Key Metals Surge, Unlocking
New Opportunities for Savvy Mining Investors
November 19th, 2024 -
InvestorsHub NewsWire -- NetworkNewsWire
Editorial Coverage: Investment interest in the mining space
is growing, driven by increasing demand for a wide range of metals
that are becoming essential to modern industries. The push for
clean-energy technologies, such as electric vehicles ("EVs") and
renewable energy systems, has amplified the need for critical
minerals such as lithium, cobalt, nickel and rare earth elements.
Meanwhile, traditional metals such as copper and aluminum are
experiencing a resurgence due to their critical role in
infrastructure and energy transmission. Gold and silver, as
traditional stores of value, remain attractive amid economic
uncertainties and inflationary pressures. Finally, the global
transition toward decarbonization and energy efficiency is fueling
demand for platinum group metals ("PGMs"), which are known for
their purity, high melting points and unique catalytic properties.
PGMs are vital in a number of industrial processes, technologies
and commercial applications and play a critical role in
autocatalysis and pollution control in the automotive sector. With
potential supply constraints from key producing countries and
geopolitical risks further tightening markets, mining companies are
poised for growth. Platinum Group Metals Ltd. (NYSE:
PLG) (TSX: PTM) (Platinum
Group Metals
Profile) is
positioning itself as an emerging leader in the PGM sector through
its flagship Waterberg Project in South Africa. Other mining and
commodity related entities, including Sibanye
Stillwater Limited (NYSE: SBSW), VanEck
Junior Gold Miners ETF (NYSE: GDXJ), abrdn
Physical Palladium Shares ETF (NYSE: PALL) and iShares
Silver Trust (NYSE: SLV), are also seeing increased
investor interest.
- Several key factors have
contributed to an improvement in the PGM demand
outlook.
- Platinum Group Metals is
dedicated to meeting the growing need for platinum and palladium
through its flagship Waterberg Project.
- The company recently
released positive results from an Independent Definitive
Feasibility Study Update for the Waterberg Mine.
View the infographic of
the Platinum Group
Metals editorial here
Improved Industry
Outlook
The platinum group metals
industry includes six key metals: platinum, palladium, rhodium,
ruthenium, iridium and osmium. Renowned for their catalytic
properties, high resistance to corrosion, and excellent electrical
conductivity, PGMs play an essential role across various sectors,
including automotive, electronics, and healthcare. Despite earlier
concerns that the rise of battery electric vehicles ("BEVs") would
diminish the demand for PGMs, the industry outlook has improved
significantly due to several factors.
A Rebound in Auto
Demand for Platinum and
Palladium: The automotive sector
remains a cornerstone of PGM demand, particularly for platinum and
palladium, which are critical in catalytic converters for internal
combustion engine ("ICE") and hybrid vehicles.
While BEV adoption initially posed a threat, faltering BEV sales
have led to a resurgence in ICE and hybrid vehicles, bolstering
demand for PGMs. This shift underscores the continued relevance of
PGMs in emissions reduction, even as the industry evolves toward
greener technologies.
Supply Risks from
Russia: Russia is the world's
largest producer of palladium, accounting for a substantial share
of global supply. However, geopolitical tensions and potential
sanctions on Russian exports pose significant risks to
the palladium
market. Such uncertainties could lead to supply shortages
and higher metal prices, benefiting producers outside of
Russia.
South African Supply
Constraints: South Africa dominates
the global production of platinum and rhodium.
However, ongoing
challenges such as energy shortages, labor disputes
and operational inefficiencies have led to production cutbacks.
Many of the conventional platinum and palladium mines are old,
deep, and expensive to operate. Safety is a concern.
These supply constraints add another layer of support to PGM
prices, reinforcing their strategic importance.
Investment Demand
for Platinum: Amid global economic
uncertainty and geopolitical tensions, investors are turning to
precious metals as safe-haven assets. Platinum, in particular,
has garnered
interest alongside gold and silver. This trend
highlights the dual role of PGMs as both industrial and investment
commodities, enhancing their appeal in volatile
markets.
A Key
Player
Keenly aware of the growing
interest in the PGM space, Platinum
Group Metals is dedicated to meet the growing need for
these metals, specifically through its flagship Waterberg Project,
which is located in South Africa. This project, which Platinum
Group Metals Ltd. initially discovered in November 2011, focuses on
palladium, platinum, rhodium and gold, leveraging the company's
expertise to meet the growing demand for PGMs.
The Waterberg
Project is a joint venture between Platinum Group;
Impala Platinum Holdings Ltd. (Implats); HJ Platinum, which
consists of Japan Oil, Gas and Metals National Corporation and
Hanwa Co.; and Black Economic Empowerment ("BEE") partner Mnombo
Wethu Consultants ("Pty") Ltd. The project deposit is shallow, and
the planned mine is designed as a bulk, mechanized, underground
operation and aims to provide a safe, sustainable and scalable
source of PGMs.
The Waterberg Project
provides leverage to investors looking for PGM exposure. In
particular, the project offers a distinctive competitive advantage
based on its leverage to ounces in the ground, potential low-cost
production, partnership with a major platinum producer and a
Japanese consortium, and its relationship with a Saudi Arabia-based
group seeking to build a PGM smelter in Saudi
Arabia.
The World-Class
Waterberg Project
Most recently, Platinum
Group Metals released positive results from an Independent
Definitive Feasibility Study Update (2024 DFS) for the Waterberg
Mine. Highlights of
the report note several key factors, including the
following:
- Increased Mineral
Reserve Estimate: Proven and probable mineral
reserves increased by 20% to 23.41 million 4E oz (246.2 million
tonnes at an average grade of 2.96 4E g/t, 0.08% copper ("Cu"), and
0.17% nickel ("Ni").
- Extended Life of
Mine: LOM increased from 45 years to 54 years with
annual steady state average production in concentrate of 353,208 4E
oz. and peak annual production of 432,950 4E oz.
- Robust
Economics: After-tax net present value at an 8% real
discount rate of $569 million and an Internal Rate of Return of
14.2% using average long-term consensus metal prices as of May
2024.
- One of the Lowest
Cost PGM Mines in Southern Africa: On site LOM
average cash cost, including base metal byproduct credits and
smelter discounts as a cost, of $658 per 4E oz, with an all-in
sustaining cost of $761 per 4E oz.
- Strong Cash Flow
Generation: LOM free after-tax cashflow of $6.50
billion at consensus prices.
- Reasonable
Capital: Estimated total project capital of $946
million, including 8.5% for contingencies, and peak capital
estimated at $776 million.
"The 2024 DFS validates the
world-class nature of the Waterberg Project," said Frank R. Hallam,
Platinum Group president and CEO. "Engineering teams from Stantec,
DRA and Fraser McGill have collaborated to achieve an optimized and
de-risked mine plan while also minimizing capital requirements. The
primary objectives of the 2024 DFS were to update and minimize
capital and operating costs, and to simplify the construction, ramp
up and operating profile of the Waterberg Mine.
"I believe these objectives
have been achieved," Hallam continued. "We look forward to
advancing the Waterberg Project for the benefit of our partners and
local communities, as well as all the people of South Africa. The
Waterberg Project is planned to create approximately 2,000 jobs
during construction and approximately 1,425 mostly high skilled
jobs once steady state mining is achieved. PGMs, copper and nickel
play key roles in automotive emissions control and energy
transition technologies, including that found in battery electric,
plug-in hybrid, gasoline hybrid and hydrogen fuel cell vehicles.
The Waterberg Project is a long life asset capable of profitably
producing these critical metals."
Revolutionizing
Storage, Diversifying Applications
Another component that
sets Platinum
Group Metals apart is PGM's Lion Battery
Research project, which is a collaborative effort with
Anglo American Platinum to develop a lithium sulfur battery using
PGMs, which could revolutionize energy storage and further
diversify PGM applications.
Platinum Group Metals
founded Lion
Battery Technologies in partnership
with Anglo
American Platinum Limited to support the use of
palladium and platinum in lithium battery applications. "The
possibility of creating additional demand for platinum and
palladium in the battery technology space is an exciting
development and of strategic importance to both parties," the
company notes. "Lion Battery has entered into an agreement with
Florida International University to further advance a research
program that uses platinum and palladium to unlock the potential of
lithium air and lithium sulfur battery chemistries to increase
their discharge capacities and cyclability."
According to the agreement
with the university, Lion will have exclusive rights to all
intellectual property developed and will lead all commercialization
efforts. Lion is also currently reviewing several additional and
complementary opportunities focused on developing next-generation
battery technology using platinum and palladium. Because lithium
oxygen and lithium sulfur batteries have considerably higher energy
density, they can perform better, by orders of magnitude, than the
best-in-class lithium-ion batteries currently on the market or
under development. "This new generation of lightweight, powerful
batteries has the potential to grow to scale on the back of the
attractiveness of battery electric vehicles and the use of lithium
batteries in other applications beyond mobility," the company has
stated.
Opportunities
The current mining
environment presents opportunities for investors seeking exposure
to sectors driving the future of energy, technology and
infrastructure development. As demand continues to climb, mining
investments are increasingly becoming a cornerstone of
forward-looking portfolios. Many companies, including these, are
focused on providing attractive investment options for those eyeing
the mining space.
Sibanye
Stillwater Limited (NYSE: SBSW) is a multinational
mining and metals processing group with a diverse portfolio of
operations, projects and investments across five continents. The
group is also one of the foremost global recyclers of PGM auto
catalysts and has interests in leading mine tailings retreatment
operations. Sibanye-Stillwater is
one of the world's largest primary producers of platinum, palladium
and rhodium and is a top-tier gold producer. It also produces and
refines iridium and ruthenium, nickel, chrome, copper and
cobalt.
VanEck
Junior Gold Miners ETF (NYSE: GDXJ) is designed to
replicate as closely as possible the price and yield performance of
the MVIS("R") Global Junior Gold
Miners Index, which is intended to track the overall
performance of small-capitalization companies that are involved
primarily in the mining for gold and/or silver. The fund features a
portfolio of small gold miners, some of which are in early
exploratory stages with upside potential. The fund also provides
high beta exposure to gold prices and is highly liquid,
historically seeing greater average trading volume than any of its
underlying junior miners.
abrdn
Physical Palladium Shares ETF (NYSE: PALL) is an
investment product offered by abrdn Investments. The fund is
designed for investors who want a cost-effective and convenient way
to invest in palladium with minimal credit
risk. abrdn
Investments offers investment expertise across key
asset classes, regions and markets so that its clients can capture
investment potential wherever it arises. By combining market and
economic insight with technology and diverse perspectives, abrdn
Investments offers optimal ways to help investors navigate the
future and reach their financial goals. And by putting
environmental, social and governance ("ESG") considerations at the
heart of the process, the company also invests in a better
future.
iShares
Silver Trust (NYSE: SLV) is designed to generally
reflect generally the performance of the price of silver. The trust
is designed to provide exposure to the day-to-day movement of
the price of silver
bullion while offering investors convenient,
cost-effective access to physical silver as well as a way to
diversify their portfolios and help protect against inflation.
iShares has been a leader in the ETF marketplace for more than two
decades, and as a part of BlackRock, its products are engineered by
investment professionals with discipline and deep risk-management
expertise
In summary, the PGM
industry's positive outlook is driven by a combination of
rebounding automotive demand, geopolitical supply risks, and
increased investment interest. Companies such as Platinum Group
Metals Ltd. are well-positioned to capitalize on these trends,
offering potential opportunities for investors seeking exposure to
this dynamic and essential sector.
For more information about
Platinum Group Metals, please visit Platinum
Group Metals Ltd
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Abrdn Palladium ETF (AMEX:PALL)
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