As major players in Russia and South Africa struggle to increase production, Gerald Harper believes he has picked a good time to carve out a niche in the platinum group metals sector.
It is why the mining industry veteran decided to come out of retirement to head up Minfocus Exploration Ltd., (TSX: V.MFX, Stock Forum), a Vancouver-based junior which is exploring for platinum and palladium in northwestern Ontario, near Thunder Bay.
Trading at 15 cents this week, the company has a market cap of $6 million, based on 40 million shares outstanding.
“We want to be the new pre-eminent platinum group metals company, focused on exploration and development,’’ Harper told Stockhouse recently.
A 67-year-old native of Zimbabwe, and former President of the Prospectors and Developers Association of Canada, Harper has seen most of what the global mining sector has to offer.
After moving to Canada in 1970, his career has included spells with Falconbridge Ltd., Northgate Minerals Corp. (TSX: T.NGX, Stock Forum) and Geddes Resources Ltd., the company that had its infamous Windy Craggy copper project in British Columbia declared a wilderness park.
From 2005 to 2009, he was also senior vice-president of Mongolian operations with Western Prospector Group Ltd., a uranium-focused company that was acquired by China National Nuclear Corp. in 2009.
In North America, opportunities to invest directly in the PGM sector are limited to Stillwater Mining Co. of Billings, MT, and a handful of juniors, including Minfocus, North American Palladium Ltd. (TSX: T.PDL, Stock Forum), Prophecy Platinum Corp. (TSX: T.NKL, Stock Forum), and Magma Metals Ltd. (TSX: T. MMW, Stock Forum).
But Harper is bullish on the sector for two main reasons:
Firstly, South African producers Anglo American Platinum Ltd. (Amplats) and Impala Platinum Holdings Ltd. (Implats) and Russia’s Norilsk Nickel are having trouble raising production in order to meet demand from the growing auto sector. (Platinum and palladium are critical ingredients in the production of catalytic converters, which are used to convert toxic emissions in to less harmful substances).
Amplats, the world’s leading primary producer of PGMs, has said supply challenges are expected to escalate this year with increased risk of supply disruptions from power shortages, industrial action and safety stoppages in South Africa.
Black economic empowerment laws are also limiting the drive to raise production in South Africa and Zimbabwe because they require miners to transfer large portions of their holdings to blacks.
Secondly, world automobile production -- the major source of PGM demand -- is forecast to continue growing in 2012 to new record levels, a development that is forcing buyers to look elsewhere when sourcing PGMs.
As a case in point, Japan’s Mitsubishi Corp. has agreed to invest $94.9 million in Stillwater Mining’s Marathon PGM and Copper Project, near Marathon Ont. (300 kilometres east of the city of Thunder Bay).
Announced on March 28, 2012, the deal gives the Japanese firm a 25% stake in the Marathon project and an option to purchase up to 100% of its PGM production.
Harper is hoping for a similar outcome at Minfocus, a company that was set up in 1993 to explore for diamonds, but turned its attention to PGMs after being resurrected by Harper in 2009.
The junior has just wrapped up a winter drilling program on the Seagull North claims on its flagship Nipigon Reefs project, which were optioned from Black Panther Mining Corp. (TSX: V.BPC, Stock Forum), Rainy Mountain Royalty Corp. (TSX: V.RMO, Stock Forum), and Trillium North Mineral Ltd. (TSX: V.TNM, Stock Forum).
Having identified multiple layers of mineralization with platinum group elements (PGE), gold, copper and nickel, Harper said the key goal for this year is to start “blocking out resources.’’
“We feel that the mood in commodities markets is starting to swing in favour of analysts who are bullish on platinum and palladium,’’ said Harper, who is currently a director of NWM Mining Corp. (TSX: V.NWM, Stock Forum) and Urania Resources Ltd. (a uranium and gold-focused reporting issuer, which is expected to be listed soon on the TSX).
“We are also watching the field for opportunities,’’ he said. “If an M&A target came up, I wouldn’t shy away from going after it,’’ he said.