I know Panton has a much higher cost base than the SA projects. I also however remember that Panton was declared uneconomical after a collapse in the Palladium price.
Palladium markets are heating up again and I include a post below from the NKP site which refers to Palladium as a 2011 pick.
Value buyers are again looking at the relatively small palladium market and seeing the opportunity of further price gains. The fact that palladium remains well below its nominal high of nearly 10 years ago ($1,110.50/oz on a closing weekly basis seen on 26/01/10) is enticing hedge funds and investors. Royal Bank of Scotland Plc said in a report today that platinum supplies may exceed demand through 2014 while palladium's shortage will drive "significant price gains out to 2014. Scotiabank economist Patricia Mohr Tuesday picked palladium as a "commodity pick for 2011".
If Palladium prices move significantly higher then Panton does offer 2 clear advantages to PLA;
1) It is 100% owned, so a new JV arrangement can be negotiated.
2) Whatever may be said as regards the mining tax I see Australia as a much lower country risk than SA. Would not be surprised to see interest from key PGM users to diversify supply sources beyond SA and Russia. Jogmec for example is allready cooperating with PLA at stellex.
If we only focus on the cost disadvantages at Panton, there is the risk that we miss a step change in Palladium prices that make this project worthwhile. There are surely JV options that will ensure PLA management and funding are not overstreched by taking on this project.
I did see in the 26th October CITI presentation that there is now a reference to Panton as the possible first Australian PGM mine.
We should not forget that it is key changes in commodity prices that is now driving the Rare Earth and Tin investment boom. Palladium could possibly be joining them, especially if the Russian stockpiles are gone.
BR Max
PLA Price at posting:
64.8¢ Sentiment: None Disclosure: Held
