Hey, rob, things change and in this crazy market, they change at the
drop of a hat. For some metals, juniors may be right, but that does
not change the economics of gold mining. Unless you have a producing
mine, creating a gold mine out of test drills is one expensive
propositions
On Mar 14, 8:50 am, Nomen Nescio <nob...@[EMAIL PROTECTED]
> wrote:
> Gold junior to seize platinum op****tunity
> Both RBC and Great Basin Gold says it is op****tune for a gold junior to
move
> into the platinum space to create a precious metals investment
op****tunity.
> Author: Tessa Kruger
> Posted: Thursday , 13 Mar 2008
> JOHANNESBURG -
> A gold junior is likely to seize an op****tunity to acquire a platinum
asset
> as platinum juniors could represent a good bargain and will boost a gold
> company's cash flow.
> Both top platinum analyst, Leon Esterhuizen (RBC Capital) and Great
Basin
> Gold (TSX:GBG,JSE:GBGOLD) CEO Ferdi Dippenaar said recently the climate
might
> be good for a junior gold company to get involved in the South African
> platinum sector.
> Esterhuizen said in a recent re****t that platinum mines remained
bargains for
> gold companies as PGM junior stock prices weren't increasing as rapidly
as
> the majors. This was unusual as the majority of platinum juniors had
shallow
> mines and good growth profiles.
> "Gold companies could grab this op****tunity, especially if they can pay
with
> shares and wait four to five years to production. Although metal prices
could
> decrease, platinum mines generate a huge amount more cash than gold
mines as
> they produce seven or eight metals."
> Esterhuizen said RBC continued to believe that a gold mining company
would
> shortly get involved in the PGM space - buying cash flow and margin with
high
> P/E paper.
> Meanwhile, GBG President and CEO Ferdi Dippenaar told Mineweb today it
was
> op****tune for the company to add platinum ounces to its resources in an
early
> stage and to develop both gold and platinum projects simultaneously.
> He said Great Basin should attain good trading multiples as it goes into
> production. The case for adding platinum was strengthened by the fact
that
> precious metals attained good prices, platinum and gold demanded similar
> mining methods and platinum would expose Great Basin to the same country
(SA)
> risk.
> The company did not carry the burden of historic rivalry between gold
and
> platinum sectors and it was in a unique position to acquire platinum,
while
> this proposition did not even occur to gold majors.
> Dippenaar said the company would consider op****tunities to take a
platinum
> exploration project on board as its gold assets grew.
> "We are looking at op****tunities in exploration and at the exploration
> projects of junior companies that could possibly fit the profile."
> He said gold and platinum would be a good combination and an op****tunity
to
> offer investors a different value proposition - to invest in precious
metals.
> However, as far as Great Basin Gold was concerned it was still
investigating
> op****tunities to get involved in platinum mining.
>
> Dippenaar said the reverse scenario of a platinum company acquiring gold
> assets or company was unlikely as the gold industry was generally
struggling
> and in a "sunset" phase, while platinum companies were experiencing
their
> best cycle yet.
> "Why would a platinum company get involved in conventional gold mining
seen
> as dangerous in South Africa?" he said.
> Major gold companies could not afford to diversify into platinum and
only a
> very large amount of PGM production would make a difference to a gold
major's
> production and cash flow.
> Dippenaar said ten years ago gold companies did not want to sacrifice
their
> gold trading multiples by acquiring cheap platinum ounces, but the
situation
> has changed with the platinum price soaring to record levels.
> Kobus du Plooy, executive director of Pamodzi Gold (JSE:PZG), however,
said
> the company would not pursue platinum projects in the near to medium
term as
> it was focused on reaching its target of 1m gold production ounces by
2009.
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