20 cents will be very, very cheap soon.
I know I bang on about the PGE metals but what is coming down the pipeline will give a lot of umpf to the metrics of this deposit and will ensure the viability of the project for a long time.
The issue for Pd is that there is no stocks of the metal. The demand will continue with the phasing out of diesel vehicles in Europe and Asia. Platinum is used in the diesel converters while Pd is used in the petrol converters so the push to higher emission standards will only place more demand on the ever decreasing supply of Pd. It is not easy to replace Pd with a cheaper alternative - certainly in the next few years.
These are the lease rates from last night - definitely stress in the market.
1 Mo. 36.65%
3 Mo. 25.82%
6 Mo. 18.84%
1 Yr. 14.92%
If you check the comex there is only 19,000 oz left that is available.
This is all classic paper issues from the metals markets and shows how price suppression distorts true fundamentals and pushes any problem with supply down the road. The flow on effect is to create atmosphere of malinvestment to the point where it is very difficult to get a project off the ground. Just look at the australian companies that have PGE deposits - that will give you an indication of how it has been very difficult to get any attention, interest and consequently funding. To get a project from deposit to a mine takes years if we start today so i am expecting these supply issues to continue.
Commodities are still rock bottom and I am predicting an explosion in prices. Pd is a classic supply/demand example that cant be papered over. While Ni is in the doldrums atm I have no doubt the deficit will continue. Copper will have its day too.
What does this mean for the dragon?
I have done a beer coaster calculation based on the tonnage quoted in the Argonaut report from a year ago. They quoted 2.5 mill tonnes as a guesstimate.
Using a conservative 3%Ni and 3gram/tonne for PGEs we get a figure of 75,000 tonnes of Ni and 234,000oz of PGE
Inground value of the Ni (using the current price with a $2500 premium for sulphate) @$16500 is
$1.2 billUSD (1.8 bill AUD)In ground value of the PGE
@2400 USD is
560mill USD (815 mill AUD)I havent even considered other credits so the fundamentals stack up in a climate where we can see significant appreciation of commodity prices in the near future. The rampant printing of fiat will ensure it.
These are very rough calculations and I would love the esteemed SMEs to jump in but it does give you an idea of the potential here and the obvious mis-pricing of the stock.
