The above article from 6th October should be again carefully reviewed.
1. Investment of R4.5 million in order to get 300,000oz from underground production. They allready paid $1 billion to acquire Elands. The 2007 article (http://www.miningmx.com/news/platinum_group_metals/341567.htm) summed things up well. Garatau seems to be a very similar resource but with almost twice the mine life. Then there is Tubatse which is all over and above these numbers.
2. It states "The move could be beneficial as the southern section of Nkwe's projects is located near Xstrata's large Lion ferrochrome smelter in Limpopo, Business Day reports." We have recently received information that the Lion smelter expansion is going ahead, so makes one think! It further gives away a key point in "If we use synergies between Nkwe and Xstrata Alloys we can make it work". The Xstrata alloys part is now going ahead.
3. Then the hugely important statment "while the end of a concentrate off-take agreement with Anglo Platinum in 2015 would allow Xstrata to build its own smelter". This would allow combination of the various technologies to exploit all synergies between Chrome / PGM mining and boost profitability by killing off smelter fees etc. If I were the CEO of Anglo the last thing I would want to see is Xstrata having their own smelting capacity as that would reduce my overall profitability. How to step them - bid for NKP ourselves! Who knows if Anglo is supporting behind the scenes the Tubatse claims?
As I have said before, I think that there is much more to the BFS delays that meets the eye. All we know is that initial BFS had some financial shortfalls but that is a very broad brush statement and nobody knows any specifics. These shortfalls could well be any of the following;
1. Identification of synergies between NKP and Xstrata alloys not built into BFS.
2. Further work needed to apply new technologies to high chrome ores (the lower grade sections the BFS talks about?).
2. Needed further work to maximise the resource and therefore oz produced for a given capital cost, which will minimise capex per oz.
Yes, there are many risks associated with investing in NKP, but anyone wanting exposure to new PGM developments cannot afford not to be in this.
BR Max
NKP Price at posting:
62.0¢ Sentiment: Buy Disclosure: Held
