I was doing some research on Platinum Australia and came across some interesting figures. On the 27 October 2008, PLA announced to the market that it was benefitting from the US dollar to RAND exchange rate as all their debt from the Standard Bank is in RAND. The quotes was that due to the drop in RAND to 11 RAND to US$1 PLA debt in US$ was about US$40m. Well doing a calculation today, the RAND is now only 9.42 to the dollar.
So a quick calculation at US$40m by 11 RAND would be about 440,000,000 RAND. But at US$40m to 9 RAND today would be only 377,000,000 RAND. The difference being 63,000,000 RAND which when you convert back to US$ at today’s rates would be about US$6,684,300.
So at current exchange rates, effectively Platinum Australia has reduced debt by US$6.6 million without doing a thing!
This is not including the substantial further impact on lowering the production site costs beyond that as indicated below stated in an announcement to the market as well as the increase in the Platinum price from the indicated US$800/oz to today US$910/oz!!!!!!!!
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“As we have previously noted, Smokey Hills will be among the lowest cost producers in the industry. We have recently reviewed our projected operating costs in light of the recent drop in the Rand to US Dollar exchange rate to ZAR11 to US$1. This drop has reduced our projected average on site production cost to less than US$200/oz 4E PGM (net of credits), giving a total cost including smelting and refining charges of approximately US$300/oz 4E PGM. This provides Smokey Hills a margin of over US$300/oz at the current extremely depressed metal prices of US$800/oz platinum, US$180/oz palladium and US$1,800/oz rhodium. Taking into account our current level of hedging this margin increases to approximately US$350/oz 4E PGM.”
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“A further impact of the drop in the Rand is that as all of the debt component of our funding was provided in Rand, this has significantly reduced the debt in terms of US$.”
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THIS COMPANY IS A BARGIN!
Expect good news from the company if this keeps up.
With love,
Groove.
PLA Price at posting:
53.0¢ Sentiment: Buy Disclosure: Held
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