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Platinum Group Metals - Will Russia play its Palladium Card?
By John Helmer, Moscow
Rhodium Search in Cobalt - R. Gilson
Mineral and Metal Update- R. Gilson
Little Known
Tantalum Rare, but it Future Shines-Allan Robinson -Globe & Mail
DJ Palladium Price Expected To Halve In Medium, Long Term

PLATINUM GROUP METALS
WILL RUSSIA PLAY ITS PALLADIUM CARD?
By John Helmer, Moscow

When platinum and palladium prices reached record highs in January, Russian delays in supplying the market demand were widely blamed. Platinum reached a peak of US645/oz, while palladium climbed to almost $1 100.

This week the prices of both precious metals were languishing below $440 and Russian sales to the market were again blamed. Trade gossip has it that global demand has fallen because Russian metal has flooded the market.

What exactly counts as the market for platinum group metals (PGMs) is difficult to tell. The recent price falls of platinum and palladium were fixed in Tokyo, London, and New York on tiny trades of a few thousand or, on some days, a few hundred ounces. What kind of commodity market sets international prices on the sale of less material than can fit into one tourist-class suitcase? A speculators' market, that's what.

Outside the network of telephone links and computers that make the big-city spot-market fixes, Chinese importers recently bought 200 000 oz of platinum - about 20% of Chinese annual consumption - for jewellery .

In addition, say trade sources, a big US car company is offering to lock in its order for next year's palladium at $620. The US uses palladium primary in automobile catalytic converters to reduce exhaust gas emissions. But, even if auto production drops this year, the loading of palladium in converters and the legislative requirements for emission control will bolster US demand. Indeed, if US car companies have been selling down their inventories, as many in the business believe, then it is already time for them to start restocking.

So, if the consumers of platinum and palladium believe the metals' prices have hit bottom, what do they know that the spot-market players don't? The fact is that the users and the speculators believe the same thing - that the price will start to rise soon because there is likely to be more demand than supply. Palladium supply figures show why they are betting Russia will supply less of the metal to the market this year than in 2000.

The US has imported 89,2 t (2,9m oz) of palladium so far this year - just over half the volume it imported last year. Japan has imported 18,3 t (588 000 oz) to date and will have to raise its purchases almost fourfold in the months ahead to match last year's imports. Analysts expect auto production to be flat compared with last year, or down by no more than 5%.

Russia's Norilsk Nickel produces about 2,8m oz of palladium a year. International analysts put total Russian exports to world markets last year at 5,2m oz. The difference comes from the State stockpiles, managed at the Gokhran (Finance Ministry) by Valery Rudakov. It is Rudakov who decides if Russia will supply more or less metal than the world needs, and thus its price.

Rudakov has said repeatedly that the Gokhran will not export any palladium or platinum this year. This was a little misleading, and therefore not convincing to the spot market, because Rudakov has not referred to the large stock of palladium that was shipped from Moscow to German bank vaults at the start of last year. That metal is held as collateral for loans, which the Russian Ministry of Finance has the option to redeem by paying cash. Otherwise, the German banks may sell the metal on to the market. When that happens, it appears as an import into Switzerland.

This year Swiss imports suggest that 56,8 t (1,8m oz) of palladium have been released from the Russian stocks in Germany. This estimate may not be as accurate as a Swiss watch, but it is less than the volume of stockpile palladium that reached the market in 2000.

So, if Rudakov sticks to his word and prevents further deliveries of stockpile palladium to the market, Norilsk Nickel deliveries will be inadequate to fill demand; Russian supplies would be at least 10% lower this year than last. Demand will exceed supply and, if buying is concentrated in the short period to Christmas, pressure on the price will reverse and it will rise again. Quite soon, and quite fast.

RHODIUM SEARCH HEATING UP IN COBALT

Article submitted by R. Gilson

It is rumored in the Cobalt Camp and elsewhere that the United Nations have a group of Geologists searching for Rhodium in the famed old silver camp.

Local Prospectors have reported seeing strangers prospecting throughout the area -and each group seemed to be using a different color of flagging tape. The bush around Cobalt is beginning to look like one enormous Christmas tree.

Rhodium is a precious metal of the Platinum Group. Rhodium is a silverish colored metal discovered in 1803 by William Wollaston. It is produced in Canada and South Africa as a by-product of nickel production. Rhodium carries a price tag of $2,100 to $2,500US per troy ounce.

Local prospectors have joined in the search. And I'll bet, since silver was first discovered in 1903, there has never been a sample taken and sent for Rhodium assay in the Cobalt Camp's history.

The Cobalt Camp has produced over 420,550,000 ounces of silver; 25,000,000 pounds of cobalt; 4,000,000 pounds of copper; 4,000,000 pounds of nickel; 1,500,000 pounds of lead; 150,222,000 pounds of arsenic and 500,000 pounds of bismuth. Today, we know the Camp has also produced gold and other products that were never accounted for.

It's been a good year for the famed old Cobalt Camp! In July, Outcrop Explorations Limited of Cobalt www.outcropx.com and again in August Prairie C, another local company www.geocities.com/prairiec/ announced the diamond potential in the Cobalt Camp. Since September, Cabo Mining Corp's www.cabo.ca exploration program evolved to investigate the diamond potential of the Cobalt Camp. The Resident Geologist from Kirkland Lake has made several site visits to the above mentioned Company's properties.

Another significant feature within the Cobalt area is the unusually high number of lamprophyre dykes. Many of these dykes are extremely large ( in excess of 100 meters wide in some areas) and very continguous.

Recently, diamonds have been reported from xenolith bearing dykes in the Wawa area of north central Ontario. Cabo gathered fifteen samples by backhoe from the Pan Lake Grid and twenty-two alluvial samples were collected from drainage systems on the property underlain by favorable structural features. These are being processed for kimberlite indicator minerals and analyzed for favorable geochemical indicators. The results are not available at this time.

"MINERAL AND METAL UPDATE"

TANTALUM and COLUMBIUM

Avalon Ventures has been hot on our website with TANTALUM and we thought our readers might want to know more about TANTALUM, so, we've done a little investigating.

TANTALUM and COLUMBIUM are metals of increasing value. They closely resemble each other chemically, but TANTALUM is twice as heavy as COLUMBIUM and is very hard.

OCCURRENCE

COLUMBIUM and TANTALUM are almost always found in either granites or pegmatites or iin sands and gravel near these rocks. COLUMBIUM and TANTALUM are always present together, neither occurs alone.

MINERALS

The three most important minerals are COLUMBITE, TANTALITE and SAMARSKITE.

Columbite:- Columbite and tantalite are much alike and only the trained mineralogist or chemist can tell then apart. Both contain iron, manganese, columbium and tantalum. They are iron-black in color, but their streak is dark red-brown. They are so hard that they cannot be scratched with a knife, unless it contains unusually hard steel. The hardness of columbite is 5.4 to 7; and of tantalite,5.3 to 7.3. A piece of quartz will scratch them. They are much heavier than most minerals, the actual specific gravity of each being 7, nearly two and one-half times as heavy as quartz.

Tantalite:- Tantalite is rare. The pure mineral contains 70 per cent metal, but the percentage in actual minerals is lower.

Samarskite:- Samarskite contains the rare-earth metals and columbium and tantalum.

Additional information is available upon request.

NOTE: If you, the Reader of Canadian Mining News like these brief mineral and metal updates, let us know and we'll be glad to keep you informed on the minerals and metals mentioned in the press releases we receive.

The Editor EMAIL US AT: editor@canadianminingnews.com

Little-known tantalum rare, but its future shines by Allan Robinson, Globe and Mail

The Globe and Mail, Friday, January 5, 2001
Little-known tantalum rare, but its future shines
By Allan Robinson

TORONTO-Tantalum. Never heard of it? Not surprising.
It's a rare metal, but one with everyday uses. Tantalum is found in the guts
of cellular phones, computers, pagers and even Sony's Playstation 2 and
Nintendo's Gameboy.
Its principal use is in the manufacture of capacitors-critical computer
components that regulate electrical flow-because it's a good conductor. That
market accounts for about 60 per cent of demand. But the metal is in short
supply and prices are skyrocketing, having soared tenfold this year as
buyers scramble for supplies.
As a result, a tiny group of Canadian exploration companies is taking a
renewed interest in looking for the hard-to-find metal in northwestern
Ontario and parts of Quebec and Manitoba.
But in addition to electronics, tantalum has a lot of other uses. Need
artificial hips and knees? Tantalum is used because the human body doesn't
reject it.
It's also used in superalloys in jet fighters, engines, weapon systems and
nuclear reactors. As an alloy, it is used to create hard tools for cutting
and to create specialized glass for optical purposes.
Its industrial applications range from chemical processing-such as the
production of acids-to the manufacture of insecticides and pharmaceuticals.
Tantalum is ideal for those applications because it resists corrosion.
Tantalum is sold under long-term contracts between producers and users and
there is no open auction market to determine prices. But there is one public
indicator of what buyers are willing to pay because of the metal's role in
the defence industry.
This year, prices for the strategic metal have soared to $443.90 (U.S.) a
pound according to the U.S. Defense Logistics Agency, compared with the
average price of $40 to $55 a pound under long-term contracts. The agency
reports sales from the U.S. National Defense Stockpile Center. The most
recent sale consisted of a lot of 205,000 pounds for $91-million in
December.
In September, 148,395 pounds were sold for $182.60 a pound and in June,
147,855 pounds were sold at $106 a pound.
"They [the U.S. Defense Stockpile Center] enter the market when there's a
need," said one mine executive. "There's definitely a shortage of raw
material."
Some estimate that the worldwide production of tantalum is about five
million pounds, while the U.S. Geological Survey Minerals Yearbook estimates
annual consumption is about 5.5 million pounds.
The Tantalum-Niobium International Study Center in Brussels said the growth
rate in demand for tantalum from 1993 to 1999 was 8.9 per cent a year.
However, taking into account the strong demand in 2000, the annual rate of
growth from 1995 to 2000 could be 12 per cent a year, it said.
The Ontario Geological Survey (OGS) estimates that the demand for tantalum
rose about 20 per cent this year because of growth in the electronics
industry.
A recent report from Merrill Lynch & Co. warned investors in the electronic
components industry that "we have become much more concerned [that] the
short supply of tantalum powder could make earnings-per-share growth even
more challenging during 2001."
North America's only tantalum mine, located at Lac du Bonnet in Manitoba,
accounts for only a tiny share of world production. It is owned by Tantalum
Mining Corp. of Canada Ltd., a wholly owned subsidiary of Boston-based Cabot
Corp.
Production from the underground mine and mill, which employs 230, is sent to
Cabot Performance Materials in Boyertown, Pa., for processing.
"The market is booming right now," said David Lewis, a senior markets
analyst for Cabot Corp. Cabot is a major supplier of tantalum, which is part
of the company's focus on high-performance materials. Cabot buys most of its
tantalum from a wide range of suppliers. The company is finding that passing
higher prices along to its customers is difficult, Mr. Lewis said.
Cabot would consider developing other sources, he said. However, he adds,
"It's not really our mission in life to be in the mining industry."
The biggest player in tantalum mining, supplying about 25 per cent of the
world market, is Sons of Gwalia Ltd., an Australian gold mining company. It
has plans to double production to 2.3 million pounds a year by 2003 by
spending $100-million (Australian), but many think there will be a need for
more mines around the world.
In Canada, the interest of the exploration companies has been focused on
northwestern Ontario.
"They [tantalum prospects] are a tough target," said Donald Bubar, president
of Avalon Ventures Ltd. of Toronto. The metal is found in low
concentrations. It is in oxide rocks, which are non-conductors, making it
difficult to find targets using geophysical techniques and airborne surveys.
"Northwestern Ontario is just prime geology to find these types of
deposits," Mr. Bubar said.
In the search for tantalum, geologists must look for pegmatites, a
crystalline rock formed by cooling magma, which sometimes concentrates other
exotic metals such as cesium, lithium and rubidium.
"It's just good old-fashioned prospecting, along with a good knowledge of
what the rare metals look like in the field, that will result in the
discovery of most tantalum prospects," said Dr. Frederick Breaks, a
geoscientist with the OGS.
Dr. Breaks said that the OGS has worked closely with Dr. Andrew Tindle, a
geology professor with Britain's Open University, in discovering tantalum
prospects in northwestern Ontario.
Dr. Tindle is an expert in using electron-microprobes to distinguish the
various tantalum minerals present in a given type of pegmatite. An
electron-microprobe bombards a rock sample with a beam of high-energy
electrons to determine what minerals are in the sample.
That program has been under way since 1993 and many discoveries have been
made in the Kenora, Ont., area, but none yet that are big enough to justify
a mine.
Avalon is exploring two targets in Ontario and one on the border in
Manitoba. It has a deal with a private company in the tantalum industry
giving that firm the right to earn a 50-per-cent interest in any of Avalon's
tantalum targets by spending $5-million (Canadian) on exploration.
Tantalum Mining has a joint venture with Gossan Resources Ltd. of Winnipeg
to explore a property near Kenora.
Other Canadian juniors looking for tantalum in Ontario include Houston Lake
Mining Inc. of Val Caron, Ont., and Champion Bear Resources Ltd. of Calgary.
One of the largest U.S. producers of tantalum capacitors, Kemet Corp. of
South Carolina, has reached a deal to help an Australian company develop
tantalum properties in that country.
Mine expansions and some exploration success could result in tantalum prices
falling dramatically as they did in 1979-80 when another supply squeeze came
to an end.
The 2000 squeeze $(U.S.) a pound contained tantalum pentox, isolated prices
June 2000        $106.00 a pound

Sept. 2000       $182.60 a pound

Dec. 2000        $443.90 a pound
Source: U.S. Geological Survey (Cunningham, 1999)

DJ Palladium Price Expected To Halve In Medium, Long Term

LONDON (Dow Jones)--The price of palladium, already in the middle of a sustained downturn, is expected to halve in the medium to long term, traders and analysts told Dow Jones Newswires.

Palladium prices soared to all-time highs at the beginning of 2001 on uncertainty of supply from major producer Russia, but the same uncertainty, along with the high prices, will eventually lead to its downfall, observers say.

"This is a logical scenario: first as the price is too high, and second, the reliability of the Russians is totally suspect. The delays of fresh supply could be indefinite," said a European precious metals trader. "Palladium certainly has the potential to go below $450 (a troy ounce) within the next six months." Wednesday, the metal was at $837.50/oz, already $200/oz lower than it was at the beginning of the year.

Auto manufacturers use either platinum or palladium for the production of autocatalysts and market watchers say the unloading of platinum inventories takes around six

months. "(The high price) means the car companies have to switch to platinum - they are doing so at the moment, and it's a process which is easy to carry out," said the trader.

Although the price will hold for the next few months, it is likely to go lower than $450/oz in six to 18 months, he said.

"Palladium probably won't collapse immediately but medium to long term it could be a disaster and will go lower than $450/oz," he said.

It makes sense for the car companies to use platinum instead of palladium as it is more easily obtainable and is a better deal in terms of price, another European trader noted.

Auto manufacturers started switching from platinum to palladium about 18 months ago and the whole process takes a total of three years, traders said.

Analyst Rhona O'Connell of Canaccord Capital said substantial falls of hundreds of dollars in the price of palladium are quite possible.

"While our $550/oz long-term forecast may look conservative from current levels, we believe it to be realistic for mine planning purposes."

Leading auto manufacturers declined to comment this week on their current sales and purchasing policy for palladium.

However, General Motors' head of public relations David Andres said the three leading industries which use palladium - car makers, electronics and dentistry - are all turning their backs on the precious metal.

"This is confirmation of the technical direction in which we are heading. We are continuing our plan to cut down on our use of palladium by 40-50%.

"We have already increased our use of platinum and expect to raise consumption by a total of 5%-10%," he said.

He also said it is necessary to generally reduce the use of precious metals in auto production in order to meet emission control standards.

General Motors is adopting Toyota's autocatalyst technology, which uses roughly half the amount of palladium as conventional converters, Andres said.

Deutsche Bank analysts noted in a research report Tuesday that both carmaker and producer sales have been registered on the spot market in the last week.

The U.S. Defense Logistics Agency offered 2,053 ounces of palladium, Monday, and around 5,000 ounces Tuesday, (in addition to 50,000 ounces last month). Although the total amount sold by the DLA this week isn't significant, it may be one factor applying pressure to the price, analysts said.

-By Carlina MacDonald, Dow Jones Newswires; +44-20-7842-9248; carlina.macdonald@dowjones.com

(END) Dow Jones Newswires 01-03-01

1053GMT Copyright (c) 2001 , Dow Jones & Company Inc~200103011053

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