Seeking Alpha: Impala Platinum Seeing Short-Term Pain For Uncertain Gains

As was the case when I wrote about South African platinum producer Aquarius (OTCPK:AQPTY), I can't help but feel a little sorry for management Impala Platinum (OTCQX:IMPUY) (also known as "Implats"). Dealing with the rapacious government in Zimbabwe was more than enough of a headache, and now the top three South African platinum producers are dealing with an extended strike that is running down their inventories and threatening significant cost increases over the coming years.

At some point the strike in South Africa will end and Implats, Anglo American Platinum (OTCPK:AGPPY), and Lonmin plc (OTCPK:LNMIY) will get back to business. The strike is likely running down global platinum inventories, but there is certainly the risk that higher wage costs at notoriously labor-intensive mines will weigh on the sector for years. Barring yet another attempt from the government of Zimbabwe to shake down the platinum miners, I would argue that Implats offers an investors a rocky short-term road, but decent value for the long-term.

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Impala Platinum Seeing Short-Term Pain For Uncertain Gains

Seeking Alpha: Will Aquarius Platinum's Best Efforts Come Up Short?

I have a lot of sympathy for the current management team at Aquarius Platinum (OTCPK:AQPTY). Management has made some significant strides in rationalizing the cost structure of this PGM miner and overcoming the poor capital and strategic decisions made by prior management. Unfortunately, the geology of the company's mines works against the company, and there are significant risks with the company's Zimbabwe asset. Although extensive miner strikes in South Africa could improve conditions enough that Aquarius generates the cash it needs to manage a bond maturity, this company is in precarious shape and the stock is really only suitable for very risk-tolerant investors.

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Will Aquarius Platinum's Best Efforts Come Up Short?

Investopedia: Impala Platinum Trying To Survive Multiple Challenges

Being a South African platinum miner is a pretty miserable existence right now. The contract price of platinum has fallen more than 12% over the four months and seems stuck in a trading range of $1,400 to $1,700 an ounce. At the same time, once-great mines are starting to show their age and labor unrest is becoming a serious issue. Add in the risk of expropriation in Zimbabwe, and it's not exactly surprising that Impala Platinum (OTC:IMPUY) (aka “Implats”) shares are at their lowest point in roughly eight years.

The good news is that Impala still has some of the highest-quality assets and reserves in the market, as well as a balance sheet and cost structure that stands out in the field. Were the company to get a little more aggressive in M&A and/or see a recovery in platinum prices, the shares could recover from these lows.

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