GOLD STOCKS NEWS – Gold stocks advanced Thursday as the Market Vectors Gold Miners ETF (GDX) climbed $1.07, or 1.9%, to $56.30 per share. In Canada, gold stocks surged as well, with the S&P/TSX Global Gold Index rising 1.4% to 387.40. Strength in gold stocks was fueled by further gains in COMEX gold futures, which jumped $27.00, or 1.6%, to $1,727.10 per ounce. The rally in precious metals was fueled by yesterday’s Federal Reserve meeting, in which the central bank affirmed its zero interest rate policy for the next three years.
In spite of today’s rally in gold stocks, the GDX is now higher by just 2.2% during the past 52 weeks. Over the same timeframe, the yellow metal has climbed 28.1%. The gold stocks sector has significantly lagged the price of gold due to a myriad of factors – including operational disappointments, rising cost structures, elevated political risk in many locations of their assets, and macroeconomic headwinds that have weighed on the equity markets.
Due to the underperformance of gold stocks, investors have begun to consider other areas of the precious metals space. Platinum, which like gold provides protection against currency debasement, also stands to benefit from a global economic rebound. With the price of platinum currently trading near $1,620 per ounce –near all-time lows against the price of gold – many investors have begun to pay increased attention to platinum.
Przemyslaw Radomski, a contributor to Minyanville.com, noted in a recent piece that “There are certain dogmas held sacrosanct by precious metals investors, and one of them is that platinum is supposed to be more expensive than gold… When you consider the price history of the two precious metals – platinum has traded at a $200 to $400 premium to gold – the reversal was astounding.”
At 0.94, the present ratio of platinum to gold is near a 20-year low, which Radomski described as “an anomaly unlike anything seen in recent years.” He noted that “There have been several small breakdowns below the level of previous lows, but none have held…The ratio appears to have bottomed. The bottom is of a long-term nature…The upside potential for the ratio is very high and the downside appears negligible.”
While there are numerous gold stocks available for investors to gain exposure to the yellow metal, such is not the case with platinum. Only a small number of publicly-traded platinum companies exist. One such company, Platinum Group Metals (PTM.TSX, AMEX: PLG), has begun to receive more attention of late after legendary investor George Soros acquired a sizeable position.
Last evening, Platinum Group Metals announced results from the first quarter of its 2012 fiscal year ended November 30, 2011. During the quarter, the Company made significant progress at its Western Bushveld Joint Venture (WBJV) Project 1 Platinum Mine, in which it holds a 74% interest. WBJV is located in South Africa near a belt that contains approximately 70% of the world’s current platinum production.
The Company reported that in September 2011, a joint engineering study began on potential synergies with the Jinchuan-Wesizwe platinum mine adjacent to the Project 1 mine site. Subsequently in November, the Company completed the formal public consultation process and documentation related to its Environmental Impact Assessment for WBJV. Consultation with the government of South Africa was then completed in December.
Last year Platinum Group Metals secured $260 million in a project finance loan to help fund the development of WBJV. Yesterday Platinum Group Metals noted that the completion of detailed banking documents, due diligence, hedging establishment and off take negotiations are expected to be completed by June 30, 2012. Additionally, the formal mining right record of decision from the Department of Mineral Resources of South Africa is expected by March 31, 2012.
In morning trading, notable gold stocks moving higher included GDX components AngloGold Ashanti (AU), Barrick Gold (ABX), and Goldcorp (GG). AU advanced by 1.8% to $45.26, ABX by 0.7% to $48.73, and GG by 1.8% to $48.30 per share.
Platinum Group Metals Advances Toward Production
In August, Platinum Group Metals entered into a mandate letter with a consortium of financial institutions – including Barclays Capital and the Standard Bank of South Africa Limited – for a $260 million project finance loan to enhance the development of the Western Bushveld Joint Venture (WBJV) Project 1 Platinum Mine. The Company reported that the Preparation of detailed banking documents for the senior loan facility with the mandated syndicate of banks is ongoing. The completion of this documentation, due diligence, hedging establishment and off take negotiations are expected to be completed during Q1 and Q2 of calendar 2012. The formal mining right record of decision from the DMR is expected before the end of Q1 of calendar 2012. Full Platinum Group Metals News Release.
- In September 2011, the box cut excavation at the Project 1 Platinum Mine in South Africa was completed
- Also in September, a joint engineering study began on potential synergies with the Jinchuan-Wesizwe platinum mine adjacent to the Project 1 mine site
- In November 2011 Platinum Group Metals completed the formal public consultation process and documentation related to its Environmental Impact Assessment for the Project 1. Consultation with Government was subsequently completed in December
- In November 2011 the Company reported drill intercepts in a newly discovered extension of the North Limb grading 3.47 g/t Platinum, Palladium and Gold (2 PGE+Au) over 3.5 meters and 7.00 g/t 2PGE +Au over 5.0 meters at vertical depth of approximately 660 meters on the Waterberg project
