Plastics Capital Share Discussion Threads

[mr ashley james] 14/2/2006 20:38

Rhodium has gone Mental up US$335

[yikyak] 14/2/2006 16:31

Mentions palladium in this letter as regards an ETF, I wonder if that's possible - could ignite it if so.

Should get some news end of this month from PLA.

[mr ashley james] 10/2/2006 04:04

Yikyak, nice volume coming back behind moves up IMHO

[mr ashley james] 03/2/2006 19:28

HOT,

I think Gold has possibly topped until May 2006, it might go on going up until March, but at some stage it must consolidate ie retrace.

We may see a move up to US$612 or US$628 possibly if Iran flares up.

My investment as opposed to trading horizon is normally £5m/US$8m/C$10m/AU$12.50m to £50m/US$80m/C$100m/US$112.50m

I value a 200,000 toz producer as worth rule of thumb US$2500 per toz annual production or assuming average production costs 2006 Cash Costs US$275 (June 2005 US$269)Total Operating Costs US$350 (June 2005 US$337)per toz, so another way of looking at it is assuming US$570 Gold Gross Profit US$220, net profit assuming 30% Tax US$154 per toz average 16.23 x net profit approx, ie bearing in mind most mines are 10 to 20 year mine lives, an investor is paying up front for 16.23 years of net profits.

So in a nutshell I think ASX:SGX is pretty fully valued at a guess without studying it in detail.

All IMHO, NAG, DYOR etc

Cheers

Ash:)

[holdontight] 03/2/2006 19:14

Thanks for responding.......I posted this on gold thread, but what's your view on Sino Gold (SGX.AX)....production due to commence shortly, where they are aiming for 200k oz's moving up to 300k quite quickly I gather; reserves and resources are good and increasing; they have a joint venture with Goldfields and they refer to themselves as China's Largest Gold Producer. ML's own ca 12%. Mkt cap has risen from ca $200 mill to ca $480 past few months (Aus), so they are not cheap, but quite interesting anyhow.

[mr ashley james] 03/2/2006 18:03

HOT,

Nope,

Remember threads with less posters on make you more money, when the thread has a post a minute from the average FBB Looney it is normally time to sell.

My time scale on this is probably 36 months.

I have nothing much else to say on it at moment.

All IMHO, NAG, DYOR etc

Enough idle banter.

Cheers

Ash:)

[holdontight] 03/2/2006 17:59

Surprised this thread isnt busier...ASH have you sold them?

[bangor] 02/2/2006 22:50

yiyyak - thanks for that - I agree with your analysis.

Concerning TDW I did open an account with them a few years ago but it was Stateside and they returned my cheque as it wasn't made out in dollars! Guess they have one here now, which I shall look into. Still interested in alternatives.

Meanwhile my sb on Palladium is doing well.

[yikyak] 02/2/2006 20:16

Bangor - I recently opened a seperate account with T D Waterhouse and threw small money into a selection of Canadian & UK microcaps with the intention of holding them for a good few years. I'm betting that the market goes into mania mode at some point over the next five years and the small/micro caps get pumped up to ridiculous levels, much like the dotcom boom.

Ash - Possible chance of breaking the US$400 on palladium in the next couple of months imho. By the way found an Australian forum, same old garbage most of the time but still worth a look.

[mr ashley james] 02/2/2006 17:19

Yikyak,

Palladium on a chart break out



All IMHO, NAG, DYOR etc

Cheers

Ash:)

[bangor] 02/2/2006 16:50

Great thread and discussions. I finally expect to set up a separate fund for small miners. So far most attention here is to Australian and Canadian stocks. I would appreciate sugggestions for brokers. Is it possible to use 1 who can handle the different currencies?

[yikyak] 02/2/2006 16:15

Guessing on a strong move for PLA tonight, fingers crossed.

[justjules] 31/1/2006 11:29

Subject: Production & sales stats.
Date: Tue 31st Jan 2006 10:53:02
Country: Austria
Industry: Metals & mining
Company: Platinum Australia Ltd


Platinum Australia says Smokey Hills drilling results as expected

LONDON (AFX) - Platinum Australia Limited said the results of a diamond drilling program of 55 holes at the Smokey Hills Project were "largely consistent with expectations averaging 8.68 g/t 4E PGM over 0.57 metres."
The group said the assays found that the 4E PGM content is composed of 45 pct platinum, 45 pct palladium, 9 pct rhodium and 1 pct gold which equates to a basket value of the 4E PGM's of just over 900 usd per ounce at current metal prices.
The mining company said following the placement of 30 mln shares, the 6 mln usd raised will be used to complete the feasibility study on the Smokey Hills PGM Project.
Platinum also said the the Kalplats exploration area has been extended to cover 50 Kilometres of Strike length.
[e-mail]
ec

[yikyak] 30/1/2006 15:44

Interesting analysis Ash, many thanks. One of these days for no apparent reason Palladium is going to pop upwards and that's when the likes of PLA will really start to shine. As it stands I think Australians very much overlook PGM'S and related equities but i'm sure this will change and very quickly as and when the 'pop' occurs in palladium. As we have discussed, so little choice in quality PGM plays so five/ten times existing is perfectly feasible imho.

I'm guessing the Russians know when the 'pop' will occur.

[holdontight] 30/1/2006 09:04

Joined you on this one Ashley......here's hoping!

[mr ashley james] 29/1/2006 20:07

BBJL,

Nope don't agree ASX:PLA at AU$0.43 is just around 17.50p sharesprice it can easily 5 or 10 bag over the next 18 months from these levels IMO.

All IMHO, NAG, DYOR etc

Cheers

Ash:)

[bigbobjoylove] 29/1/2006 13:04

better bet is the major shareholder APF imo.
Nice chart and significantly u/v

[mr ashley james] 28/1/2006 15:39

YikYak,

I have redone my Panton numbers whilst studying ASX:SMY in detail, with latest PGE Prices and assuming average June 2005 Gold Total Operating Costs.

It looks like as follows:-

Panton looks like ASX:PLA will earn 50% of following:-

1,500,000 Metric Tonnes of Ore, at I assume a Top Reef grade of around 2.50g/t Pt 2.90 g/t Pd and 0.40 g/t Au, plus 0.30% Ni and 0.10% Cu

A gramme of Pt is US$34.08, of Pd US$8.78, Gold US$17.96 ie PGE Content around US$85.20 Pt, + US$25.46 Pd + US$7.18 Au, Base Metals Cu at US$4,855Mt and Ni US$14,975 Mt gives us base metals of Cu US$4.86 per Mt and Ni US$44.93 per Mt

A Mt of Rock thus contains approximately US$167.63 Contained Metal Value of which overall recovery assuming Panton Process unlikely to exceed 80% say US$134.10 per Mt

The 100% Revenue on 1,500,000 Mt of Ore might be US$201,156,000 and my gut feeling is this is a five year deal if ASX:SMY have plant production capacity of 300,000 Mt pa, ie roughly US$40,231,200 pa say AU$53,527,612 pa

ASX:PLA 50%=AU$26,763,806 pa

Production 100% at 5.80g/t PGE from 1,740,000 grammes mined assumed 1,392,000 (Pt 600,000, Pd 696,000, Au 96,000) grammes recovered, ie 44,754 toz pa

Assumed Average Global Gold Mining Operating Costs US$269 per toz Cash Costs US$337 per toz total operating costs, ie US$12,038,826 pa (AU$16,017,658) Cash and US$15,082,098 pa (AU$20,066,731) Total

Assumed Gross Profit AU$6,697,075
Assumed Net Profit 70% less 30% Corporation Tax AU$4,687,953pa

Assumed PER 5 X AU$23,439,763

Over 155,262,523 shares in issue AU$0.15 per share doubling after Year 5 to AU$0.30 per share, possibly doubling again on achieving 600,000 Mt pa throughput ie to AU$0.60 per share.

If you work on top reef 10,100,000Mt at 6.10g/t PGE, ie 61,610,000 grammes, 1,980,806 toz, assumed 80% recoverable, say 1,584,645 toz PGE, the above 5 years would produce 223,770 toz (44,754 x 5) and reduce resource base to 1,701,093 toz (1,980,806-279,713)but still leave ASX:PLA able to increase production from 300,000 Mt pa to 600,000 pa after 5 years on building own plant etc, ie with 8,600,000 Mt of Ore left to mine producing roughly 90,000 toz pa (89,508 toz pa).

Anyway I personally think this should be trading above AU$0.665 by now personally.

I still think the Panton asset is worth around US$337,500,000/AU$449,043,750 longer term ie roughly AU$2.89 per share at 90,000toz PGE per year less project finance cost.

The Resource Base of 10,100,000 Mt afterall contains some US$1,693,063,000 of PGE plus bi product Nickel and Copper, of which roughly US$1,354,450,400 should be recoverable.

Roughly Resources currently are US$117.84 per Mt PGE (70.30%) and US$49.79 per Mt (29.70%) Ni/Cu out of the US$167.63 Contained per Mt, if I valued as producer at 26.00% of PGE Resource and 10.20% of Base Metals Resource Im still likely to value at:-

US$1,693,063,000 x 70.30% x 26.00%=US$309,458,055
US$1,693,063,000 x 28.70% x 10.20%=US$ 51,289,650

Total US$360,747,705 ie AU$479,974,822 ie AU$3.09 per share so the numbers work out whichever way I look at it on Resource/Reserve valuation or Production Valuation assuming US$3,750 per toz PGE of annual production.

All IMHO, NAG, DYOR etc

Cheers

Ash:)

[mr ashley james] 24/1/2006 02:08

Platinum stocks conundrum
By: Barry Sergeant
Posted: '18-JAN-06 14:45' GMT © Mineweb 1997-2004



JOHANNESBURG (Mineweb.com) -- Mark Smith, an investment analyst at RBC Capital Markets, recently completed detailed presentations suggesting that investors reduce their holdings of Anglo Platinum and Impala, the world's two biggest platinum stocks.

This may prove to be important advice, in the wake of the fantastic bull run that has been enjoyed by these stocks.

Looking at the global platinum-group-metal (PGM) sector, RBC has, however, recommended neutral-to-positive recommendations on other stocks.

Other stocks with operations in SA are ranked as 'outperform' in the case of Lonmin and Platinum Group Metals (listed in Toronto), and neutral in the case of Aquarius and Northam. RBC notes that South African PGM equities have rallied over 200% since the start of 2005, 'and are now trading at historic highs'.

The stocks have been driven to these peaks on the back of 'the uncertainty of the metal price outlook, and are pricing in spot metal prices in the short-to-medium term to derive valuations'.

In RBC's opinion, 'these high PGM prices are unsustainable, particularly in rand terms, longer-term'. RBC has just revised its platinum, palladium price and rand forecasts; it continues to forecast a 'natural' closing of the spread between platinum and palladium prices in the longer run towards historical levels, of around $375 an ounce.

RBC's long-term price forecasts remain at $700 an ounce for platinum and $375 for palladium (up from $300 an ounce). The current spot price for platinum is $1 025 and for palladium $270 an ounce. RBC argues that the price forecasts are supported by three underlying themes. First, supply-demand analysis; second, operating margin preservation, and third, price support to attract new supply onto the market. RBC now also expects a weaker rand longer-term.

The platinum market is seen as supply driven. RBC anticipates the platinum market to remain tight for 2006, but to start moving into a net supply surplus in 2007. The palladium market is now seen as turning into a demand driven market. According to RBC, the largest influence on the demand for palladium is from the increased use of the metal in automobile catalysts, followed by the emergence of a palladium jewellery market in China, and strong fundamentals for palladium overall.

RBC expects that gross operating margins at South African PGM producers will peak between 35% and 50% in 2006, and then decline moderately going forward. It is believed that current increases in profit margins are already priced into certain equity prices, that that a margin decline will trigger a sell off in the equities.

Analysts traditionally look at PGM producers' revenues on the basis of a 'basket price' that represents the '4E' metals, viz., platinum, palladium, rhodium and gold.
Domestic PGM producers also dig out nickel, copper and yet other metals and minerals.

Anglo Platinum is seen as facing a 'challenging outlook, including the heavy burden of simultaneously developing a number of new mines and paying dividends'. RBC adds that Anglo Platinum may indeed be at risk of not gaining its necessary black economic empowerment (BEE) credits. Failure to achieve mining charter requirements could hasten the need for Anglo Platinum to sell portions of its existing highly profitable mines.

Impala Platinum is seen as dogged by an 'unclear' corporate strategy and its Zimbabwe exposure, 'as well as a glass ceiling to expansion due to the political situation in Zimbabwe'. Growth at Impala Refining Services is seen as uncertain, with margins 'coming under competitive pressure'. RBC's concern over clarity on corporate strategy springs from Impala's recent withdrawal from the Ambatovy Nickel Project in Madagascar and the resumption of a share buyback.

Lonmin is favoured, not least on its growth potential, principally at the Greater Messina operations, and the respected influence of the guiding hand of relatively new CEO Brad Mills.

RBC sees Lonmin as offering the 'most potential upside to spot metal prices (long-term)'. Aquarius (rated as neutral by RBC) is seen as somewhat hampered by a large portion of its growth potential being attached to Zimbabwe; 'clearly there is increased sovereign risk'. Northam, also ranked as neutral, stands to capture the growth potential offered by the yet-to-be-developed Pandora, Booysendal project, and toll smelting ability.

As for other stocks in the PGM universe, RBC rates Stillwater Mining (NYSE: SWC) as 'outperform', and North American Palladium (TSE: PDL) as 'neutral'. RBC is restricted on offering a recommendation on Ridge Mining. For investors looking for a play on palladium, the North American PGM equities are seen as offering the greatest leverage; Stillwater ranks as RBC's preferred name.