R. Michael Jones, President/CEO/Director of Platinum Group Metals Ltd. (PLG), said the first production from its Western Bushveld Joint Venture Project 1 Platinum Mine (WBJV1) in South Africa is scheduled for 2015. He was speaking at the Denver Gold Forum in Denver, Colorado.
Platinum Group Metals Ltd.’s WBJV1 platinum mine is located near Rustenburg, South Africa. The company is also focused on the exploration and initial engineering on the newly discovered Waterberg platinum deposit, located near Mokopane, South Africa, where Alacer is the operator of the Waterberg joint venture project with the Japanese Oil, Gas and Metals National Corporation (JOGMEC) and Mnombo Wethu Consultants (Pty) Ltd. It has also expanded its exploration to the prospecting rights covering 530 square kilometers immediately adjacent and north of the Waterberg JV Project property, known as the Waterberg Extension Project.
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Platinum Metals Group Ltd. has moderated the pace of its Project 1 mine construction while it works on finalizing a US $195 million project loan mandate, updated project finance plans for Project 1, and tests the scale of the Waterberg discovery, Jones said. In the short term, Jones said Platinum Group is particularly focused on exploration drilling with large scale step outs over 20 kilometers underway on the approximately 87% owned Waterberg Extension Project.
Jones said the WBJV Project 1 Platinum Mine is a large scale, high grade, shallow development with steady state production projected at 275k ounces 4E/year with a 20-year mine life. The company, which has multiple construction operations at WBJV, has invested approximately $300 million USD in the mine to date, Jones said, and holds an 83% interest. Construction continues at the site, with expansion plans already on the board.
Platinum Group also touted its Waterberg location, focused on the exploration and initial engineering on the platinum deposit located near Mokopane, South Africa. Jones said it believes the location has an updated resource of 29 million ounces 4E inferred on a combined basis as of June, 2014. Drilling with 24 rigs continues to upgrade and expand the deposit, which Jones described as “a thick mechanized discovery, growing, open and near surface.”
The South African PGM mining industry is undergoing a restructuring, in part because of strikes, historic overproduction and muted price response to the strikes. The WBVJ Project 1 has 1,600 workers, 23% locals, Jones said.
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Rodney P. Antal, the CEO/Director of Alacer Gold Corp (TSE:ASR), said there is a definitive pathway for its Copler mining operation to generate positive cash flow for the next 20 years.
Alacer Gold Group is a Denver, Colorado company with a US$625 million market cap and US$292 million in cash. It has a goal of becoming a multi-mine producer, and claims it has identified high-quality targets in several locations in Turkey. The company has been in that country for 18 years, and believes its Tethyan Belt is “historically under-explored and has excellent mineral potential,” Antal said.
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Alacer has confirmed solid oxide gold production at its Copler mine and expects it to last to 2017, with sulfide gold production increasing the mine life by 17 years, Antal said.
The company is also studying how to expand its existing heap leach pad capacity at that location and anticipates from initial studies adding 15-20Mt of additional capacity, Antal said. The heap leach operation consistently delivers substantial cash flow, he added.
In addition to Copler, Alacer has also drilled 250 holes at its Dursunbey Project in western Turkey. The initial metallurgical work to determine processing options at the location is underway, Antal said.
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Peter Bradford, Managing Director/CEO of Independence Group (IGO) of Perth, Australia, said the company has a $1 billion AU market capitalization as of Sept. 12.
Independence Group (IGO) is an Australian producer of gold and base metal, with three Australian mines producing gold, nickel, zinc and copper. The company has fiscal year profit after tax of $46.6 million AU and net cash as of June 30 of this year at $28 million AU. Independence Group has a fiscal year free cash flow of $55.9 million AU, Bradford said.
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The company has a primary focus on organic growth, Bradford said. It seeks to unlock value through discovery and development, but is also using joint ventures and acquisition to build its product pipeline.
A JV with AngloGold Ashanti on the Tropicana mine has resulted in discoveries of three substantial gold deposits, Bradford said, with project construction currently underway. In addition, Independent Group’s wholly-owned Jaguar mine is producing an annual mining rate of 444,000 tons, with 10% yielding zinc and 1.8% copper. The Jaguar mine is expected to generate a fiscal year 2014 free cash flow of $21.2 million AU, Bradford said.
The company has an Australian focus, having also acquired De Beers Australia Exploration and taking over Jabiru Metals Limited. But it is also looking offshore, Bradford said. He predicted a strong market for zinc, driven by mine closures, and copper prospects are also looking robust, Bradford said.
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Dundee Precious Metals Inc. (TSE:DPM) is building a new gold project in Krumovgrad, Bulgaria, as a key to its goal of becoming a premier, low-cost gold producer. That’s according to President/CEO Rick Howes, who spoke at the Denver Gold Forum in Denver, Colorado.
A Canadian company, Dundee Precious Metals Inc. owns mines in Bulgaria and Armenia, as well as a smelter in Namibia that it hopes will increase margins through higher throughput and cost improvements. It is also in advanced exploration for new assets in Serbia, and is also investigating brownfield and greenfield exploration opportunities, Howes said.
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While gold is the company’s primary focus, Dundee is also generating revenue with mining of copper, silver and zinc. This year, the company has produced one million tons of ore at its Chelopech mine in Bulgaria, Howes said.
Its smelter operation in Namibia is generating significant revenue, Howes said, noting that it is one of the few smelters with the ability to process large volumes of complex concentrate.
The company has $225 million Canadian in available liquidity, including cash and an undrawn amount of $200 million Canadian. It also has $132 million Canadian in total debt, representing 13% of its total capitalization as of June, 2014. Major shareholders include GMT Capital Corp., Van Eck, USAA Asset Management, and Norges Bank.
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Wojtek Wodzicki, the President/CEO of NGEx Resources Inc., (NGQ), said at the Denver Gold Forum in Denver, Colorado that an anticipated supply gap in the world’s copper supply will start in 2017.
Because large copper deposits are rare, difficult to find, and take a long time to develop, Wodzicki claimed that existing projects are the only hope to develop in time to fill the anticipated supply gap.
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NGEx Resources is a Canadian mineral exploration company with a focus on copper-gold, which is hosted within iron oxide gangue assemblages. The ore can contain concentrations of copper, gold and uranium ores, as well as bismuth and rare earth metals.
NGEx Resources has projects in Chile (Los Helados) and Argentina (Josemaria) with Filo del Sol straddling the Argentine/Chilean border. Wodzicki claims the company assets include one of the largest copper deposits in the world, and claims some of the largest new discoveries of the mineral in the last decade.
Wojtek Wodzicki had an aggressive title for the NGEx Resources (NGQ) presentation at the Denver Gold Forum: “No Guts, No Glory,” reflecting the company’s push for new discoveries. The non-major, non-state-owned company has $34 million Canadian in cash, with a market cap a of Sept. 2014 to $362 million in Canadian dollars.
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Nordgold (FRA:RTSD) is continuing to grow its operations and development, and expects production to be in the range of 900-950 koz in 2014, according to CEO Nikolai Zelenski, speaking at the Denver Gold Forum in Denver, Colorado.
Nordgold is an emerging markets gold producer that has operations in Burkina Faso, Russia and Kazakhstan. It has nine producing mines, two large-scale development projects, and four advanced exploration projects.
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Zelenski said the company has seen significant growth of its gold production and has entered South America for the first time via its Montagne d’Or project in French Guiana. The company also has an investment in Arctic Canada with its Pistol Bay project, where Nordgold is developing a high grade open pit mine. Nordgold took a 22.6% stake in Northquest (NQ), which owns 100% of the Pistol Bay project, in order to finance a drilling program there, Zelenski said.
Nordgold has a large JORC resource base, exceeding 37 Moz gold-equivalent, and reserves at 12.6 Moz, with a life of approximately 13 years, Zelenski said. He emphasized the company’s positive free cash flow generation at all its operating mines, achieving that through cost, working capital and capex optimization and updates to its mining model. Its positive free cash flow is expected to reach US $72.6 million in 2014, with cash and cash equivalents as of June 30 of this year standing at $306.9 million in US dollars.
Zelenski said Nordgold would continue its policy of paying dividends to shareholders equivalent to 30% of profits attributable to shareholders.
Targets moving forward include developing a pipeline of high quality greenfield and brownfield projects through exploration, and to evaluate potential purchases of premium-quality reserves to enlarge Nordgold’s reserve base, Zelenski said.
Zelenski noted there are several gross major technical challenges to overcome, including large but low grade deposits for heap leach technology, the high seasonality of heap leaching in arctic climates, and a sharp slowdown of the process at low temperatures. The difficult hilly landscape, lack of flat space for large leach pads, and the lack of access to the electric power grid are obstacles. But the company is working on several solutions, including an onsite steam coal power plant for low-cost electricity and heat.
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John Fattibene, Director of Financial Planning at Harvest Financial Partners, says The Coca-Cola Company (KO) is a solid global growth story, with an above-market dividend and the ability to deal with temporary headwinds.
“[Coke’s] got a 2.9% dividend yield. It’s obviously a mature company, facing a number of issues as carbonated beverage volumes are slowing. Coke’s faced a number of issues in the past, and it’s dealt with them all successfully over time,” Fattibene said.
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The Coca-Cola Company has the characteristics that make up a high-quality company, Fattibene says, and though it is a mature company has doubled its net profit over the last 10 years.
“Coke pays an above-market dividend, it has very high returns on equity, which is one way you can measure quality. It’s very reasonably financed, another way we measure quality. It commits a lot of the free cash flow it generates, and they generate a lot of it, to go back to shareholders,” Fattibene said.
Chief Investment Officer Jim Wright of Harvest Financial Partners expects McDonald’s Corporation (MCD) to grow its dividend, expand its store base and return a significant amount of money to shareholders in the next few years.
“That stock right now has a 3.5% yield, which they’ve grown at a midteens rate over the last five years. That dividend growth has been even faster than that over the last 10 years. We expect the company to probably grow its dividend in the high single digits,” Wright said.
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While McDonald’s has seen a slowdown in same store sales in the U.S., Wright says the big opportunity is in international markets.
“What we really like about McDonald’s is its tremendous global presence. There it has a huge opportunity to expand its store base and build out their franchisee base overseas,” Wright said.
Additionally, Wright says McDonald’s remains committed to returning money to shareholders.
“Over the next three years, they intend to return $18 billion to $20 billion to shareholders. That’s up from $15 billion over the last three years…I think what it represents is a management that’s committed to its shareholders and is comfortable with the growth opportunities out there,” Wright said.
John Fattibene, Director of Financial Planning at Harvest Financial Partners, says Apple Inc. (AAPL) is a stock that exemplifies his firm’s investment philosophy of investing in high-quality companies that offer dividends.
“[Apple] is a stock that has over a 2% yield; it’s under 14 times forward earnings, and it has a ton of cash on its balance sheet. As of the latest quarter, they had net cash, cash minus debt, of over $130 billion or roughly $22 per share. If we adjust the p/e for that cash, we’re closer to 10 to 10.5 times forward earnings, an extraordinarily cheap multiple for stock that is still growing pretty well,” Fattibene said.
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Fattibene says Apple’s fastest growing segment right now is software and services, which has created a positive loop for people to continue buying the company’s hardware.
“They’ve created this wonderful ecosystem,” Fattibene said. “The fastest growing segment they have right now is software and services through their iTunes and App Stores. They generated over $13 billion in sales for the nine months that ended with their June quarter. At $13 billion, you have one of the largest software companies in the world, but that’s just part of Apple.”
American States Water Co (AWR) CEO Robert Sprowls says the company has a plan in place to deal with continued drought conditions in California. Sprowls says 35% of the company’s water supply is purchased from member agencies of the Metropolitan Water District of Southern California, and about 65% comes from the company’s own groundwater basins.
“Reduced precipitation in California has resulted in reduced recharge to groundwater basins, and water levels in several of the basins — especially the smaller basins — are dropping,” Sprowls says. “We have been in pretty good shape so far, but we will start to have more significant issues if we don’t get more precipitation this upcoming winter.”
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Sprowls says none of American States Water Company’s systems are in immediate danger. He adds that the company is implementing mandatory outdoor water restrictions in accordance with requirements recently issued by the State Water Resources Control Board, and is communicating with customers about conservation.
“In some cases, we’ve already made physical adjustments to our wells to draw deeper into the aquifers,” Sprowls says. “In other cases, we are taking steps to bring in supply from other areas, should that become necessary.”
