Maybe you have never danced with the Platinum Group Metals. Now is the time to put on those dancing shoes. Today, July Platinum is $865. Yes, off its recent levels of $851, but still very much in a great buying range. I don't care if you do the twist, salsa, tango, or merengue. But get out on the floor. Take a look at my ebook and all my blog posts for the reasons you need to step out, or should i say, step up!
Along the way, I would pick up some SBGL. Reading my blogs, you know I am long Sibanye-Stillwater. I keep adding to my position, having bought stock this morning between $3.49 and $3.55. Why? SBGL is one of the largest Platinum Group Metals producers in the world, and will be even bigger if the expected Lonmin acquisition closes. I like Neal Froneman, the CEO. From all that I see, he is prudent, honest, a visionary, and while making bold moves, I think he is also conservative. In the midst of a long gold strike, Neal was able to raise a war chest in a very smart way, by selling equity at a good price and doing a streaming deal. Now that the gold strike is resolved, that war chest is great for the balance sheet.
Neal intends to reduce debt to EBITDA coverage from what was at the high, 3X to 1.8X by the end of the year. He also expects to restart the dividend, at probably 5%. Of course, most important, I am bullish on the PGMs, and on Gold, and SBGL is a leveraged way to play.
Yes, one must be aware of the risks inherent in a South African investment, given the numerous issues facing that economy, that I have written extensively about. But SBGL does own the Stillwater Palladium mine in Stillwater, Montana... an important diversification.
I am also a happy holder of the Canadian Gold company, Kirkland Lake (KL), which has two of the highest grade gold mines in the world, in Canada and Australia. I really like this position, since KL is increasing production significantly which hedges the gold price. Yes, it has one of the lowest costs of production; has no debt; has $400+ million in cash, and is extremely well managed. The stock at the moment is $32.69. My average cost is $31.4 - much higher than where the stock has been, but I expect much lower than where it is going.
It's time to enter the dance hall and pick a partner, or two, or three! :-)
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