This Could Be The Next Big PGM Discovery. So What?
From the hard-to-miss IPOs of Beyond Meat and Uber to the non-stop talk about cannabis, commodities like platinum and palladium have failed to garner much attention lately. But all that could be about to change. The latest drill results from a PGM project called Sunday Lake make it the most significant pure platinum palladium intersection seen in decades. In the world. So why should you care? First, a little more about Sunday Lake and some of the drill-result highlights.
The Sunday Lake Project is a joint venture between Impala Platinum Holdings Limited (Implats) and Transition Metals Corp (TSXV:XTM). North American Palladium (TSX:PDL) holds an option to earn up to a 75% interest in Sunday Lake from Impala Platinum Holdings Limited and Transition Metals Corp holds a 25% free carried interest through to the completion of a Feasibility Study.
- Thickest and highest grade intersection encountered to date on the property reported in hole SL-19-026 that returned 41.20m @ 5.51 g/t PGM (Pt+Pd+Au) and 0.57% Cu including a high grade section of 15.80m @ 9.11 g/t PGM and 0.88% Cu.
- Hole SL-19-29: 61.00m @ 2.20 g/t PGM including 8.17m @ 5.44 g/t PGM.
- Drilling has confirmed extensive high-grade PGM mineralization associated with the basal contact of the SLI that can be successfully targeted using surface and borehole geophysics.
- Numerous high quality targets remain to be tested.
(These results were conducted by North American Palladium and were sourced from a North American Palladium news release dated April 29, 2019. Please refer to that release for the full information regarding the drill program, including location maps, cross sections and drill hole details.)
Unless you’re a geologist, these results may not mean much so to put it simply, it’s very likely that there is a continuous layer of mineralization traced over a 1,500m by 900m area, with thickness ranging from 1-40m. And to add a little context, a 1,500m by 900m area is the same as 225 football fields, and a 40m thick intersection is the same height as a 12-story building. Needless to say, that’s potentially a lot of platinum and palladium (and gold too)!
Over the years, platinum and palladium have been used in automotive catalytic converters, medical equipment, and fine jewellery. But lately there’s a new and growing platinum demand for use in hydrogen fuel cells. Platinum is used as a catalyst in fuel cells to enhance the rate of the chemical reaction of hydrogen with oxygen. This process produces electricity and clean water. That makes platinum a key component in hydrogren fuel cell vehicles (FCVs).
An FCV is similar to a battery electric vehicle (BEV) in that it’s powered by an electric motor. But unlike a BEV that needs to get plugged in to recharge its battery, FCVs get their electricity from that chemical reaction mentioned above and store hydrogen gas in a tank that can be refilled in as little as five minutes at a filling station. Not only that, they can also travel further on a single tank (versus a single charge in a BEV). Hydrogen fuelling stations are already operational across the major auto markets and the number of them continues to grow.
More and more automakers are seeing hydrogen as a key source of clean, renewable energy. And for good reason. It’s the most abundant element in the universe and stores more energy than a battery of equivalent weight. Growing FCV production will certainly have an impact on platinum-group metal demand. According to industry data and forecasts, that demand is set to grow sharply in the 2020s.
And that brings us back to Sunday Lake and Transition Metals (XTM). Under a project generator model, XTM owns 25% of the project, free carried through to the completion of a Feasibility Study. If those results lead to as large of a discovery as they are pointing to, that means XTM will benefit from the reward without taking on the risk. And that’s music to every investor’s ears.
While it would seem that platinum, palladium, and even gold, aren’t as sexy as IPOs and cannabis for investors, it might be wise to put them back on your radar. After all, it might not be too long before that Uber you call to take you to A&W for your Beyond Meat burger is a FCV that needed a little platinum to get things going.
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