Palladium/Platinum Opportunity in Group Ten
A couple of weeks back I was calling for a correction in gold. All of a sudden everyone was talking about gold and how high it was going to go. Bullish sentiment hit an absurd extreme. I got it right; the correction began the next day.
Investors tend to forget that even in the most bullish of markets, corrections are common and desirable. Since the high, sentiment has dropped a lot more than price. I see the bull resuming its run very soon. Late July tends to be one of the best times to be taking new positions in resource stocks.
There is a lot of low hanging fruit out there and there are many penny dreadfuls that are going to go up a lot higher than investors realize. One of my favorites in the palladium/platinum space has come down a lot since I wrote about them in February of 2018. At today’s price I find the company very attractive.
To fairly understand the incredible potential of Group Ten (PGE-V) first it is valuable to learn about their next-door neighbor in Montana, Sibanye-Stillwater. A South African company bought the Stillwater Mining Company in 2017 for a cost of $2.2 billion. For that they picked up a mining reserve of 20 million ounce Pt+Pd at a cost of $110 per ounce.
Fast-forward two years. Sibanye-Stillwater embarked on a major drill program and expanded the reserves to an incredible 80 million ounces at a grade of 16.8 g/t and put a third mine into production on the project.
In a masterpiece of timing, the Chairman of Group Ten, Greg Johnson, put together the Stillwater West project in June of 2017 just before the Sibanye purchase under a mostly share deal. It calls for PGE to own 100% of the project subject to a 2% NSR that can be bought down to 1% for a $2 million payment.
The agreement gave Group Ten a 25 km package of the lower Stillwater stratigraphy directly south of the Sibanye’s JM Reef deposit within the Stillwater Complex. The JM Reef is the largest PGE deposit outside of South Africa or Russia and is the highest grade PGE in the world.
Group Ten is the first company to have consolidated the lower Stillwater Complex into a single package. This allows PGE to put together all historic data so they can conduct a systematic exploration program. The company has spent the last eighteen months assembling and studying the data from 11,000 meters of drilling and groundwork.
Progress to date has defined 14 large-scale projects that include 8 bulk tonnage “Platreef-Style” targets. These bulk tonnage areas compare in size to the 3-6 km individual deposits at Platreef. These Platreef PGE prospects are some of the largest and most profitable to mine PGE properties in the world. The industry is discovering that the bulk tonnage properties are far more valuable than the historic deep, narrow reef, high-cost mines in the Bushveld Complex in South Africa.
In 2019 Group Ten wants to focus on the three most advanced targets, Chrome Mountain, Camp Zone and Iron Mountain. Past drilling has shown continuous mineralized zones. Historic drill data shows PGE, nickel and copper with results of 50 to 200 meters of thickness with similar grade to the deposits of the Platreef in South Africa.
3D Modeling of the deposit indicates the magmatic layers at Stillwater West start at surface and may extend to kilometers of depth. Mineralization varies in thickness and depth with areas of thickening and higher grade termed “ballrooms” at Stillwater on the JM Reef and called “potholes” in the Bushveld. Platreef deposits are typically 2-6 km in width, which is comparable to the individual geophysical and geochemical targets at Stillwater West.
Company President and CEO Michael Rowley has laid out a staged drill program for 2019 to hit the best grade areas within the three most advanced projects. The company sees a potential for a multi-million ounce resource of platinum, palladium and gold with potentially more than a billion pounds of nickel and copper.
The initial drill program will cost $1 million to $1.5 million for a 5,000-10,000 foot program necessary to define an initial 43-101 resource. With some additional funding the program could be expanded. Drilling should begin in August and continue through October. The company has brought in $350,000 in early warrant exercise and is in discussions with existing warrant holders to hopefully exercise the remainder of the outstanding $2.5 million in warrants. Should those warrants not be exercised, Group Ten would almost certainly do a private placement shortly.
I happen to be a giant fan of platinum right now. It is at the greatest discount to gold in history and is absurdly cheap. I don’t know how cheap palladium is, it has had a giant run. But all of the metals are about to embark on a historic run. There are only a handful of Pt/Pd junior companies to choose from and it sure looks to me as if Group Ten is the most attractive. Starting in September or so there will be assays coming out from the drill program. Sooner or later the market will get it and bid up the shares.
I was a buyer of shares in the open market at higher prices and I don’t mind adding to my position in here and averaging down. The company has excellent management, a brilliant technical team and one of the most undervalued mineral projects I have ever seen. Greg Johnson has done this before with great success.
Group Ten is an advertiser and naturally that makes me biased. I do own shares bought in the open market. Do your own due diligence.
Group Ten Metals