buy it now while it's unloved

Not long ago, Sylvania announced a joint venture with Aquarius Platinum that will see them producing PGM's from chrome tailings dumps in South Africa.

The money has been raised, the first pad began construction two weeks ago and the first concentrate is expected to be sold in October.

The process of extraction does not involve radical new technology. The percentage of PGM's that exist in the dumps is known (4g/t PGMs) and the mining costs are minimal, as the dumps are at surface. The investment arithmetic has been worked out VERY conservatively and points to a project that is EXTREMELY robust.

Last week, the platinum price rose 5% to end at US$844.40. The sums for the project were done assuming a basket price for the PGMs of US$520/PGM oz. THE PRESENT BASKET PRICE ACHIEVEABLE IS ACTUALLY CLOSER TO US$700/PGM OZ.

The first operation, Kroondal (and there is actually another already confirmed and a third highly probable!), is scheduled to produce 20,000 ozs PGMs initially and then move on to 30,000 ozs. Operating costs will be US$170/oz in the first year, and then fall back to US$145/oz.

On a risk/reward basis, SLV/SLVO is, in my view, a STRONG BUY at current prices.

All the usual caveats apply.