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Equity rally bad news for platinum

Posted on 2012-11-06, By A-Best Staff

By Leia Michele Toovey- Exclusive to Platinum Investing News

Monday’s equity market rally switched precious metals to a negative track.  As equities rose, the precious metals were less enticing to investors, and this was reflected in their value. Platinum for April delivery ended the session in New York down $14.20 to $1,049.40 per troy ounce.

U.S. platinum exports fell 41.9 per cent in January 2009 from December 2008, but were up 3.0 per cent from the previous year, according to the Commerce Department. In 2007 the global platinum market was in a deficit.  Safety shutdowns, geological and equipment problems, and a challenging labour environment curbed platinum supplies from primary producer South Africa. The country’s production declined 260,000 ounces from a year earlier, hitting 5.04 million ounces. The unfavourable supply picture pushed the price of the metal to nearly $2300 an ounce.

Global demand for precious metal platinum climbed by 8.6 per cent to 7.03 million ounces in 2007; supply was 6.55 million ounces. The deficit between supply and demand came just a year after the market saw its first supply surplus in eight years. For 2009, with the economy in the midst of a recession, and lack of ability to pin point a revival, the precious metal’s performance for the year is hard to predict.

Company News

Beartooth Platinum Corporation (TSX.V: BTP) is looking to a business combination with Kria resources to stay afloat.  With negative working capital and outstanding liabilities that exceed its current cash position, Beartooth’s financial position continues to be a significant concern. In the current economic environment, it is increasingly difficult to raise necessary financings.  That is why Beartooth’s management instead supports the combination with Kria Resources; this combination could be the only way to save the company from bankruptcy.

The combination will enable Beartooth to benefit from Kria’s cash-flow positive situation. Beartooth Shareholders, through their ownership of New Kria Shares, will continue to participate in any increase in the value of Kria’s projects, as well as the current assets of Beartooth. On Thursday, March 19, 2009, the management of Beartooth and Kria will host a conference call to discuss the merits of the proposed business combination with shareholders of both companies.

Platinum Group Metals Ltd. (TSX: PTM) has announced an agreement with Japan Oil, Gas and Metals National Corporation (JOGMEC).  For a total investment of US $10 million over 5 years, JOGMEC has the option to earn 35 per cent of Platinum Group’s War Springs Project in South Africa. The first year firm commitment is US$500,000. Platinum Group currently holds a 70 per cent interest in the War Springs Project.  Commenting on the project, President and CEO R. Michael Jones stated, “Our planned exploration at War Springs is part of our overall focus on competitive platinum deposits in any conceivable market. We have already defined a large near surface resource at our main project in the Western Bushveld Joint Venture that fits that criterion. At War Springs we are exploring at surface along strike from our current deposit and at depth. In the deeper areas our target is not a typical narrow reef but rather bulk material for potential low cost mining. ”

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