and Pd are 10 times as rare as gold, and annual production is only approx. 1/10th that of gold. It is also difficult to mine, and can be complex and costly to extract from ore. Barriers to entry are extreme.

2. According to Johnson Matthey, South Africa, Zimbabwe and Russia produced 90% of the world's Pt and nearly 80% of the world's Pd in 2013. Most other production comes from recycling, with some modest production in other parts of the world. South Africa and Zimbabwe hold 90% of the world's reserves of platinum. Russia's supply of both Pt and Pd comes as a by-product from other mining, particularly nickel.

Note well that a Pt/Pd cartel is being openly discussed among these three countries and being driven by Russia, a country with experience in establishing cartel-oriented commodities trade.

3. As reported by Bloomberg on October 7, based on an interview by Bloomberg reporters with Russia's Natural Resources Minister, Sergei Donskoi, Russia and South Africa will meet in November - within a month - to advance their discussions and to cooperate to support PGM (Platinum Group Metal) prices. The two countries signed a pact in March 2013 to set up an OPEC-style bloc to coordinate exports of PGMs.

4. Concurrently, with much fanfare last month, Russia committed $1 billion to Zimbabwe - the first $1 billion of a total of $3 billion that Russia has committed to Zim PGM mining - for development of Zimbabwe's Darwendale PGM Mine, a massive Pt/Pd project targeted to become the second-largest Pt producer in the world, despite threats of further sanctions from the US.

5. In short, PGMs make ideal metals for establishing global price controls, since there are just three major producing nations. Russia is aggressively making certain that by coordinating exports with South Africa and Zimbabwe, they will have a far stronger lock on Pt/Pd supply than can be achieved with other of their favorite commodity exports, including oil, natural gas and processed uranium.

On the Demand Side

Two additional notes are needed here: First, according to J.P. Morgan, ETFs hold approximately 1.5 million oz. Pt and 2 million oz. Pd. These ounces were mostly purchased at a much higher cost, mainly in 2010 and 2013, and the J.P. Morgan analysts do not believe a material amount of ETF holdings will be liquidated anywhere near the low prices of today.

Second, and importantly, on the demand side of the equation, the mover is global auto sales. Anticipation of reduced auto demand in Europe and China because of their sputtering economies has been the headline item in explaining why Pt and Pd tumbled in recent months. J.P. Morgan forecasts 2%/year growth in global auto and truck sales in 2014 and 2015. The analysts note that even with no growth in new auto sales, emission standards in the EU and other parts of the world are tightening, and will require greater use of Pt and Pd.

There is a limit to the substitution of lower-priced Pd for Pt in catalytic converters, note the analysts, because as the price of Pd rises relative to Pt, the benefits of substitution decline and can reverse. "A positive outlook for palladium in the longer term invariably implies a positive platinum outlook although not to the same extent."

North American Solutions

Looking at these factors from the automotive manufacturer's viewpoint, a major new source of near-term, low-cost platinum and palladium production in a stable, mining-friendly jurisdiction has to be a top priority. Most cars and trucks are manufactured in China, India, Japan, the U.S. and the EU.

North America has the only significant PGM resources outside of southern Africa/Russia. New and expanded production of Pt/Pd in North America would be ideal, and the candidate companies that I've reviewed include Stillwater Mining Company (NYSE:SWC), Wellgreen Platinum (OTCQX:WGPLF), Duluth Metals (OTCPKULMF), PolyMet Mining Corp. (NYSEMKT:PLM) and North American Palladium (NYSEMKT:PAL). While these companies all stand to benefit if events develop as analysts anticipate, I've concluded that SWC and WGPLF may represent the strongest opportunities for nearer-term, potentially very large gains.

1. Stillwater Mining Company is a well-known and recognized firm with a share price that has been pummeled by the down prices of palladium and platinum. The analysts believe this is a temporary downturn, has probably already bottomed, and that Stillwater stands to gain significantly in the coming months as the prices of palladium and platinum recover.

Since July, SWC has fallen from +$19/share to below $14/share. Today's market cap is $1.7 billion, with 120 million shares outstanding. Five analysts are reporting on the company, and show an average price target of $21/share. If the J.P. Morgan analysts are correct about the coming prices of Pt and Pd, this stock is poised to roar back and take out previous highs as the largest producer in the first world, despite the relatively high cost per ounce of its underground production. Stillwater has a significant recycling component to its operations as well; a key positive, in my view.

2. Wellgreen Platinum Ltd. is a lesser-known, development-stage company that is gaining recognition due to the significant advancements by the company's new management team over the past 2 years. The company now holds one of the largest Pt/Pd resources outside of southern Africa and Russia, with a global resource of more than 19 million ounces of platinum, palladium and gold in all categories, with co-occurring nickel, copper and cobalt, and including over 5 million platinum and palladium ounces in the highest-confidence Measured and Indicated resource category. Based on current comparable development stage valuations in the sector averaging $20 of enterprise value per ounce of total resource, this company is radically undervalued for the size, quality and location of its deposit.

The company's main project is located in southwestern Yukon, Canada, adjacent to the Alaska Highway, which connects to year-round shipping ports in Haines and Skagway, Alaska. Wellgreen has a veteran management and technical team with experience in permitting, developing and producing both open-pit and underground mines in the Yukon and other parts of Canada and Alaska. An important factor.

Wellgreen is being developed as an open-pit mine, greatly reducing the capital expenditure as compared with most pre-production PGM miners, and reducing overall operating expenses per ton mined by as much as 90% versus underground operations. At present, the company is targeting the delivery of an updated, independent preliminary economic assessment (PEA) before year-end. In 2012, the company published an initial economic assessment which, while quite positive, left much room for optimization. Since that time, new testwork has notably improved the understanding of the processing and recovery of the larger, richer resource, which is also far better understood from a technical and geological standpoint.

It is also noteworthy that like some other low-cost, tier one platinum and palladium producing assets in the Sudbury Mining District (and Noril'sk), the Wellgreen project's PGM mineralization occurs along with a very significant volume of nickel and other base metals. Net of these by-product or co-product credits, Wellgreen would certainly be among the lowest cash cost producers in the sector. Inclusion of rhodium and the other, less familiar platinum group elements such as iridium and osmium into an economic analysis would further add to the project's bottom line.

Based on these factors, my expectation is that the 2014 updated PEA will show robust economic numbers, and should attract both market attention and the interest of the major mining companies that are looking to secure PGM-containing projects outside of southern Africa and Russia.

To Summarize

In summary, I'm optimistic that the washout in platinum and palladium that has been occurring over the past three months has come to an end or is very, very close. Clearly, significant PGMs had been stockpiled in anticipation of the labor strikes in the early months of this year. Since that time, judging by the depth of the correction in commodities generally - driven mostly by U.S. dollar strength, Pt bottomed below $1200/oz., nearly the same price as gold for one to two days, and has recovered to $1260/oz. - desperate sellers had been unloading final inventories, or desperate longs had to get liquid. This presents a great opportunity for investors.

It appears that it may at last be clear for the fundamentals-driven kind of run in the prices of platinum and palladium that are expected by the analysts at J.P. Morgan and other securities firms over the next couple of years. As a long-term, value-driven investor, I believe the greatest risk-adjusted upside is with SWC and WGPLF, and I'm continuing to monitor the others.

Keep in mind that the company has a market value below $100 million, and has greater liquidity on the Canadian Toronto exchange under its symbol WG.

http://seekingalpha.com/article/2581885-contrarian-alert-a-c…

[pedro_III]

Chris Ackerman Update: Die Konferenz in New Orleans war erfolgreich. Hier wurden sehr viele Gespräche mit potentiellem Investoren und Börsenbrief-Herausgebern geführt. Konkret genannt hat er Brian Lundin, Nick Hodge, Scott Gibson, Byron King und Rick Rule; Kontakte gab es außerdem mit Doug Casey. Alle Augen sind auf die PEA gerichtet; das Interesse an WG wird merkbar größer. Greg Johnson wird nächste Woche mit der Yokon Mining Alliance und Vertreters der Regierung bei der Zürich Precious Metals Summit sein, danach fliegt die ganze Kombo nach London. Rob Bruggeman nimmt an einer anderen Konferenz in München teil und wird hier ebenso von der YMA unterstützt. Seine abschließenden Worte: PEA ist auf dem Weg.

[pedro_III]

Brian Lundin hat seine Kaufempfehlung gestern jedenfalls erneuert. Bin mal gespannt, ob und wann im Vorfeld der PEA, der Kurs nach Norden dreht. Erwartet wird die Veröffentlichung ja Ende November/Anfang Dezember. Auf eine meiner früheren Nachfragen, wollte sich Chris hierzu nicht konkreter festlegen lassen und bestätigte lediglich Quartal 4 als Termin. Vorgestern war die PEA "on track".

Brien Lundin, in the October, 2014, edition of the Gold Newsletter, refreshes his buy of Wellgreen Platinum Ltd., recently 49 cents. Mr. Lundin said buy four times between August, 2011, and July, 2014, at prices ranging from 63 cents to $3. Assuming a $1,000 investment for each of the four buys, the $4,000 position is now worth $1,879. Mr. Lundin says Wellgreen reminded the market of just how large its nickel-3E (platinum, palladium and gold) project in the Yukon is with the release of an updated resource estimate in September. The Wellgreen project contains a truly staggering amount of precious and base metals, says the editor. At a 0.15-per-cent nickel-equivalent cut-off, Wellgreen hosts a measured and indicated resource of 5.53 million ounces of 3E, 1.89 billion pounds of nickel, 1.02 billion pounds of copper and 110 million pounds of cobalt. This massive resource will form the basis of a preliminary economic assessment due later this quarter. Mr. Lundin predicts that given the sheer size of the resource, the PEA's numbers should be "eye-popping" as well. Investors would be hard pressed to find another company with a larger resource trading at a steeper discount than Wellgreen, he concludes. Buy.

[gertschi2381]

Dieser Sch... Stockhouse Thread ist ja sowas von anstrengend!!!
Könnte mir freundlicherweise jemand eine bessere Informationsquelle nennen?
Danke schön!

[Peedy2003]

Antwort auf Beitrag Nr.: 48.191.116 von gertschi2381 am 31.10.14 19:54:23

Informationsquelle

Diese hier ist ganz gut:

http://www.wellgreenplatinum.com/

[gertschi2381]

Antwort auf Beitrag Nr.: 48.191.146 von Peedy2003 am 31.10.14 19:56:51

Danke schön aber kenne ich eh. Dachte eher an ein anderes Forum. Kenne mich zwar nicht aus, lese aber doch ab und zu mal gerne was

[Boersiback]

Antwort auf Beitrag Nr.: 48.191.146 von Peedy2003 am 31.10.14 19:56:51

en echter geheimtipp jetzt oder ?

[pedro_III]

Ich kann Dir da nur zustimmen. Stockhouse ist vollkommen degeneriert und es liegt allein an einem User, der den thread zur Selbstdarstellung nutzt. Schon lange gibt es hier nur noch isolierte postings, die wirklich interessant sind. Aber wie oft habe ich das auch woanders schon erlebt. Plötzlich taucht jemand auf, schafft durch Provokationen eine emotionale Ebene und die Infos bleiben eine ganz Zeit lang auf der Strecke. Widmen wir uns lieber WG. In diesem Monat könnte die PEA veröffentlicht werden, auch wenn Chris sich hierauf nicht festlegen lassen wollte. Der Vorstand jettet um die Welt und besucht Konferenzen und Roadshows, führt Gespräche und promotet die eigene Firma. Sehr viel Engagement mit noch wenig direkter Auswirkung auf den Aktienkurs. Hoffen wir, dass sich das bald ändert und wenn dies langfristig nur mit einem Partner passt, wäre mir das - bei akzeptablen Rahmenbedingungen - auch recht. Schönes Wochenende allen.

[piecesof8]

duluth übernahme:
DM wird vom JV-partner antofagasta übernommen

"The Offer represents a 284% premium to the 20-day volume weighted average price of Duluth Metals' common shares on the TSX as at October 31, 2014. "

http://www.duluthmetals.com/s/NewsReleases.asp?ReportID=6816…

[piecesof8]

DM :

obwohl der kurs heute bei " +478% " steht, wird dies für vielen anlegern eine "unterwasser-übernahme" sein, [unterhalb ihrer anschaffungskosten].