G'day DoctorI spoke to the company again this week. Where they...

G'day Doctor

I spoke to the company again this week. Where they again suggested that they had not had any indication from Patersons that the 'Underwriting' Agreement was going to be withdrawn, and that if they were to pull out that they would have to make an announcement before the rights issue closed (12 noon this Friday).

My gut feel is that Patersons will place the shortfall of approx. 36,844,170 shares over the coming weekend (and probably has had someone in the wings since the rights announcement and this whole exercise has just been an attempt to try to keep existing shareholders happy about a capital raising at a ~30% discount).

Now as the shares are only trading at a slight discount to the market and represents an opportunity to pick up a significant parcel at a great price. I'm guessing the big boys in the investment world would be following the macro picture - and buying for the medium to longer term.

Industry sources suggest the macro picture for Platinum is also looking promising for the end of 2012 and beyond. From the reading I've been doing these macro points stand out;

Platinum discount to Gold Price at record levels (not seen since 1985) - will create an increase demand for Platinum Jewelry as producers/consumers substitute away from Gold (or bend more Platinum in). Positive.

[side point - does yesterdays Gold price action (drop) suggest people are unwinding their 'defensive' positions? Good to see that the platinum price held up relatively - US$200 gap reduced to $150 gap].

Drop in the value of the Rand v's USD. Lowers cost of production in South Africa (however this has also been linked to the drop in the Platinum price). Positive.

Platinum prices must rise in line with cost of production, otherwise producers (such as PLA) will close shop, thereby reducing supply. Positive - as long as PLA can turn things around in the next 3 months!

Demand from the Auto industry has been forecast to rise (had to correlate to the current European situation - but perhaps Asia growth will pull the global economy along). Positive.

Also Zimbabwe's nationalization plans are certainly making South Africa look like a dream place to be operating. Yesterdays announcement by AQP regarding the gifting of 10% of some of their Zimbabwe operations was not welcomed by their shareholders. This could also be seen as an opportunity for PLA and AQP to merge and diversify the 'sovereign' risk associated with operating in Africa. PLA also has the Panton project in Australia which is in the pipeline. Another Positive.

I hear that John Lewins is back in Australia now, but is heading back to South Africa before Christmas and then again in the new year with their CFO David Neil. For normal operations stuff apparently!

I'm guessing there will a bit of a recovery in PLA's share price from Monday, once the 'rights issue' over-hang of shares is removed and PLA has the cash to keep funding their operations until they start turing a profit (March Quarter 2012).

Cheers Gus