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Northam overheating
David McKay
Posted: Tue, 30 Aug 2005
[miningmx.com] -- NORTHAM Platinum has gained 70% this year, possibly on expectations that it will enjoy a mineral-sharing deal with compatriot miners Aquarius Platinum and Anglo Platinum. However, the concern is that the share is overheating. The likelihood of such a transaction soon is considered remote.
The mineral-sharing deal is the pooling of Northam’s Booysendal, a property on the eastern Bushveld that may contain 100m oz of platinum group metals, with Everest South, a contiguous project scheduled for first production in December and owned by Aquarius Platinum.
Aquarius has been active in two pool and share deals before, both with AngloPlat. The principle is that both parties pool resources that would be less commercial on their own. In short, it’s the platinum industry’s version of breaking down the farm boundaries, which the gold industry was fond of doing in the
Nineties.
It took three years for Aquarius and AngloPlat to agree to their separate pool and sharing deals. It may take longer for Booysendal. A mine will take three to four years, says Steve Shepherd, an analyst at JP Morgan, were Northam to attempt the high capital project alone. “In our view it would be unlikely that a mine could be brought into production there much inside four to five years.” The process could be accelerated if a pool and share joint venture with neighbouring Everest South, a mine currently being built by Aquarius, could be formed, Shepherd says. But three parties would be involved, which is complicated. (Northam is 22,5% owned by AngloPlat).
One reason for the improvement in Northam’s share price is that some investors have cottoned on to a disconnect in the rand platinum price and the US dollar. Aquarius CEO Stuart Murray says: “Investors haven’t factored in a sustainable R5 000/oz platinum price and a stronger basket of prices from platinum
group metals.”
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