Nice to know Noront has 2,500,000 ounces of precious metals so far in the 2% of the land package explored so far. I'm looking forward to knowing what is in the other 98%.

Nice to know that the 2,500,000 ounces of Precious metals are in ONTARIO, CANADA.

Platinum supplies hit by Zimbabwe expropriation

2011-APR-06

Roman Baudzus writes --

According to TD Securities, platinum and palladium prices could increase dramatically over the next couple of years. The financial institute bases its outlook predominantly on the fact that supply constraints are affecting both precious metals. Palladium in particular faces serious potential supply problems, which could also affect platinum before 2013. This is primarily due to events in Zimbabwe, where dictator Robert Mugabe is confiscating the shares of foreign mining investors.

Anglo Platinum, Impala Platinum, Aquarius Platinum and several smaller companies listed on the South African stock exchange have been hit by this development. According to an official statement from the Mugabe administration, the enterprises operating in Zimbabwe will be granted a period of 45 days in which they are supposed to work out how the majority stakes of foreign investors shall be transferred to Zimbabwean investors. 4.5% of the world’s annual production of platinum comes from Zimbabwe; the country is the third-largest producer of platinum in the world.

Decreasing confidence in property rights in the region could lead to the cancellation of many mining projects, according to TD Securities. South Africa is the world’s biggest producer of platinum – supplying about 74% of annual worldwide-demand for the metal. But the politically influential ANC youth leader Julius Malema is still pleading for the nationalisation of South Africa’s mining operations, which is adding to market uncertainty.

There could also be supply bottlenecks in the palladium market in the not too distant future. Russian mining giant Norilsk Nickel has already warned of depleted Russian stocks, while demand for palladium among industrial end users has not slowed down significantly, despite the recent price correction. Many investors used palladium’s recent correction phase to stock up on the metal at cheaper prices.

Zimbabwe's looming wave of confiscations is hanging over the platinum market like a sword of Damocles, and has come about at an unfortunate time for miners, as other countries in the world seek to raise taxes on the commodity sector. Australia upset miners in the spring of 2010 after announcing the introduction of a so-called super tax on the profits of domestic mining companies. The two commodity giants BHP Billiton and Rio Tinto were particularly concerned by the newly-planned legislation. The super tax, to be passed in 2012, will tax the profits of all domestic mining companies, to the extent that these profits exceed the return on 10-year Australian government bonds.

The Australian government hopes that this will contribute to a budget surplus for the fiscal year 2012/2013. But, unsurprisingly, the resulting outcry from mining companies running projects on the fifth–largest continent has been huge. Besides BHP and Rio Tinto, Xstrata has also threatened to cancel or scale-down planned projects. This situation could also contribute to further reductions in the supply of platinum and palladium, as well as constricting the extraction of rare-earth minerals.

However, things are getting worse for Australian miners. As was disclosed on March 29, the super tax bill will be revised again, as Australian states also want to participate in higher tax revenues. In order to do so, state governments are pleading for further taxes in the form of higher royalties, which would put further pressure on miners.

Following these moves in Australia, other mining countries such as Peru, Venezuela, Chile and Canada have followed suit. This worldwide attempt at skimming the profits of mining companies could make many projects uneconomical and lead to a cancellation of planned operations. The prices of platinum, palladium and many other minerals are likely to increase as a result of this trend.