Good Progress From Braemore Resources, On The Platinum In South Africa And On The Nickel In Australia
By Alastair Ford
minesite.com
Just a quick note to any investors, brokers, analysts, fund managers, or company directors who are about to head off down to Indaba for South Africa’s annual mining jamboree: that two hour time difference may be minimal in terms of the practical ease of doing business with the UK, but first thing in the morning it can still be a killer. All you hard-working diligent City types who are used to being at your desks at 7 a.m., God help you, ought just to be mindful that over in South Africa when it’s 7 a.m., it’s still only 5 a.m. in the UK. So impressing your bosses that you are at work and on post on time, rather than enjoying a three hour lie-in with your hangover and the memories of the 4 a.m. finish in the bars of the town centre and Camps Bay the night before most certainly won’t work if you ring them up to tell them. It will feel especially bitter if you come back with a tan too, given the squally climate we are currently putting up with here in London. Bring back new business, though, it goes without saying, and all will be forgiven.
And those on the lookout for a company on the up could do worse than check in with the boys from Braemore Resources. Minesite got in a bit of a tangle with the time zones at the other end of the day when we tried to catch up with Braemore chief executive Leon Coetzer for a chat about the latest news from Braemore. The office answering machine helpfully explains to any johnny-come-lately callers that Braemore’s hours of work are a perfectly reasonable 8 a.m. to 4 p.m., which means that here in London if you take an extra five minutes after lunch to pick out the crumbs from the corner of your mouth, you’ve missed the boat. But Leon’s not such a stickler for office routine that he won’t phone you back later in the afternoon, providing you know how to get a message to him – step forward the company’s London PRs, earning their tuppeny-ha’penny’s worth, even though, from our own subscription records, it appears that they don't actually read Minesite.
To call Braemore a company that’s on the up might be thought by some to be stretching a point. To be sure, the shares are currently trading at a modest 1.81p, down from a 12 month high of 21.5p, hit at the very beginning of last year. But remember the platinum price at the beginning of last year? Remember how the global economy looked? Remember how China was still gunning for 10-plus per cent GDP growth, instead of the negative growth that some people are now forecasting on the latest numbers? The world’s stock markets have been comprehensively re-rated downwards since that time – and how! – and in its own small way Braemore has been a part of that. Of course uncertainty about the company’s direction and a change of management at the top didn’t help Braemore’s particular cause, but when all’s said and done, comparing a company’s share price to where it was before the credit crunch really bit hard has something of the air of last year’s game now. Or to put it another way – we are in a new paradigm, let’s get used to it.
So to recap, Braemore is on the up. Why is this? Answer: the shares have risen by 80 per cent since the all-time low of 1.00p was hit last November. Curiously, many other small companies are also up since around this time. Far be it from us to call the bottom of anything, but there’s no doubt that as November wound into December the market did start to find its level, and some support. Bramore’s graph isn’t uncommon in that it presents a picture of straight and steady decline over the past year. Lately though, the trend has been for the shares to flat-line. Or, if you zoom in a bit, actually for them to bounce. “We’ve seen some heavy trading in our shares”, says Leon Coetzer, “and we’re hoping we’re flushing out the last of the sellers”.
There have been two bits of good news lately. The first concerned the company’s platinum smelting operations at the Mintek facility in Johannesburg. This was a technical update, designed largely, says Leon, to let potential customers know that the technological credibility of the company’s treatment of high-chrome product is increasingly sound. On a 3.2MW capability, Mintek has produced just under 6,000 ounces of platinum and associated metals, with a recovery rate of 99.52 per cent since it was commissioned last September. The company has more feed than it knows what to do with, and hence the long-standing plan to scale up to a 10MW capability looks increasingly viable. In the meantime, the ramp up to full production from the existing facility is continuing apace, and Leon emphasizes that increases in output will happen pretty rapidly. The plan is for the Mintek facility eventually to be producing at around 70,000 ounces per year, depending on the feed grades. As things stand, though, it’s a cash-positive operation, and might very well be the key to Braemore’s survival.
So, one reason why Bramore’s have shares ticked nicely upwards recently is that there’s been good news from the platinum side. The other is that details of the long-awaited scoping study on the company’s Leinster nickel tailings project in Australia were finally released to market. In a way, says Leon, this was the more significant news release as it confirmed Leinster as a sizeable, low-cost nickel project, and, more to the point, the study delivered numbers that were good enough to retain the interest of Braemore’s partner on Leinster, BHP Billiton. In plain terms the plan for Leinster is to produce around 12,500 tonnes per year of nickel as an intermediate product, at a cost of around US$4.00 per pound, or lower, and at a capital cost of less than US$450 million. Even allowing for the recent precipitous decline in nickel over the past year, it looks as though Leinster could make money. The current nickel price seems to be trending back towards the US$5.00 per pound level, so imagine the potential for Leinster if there’s an upswing. Over the next few months BHP Billiton and Braemore will kick around some of the ideas presented in the study to see if they can get costs even lower, but once BHP Billiton is satisfied that as much tweaking that can be done has been done the project will move into the bankable stage.
All in all, there’s plenty for Leon Coetzer to be happy about in the progress Braemore has been making. And just to underline that message, he could, perhaps, do worse than present at one of our Minesite forums which will be taking place regularly as the year progresses. That way London will be fully up to speed, and can play catch up with all that’s gone on over the last few months. It’s no exaggeration to say that it’s been something of a baptism of fire since he took over the company last June. But what with all that he’s been through since then, you’ll have to get up pretty early in the morning these days to catch him napping. Especially if you’re phoning from London. |
