  | |
| |
 |
|
| ||
Platinum supply set for 50% increase Posted: Thu, 12 Jul 2007 [miningmx.com] -- AN estimated 2.5 million ounces of platinum from junior projects in South Africa could come on to the market in five years, combined with two million more ounces from expansions by the major companies, Investec platinum analyst Leon Esterhuizen said. According to Investec’s Junior Platinum Project Review, the current platinum supply of eight million ounces/year could grow by 50% over the next five years. It is unlikely that demand will keep pace with this size of increase, Esterhuizen said. “However, we do not expect all the junior projects to become mines. This is both a function of the capacity to raise capital as well as the risk associated with a long lead time to delivery,” he said. Mike Solomon, CEO of Wesizwe Platinum, which is developing a project on the Western Limb of the Bushveld Igneous Complex, said there is approximately five to seven years left for the high platinum prices seen in the market. “We have got five to seven years of these hard PGM (platinum group metal) prices and we want to get payback on our project in that time so we can endure the softer prices,” he said at Investec’s junior platinum miners’ conference in Cape Town. Wesizwe has placed orders for long lead items and secured shaft sinking contractors ahead of completing a bankable feasibility study because of the rush towards developing projects. He estimated there are 17 shaft sinking projects in southern Africa and just three companies to do the work. If prices did come down, the majors, which supply 85% of the world’s PGMs, could cut back their expansion plans. “Even more aggressively, in a declining metal price environment, we believe the majors could well buy out some of the more promising juniors with the express aim of removing possible new supply ounces from the market,” Esterhuizen said. Corporate activity will continue apace in the junior sector in the coming year because of the relatively low ratings the juniors have, he said, estimating that the sector is rated about 60% below the major companies. “A keenly awaited occasion, in our opinion, will be the first meaningful move by a gold producer into this space,” he said. Gold Fields is widely expected to move into the platinum sector. Its executives have openly spoken of a willingness to move into the sector. It has been linked to Lonmin, the world’s third-largest producer, in the past, but nothing came of it. Esterhuizen picked out three companies that were the most likely to be acquisition targets within the junior sector. These are Eastern Platinum, Jubilee Platinum and Anooraq. Eastern Platinum has large resources and has “exceptional scaleability”, he said, while Jubilee has a low rating across most benchmarks and has nickel exposure through a project in Madagascar. Anooraq can raise significant capital without diluting its empowerment partner. Eland Platinum, which is subject to a lot of speculation about being a takeover target, is also offering good value, Esterhuizen said. Xstrata is said to be running the rule over Eland’s surface and underground prospects. Platinum Australia is also seen offering good value and will begin generating earnings within 12 months. Investec expects Lonmin to make an offer to the minority shareholders in its 22% owned Platmin. Click Here to subscribe to our daily newsletter
| ||||
