"A preliminary metallurgical evaluation was conducted by SGS Mineral Services ("SGS") for the Langmuir North deposit and the results are summarized in a report entitled "An Investigation into the Recovery of Nickel and Copper from the Langmuir #2 North Zone" dated June 25, 2009 (the "SGS Report"). A copy of the SGS Report can be viewed under the Corporation's profile on the SEDAR website (www.sedar.com).

According to the SGS Report, most of the nickel value is contained within the mineral millerite, a mineral with a high nickel content which is somewhat different from other deposits known to date for the region. Excellent recoveries of nickel sulphides are obtained at a relatively coarse grind.

Based on the SGS Report and on previous historical work and metallurgical recoveries from previous production from the area, the Corporation believes that a platinum-palladium and a cobalt credit from the concentrates is possible."

LONDON — "The market balances of both platinum and palladium are expected to tighten this year as the automotive industry recovers after last year's slump, metals consultancy GFMS said in a closely-watched report on Thursday.

However, with mine supply seen rising a touch for both metals and jewellery buying, especially of platinum, expected to be hit by high prices, fundamentals may not reach 2008 levels, it said.

Platinum's gross market surplus grew by nearly half to 849,000 ounces last year and above-ground stocks virtually doubled as the global economic slowdown hit automotive demand, GFMS said.

The palladium market deficit also shrank to just 12,000 ounces from 651,000 ounces in 2008. However, demand for both metals is seen picking up this year.

“Amid last year's turmoil, autocatalyst and industrial demand for platinum and palladium was exceptionally depressed in early 2009, as output was cut drastically and expansion plans abruptly curtailed,” GFMS said in the report.

“With the worst of the economic crisis having passed by mid-year, a recovery in these areas got under way.”

“As this continues into 2010, it will be no surprise that we anticipate improved demand for both platinum and palladium in autocatalyst and industrial applications in 2010,” it said.

Demand for platinum for use in catalytic converters fell 28 per cent to 2.597 million ounces last year, while consumption by other industries, including the chemicals and electronics sectors, fell 30 per cent to 1.253 million ounces.

Jewellery buying rose however to 2.259 million ounces from 1.635 million, as low prices early in the year attracted buyers. Overall, platinum demand fell to 6.413 million ounces from 7.481 million.

This more than outweighed a 10 per cent fall in supply to 7.262 million ounces, with jewellery and autocatalyst scrap levels falling by a third to 1.221 million ounces as prices declined. Mine supply also eased 1.6 per cent.

Prices Hold Firm

Platinum prices held firm despite the metal's burgeoning market surplus, however, as investment demand in futures and products like physically-backed exchange-traded funds, which GFMS counts as a “below-the-line” factor, supported the market.

“Investment in platinum ETFs was not only substantial but near continuous during 2009, with allocations at year-end having risen by 384,000 ounces,” GFMS said.

The launch of U.S.-based ETFs at the beginning of 2010 is likely to ensure this factor continues to support prices going forward, it added.

Palladium's market deficit meanwhile shrank almost to balance. The metal recorded a smaller 14 per cent drop in autocatalyst demand to 3.911 million ounces.

Its resilience partly reflected the relatively strong performance of Chinese car sales last year, which is predominantly a petrol market. Petrol engines use a higher loading of palladium than platinum in their autocatalysts.

“While platinum is likely to enjoy much better industrial demand this year... we expect its improvement in autocatalyst to underperform that of palladium,” GFMS said.

“This is due to the concentration of platinum demand in diesel autocatalysts in Europe. While diesel's share is expected to rise this year, overall production growth in the region is likely to be anemic.”

Other industrial palladium demand fell 10 per cent to 1.631 million ounces, while jewellery buying eased to 1.150 million ounces from 1.296 million ounces. Retail investment jumped 81 per cent, however, to 170,000 ounces.

At the same time, supply held relatively steady, with mine production, jewellery and autocatalyst scrap levels declining only slightly to 7.497 million ounces from 7.756 million."