Prime Meridians – 3 Ideas For A Coming Platinum Boom

This week in Pierce Points:

The U.K. surged ahead in shale gas development. New rules in the country to expedite drill permitting will speed new projects.

U.S. oil producers looked to Mexican buyers. The Commerce Department is set to allow exports through swaps agreements.

Kazakhstan ignored lower uranium prices. The world’s leading mining nation said its production increased significantly during H1.

More platinum production disappeared. One mine is closing in South Africa, and America’s only operation is teetering on the edge.

Courts said conflict minerals law is unconstitutional. Judges said forcing companies to report on mineral sourcing violates free speech.

3 Ideas For A Coming Platinum Boom

Further to the second-last item above, the platinum space is looking brighter and brighter.

At least, if we’re looking in the right places.

News this week of closure at Glencore’s Eland mine, as well as potential disruptions at Montana’s Stillwater facility, show things are increasingly looking bleak for supply.

Which means it’s a rough time to be a mine operator. But may be shaping up as a great time to be a project developer.

If things keep going the way they are, we could see global supply fall by millions of ounces as soon as next year. Which would be one of the most dramatic effects seen in any commodity during the current downturn (global gold output by contrast, has barely budged since prices fell three year ago).

And if there’s one truth in natural resources, it’s that low prices cure low prices. By choking off supply until finally there’s a shortage again.

Such a situation could be shaping up in platinum. Which begs the question — what projects would benefit from a resurgence in prices?

The most obvious answer is projects already at the development stage. Ones being built — but not yet mining — which could catch an updraft if they hit the market as prices begin to turn.

Unfortunately, there aren’t a lot of those — with Ivanhoe Mines’ Platreef project in South Africa being one of the only such construction-stage works across the industry.

So, what else? Exploration is another obvious answer — although even here it’s not easy to spot high-potential locations.

Quebec, Canada saw some work in the 1990s — yielding a few small deposits, and a number of untested targets. Indeed, the geology here is roughly similar to South Africa, with zoned ultramafic complexes resembling the Bushveld.

News last month also suggests another possible exploration locale: Australia. Where one of the world’s classic mining districts yielded a surprising platinum discovery.

That’s the Broken Hill area of New South Wales — namesake of major miner BHP Billiton. A proven mining district where tiny junior Impact Minerals announced drill intersections of 30 meters grading 6 g/t platinum last month.

This is one of the highest-grade drill results announced outside of South Africa or Russia. And suggests that Australia could be another place to look for new platinum projects (again, the geology is roughly similar to the Bushveld).

Finally, here’s an out-of-the-box idea. Revolutionary new metallurgy that could change platinum extraction.

That’s the result of research at the Western Australian School of Mines. Where mining experts reported this week they are making progress with heap leaching techniques for extracting platinum.

Up until now, heap leaching — a go-to practice for lower-grade gold deposits — has never been implemented commercially for platinum. But researchers believe they are closing in on a technology that would work.

If such a development materializes, it would be a game-changer. Allowing lower-grade platinum deposits (of which there are a number around the world) to be produced at lower capital and operating costs.

That could open a whole new class of ores to exploitation. Making currently-worthless properties very valuable overnight.

It’s a longer shot, but if we get a tailwind from a rising market, this is an area that project developers will be looking at.

Some food for thought as we watch the platinum space unfold over the coming months.

Here’s to a rising star,

Dave Forest

dforest@piercepoints.com / @piercepoints / Facebook

 

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