Critical Metals Surge Opens Prime Opportunity
for Mining Investors
November 22nd, 2024 -
InvestorsHub NewsWire -- NetworkNewsWire
Editorial Coverage: Interest in the mining sector is on
the rise, fueled by growing demand for metals that are crucial to
modern industries. The shift toward clean-energy technologies,
including electric vehicles (EVs) and renewable energy systems, has
heightened the need for critical minerals, particularly lithium,
cobalt, nickel and rare earth elements ("REEs"). At the same time,
traditional metals such as copper and aluminum are seeing renewed
importance due to their essential roles in infrastructure and
energy transmission. Gold and silver remain appealing as safe-haven
assets during periods of economic uncertainty and inflation.
Additionally, the global drive for decarbonization and energy
efficiency is boosting demand for platinum group metals ("PGMs"),
which are valued for their purity, high melting points and unique
catalytic properties. These metals are integral to numerous
industrial processes and play a pivotal role in autocatalysis and
pollution control within the automotive industry. With potential
supply disruptions from major producers and geopolitical tensions
tightening the market, mining companies are well positioned for
growth. One of those companies, Platinum Group Metals Ltd.
(NYSE:
PLG) (TSX: PTM)
(Platinum
Group Metals Profile), is emerging as a
leader in the PGM space, due to the performance of its flagship
Waterberg Project in South Africa. Platinum Group Metals joins
other mining and commodity-related organizations that are focused
on strengthening their foothold in the mining sector, including
companies such as Endeavour
Silver Corporation (Canada) (NYSE:
EXK), Fortuna
Mining Corp. (NYSE:
FSM), New
Gold Inc. (NYSE
American: NGD) and Sandstorm
Gold Ltd. (NYSE: SAND).
-
PGM outlook on rise due to
several critical factors.
-
Recognizing the rising
demand for PGMs, Platinum Group Metals is committed to developing
flagship initiative.
-
Company reports notable
results from independent feasibility study.
Critical
Factors Lead to Positive Sector Outlook
The platinum group metals
("PGMs") space encompasses six key metals, including platinum,
palladium, rhodium, ruthenium, iridium and osmium. These metals are
highly valued for their catalytic capabilities, resistance to
corrosion, and superior electrical conductivity, making them
indispensable across an array of industries such as automotive,
electronics and healthcare. Although there were initial concerns
that the rise of battery electric vehicles ("BEVs") could reduce
PGM demand, the industry's outlook has improved due to several
critical factors.
Renewed
Auto Sector Demand for Platinum and Palladium: The
automotive industry remains a major driver of PGM consumption,
particularly for platinum and palladium, which are essential
components in catalytic converters for internal combustion engines
("ICE") and hybrid
vehicles. While BEVs once seemed poised to dampen
demand, a slowdown in BEV sales has led to a renewed focus on ICE
and hybrid models, boosting the need for PGMs. This trend
highlights the ongoing importance of PGMs in reducing emissions,
even as the automotive sector gradually shifts toward more
sustainable technologies.
Geopolitical Risks Affecting Palladium
Supply: Russia is the leading global supplier of palladium,
accounting for a significant portion of the world's output.
However, geopolitical instability and the possibility of sanctions
on Russian exports present serious risks to the palladium supply
chain. These uncertainties could result in supply
disruptions and increased prices, offering potential advantages to
producers operating outside Russia.
South
Africa's Challenges in Platinum and Rhodium Production:
South Africa plays a dominant role in the global production of
platinum and rhodium. However, the country faces persistent
issues
such as energy shortages, labor disputes, and operational
inefficiencies, which have led to reduced output. Many of the
region's traditional platinum and palladium mines are aging, deeply
situated, and costly to maintain, raising safety concerns as well.
These production challenges further tighten supply, providing
additional upward pressure on PGM prices and underscoring their
strategic value.
Growing
Investment Interest in Platinum: Amid rising economic
uncertainty and geopolitical tensions, precious metals are
increasingly sought after as safe-haven investments. Platinum,
alongside gold and silver, has attracted significant
attention from investors. This growing investment demand
underscores the dual nature of PGMs as both industrial and
financial assets, making them particularly appealing in times of
market volatility.
Joint
Effort Creates Flagship Initiative
Recognizing the rising
demand for PGMs, Platinum
Group Metals is committed to addressing this need
through its flagship initiative, the South Africa-based Waterberg
Project. Originally identified by the company in November 2011,
this project focuses on key PGMs such as palladium, platinum and
rhodium, as well as gold, capitalizing on the company's specialized
knowledge to help meet growing global demand.
The Waterberg
Project is a collaborative effort involving several
partners: Platinum Group Metals; Impala Platinum Holdings Ltd.
(Implats); HJ Platinum, a consortium of Japan Oil, Gas and Metals
National Corporation and Hanwa Co.; and Black Economic Empowerment
("BEE") partner Mnombo Wethu Consultants ("Pty") Ltd. The deposit
is relatively shallow, and the planned mine is designed as a
mechanized, underground operation focused on bulk production. This
approach aims to deliver a safe, sustainable, and scalable supply
of PGMs.
The Waterberg Project offers
significant opportunities for investors seeking exposure to the PGM
market. The project's strengths include a substantial resource
base, the potential for cost-efficient production, strategic
partnerships with a major platinum producer and a Japanese
consortium, and a collaboration with a Saudi Arabia-based group
working to establish a PGM smelter in Saudi Arabia. Together, these
factors position the Waterberg Project as a unique and competitive
asset in the PGM industry.
Feasibility Study Notes Project
Potential
Platinum Group Metals
recently reported on results from an Independent Definitive
Feasibility Study Update (2024 DFS) that the company had
undertaken, which was focused on the Waterberg Mine. Key findings
from the report
include several notable observations, 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."
PGM
Collaborative Venture Eyeing Breakthrough Batteries
Another key piece that
distinguishes Platinum Group Metals is its Lion Battery Research
project, a joint venture with Anglo American Platinum. This
project aims to develop lithium-sulfur batteries
incorporating PGMs, a breakthrough that could transform energy
storage and broaden the applications of PGMs.
To advance this goal,
Platinum Group Metals and Anglo
American Platinum Limited cofounded Lion
Battery Technologies. The venture focuses on integrating
palladium and platinum into lithium battery technologies. According
to the company, "The potential to drive new demand for platinum and
palladium in battery technology is both an exciting opportunity and
strategically significant for both partners." Lion Battery
Technologies has partnered with Florida International University
("FIU") to push forward a research program exploring the use of
platinum and palladium in lithium-air and lithium-sulfur batteries
to enhance their energy capacity and cycle life.
Under the terms of its
agreement with FIU, Lion Battery Technologies is granted exclusive
rights to any intellectual property developed and will oversee the
commercialization of these advancements. The company is also
evaluating several complementary opportunities to further develop
next-generation battery technologies incorporating PGMs.
Lithium-air and lithium-sulfur batteries offer much higher energy
density than current lithium-ion options, potentially delivering
performance improvements by several orders of magnitude.
The company highlights the
transformative potential of these next-generation batteries, noting
their lightweight, high-power capabilities. This makes them
particularly appealing for battery electric vehicles and a wide
range of other applications beyond transportation. As these
technologies scale, they could play a significant role in the
growing market for advanced energy-storage solutions.
Shaping
the Future
The present landscape in
mining offers promising opportunities for investors interested in
sectors shaping the future of energy, technology and
infrastructure. With demand on the rise, mining investments are
becoming an integral part of growth-oriented portfolios. Numerous
companies are actively working to present compelling investment
opportunities for those looking to capitalize on the mining
industry's potential.
Endeavour
Silver Corporation (Canada) (NYSE:
EXK) is a mining company focused on discovering and
mining silver, with projects and operations in three countries,
including Mexico, Chile and the United States. The company is
focused on being a leading silver
producer that creates value for its stakeholders by discovering,
developing and operating mines in a sustainable way. Endeavour's
business strategy balances short-term profitability with long-term
investments in exploration and development to extend mine lives and
build new mines to drive future profitability.
Fortuna
Mining Corp. (NYSE:
FSM) is a Canadian mid-tier precious metals producer
established in two of the world's premier mining regions: Latin
America and West Africa. The company operates five mines as well as
an advanced exploration project; these operations are located in
Argentina, Burkina Faso, Côte d'Ivoire, Mexico, Peru and Senegal.
Fortuna Mining
Corp. produces gold and silver and is committed to
generate shared value over the long-term for its stakeholders
through efficient production, environmental stewardship and social
responsibility.
New
Gold Inc. (NYSE
American: NGD) is on a mission to be the leading
intermediate gold producer, driving responsible and profitable
mining in a way that creates sustainable and enduring value for
shareholders as well as the environment. The diversified company
operates multiple mines, producing byproducts such as silver and
copper while using multiple mining methods and types of
deposits.
Sandstorm
Gold Ltd. (NYSE: SAND) holds royalty rights on mining
operations around the world. Rather than operating mines, Sandstorm
Gold provides an upfront payment in exchange for future revenue or
gold production. The result is a diversified portfolio of mining
royalties that provides stable cash flows and an impressive growth
profile because royalty companies can outperform the underlying
metals that their portfolios
are comprised of as well as amplifying investor returns.
In summary, the PGM industry
is positioned for growth, driven by the resilience of auto-sector
demand, geopolitical supply risks, and increased investment
interest, all of which reinforce the strategic importance of these
versatile metals.
For more information about
Platinum Group Metals, please visit Platinum
Group Metals Ltd.
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