What is your PGM concentrate worth?

There are a couple of dozen junior platinum mining companies coming into existence in Southern African and most intend to mine, concentrate the PGM?s in a flotation product and sell the concentrate to one of the major producers in South Africa. The price they will receive for their product and hence the return they achieve for their investment will depend upon the large number of factors that influence the market for such a product. Unfortunately the number of buyers is severely limited as it is dominated by the two major local producers, Impala Platinum and Anglo Platinum. Furthermore the current smelting technology has limited capacity for UG2 concentrates and high nickel concentrates will quickly fill any available base metal refining capacity. Few if any overseas buyers can compete for the bulky flotation concentrate produced. This paper will explore those factors such as metal recoveries, metal prices, operating costs, capacity constraints, deleterious elements, transport issues, metal premiums and discounts that are in play, types of flotation concentrates, processing capital costs, PGM grades, etc and their impact up on what smelters and refiners might be prepared to pay for such PGM concentrates. Ultimately simple graphs and equations can be developed for probably payment terms for such concentrates. Those who negotiate well will move to the higher return section of the envelope and those who use the concentrator facilities to produce the most saleable combination of flotation concentrates will enhance their returns. A deep and firm understanding of the issues surrounding this market is necessary in order to negotiate the best possible price for the seller.