And this is why I think the stars are aligning nicely for the dragon. Two years is perfect for project development of a rich and shallow ore body and the projected supply deficits in all the metals that lie within this deposit. When you look at all the analysts projections for Cu, Ni, Pd etc you cant really believe that we have this window of opportunity and the signs are all there. I can really understand the excitement of JP and fellow posters on the forum.
Barring a global meltdown which would soften demand for raw materials i think the timeline for project development versus metal supply fundamentals.
While the focus is primarily on Ni and Cu, from a metals market perspective, the current palladium forecasts give a snapshot of the dynamics at play and the potential to really put SGQ on the map.
The current palladium market is a synopsis of classic supply/demand metal market fundamentals.
To maintain market balance 1. Reduce demand for the commodity 2. Increase supply for the commodity
To reduce the demand in the market, prices have to rise, production has to increase or a substitute material needs to be used. Platinum can be used as a replacement and i would think this would be the best near term fix but with SA and Russia producing over 80% of the metal the geopolitical shadow is ever present.
This is only a 10 million oz per year market. This would suggest that supply needs to increase but this cant happen overnight. While above ground stockpiles are difficult to ascertain accurately they are fast running out. Interestingly PGEs are associated with nickel mining as is the case with Canadian ore bodies but this requires an increase in the Ni price to get marginal projects on line and thus increase the by product effect of PGMs.
I dont think an increase in price will fix the imbalance in the short term. It might attract some stockpile metal back into the market but the 1 million oz deficit will be hard to fix for the forseeable future. This deficit does not include the leased metal that needs to be returned to the market - another stress that needs to be considered.
While i have mentioned Pd here as an example it is the canary in the coal mine in the short term as an example for other metals markets that will add pressure over the next ten years
IMHO of course
SGQ Price at posting:
16.5¢ Sentiment: Buy Disclosure: Held
(20min delay)
