long term buying opportunity emerging, page-5

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RBC -

October 15, 2008



Platinum Australia Limited (ASX: PLA; AIM: PLAA)





Metal Price Revisions: Upgrading to Outperform



Outperform (prev: Sector Perform)

Above Average Risk






Price:
0.78




Shares O/S (MM):
220.1

Dividend:
0.00


Price Target:
1.452.90

Implied All-In Return:
86%

Market Cap(MM):
172

Yield:
0.0%











Event
Having revised our PGM price forecasts and valuation methodology, we reduce our target price but upgrade our recommendation.

Investment Opinion
Having comprehensively reviewed our PGM demand and supply model, we are adjusting our PGM price forecasts.

Platinum - Our short-term platinum price expectations (years 2008-2010) have been lowered. We have left our long term (2011 onwards) price forecast unchanged at US$1,500/oz.

Palladium - We have reduced our short-term (2008-2009) price forecasts; our long-term number of US$250/oz remains unchanged.

Rhodium - We have reduced our short term (2008-2011) price expectations; our long-term (2012-onwards) price remains unchanged at $3,000/oz.



A detailed Sector Review explaining the rationale underpinning our forecasts will follow shortly.

Valuation
As production is now imminent at Smokey Hills, we are opting to value Platinum Australia as a junior producer going forward. Our US$1.00/share (A$1.45/share) target price is based on a 10x 1-year forward P/E multiple, in line with junior producers.



Given the current share price in relation to our new target price, we are upgrading our recommendation from Sector Perform to Outperform. We maintain our Above Average Risk rating