SBSW Sibanye Stillwater

Key Metals Surge, Unlocking New Opportunities for Savvy Mining Investors

November 19th, 2024 - InvestorsHub NewsWire -- NetworkNewsWire Editorial Coverage: Investment interest in the mining space is growing, driven by increasing demand for a wide range of metals that are becoming essential to modern industries. The push for clean-energy technologies, such as electric vehicles ("EVs") and renewable energy systems, has amplified the need for critical minerals such as lithium, cobalt, nickel and rare earth elements. Meanwhile, traditional metals such as copper and aluminum are experiencing a resurgence due to their critical role in infrastructure and energy transmission. Gold and silver, as traditional stores of value, remain attractive amid economic uncertainties and inflationary pressures. Finally, the global transition toward decarbonization and energy efficiency is fueling demand for platinum group metals ("PGMs"), which are known for their purity, high melting points and unique catalytic properties. PGMs are vital in a number of industrial processes, technologies and commercial applications and play a critical role in autocatalysis and pollution control in the automotive sector. With potential supply constraints from key producing countries and geopolitical risks further tightening markets, mining companies are poised for growth. Platinum Group Metals Ltd. (NYSE: PLG) (TSX: PTM) (Platinum Group Metals Profile) is positioning itself as an emerging leader in the PGM sector through its flagship Waterberg Project in South Africa. Other mining and commodity related entities, including Sibanye Stillwater Limited (NYSE: SBSW), VanEck Junior Gold Miners ETF (NYSE: GDXJ), abrdn Physical Palladium Shares ETF (NYSE: PALL) and iShares Silver Trust (NYSE: SLV), are also seeing increased investor interest.

• Several key factors have contributed to an improvement in the PGM demand outlook.
• Platinum Group Metals is dedicated to meeting the growing need for platinum and palladium through its flagship Waterberg Project.
• The company recently released positive results from an Independent Definitive Feasibility Study Update for the Waterberg Mine.

View the infographic of the Platinum Group Metals editorial here

Improved Industry Outlook

The platinum group metals industry includes six key metals: platinum, palladium, rhodium, ruthenium, iridium and osmium. Renowned for their catalytic properties, high resistance to corrosion, and excellent electrical conductivity, PGMs play an essential role across various sectors, including automotive, electronics, and healthcare. Despite earlier concerns that the rise of battery electric vehicles ("BEVs") would diminish the demand for PGMs, the industry outlook has improved significantly due to several factors.

A Rebound in Auto Demand for Platinum and Palladium: The automotive sector remains a cornerstone of PGM demand, particularly for platinum and palladium, which are critical in catalytic converters for internal combustion engine ("ICE") and hybrid vehicles. While BEV adoption initially posed a threat, faltering BEV sales have led to a resurgence in ICE and hybrid vehicles, bolstering demand for PGMs. This shift underscores the continued relevance of PGMs in emissions reduction, even as the industry evolves toward greener technologies.

Supply Risks from Russia: Russia is the world's largest producer of palladium, accounting for a substantial share of global supply. However, geopolitical tensions and potential sanctions on Russian exports pose significant risks to the palladium market. Such uncertainties could lead to supply shortages and higher metal prices, benefiting producers outside of Russia.

South African Supply Constraints: South Africa dominates the global production of platinum and rhodium. However, ongoing challenges such as energy shortages, labor disputes and operational inefficiencies have led to production cutbacks. Many of the conventional platinum and palladium mines are old, deep, and expensive to operate.  Safety is a concern.  These supply constraints add another layer of support to PGM prices, reinforcing their strategic importance.

Investment Demand for Platinum: Amid global economic uncertainty and geopolitical tensions, investors are turning to precious metals as safe-haven assets. Platinum, in particular, has garnered interest alongside gold and silver. This trend highlights the dual role of PGMs as both industrial and investment commodities, enhancing their appeal in volatile markets.

A Key Player

Keenly aware of the growing interest in the PGM space, Platinum Group Metals is dedicated to meet the growing need for these metals, specifically through its flagship Waterberg Project, which is located in South Africa. This project, which Platinum Group Metals Ltd. initially discovered in November 2011, focuses on palladium, platinum, rhodium and gold, leveraging the company's expertise to meet the growing demand for PGMs.

The Waterberg Project is a joint venture between Platinum Group; Impala Platinum Holdings Ltd. (Implats); HJ Platinum, which consists of Japan Oil, Gas and Metals National Corporation and Hanwa Co.; and Black Economic Empowerment ("BEE") partner Mnombo Wethu Consultants ("Pty") Ltd. The project deposit is shallow, and the planned mine is designed as a bulk, mechanized, underground operation and aims to provide a safe, sustainable and scalable source of PGMs.

The Waterberg Project provides leverage to investors looking for PGM exposure. In particular, the project offers a distinctive competitive advantage based on its leverage to ounces in the ground, potential low-cost production, partnership with a major platinum producer and a Japanese consortium, and its relationship with a Saudi Arabia-based group seeking to build a PGM smelter in Saudi Arabia.

The World-Class Waterberg Project

Most recently, Platinum Group Metals released positive results from an Independent Definitive Feasibility Study Update (2024 DFS) for the Waterberg Mine. Highlights of the report note several key factors, including the following:

• Increased Mineral Reserve Estimate: Proven and probable mineral reserves increased by 20% to 23.41 million 4E oz (246.2 million tonnes at an average grade of 2.96 4E g/t, 0.08% copper ("Cu"), and 0.17% nickel ("Ni").

• Extended Life of Mine: LOM increased from 45 years to 54 years with annual steady state average production in concentrate of 353,208 4E oz. and peak annual production of 432,950 4E oz.
• Robust Economics: After-tax net present value at an 8% real discount rate of $569 million and an Internal Rate of Return of 14.2% using average long-term consensus metal prices as of May 2024.
• One of the Lowest Cost PGM Mines in Southern Africa: On site LOM average cash cost, including base metal byproduct credits and smelter discounts as a cost, of $658 per 4E oz, with an all-in sustaining cost of $761 per 4E oz.
• Strong Cash Flow Generation: LOM free after-tax cashflow of $6.50 billion at consensus prices.
• Reasonable Capital: Estimated total project capital of $946 million, including 8.5% for contingencies, and peak capital estimated at $776 million.

"The 2024 DFS validates the world-class nature of the Waterberg Project," said Frank R. Hallam, Platinum Group president and CEO. "Engineering teams from Stantec, DRA and Fraser McGill have collaborated to achieve an optimized and de-risked mine plan while also minimizing capital requirements. The primary objectives of the 2024 DFS were to update and minimize capital and operating costs, and to simplify the construction, ramp up and operating profile of the Waterberg Mine.

"I believe these objectives have been achieved," Hallam continued. "We look forward to advancing the Waterberg Project for the benefit of our partners and local communities, as well as all the people of South Africa. The Waterberg Project is planned to create approximately 2,000 jobs during construction and approximately 1,425 mostly high skilled jobs once steady state mining is achieved. PGMs, copper and nickel play key roles in automotive emissions control and energy transition technologies, including that found in battery electric, plug-in hybrid, gasoline hybrid and hydrogen fuel cell vehicles. The Waterberg Project is a long life asset capable of profitably producing these critical metals."

Revolutionizing Storage, Diversifying Applications

Another component that sets Platinum Group Metals apart is PGM's Lion Battery Research project, which is a collaborative effort with Anglo American Platinum to develop a lithium sulfur battery using PGMs, which could revolutionize energy storage and further diversify PGM applications.

Platinum Group Metals founded Lion Battery Technologies in partnership with Anglo American Platinum Limited to support the use of palladium and platinum in lithium battery applications. "The possibility of creating additional demand for platinum and palladium in the battery technology space is an exciting development and of strategic importance to both parties," the company notes. "Lion Battery has entered into an agreement with Florida International University to further advance a research program that uses platinum and palladium to unlock the potential of lithium air and lithium sulfur battery chemistries to increase their discharge capacities and cyclability."

According to the agreement with the university, Lion will have exclusive rights to all intellectual property developed and will lead all commercialization efforts. Lion is also currently reviewing several additional and complementary opportunities focused on developing next-generation battery technology using platinum and palladium. Because lithium oxygen and lithium sulfur batteries have considerably higher energy density, they can perform better, by orders of magnitude, than the best-in-class lithium-ion batteries currently on the market or under development. "This new generation of lightweight, powerful batteries has the potential to grow to scale on the back of the attractiveness of battery electric vehicles and the use of lithium batteries in other applications beyond mobility," the company has stated.

Opportunities

The current mining environment presents opportunities for investors seeking exposure to sectors driving the future of energy, technology and infrastructure development. As demand continues to climb, mining investments are increasingly becoming a cornerstone of forward-looking portfolios. Many companies, including these, are focused on providing attractive investment options for those eyeing the mining space.

Sibanye Stillwater Limited (NYSE: SBSW) is a multinational mining and metals processing group with a diverse portfolio of operations, projects and investments across five continents. The group is also one of the foremost global recyclers of PGM auto catalysts and has interests in leading mine tailings retreatment operations. Sibanye-Stillwater is one of the world's largest primary producers of platinum, palladium and rhodium and is a top-tier gold producer. It also produces and refines iridium and ruthenium, nickel, chrome, copper and cobalt.

VanEck Junior Gold Miners ETF (NYSE: GDXJ) is designed to replicate as closely as possible the price and yield performance of the MVIS("R") Global Junior Gold Miners Index, which is intended to track the overall performance of small-capitalization companies that are involved primarily in the mining for gold and/or silver. The fund features a portfolio of small gold miners, some of which are in early exploratory stages with upside potential. The fund also provides high beta exposure to gold prices and is highly liquid, historically seeing greater average trading volume than any of its underlying junior miners.

abrdn Physical Palladium Shares ETF (NYSE: PALL) is an investment product offered by abrdn Investments. The fund is designed for investors who want a cost-effective and convenient way to invest in palladium with minimal credit risk. abrdn Investments offers investment expertise across key asset classes, regions and markets so that its clients can capture investment potential wherever it arises. By combining market and economic insight with technology and diverse perspectives, abrdn Investments offers optimal ways to help investors navigate the future and reach their financial goals. And by putting environmental, social and governance ("ESG") considerations at the heart of the process, the company also invests in a better future.

iShares Silver Trust (NYSE: SLV) is designed to generally reflect generally the performance of the price of silver. The trust is designed to provide exposure to the day-to-day movement of the price of silver bullion while offering investors convenient, cost-effective access to physical silver as well as a way to diversify their portfolios and help protect against inflation. iShares has been a leader in the ETF marketplace for more than two decades, and as a part of BlackRock, its products are engineered by investment professionals with discipline and deep risk-management expertise

In summary, the PGM industry's positive outlook is driven by a combination of rebounding automotive demand, geopolitical supply risks, and increased investment interest. Companies such as Platinum Group Metals Ltd. are well-positioned to capitalize on these trends, offering potential opportunities for investors seeking exposure to this dynamic and essential sector.

For more information about Platinum Group Metals, please visit Platinum Group Metals Ltd

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