holy smoke!, page-3

'Back to the Future'

I've been reading a few articles on Kitco over the weekend. And I now suspect an 'industry' development in South Africa is responsible for the continuation of the short term share price strength, volumes and now medium-term trend (up!). Looks like it could be a game changer to me! From what I can tell the big boys are moving in to start consolidating while the industry is on its keens. I suggest people take a look.

This industry development certainly adds a new dimension to the PLA story. And while there has been a bit of take-over talk here on HC, I now suspect this development along with the Smokey Hills turnaround announcement have been the SP and High Volume drivers. So until there is an clarification announcement by the company I still tend to discount the idea of a full take-over play for the company. However, I do tend to think that these company and industry developments as potentially an even better outcome for long term holders. DYOR.

Platmin/Pallinghurst/IDC/Newco 'strategic venture'

Here's a few quotes from the articles attached:

'The new company will operate a mega-mine created from the merger of three existing shallow PGM mines that are situated on the western limb of the Bushveld complex' - right next to PLA's Rooderand!

The new company's strategy identical to PLA's. Namely: 'shallow at low cost'.

Newco will have cash war chest of '$500m'.

'The IDC has agreed to purchase a 16.2% stake in the new company for US$420 million plus warrants equal to another 4% stake in the company. The partners said that the IDC's investment values the new company at about US$3 billion'.

'"The new company will have a PGM resource base of 70Moz and a mine life of more than 30 years,” the partners said'. As a comparison PLA's most recent presentation suggested the Rooderand Project has a Total Resource 4.2 Moz and 17year life.

'It would also be debt-free with a US$500 million cash position, thanks to a cash injection from South African state investment agency the Industrial Development Corporation (IDC)'.

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My simple company valuation metric:

Newco valuation 70Moz Resources = $3b (or $2.5b + $500m cash)

PLA Valuation (PLA attributable) 9.7 Mozs Resources = $346-415m v's Market Cap of ~$83m

[is this too simplistic? does this stand up? other opinions? - please!]
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To recap PLA story: Rooderand Project (PLA earning 70%)
http://www.platinumaus.com.au/viewStory/Rooderand%20Project

PFS completed - Total Resource 4.2 Moz, open pit production of 115,000 ozs pa at a Cash Margin of US$500/oz with 10 year life followed by ~7 year underground

JV with Atla Mining Resources – PLA 30%, earning 70%

UG2, Merensky and Pseudo/Tarentaal Reefs

Pre Feasibility Study completed April 2011

Definitive Feasibility Study drilling program completed July 2011

Updated Resource due March 2012

DFS due for completion First half 2012

Over 350 diamond drill holes completed since November 2009

IRR ~40%

Platinum Australia has Total Resources of 14 Mozs 4E PGM (PLA attributable 9.7 Mozs)

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Source articles/presentations:

http://www.businessday.co.za/articles/Content.aspx?id=168654

http://beta.miningreview.com/IDC/invest/US/420/million/dollars/new/SA/platinum/venture

http://www.businessday.co.za/articles/Content.aspx?id=168634

ww.reuters.com/article/2012/03/29/safrica-idc-idUSL6E8ET27G20120329?feedType=RSS&feedName=basicMaterialsSector

http://www.gtp.com.au/platinumaus/inews_files/ASX1218JL_020312.pdf

Enjoy

Gus