Palladium Production Companies With Strong Outlook Anglo Platinum AMS, Chinese demand

Platinum group metals which include palladium, platinum and rhodium have important auto (catalytic converters), jewelry (white gold plating) and industrial applications.  In recent months, people have raised concerns regarding supply since Russian company Norilsk is the world's leading producer of the white metal.  Add to that the potential for worker strikes in South Africa's platinum belt and you have a recipe for the perfect storm.  Europe is by far the biggest platinum group metals customer for both Norilsk (50% of sales) and Anglo Platinum (over 48% of sales).

Russian palladium shipments via Switzierland continue to decline.  

According to Barclays, the Palladium market will deliver a sizable deficit in 2014 which will lead to a higher bottom price.  Not only are Russian stockpiles dwindling but because it's Russia there are other geopolitical issues at play.  Will Russia limit the supply in order to use palladium as a tool to counter economic sanctions?

And don't forget about the China-effect:  Chinese demand for platinum continues to soar.  Recently, China became the world's largest consumer of platinum thanks in part to fragile European auto markets.

Norilsk Nickel NILSY i) world's number one nickel producer ahead of Vale, Jinchuan, Xstrata.  ii) leading producer of palladium.  production:  platinum:  651,000 ounces (vs 683).  palladium: 2661,000 ounces (vs 2732). revenue, percent of revenue: platinum:  $956 million  9.2%  (vs $1028m 9.0%), palladium:  $1,935m  18.6%  (vs $1722 15.1%).

Anglo Platinum AMS-JO i) low risk South African miner:  BRPM achieved 2 million fatality free shifts in April, a milestone.  Modikwa had no fatalities in 2013.  World's largest platinum producer (38%).  production: platinum: 2376331 oz  (up from 2391), palladium:  1556m (up from 1554m).  palladium output by quarter:  428 vs 413; 369 vs 392; 320 vs 356; 439 vs 403.  revenue six months 2013: platinum:  15398 (vs 11705) 63.3% (vs 59.9%).  palladium:  3868 million ounces (vs 3206m) 15.9% (vs 16.4%)

Stillwater Mining SWC - As of December 31, 2013 2p reserves: palladium 10.346 million ounces (+1.59m), platinum 2.873 million ounces (+0.207m). realized prices: palladium $641-> $721 platinum $1551-> $1481

Primary mine production (supply from metals recycling in brackets): palladium   404.2 (395.9)  223.9 (258.5), platinum 119.7 (117.8) 345.7 (154.9).  percent % of revenue: palladium 37.4% (45.4%), platinum 58.4% (50.0%).

Lonmin LNMIY - Fiscal year ends September 30.  i) platinum sales of 696,000 ounces exceeded guidance by +30,000 oz.  ii) three work related deaths.  iii) capex of $159 million iv) increase in reserves at Marikana +3 million ounces platinum group metals, gold up by 0.9 million ounces.  Production:  palladium 320,503 (331,601), platinum 709,029 (687,372).  percent of revenue: palladium  14.7%   13.1%, platinum  69.4% 65.9%

Aquarius AQP - Fiscal year ends June 30.  i) total revenue declined 24% to $371 million; net earnings amounted to a loss of $288 million or $0.6113 per share.. this despite total PGM production up 13% to 325,103 ounces.  Bulk of metals production comes from Kroondal - 100th oz per quarter for final 3 quarters of 2013. Joint parter at Platinum Mile (12,596 oz) is Anglo Platinum.

Investing In Bullion, Make Gold A Priority (silver price, platinum)

                      Though it's true that for much of history the gold to silver ratio was 12, that trend ended more than half a century ago at a time when gold and silver prices were a lot lower than they are today.  In recent history the ratio has been somewhat erratic ranging from a low of just over 30 (April 2011 gold avg $1474, silver avg $42) to a high of 85 in 2008;  During this period there was a lot of downward pressure on both ironically coming from one of its biggest buyers central banks - rising interest rates cause money to flow out of gold and into other sectors of the economy but gold still stood out, maintaining a price at least 75% of its high, silver however presently trades at only 40% of it's 2011 high of $50.

During the last recession the price of platinum fell below the price of gold, an occurrence that usually only happens during crises  - the last time it happened was in the 1970's when the world's main economic drivers, the US and Europe were going through recessionary periods of low growth, high unemployment, high debt levels and oil prices.

The more recent inverse relationship between gold and platinum dominated the period of August 9, 2011 to January 2013.  Prior to that, since 1986 the price of platinum always exceeded gold with the exception of very few brief periods but even then the difference was marginal.  What this means is that the current economic climate is not as rosy as it's made out to be - the factors now driving gold closer to platinum are the same ones that come into play during times of economic uncertainty (central bank buying, inflation leads to lower confidence in the dollar, causing people to jump onto the bullion bandwagon).

Platinum versus Gold

For bullion buyers, the platinum group metals (pt, pd, rh) provide an interesting alternative to gold but a couple other key factors to consider may make gold the safer option.  In 2008 when rhodium hit $10,000 an ounce before hitting rock bottom a year later (2009 average $1500) investors lost interest in the white metal.  In a healthy economy, demand for platinum and palladium will still be there since both rely on industrial (catalytic converters) and high end markets (white gold plating, platinum jewelry);  however, yearly demand in general is not nearly as high as it is for silver or gold;  2012 platinum demand was about 6 million ounces, 7 million ounces for palladium which is only a fraction of the 155.4m ounces of gold, 1.16b ounces of silver consumed.

2012 exit year - Global reserves of platinum group metals total 2.328 billion ounces (2013 Mineral Commodity Summaries: 66m kg, annual production represents 0.6% of this) versus 1.799 billion ounces for gold (annual production represents 5% of this).  This doesn't sit well with me given that production of gold is some eight times greater than all platinum group metals combined.  As an investor what this tells you is that it's a lot easier to raise mine output to either match higher demand /or to put downward pressure on the price, than it is for gold.  At current prices, gold is just as rare as the platinum group metals but demand remains many times greater.  This is precisely why the rhodium crash of 2008 could never happen to gold (rhodium supply increased substantially as miners saw an opportunity to sell at higher prices but it turned out that demand was not nearly as strong as anticipated).  Platinum may be brighter but from an investment perspective gold still outshines it. 

Demand for platinum has a shiny future - light vehicle production is expected to increase by 13.6% over the next three years, with each vehicle needing a catalytic converter containing four grams of platinum and palladium what that amounts to is an additional 1.54 million ounces of pt/pd demanded.

Euro zone leaders reach debt deal; Gold, Silver demand up/price up $100/oz on week

   In Brussels, European leaders alongside the IMF negotiated with the financial institutions that own Greek debt in the form of bonds. They struck a number of key agreements the main one being a reduction in the value of Greek bond debt by half (banks take on the 50% loss on the nominal value of those bonds) wiping out $100B worth of debt commitments, bringing debt to a more managable level (120% of GDP down from 160%). Some of the insurers affected such as France's Groupama (wrote 2 billion euro worth of CDS) could bear an even greater burden due to their issuance of credit default swaps (CDS contracts) which they'd have to honour if it's determined that a credit event has taken place (unlikely though given that the deal was not forced on either party). CDS contracts on Greek debt stand at $75 billion up 50% since 2009. To woo insurance companies, the EU made available to it a €30B+ credit. Also helping Greece; Government crackdown on corruption which could increase tax revenue by as much as €1.2B in 2011 (will force more businesses to collect taxes on sales).

Just because Greece was taken care of doesn't mean the European situtation has stabilized; Italian bond rates are currently at 6.5% (November 2011, was 5.867% on Oct 27) up from 4.6% in June 2011 meaning that Italy needs to raise €600 billion from private investors over the next three years just to finance its current debt level. In comparison, it was when the ten year Greek bond yield initially hit 8% that Greek debt became unmanageable. To deal with that problem the European Financial Stability Facility (EFSF) increased its available funds from €440 billion to €1.0 trillion euros (US$1.4 trillion) giving more security to Spain and Italy at least for the next couple years. Problems at the negotiating table remain an issue due to differences between Germany and France. News of the deal pushed the euro to a 7 week high against the US dollar ($1.42). Update: On November 3rd the yield on Greece's 2 year bond topped 100% for the first time.
2010 deficit to gdp ratio by country: UK: 10.4% (government debt is 80% of gdp), Spain 9.2% (Spain's unemployment rate suprassed 20% in 2010, total government debt to gdp ratio is 60%), France 7% (gov debt 81% of gdp), Italy 4.6% (gov debt 119% of gdp, austerity has included cutting back on public holidays). (CBC: TSX, loonie, soar on Europe crisis plan) The budget deficits in most of those countries is a direct result of deflation due to prices being too high/governments of the weak economies having no control over the currency (monetary policy). Also during the week, the EU approved another €130B bailout package.
Here is where Greece is coming from, Last year they had 800,000 civil servents collecting $48,000 annually in full pensions, those pensioners became eligible for that at age 52. New austerity measures are likey to impact those people significantly. European banks typically leverage about 80 times (debt used to acquire additional assets), that puts the EU in a more preciarious situation than the United States (40 times leverage). More info Buyers of Greek Bonds Choose only 1 of 4

Update - A new problem has since been acknowledged: The European Stability Fund is having a difficult time attracting investors. Canada has already said no to investment while China has "no concrete plans". The Fund recently delayed a €3B bond sale citing market conditions.

Gold is up again! Gold soared by 1.4% to $1,747.70 (after reaching a one month high of $1,728.11/oz, up half a percent before the day even began) as demand remains strong in China (high inflation, economic uncertainty, real estate bubble) and the rest of the world where many still view the EU's most recent deal as only a temporary fix that doesn't solve the root of the problem. SPDR Gold Shares added 16.645 tonnes over the last three sessions. Silver was up 5.77% or $1.80. There's also a temporary slowdown in demand from India (Diwali festival of lights festivities are ongoing; Diwali is a five day festival however the entire event including other festivities runs from the middle of October to the middle of November, most of its gold demand came in preparation for the festival) and Thailand (recovering from the worst floods in fifty years). In India, gold trades on the Multi Commodity Exchange (MCX) where the price is commonly listed per 10 grams. Indian gold demand was up 38% in the second quarter of 2011 and 29% in the last 12 months. Just to give you an idea of how unprecedented the price of gold is today; Over history, the last bull market high was $850/oz.

If, as many suggest, the People's Republic of China lets the RMB increase in value relative to the USD, that will weaken demand for gold in the short term as investors see the new exchange rate as a sign of economic stability but in the long run, the stronger RMB will increase Chinese demand for Gold due to its greater purchasing power. Also, a stronger RMB will raise Chinese import demand, indirectly increasing Gold demand from abroad too.
Platinum group metals increase Platinum was up 2.77% ($44.2/oz) by the end of the trading day Thursday to $1,641.4/oz. Platinum, used in everything from surgical equipment to white gold plating to catalytic converters, is produced at a rate of only 5-6M ounces a year (5-10% as much as gold). South Africa produces 80% of the world's platinum. Spot palladium up 2.78% to $665/oz reaching another one month high (also recorded one month high the day before). Palladium began the year around $799.5/oz but since then has dropped 20%, platinum began the year at around $1770/oz but has dropped 7.8% since.

Other Notes: In the July-September 2011 period the US economy grew 2.5% up from the 2.3% estimate.
Total EU-Canada (ex UK) trade is $50 billion (6% of total Canadian trade). News of the Greek debt deal boosted the exchange rates of a number of currencies against the American dollar however not versus the Chinese Yuan or Japan's Yen (Euro up 2% to US$1.42, Canadian dollar up 1.5 cents to above parity at US$101.02). Many non US currencies actually strengthened versus the euro and dollar (US & Cdn).
Sony buys out its partnership with Ericsson for $1.5B giving Sony complete control over its smartphone business, allowing it integrate more of its products and software. Ericsson will now be able to focus more on its wireless technologies. Total world debt represents about 5X total GNP.

Palladium Is Widely Used, Similar to Platinum and A Lot Cheaper than Gold & Platinum Group Metals (Rhodium) so Bullion Investment Should Increase; 2011 Production Down 5.4% but Automotive Demand Up 6.7% (Norilsk, Anglo Platinum, North American Palladium)

        Palladium is a widely used durable and versatile metal. Though useful in plating jewelry, clothes fasteners and engine systems (aircraft and automotive) most of the demand comes from industries that require catalysts (mainly catalytic converters, useful due to its light weight, high boiling point, is an oxidizing agent) and versatile metals used in plating conductive materials; In electronics, palladium is preferred over nickel and platinum (plating the electrodes of capacitors is either alone or palladium in conjunction with silver); For plating electrodes, the only alternative to palladium is nickel but nickel has its limitations, it can only be used in less demanding applications. In automobile circuits, palladium holds silver plated conductive tracks in place. (Platinum today: Electric Components) Some types of jewelry prefer palladium to gold/platinum for reasons which include color (44% whiter than platinum), weight (38% lighter than gold), hardness (harder than gold meaning that even at high purity it's highly resistant to scratches), and price (cheaper than gold and platinum). Even with those advantages the jewelry industry uses most of it only as a hardening and whitening agent that's alloyd with gold (white gold can't be made without platinum group metals like palladium which is notable considering that white gold is gaining popularity particularly among brides preferring white gold wedding rings). The process of transforming yellow gold to white gold is made easier when gold-palladium alloys are used because gold and palladium are soluble in one another. Palladium is also used to purify hydrogen gas because when heated, the metal allows hydrogen to diffuse through it, a process that's made easier by the metals' high melting point.
       Other info: The Spanish were among the first to discover it when they mined for silver in Colombia. Palladium was first isolated by WH Wollaston in 1803, at the same time he discovered Rhodium. In late 2010 George Soros affiliated fund, Soros Fund Management raised its stake in Platinum Group Metals Ltd (one of Canada's largest platinum group metals exploration companies) to 9.73% from under 1%. Platinum Group's primary asset is the Western Bushveld Complex in South Africa (74% interest/20 year mine life @ 275,000 ounces/yr but the mine will cost over $400m & take two years to construct); Platinum Group Metal's shareholders include JP Morgan and TD Asset Management. The ETF Physical Palladium Shares (PALL) holds over $500M worth of palladium (in terms of bullion weight, the etf's holdings are presently 6X more than they were just 4 years ago).

Investment Options: ETF'S - Top pureplay options are NYSE:PALL Palladium Silver Shares ETFS and NYSE:LPAL VelocityShares 2x Long Palladium ETN.  PALL holds around 700,000 ounces of the white metal but has exceeded one million ounces as recently as 2011 (holdings increased with the dramatic rise in palladium prices).  VelocityShares ETN is relatively new; ETN's are debt instruments so they are not considered great options for long term buy and hold investors (why VelocityShares holdings of palladium are wildly inconsistent).  VelocityShares began trading mid October 2011.  Diversified ETF options Zurich Cantonal Bank, or ZKB ETF has holdings of palladium (387,257 ounces) and platiunum (366,957 ounces).

The number 1 source of demand is vehicle manufacturers who make use of its capabilities as a catalyst in catalytic converters. The catalyst is required to stimulate an oxidation reaction that ultimately converts toxic combustion byproducts to carbon dioxide and water (reduction of NO to O and N is by rhodium).
Palladium accounts for 90-95 % of precious metals used in catalytic converters (95% for gasoline/20% in diesel powered vehicles) and even more noteworthy, palladium's share of diesel catalysts rose from 7% in 2007 to 20% in 2009. Each catalytic converter uses 4 grams of palladium and platinum. Palladium shares many characteristics with platinum, not surprising given that palladium is one of only six transition metallic elements comprising the Platinum Group of the periodic table (the other four being rhodium, ruthenium, osmium and iridium). Among their similarities: all are great catalysts, are hard metals making them resistant to scratches. They also have high boiling points and are noted for their electrical properties. As for platinum, its share of diesel catalysts fell to 80% compared to 86% in 2008 owing to the increased popularity of palladium. Between June 2010 and June 2011 3.1m oz of platinum was used by automakers (compare that to 5.4M ounces for palladium) however jewelry demand for platinum waned (15% less, bringing it down to 2.4M ounces; palladium jewelry demand fell 20% to 0.6M ounces), that's in contrast to late 2008/2009 when lower prices boosted demand by jewelry 70% with growth recorded in China. (Northram Platinum Ltd July 2011 Annual Report. Angloplatinum 2009 Report) With regards to rhodium, South Africa produces 60% of the extremely reflective/corrosion resistant platinum group metal ranking just ahead of Russia. In 2009 the spot price of rhodium dropped like a rock; it averaged only $1,509/oz that year after averaging $5,174/oz the year before. In 2009 gold was the only metal with an iso currency code to avoid a price decline (averaged price). One of rhodiums key uses is in the production of nitric acid (nitric acid is one of the compounds usedby jewelers to verify whether or not something is real gold). Supplementary info Trends in the gold to silver & gold to platinum ratios Palladium demand by end-market : auto catalysts (54%), electronics (14%), investment (9%), dental (9%) & jewelry (8%). (Stillwater Mining 2010 annual report)

In 2010, 80% of the world's palladium came from Russia (2.7-2.9 million ounces, steady from 2008 to 2009 but down 16% from 2006) and South Africa (2.485M oz same as the previous year but down 11.3% from 2007). South Africa is home to some of the biggest platinum-palladium mines in the world namely those in the region of the Bushveld Igneous Complex (South Africa just behind Russia at 40% for palladium production but leads all countries in platinum supplying 80% of that metal (4.725M ounces). The 2011 global supply of palladium is forecast to decline 5.4% yoy to 6.8M oz from 7.1M oz in 2010 & 7.6M oz in 2009. 6.3M oz of the supply was mined. Palladium supply from the top 3 sources (Russia, South Africa, North America) is down 18% in just the last four years (2006: 6980M oz vs 2010: 5545M oz). There are a number of problems regarding supply, firstly mine depletions particularly in Russia where Norilsk has become the only major producer, also Russian stockpiles are dwindling which is significant given that traditionally it has been the largest source of non mined production (total non-mined prod: approximately 1.3 million ounces annually). Also of concern: deeper mine shafts in South Africa (mines are being made deeper because that's where the high grades are) and so there are safety concerns, the country is also struggling with foreign exchange rates and their affects on currency losses. (Stillwater Mining Company: March 2011 Presentation) Palladium primary production has fallen even faster than it has for platinum (-15% vs -12% since 2006). Stockpiles in Russia, the source of 17% of Pd supplies since 1984 are almost entirely exhausted.

In catalytic converters, palladium now accounts for over 95% of the catalysts used, up from 85% in 2007 (Stillwater Mining, March 2011) meaning that the automotive industry (a growing industry sector with 40-50 million people entering the middle class each year in China, Brazil and other rapidly developing countries) is becoming ever more reliant on palladium (6% increase in palladium use by automakers in 2011, 5.5M ounces, each catalytic converter uses 4 grams of palladium + platinum). In 2010 72 million light vehicles were produced and that number is expected to grow to 88 million by 2013 reaching 100 million by 2016. Strict pollution controls mandate the use of catalytic converters. (North American Palladium, October 2011)

September 2011: HSBC, the world's #2 bank outside China, raised its 2012 price forecast for palladium by 8% to $810/oz citing the fact that demand will outstrip supply (in stark contrast to the previous two years). Long term price forecast raised by 21% to $850/oz. However other top banks are forecasting even higher palladium prices in 2012; JP Morgan and Credit Suisse have the spot price pegged at $938/oz and $950/oz respectively (the lowest forecasts were made by UBS ($825) and BNP Paribas ($810) *of note RBC lowered its outlook from $1000/oz to $860/oz. Between October 2008 and September 4, 2011 spot palladium increased by over 290% compared to 133% for platinum, 200% for gold and 0% for rhodium. Despite similar production (over 6M ounces), demand for palladium by end market users exceeded platinum demand by 24.0% (7.0 vs 5.72 million ounces). (Stillwater, March 2011) 91% of the world's 6.8M ounces of annual palladium supply comes from South Africa (42%), Russia (40%), and North America (9%) (includes about 1.3M ounces of secondary supply). (North American Palladium, October 2011) Here is more info on gold/silver investing

 More Reason To Like Palladium: Shipments to Switzerland (1 of only 2 main hubs in Europe for storage of the metal) from Russia (world's largest primary producer of palladium) are down to 500,000 ounces in 2010 (average 1.3M ounces for the last 20 years); The main reason for the decline is that Russia used to have four big producers but today they only have one, the rest have nearly exausted their reserves (the largest of them, OAO GMK Norilsk Nickel could also be deplete of palladium by 2015-2020). For 2011 output is forecast to fall by 5.4% to 6.8M ounces even though demand from carmakers alone will increase 6.7% to 5.5M ounces. Russian stockpiles form the fourth biggest source of palladium supply. The price of palladium peaked in 2001 at $1,090/oz when concerns regarding supply caused many to hoard the white metal. There are also ETF's that hoard palladium; they first began trading in 2007 and have since grown their assets to over 2M ounces (currently they trade in Europe (Zurich, London), the United States (NYC) and Japan). Total annual supply of palladium was as high as 8.58 million ounces in 2007 but has since fallen to around 7 million (6.8M in 2010/7.1m oz in 2009) a 17.2% decline even though total gross demand only fell by 7.4%; During that time Russian supplies fell 19.93% and that's directly responsible for 61.15% of the global drop in supply (1.48m ounces). (Aquarious Platinum) 2009 combined production of platinum group metals was only 16% as much as gold (Au: 2572 tonnes about the same as in 2005); Three of the top five sources of gold, the USA, South Africa, Australia combined, produced 21.1% less of the yellow metal in 2009 than in 2005.

If you wanted to invest in a company here are a few to keep in mind:

Stillwater Mining produces 63% of the palladium coming out of North America (or 5.7% of the global supply) which is notable since North America is the world's #1 source of palladium demand (29% in 2010 ahead of China at 20%). Stillwater's reserves are at 19.9M ounces (palladium and platinum). In 2010 metals recycling contributed 6.8% of total revenue ($11.5m/$168.5m) down from 7.9% in 2009 ($6.5m/$81.8m). Average price realization per ounce of metal produced: $1,046 up 34.3% from the year before ($779/oz). Since 2002 it has had business relations with Norilsk, that has opened the door to more investment from abroad (though sales of palladium received from Norilsk ended in 2006). 2011 capex at $120 million up 139% in just the last year. Stillwater is a primary producer of platinum and palladium meaning that anything else that it mines (rhodium, gold, nickel, silver and copper) is produced as a byproduct. About 3/4 of Stillwater's output of platinum group metals comes from the Stillwater Mine (the other 133,000 oz is produced at East Boulder). North America contributes 9% of total supplies of Pd but 11% of primary production. Last year Stillwater Mining paid $118 million for the Marathon mine in northern Ontario (2.4M ounces of palladium 2P reserves/total resource 5.4M ounces).

(gold:platinum ratio 2007-May 2011)
North American Palladium (tsx:PDL, amex:PAL) (41% fall in stock price over last 12 months means it has a high beta value) - The company is the only primary producer of palladium in Canada. Flagship mine is Lac des Iles abbreviated LDI, located in Thunday Bay, Ontario; LDI is currently undergoing a $250 million shaft expansion (October 2011) intended to eventually raise production at the mine to 250,000 ounces by 2015 (when cash costs are forecast to be lower at $200/oz). LDI: The second quarter of 2011 produced 28.9% more ore than Q` and at a 29.4% higher grade (cash costs fell 35.5% quarter to quarter). First phase of the project commences producing the last quarter of 2012. 2012 production for NAP is expected to be in the range of 190-200,000 ounces. The company's other operating mine, Sleeping Giant is part of its gold division and is located in Quebec. Sleeping Giant has very high cast costs (over 1550/oz) because ore grades have been low (but will climb due to deeper access later on). Sleeping Giant was acquired in 2009 from iamgold (expected to produce 40-50,000 ounces in 2012). (Miningweekly: NAP expects palladium output to rise 75% this year) Total palladium production by NAP was 95,100 ounces in 2010 but is forecast to increase by 75% in 2011 to 165,000 ounces, palladium cash cost in 1Q11 was $519/oz but that dropped to under $400/oz by Q2. NAP has operated in Thunder Bay for over 17 years. Overall production costs for NAP are forecast to drop to $125/oz from $325/oz in 2009 (60% decrease). (ThunderBaybusiness.ca: North American Palladium Mine Celebrates Reopening) Between November 2010 and February 2011 North American Palladium stock increased by 51% on the back of higher palladium prices (week of January 30,2011 spot price was above $800/oz). The other gold mine, nicnamed Vezza is located just north of Sleeping Giant. The whole Vezza-Sleeping Giant region contains 1.379 million ounces of M&I + Inferred gold but 2P reserves are only at 52,000 oz so a lot of investment is needed to upgrade resources. Vezza isn't expected to come on tap until 2013 but when it does it will immediately add about 40,000 ounces of gold to production (combined with Sleeping Giant total production could be as high as 80,000 ounces). Palladium production: 95,057 oz (2010), 145-165,000 oz (2011). About 90% of revenue comes from palladium (4Q10 revenue: $35.2M from LDI, $4.2M from Sleeping Giant).

Norilsk - One of the world's main sources of nickel also supplies the world with 11% of its platinum and 20% of its palladium. 2P reserves: 68.457M ounces of palladium (55.018M oz) + platinum (13.439M oz). (Norilsk 2011 Fact Sheet) In 2010 9% of Norilsk's revenue came from palladium (compared to 12% for platinum; largest was nickel at 53% and copper at 24%, gold was only 1%). Norilsk accounts for virtually all of Russia's production right now with the other 3 Russian companies having resource problems. In Russia and South Africa palladium is produced as a by product of other production (platinum/nickel), only a few of the world's mines focus on palladium as the primary source.

Anglo Platinum - One of only a few companies that actually increased palladium production in 2010 (by 9% up to 1.485 million ounces - 2.5699 million ounces for platinum also up but by half as much 4.8%). Rhodium produced: 329,000 oz down from 350,000 oz in 2009. 2P ore reserves (platinum, palladium and rhodium (2011): 165.5M oz down from 170.5M oz in Jan. 2010: 53% of 100% owned production reserves are at UG2 Reef (there are four sources in total). There's also another 0.8M ounces at a tailings facility and about 5M ounces stemming from interests in a mine named Unki. In addition there are antoher 620M ounces of measured and indicated resources. In fiscal 2009 Anglo's revenue fell 28% to R36,947M under R39,000M for the first time since 2005; gross profit margin down to 5.4% from 33.7% owing to the global financial crisis reducing demand and prices starting in late 2008; prices and demand didn't recover until the second half of 2009. Cash from operations fell from over R18,000M to under R6,000M in 2009 the lowest level in more than five years. Anglo Platinum ranks third among major producers in terms of its PGM reserve life, 36 years which lags only Anooraq (47) and Stillwater (40).

Trends In The Gold to Silver Ratio Point To Lower Ratio In Bull Markets (gold & silver standard)

   The gold to silver ratio was 16 in 1980 when silver reached $50/oz but it was only there momentarily, for most of the next two decades it was over 65 (when gold ranged in price from $250 to $500), between 2000 and 2003 it was 60 to 80 before falling to 47 to 55 in 2005-2008 which is notable since that coincided with gold's rise from $425/oz to $1000/oz. In the ensuing years (2008-2010) the ratio nudged higher, remaining between 50 and 70 at the same time gold went from $800/oz to $1250-$1300 per ounce (about 4X greater than it was during any of the previous 25 years);

However following that period the ratio experienced one of its biggest declines to date going from 70 in February 2010 to 33 in April 2011, subsequently gold broke into new territory, gold was $1540/oz in April 2011 when silver reached $49/oz (end of month) signifying that over the long term, the ratio decreases when gold prices reach higher support levels. In February 2011 in the midst of a commodities bull market the gold:silver ratio reached its lowest level in 13 years,

Meanwhile gold reached parity with platinum on August 8, 2011, an unusual occurrence but not surprising given that concerns over platinum demand coincided with gold investment peaking due to economic uncertainty. Prior to that, the 20 year high was 0.93, attained in October 1992. Platinum was worth 24% more than gold at the start of 2011, by August 23, 2011 the difference fell to only 1.8% even though Jan-Aug platinum production was 12X less than gold production. (Long-Term Decline In Gold/Silver Ratio To Favor Silver) 2nd Graph: Gold to Platinum Ratio 2007-2011

The gold to silver ratio averaged 59 from 1976 through February 2011 but the average in the earlier years was much lower, the ratio average was 49.1 in the 1980's, 31.3 in the 1970's, 78.5 from 1990-1997 then 53.8 from 1998-2000; the current average of 44.5 (January through August 2011, update: as of Nov 19 the ratio is 53.2 which is about at the 1 year high of 54.24, average Jan-Nov is about 47) is still a lot higher than the 16:1 ratio that held up for more than 160 years from 1700 until the 1860's (was 16 during the US Coinage Act of 1873), in the 1930's was when things started to change but there was a new driving force there: China stopped using the silver standard spilling a lot of excess silver onto the open market, much more than industrial demand. In 19th century Britain, numismatically (coins were predominantly made of gold and silver) the gold to silver ratio was 14.29 as per the monetary law established in 1816 (20 schillings (silver) equaled 1 sovereign (gold). In France the ratio was set at 15.5 in 1803 the same ratio used the United States to determine the monetary relationship between gold and silver coins. Then, around 1870 the gold standard slowly replaced the gold-silver standard (silver was still used but fewer countries linked a coin's monetary value to the amount of silver it had (silver supply skyrocketed with higher US production rates while Germany and Scandanavian countries dumped silver onto the markets due to their abandonment of the silver standard). The ratio rose to a high of 30 by 1894. (Energy & Mining: The ratio gold and silver from 1800 to 1900)

Presently, the lower long term ratio has numerous causes: gold has few alternatives especially with regards to its biggest consumer (jewelery) and silver being much more affordable becomes a more attractive option. The price difference also makes silver a more attractive investment option (in January 2011 the US Mint recorded a one month silver coin sales record of 6.422 million ounces). Alternatively, the short term rise in the ratio is because the biggest investors in bullion (countries, banks, billionaires) favor gold and because a short term price correction always happens when silver rises too fast due to traders erring on the side of caution (if silver rises too fast traders begin to put more emphasis on technical data). In the year leading up to September 2010, gold soared 28% while silver grew only 4%, but in 2011 silver grew at a slightly faster pace showing once again that there's a time lag between silver and gold at the beginning of a commodities bull market. Production of silver is only about 9.5X greater than that of gold, another reason to consider the current price ratio of 43 to be too high.