Member Info for ragnarlothbrok

At the peak of the 2008 financial crisis in September/October gold was sold off like every other asset. It was choppy for weeks as portfolios were rebalanced and many traders were wiped out by the huge falls leading to senseless, irrational liquidation of all asset classes.

Sound familiar?

After a few weeks gold slowly started to recover. Then US interest rates were rapidly dropped from 2% to near zero to support an ailing global economy. This just happen to coincide with the beginning of gold’s three year bull run, from below 700 to the peak of 1900 in August/Sept 2011.

They say that history rhymes...

Gas prices are up 20% since the open this week and are at 2 week high. The articles below may explain whats happening to NGAS sentiment.

https://www.fxempire.com/forecasts/article/natural-gas-price-fundamental-daily-forecast-short-squeeze-on-as-traders-react-to-lower-oil-prices-637892

https://seekingalpha.com/article/4330673-long-oil-short-natural-gas-trade-is-officially-dead

Important to note that smelting capacity hasn't been impacted, its precious and base metal refining. Smelting is the roasting process (which is being impacted by the Eskom outages) and refining is mostly separation using chemicals. Smelting is still happening so they will be stockpiling the smelted product (free of chrome, iron ore etc).

Theres a Heraeus refinery in port Elizabeth. Its family owned so no info (however I was mistaken about Northam, they only have a smelter and use the Heraeus refinery). It must be pretty decent size as Northam is looking to expand production to close to 1moz of PGMs. They appear to have some refining capacity but don't appear to smelt. Gauteng also has one but I don't know anything about that.

There is Rand Refinery but I think that mainly does gold. Johnson Matthey is the next largest refiner after Amplats but I don't know where its plants are (not in SA). I guess there is also Norilsk.

Business as usual here, rhodium has added over 10% since the Amplats refinery issue. Amplats took one for the team there...

https://www.heraeus.com/media/media/hpm/doc_hpm/precious_metal_update/en_6/Appraisal_20200309.pdf

I didn't manage to find if Amplats is SLP's smelter/refiner. I don’t know what the impact would be to SLP if it was. I presume SLP would continue to sell concentrate to Amplats but there would be a build in working capital as Amplats doesn’t pay until the product is refined.

I know Amplats does some of Sibanye, Royal Bafokeng and African Rainbow Minerals. Implats does Tharisa. Implats has already said it does not have any spare refining capacity. Northam is another integrated producer which has added spare capacity in anticipation of expanded output

Well worth tuning in to the analyst presentation from yesterday's results release.
https://ir.dgoc.com/financial-info
Rusty is very confident and bullish, and he made the share purchase to back it up. Talking the talk and walking the walk

Nice one Rusty. Let's hear some more about these very very compelling acquisition opportunities.

Shelled out another big chunk of his salary on shares today as well

The fall in oil provides a nice tailwind to the cost of the mining operations and the rand is at 4-5 year lows which should also help. Gold appears to be stabilising around 1670. As margin calls are settled (and most likely quite a few account closures) liquidity should improve and with the next set of interest rate reductions I expect the gold price to continue heading north.

All in all a pretty favourable price environment for SA producers.

The main headwind is that Eskom has gone back to stage 1 load shedding which isn't likely to help performance. Eskom continues lurching from one crisis to the next.

Good to see Cobus picking up a few more shares when there is blood on the walls.

Gavster I've no idea on either of those off the top of my head.

I cant remember the hedging arrangement, but don't forget if its 10% of production, and 10% of revenue, it could be 20% less profit depending on margins and operating leverage.

That makes the current basket... $2,900/oz. Only 1.7% lower than the peak of $2,950 a couple of weeks ago. Remarkable

Rhodium up $1000/oz, back up to 13200

http://www.platinum.matthey.com/prices/price-tables

Topped up a few here today as well. With the Amplats refinery incident Tharisa is in prime position to capitalise on the basket increase today

Tharisa is Implats. I don't know anything about JLP. SLP have always kept their refiner close to their chest. I've never known which it is. But from note 8 in the 2019 finance statements they have had two off take agreements since 2018, and only one prior to that. I've had a pretty good trawl through the Implats third party processing info and it could definitely be them. I'm not sure about the other two I might have another look.

Visitor I'm pretty sure they can claim FM on this, there are a number of precedents for refinery breakdowns/restrictions in the past

I think that we have temporarily lost around 60koz of rhodium, which I believe represents around 6% of the market 1moz a year market.

Does the smelter have sufficient capacity to process all that additional stockpiled material in H2? I don't think so. I see stockpiles being released gradually into the market over the next 15 months.

This event will exacerbate the current shortage. I'll see if I'm right by the movement in the rhodium price over the next few days.

If Pt and Pd are 4% off the lows then what happens to Rhodium? Lost Rh output as a % of total global output is much higher than for Pt and Pd

Wow... that news is massive. Changes the whole dynamics of the PGM market.

Now, who is our refiner? Is it Amplats, Implats or Sibanye? We are going to find out real soon

https://www.fastmarkets.com/article/3921645/focus-participants-eye-lower-march-ferro-chrome-tender-prices-in-china

Hold on to your hat Eish

Here's a depressing article about the Chinese ferrochrome industry. Inventory continues to build as Chinese steel production declines. Looks like some ferrochrome capacity is going to be wiped out permanently

Don't forget that we are as much as a chrome producer as a PGM producer, we just to get to keep the PGMs for free.

Unfortunately PAFs leverage to the PoG is more limited than the other miners with those troublesome hedges!

Unfortunately I'm only 30% in gold/SLP which means I've been taking quite a hit but I'm still up this year.

I don't think there is much to hold gold back over the next month or two. And the strength of palladium is truly remarkable in the context of the automotive market weakness. Makes you wonder what will happen when the recovery kicks in