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On the subject of the actual rhodium price, JMAT have it up strongly at $27,600 today. Palladium is soaring, JMAT are quoting $2,626.
I'm sure that's the effect of Norilsk Nickel's flooded mines and production cuts kicking in. Personally, I'm not convinced by Norilsk's plan to save the two mines, so I'm half-expecting the palladium market, in particular, to get very stressed indeed.
Hi Expart!
Thanks for sharing your parallel calculation for iridium and ruthenium content in the SLP 6E prill split. Given today's prices for the "minor" PGMs, your post really shows how lucky SLP is to be processing UG2 and not Merensky reef ore. (No, I don't think Terry foresaw the current situation all those years ago when he set up the Dumps Operations!)
Taking your numbers, they imply that if SLP hit their guidance of 70K 4E PGM ounces, that would equal production of almost exactly 95K of 6E PGM ounces.
Of these extra ounces 4,845 ounces would be iridium. And 20,140 would be ruthenium. These are in the same ballpark as Barna's numbers yesterday.
Spot price iridium today: $5,900 (up again). Spot price ruthenium today: $390 (up again).
So, if you annualise today's spot prices you get "extra" revenue of $28.6m from iridium and $7.9m from ruthenium = $36.5m total for the "by-products".
To give an idea of the revenue growth now coming from the by-products, using the average prices for calendar year 2020 and similar production, you get to (4,845 oz iridium x $1,622 average price = $7.9m) + (20,140 oz ruthenium x $264 average price = $5.3m) = $13.2m.
So, if you assume today's spot prices for the by-products will be this year's average prices, that makes an improvement in revenue of $23.3m! And remember, SLP calculate their AISC on a 4E basis, so these ounces come for "free" except for the smelting and refining charge (allow a conservative 20%) and profit taxes.
An alternative approach to caculating Ru and Ir content follows.
The below are the average ratios (from US Geological Survey data / company reports):
Entity Pt/Rh Pt/Ru Pt/Ir
UG2 5.3 3.3 13.6
THS 5.8 3.8 12.9
SLP 5.0
Merensky 18.2 8.7 47.4
Thus the typical Ru/Ir ratios for UG2 are 4.1 (for one UG2 based tailings dump a ratio of 4.7 was reported by USGS).
Based on the 4E/6E ratio of 73.7% of the latest SLP report, one would assume 21.2% Ru and 5.1% Ir. This is similar enough to Barna's fag packet calculations based on the document. So should be as close as we can get to use the basket numbers TBTT calculated.
Hi Toptiger!
Ruthenium $380/oz at the moment, according to JMAT ($5 lower than I quoted). Gone are the days when it was $40/oz! Iridium $5,750/oz (same as).
The prices of these two "minor" PGMs has risen strongly over the last few months / weeks. In part due to excitement over the coming "hydrogen economy", I'd guess.
Remember, my revenue figure is a guesstimate based on an estimated prill split. (And maybe up to 20% of that raw revenue needs to be taken off for smelting and purification.)
But, that said, at these prices the "by-products" are going to add a significant amount to what is an already very healthy bottom line.
FWIW, the UG2 reef of the Bushveld, which SLP and Tharisa are both mining / processing is comparatively rich in the "minor" PGMs (rhodium, iridium, and ruthenium). Hence, SLP's and THS's market-leading basket prices. (As far as I can tell, SLP's is the highest of all).
tbtt,
are those fag packet numbers correct, ruthenium seems bit too high
Also to note - I hold SLP and THS and like both but tend to think THS is probably more undervalued at present, but IF that Ir number is accurate it means that SLP out performs THS on % of Rh and Ir in the 6E PGM basket.
Yes, they were literally fag packet calculations based on that document and the 6PGE Oz expected to be produced from the last half year report, the doc is obviously quite old but I think that split should be in the ball park.
Howdy TBTT, hope all is well. Yes I agree, it would be good to get some details from SLP on the ‘by products’ particularly as they are becoming a more relevant part of the basket as prices rise, could be argued that the Au is actually a by product at these prices!
If anybody from Sylvania is reading this (and I know you do pop in from time to time) it would be good to get some official numbers on the so-called by-products in the next quarterly report. At least the 6E prill split would be welcome.
In the old days the extra income from ruthenium and iridium was just an afterthought, a nice little bonus. But the way prices are now, the income from the extra 2Es in the 6E PGM basket is becoming significant. The income from iridium (at today's prices) is not so far off the income from palladium - is that correct?
Great work, though maybe these inferred numbers should be back-tested against stoodio's revenue split (date?) before they're taken for granted.
Hi Barna!
So, at today's prices, we are talking about income from the by-products of...
1. Ruthenium 22,000 oz x $385 = $8,470,000
2. Iridium 5,500 oz x $5,750 = $31,625,000
Total annualised revenue from by-products at today's prices = just over $40m!
I know very little about the ruthenium market, so I can't comment if the current price is sustainable. Iridium - total market size around 400K oz per year, it makes rhodium look common - is booming for good reason. It has a key role in the coming "hydrogen economy". I expect $10K / oz at some point in the next few years.
Interesting document - I make it roughly 5.5% Ir, So a very rough 6E split would be along the lines of Pt 45k oz, Ru 22k oz, Pd 18k oz, Rh 9.5k oz, Ir 5.5k oz - Total 6E production of 100k oz PA
TBTT, the only detailled numbers I was ever able to find for Sylvania are in the below (Table 5.5), but it's from 2015:
https://www.deutsche-rohstoffagentur.de/DERA/DE/Downloads/Investor%27s_Procurement_Guide_II.pdf
Tiger, absolutely and I realised soon after posting you wanted the actual prill. But it's but no means insiginificant anymore, as like you said iridium in particular is trading at $5000 /oz as of this morning.
Funnily enough, the only figures I can recall with respect to the actual prill split was in the live webinar - Jaco mentioned it but I don't recall what it was!
Hi Stoodio!
Thanks for the numbers. But I was really looking for the absolute percentages of ruthenium and iridium in the 6E prill split, not the (old) contributions to revenue.
Ruthenium (14% of THS 6E prill split, for comparison) is now trading at $385/oz - when for years it traded in the $40 to $50 range. Iridium - which is incredibly rare and crucial as a catalyst for hydrogen hydrolysis (i.e. "green" hydrogen production) - has risen from about $1,500 to $5,750 / oz (it's up again this morning). (Ir is 4.3% of the THS 6E prill split, for comparison purposes).
I guess that the SLP 4E basket price must be near its record high, given that rhodium is trading at $25,500/oz today, palladium at $2,400, and platinum at $1,200. And that alone is plenty enough to justify investing here, IMO. But my point is that if you include the "forgotten" by-products ruthenium and iridium, then the outlook here is even better.
*Revenue split below, apologies, but that's the money :)
Tiger:
1.4% ruthenium
2.4% iridium
So you're right, another $130-$140 to the basket :)
Just to ask, does anybody have a link to the 6E prill split for SLP? (I.e. the prill split that INCLUDES ruthenium and iridium). I'm wondering quite how much money SLP must now be pulling in from iridium. It must be getting on towards their income from palladium. Not bad for an ignored by-product!
(I imagine that SLP's 6E prill split is ballpark comparable to THS's 6E prill split, which contains 4.3% iridium. But a precise number would help!)
Hi Stoodio and CK!
In terms of exposure to the current PGM basket price, Sibanye Stillwater is the best of the majors. Sibanye's purchase a few years ago of palladium miner Stillwater, much criticised at the time, is really paying off for them.
The two companies with the absolute highest PGM basket price (in current market conditions) are SLP and Tharisa (THS). Essentially this is due to the very high rhodium percentage in their prill splits, as they are both processing UG2 ore.
I'm not sure the significance of Nornickel's mine flooding problems has been fully recognised here yet. They are estimating that they will lose production of some 700K PGM ounces this year - mostly palladium, but some rhodium in there as well (Nornickel produce around 13% of the world's annual rhodium supply). It may be worse for them - some Russian commentators are speculating that at least one of the two mines affected may be lost entirely. In these circumstances, it's easy to imagine $20,000/oz rhodium and $3,000/oz palladium for some considerable time.
In other news, note the rocketing price of one of SLP's by products, iridium - now $5,600/oz.
CommandoKai, good on you. Been watching SBSW myself. Regards Rhodium prices, can I just make it abundantly clear, that people, myself included, were licking their lips at the prospect of hitting $7-10,000 p/oz Rh here just a couple of years ago. And here's the thing; I'm still licking my lips at $8,000 p/oz Rhodium prices with respect to SLP.
Now tell me, where we at again? :)
The rhodium price seems to have found support after a fast fall, turned up slightly today according to the Johnson Matthey chart http://www.platinum.matthey.com/prices/price-charts#
Recently everytime it's ended a fall it runs back up again for a decent period as buyers panic to get supplies.
I'm so bullish on Rhodium with it's relative scaricty while at the same time being required by ever growing environmental laws around the world to be forced to be bought by car makers as there is no real full substitute for it.
SLP was already my largest position and I'm not selling any time soon, but to gain even more exposure to the rhodium's perfect storm I've snapped up a big chunk of Sibayne Stillwater (SBSW on the NYSE) as well, as they also do PGM recycling in the US as well as mines in SA, they look cheap as chips too if the average Rhodium price just stays about 10,000 for the year, let alone these levels.
Be aware though that the last day for trading for its dividend is today if anyone was thinking of getting some.
I now have a third of my whole portfolio exposed to PGM prices, while there is a risk Rhodium could come off the boil, I cant see the fundamentals leading to a total collapse in price any time soon, but of course now watch me be proven wrong, still I've put my money where my mouth is.