Friday Round-up: 23rd July 2021

Friday Round-up

23rd July 2021

This week I’d like to take a quick look at platinum and PGE mining.  The PGE market has been plugging along quietly in the background during the pandemic, not grabbing attention like other metals experiencing skyrocketing prices, despite the fact that palladium, critical for catalytic converters, hit an all-time high of $3,018 per ounce in June.  Part of the reason for this is consumer demand for cars returning as the pandemic eased, alongside stricter environmental controls on those cars (the palladium in the catalytic converters helps reduce CO­2 emissions), but it was also due to the halt in production at Nornickel’s Oktyabrsky and Taimyrsky mines in February.  That company is the world’s largest palladium producer, and those two mines account for 36% of its ore production.  They were shuttered due to subterranean water flowing into them at the 350 m level, which, for mines over 800 m deep in a permafrost zone, is clearly a big problem.  Luckily, full production restarted ahead of schedule in Oktyabrsky in May, and at Taimyrsky in June.  Since then the palladium price has gone back down, though at the time of writing it was still about $840/oz ahead of gold, and it is still the most expensive commonly-traded precious metal.

Anglo American's Dishaba platinum mine in South Africa

Speaking of Nornickel, some of the big recent news in the PGE market was its share buyback, announced in June, of 3.4% of its shares. The major beneficiary was Rusal, the world’s biggest aluminium producer outside China, which stood to receive $1.4 billion or thereabouts.  Nornickel planned to cancel the shares it bought to compensate for a smaller than expected dividend, retaining only 0.5% for its employee share ownership programme.  That left Rusal with around 26.2% of Nornickel’s shares, behind Russian businessman Vladimir Potanin with 35.6%.

South Africa produces the majority of the world’s PGEs, thanks to the titanic Bushveld Complex which is roughly the size of Ireland and contains two rich PGE horizons.  I’ve been down one of the platinum mines in the Bushveld, and I have to say it’s quite an experience.  I’m not envious of the working conditions down there – the Merensky Reef, which I watched being mined, is less than 50 cm thick so everything happens in cramped tunnels.  You can be more than a kilometre underground, so it’s hot to say the least, and if you get a moment between drilling noises and the air conditioning fans whirring, you can hear the faint popping of stressed rocks fracturing and settling all around you.  Nevertheless, these jobs do a lot of good for the community – they come with benefits like high quality health care that can be hard to find for many people in South Africa, and which can be a literal life saver.  The Merensky Reef, along with the UG2 Reef in the same complex, contains most of the world’s known platinum reserves and is a major booster of the South African economy.

Work underway at Bathopele platinum mine

Anglo American Platinum, the South African PGE unit of Anglo American, has done decent work for itself at the tail end of the pandemic.  It’s running its operations at 95% capacity because of COVID disruptions, but production nevertheless increased by 59% las quarter to a total of 1.06 million ounces.  The yearly output targets tightened from 4.2-4.6 million to 4.2-4.4 million ounces of PGE concentrate, but the market has not appeared to hold that against the company, given the chaos that the coronavirus has caused in South Africa, and its shares have been on an upward trajectory since Monday.

Personally, I love PGE geology and the Bushveld Complex in particular, so if anyone would like to grab a beer at a future conference and have some plat chats, please get in touch!

Around the Traps

Mammoth Resources (TSXV:MTH) has some very exciting news today about the follow-up drill targeting from its Tenoriba gold-silver project in the prolific Sierra Madre precious metals belt in Mexico.  Drill targets have been extended 1.7 km to encompass a whole new target area, and President and CEO Thomas Atkins has said drilling will commence in mid-August.

Mammoth's target areas at Tenoriba

Goldplay (TSXV:AUC) has announced the beginning of field work on its Scottie West project in the Golden Triangle of British Columbia.  The team will be ground truthing interpreted targets and fault zones, as well as sampling.  A grid talus fine geochemistry program is planned in the vicinity of an anomalous gold sample from previous work.  Goldplay has also just received a BUY rating from Fundamental Research, and for a great overview of the company you can read the report here.

Anaconda Mining (TSX:ANX, OTCQX:ANXGF) has announced drill results from its Newfoundland Stog’er Tight prospect, reporting up to 34 g/t gold over 1 m. The company is currently performing infill drilling to support pit design for a mining operation on the site, and is preparing to finalise resource estimation.

Minera Alamos (TSXV:MAI) is progressing with commissioning work at the Santara mine site in Sonora, Mexico, despite a rather stupendous amount of rain.  Work is apparently on schedule and operations proceeding nicely despite the wet conditions.

The pregnant solution pond at Santara, holding up against the downpours

That’s all from me this week, have a great weekend everyone!

- Jane Lockwood