platinum australia poised for better times

http://money.ninemsn.com.au/article.aspx?id=7961134&rf=true

This gives a good summary of where we are and what the opportunities / risks are with PLA.

Key points;

1. 12 month delay on Smoky Hills production ramp up, with 96,000 oz pa in March 2011 quarter. On this we have gone through the first 6 months and over the next 6 we need to see positive progress. The next production report in about a month is critical.

2. Rooderand may be developed before Kalplats based on higher value and lower capex.

3. The risk is that if Smoky does not start generating free cash flow PLA will need an additional share issue to raise funds. I do not however see that $16 million net debt is a large number for a company capitalised at above A$ 200 million. In perspective it is 2.5 times the cost saving from grid power so there is certainly scope for Smoky to take additional debt. The next quarters production report is critical to boost confidence and I agree with Jojo that management must now deliver or move on!

4. The opportunity is that things start looking up in which case we can get a very fast and significant rerating. One can see what happened to the sp of Equinox once it got its Lumwana mine production up to expectations.

Certainly this share has a severe dose of bot disease and the sp price is being manipulated. Won't be surprised to see a sudden bounce back up to 70-70 cts on no further news. Question is who is manipulating and why?

Consensus of brokers is a buy with A$ 1 target. I share this opinion byt key is Smoky Hills moving towards targets.

BR
Max

BR
Max